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The FM regional commercial radio licence for the North East of England was awarded on 13 April 2006 to Saga Radio (North East) Limited.

North East England licence award decision

When the regional North East of England licence was advertised last September, we stated that, given the number and type of services already available in the area to be served by this licence, Ofcom would be likely to place particular importance on criterion (c) – the extent to which a proposed service would broaden the range of programmes available by way of local (commercial) services in the area, and would cater for tastes and interests different from those already catered for – when it came to consider the applications for this licence.

We also said that, in respect of criterion (d) – the extent to which there is evidence of local demand or support for a proposed service, Ofcom would be likely to attach greater weight to robust and meaningful evidence of demand as demonstrated by findings from research undertaken in the licence area and, if appropriate, detailed analysis of the existing market, than to evidence of local support as demonstrated by letters from potential listeners and/or advertisers.

We also noted that this guidance is subject to discretion, and that Ofcom will always consider each of the four statutory criteria when making a licence award.

Given the large number of applicants (thirteen) proposing a wide variety of different formats, this was a difficult decision for the Radio Licensing Committee (RLC). However, the Committee considered that Saga’s application was a particularly strong one not only with regard to Section 105(c), but across all four statutory criteria.

Saga was particularly effective in identifying the potential local commercial radio market gap for a service targeted at an older audience aged over 50. Compared to other parts of the country, the percentage share of listening achieved by local commercial radio in the North East is high, but this is much less true of the over-55 demographic, whose share of listening in recent RAJAR surveys has been much closer to (and occasionally below) the UK average.

In the Committee’s view, the application from Saga offered a highly coherent set of programming proposals and a format that has already proved successful in attracting listeners aged 50 and over elsewhere in the UK. It was felt that the inclusion in the station’s main music mix of genres and styles such as standards, nostalgia and country, which Saga’s comprehensive output monitoring demonstrated are generally unavailable on local commercial radio in the North East, would enshrine the character of the proposed service and – as Section 105(c) requires – significantly broaden the range of programmes available in the area by way of local commercial radio. This was further reinforced by a Format requirement that tracks from the past 15 years must not account for more than 10% of the music aired each day, while Saga’s commitment to “lifestyle oriented speech” for the over-50s, plus a number of specialist music programmes (e.g. big band music, mellow jazz and rock’n’ roll) provide further points of difference from existing services in the market.

With regard to Section 105(d), Saga conducted a particularly thorough programme of research which demonstrated that ‘Easy Listening’ was by some margin the format of choice among over-50s in the region. Its quantitative research was further supported by a large-scale qualitative auditorium exercise, which demonstrated good levels of support among the target audience for the station’s more detailed music proposition. In addition, Saga’s research showed that its format would be disproportionately attractive to listeners of BBC services (particularly Radio 2 and BBC local radio) rather than listeners to existing local commercial radio services.

In discussing Section 105(a), the Committee recognised that, traditionally, the over-50s audience has been a difficult one for commercial radio companies to sell to advertisers, and the revenue challenges implicit in targeting this demographic are certainly not to be underestimated. However, the financial performance of Saga's existing analogue stations has given confidence, and demonstrated the economic viability of the format. In this respect, therefore, the RLC considered that Saga’s business plan for its proposed North East service was both realistic and achievable.

Finally, the RLC considered that, in relation to Section 314 of the Communications Act 2003, Saga’s programming proposals contained a suitable proportion of local material and locally-made programming. The station’s Format will limit the amount of syndicated or networked programming it can broadcast to a maximum of seven hours per week while all other output must be locally produced and presented, and Saga has committed to providing news bulletins containing local news 24 hours per day, seven days per week.

The following pages set out the statutory requirements relating to radio licensing, and details of the licensing process. Further information about these, and detailed information relating to the applications for the North East licence, can be found at:

http://www.ofcom.org.uk/radio/ifi/rbl/car/

Statutory requirements relating to radio licensing

In carrying out all of its functions, Ofcom is required to have regard to the general duties set out in Section 3 of the Communications Act 2003. In addition, under section 85(2)(b) of the Broadcasting Act 1990, it is the duty of Ofcom to do all that it can to secure the provision within the UK of a range and diversity of local radio services.

'Localness'

In carrying out its functions in relation to local commercial radio services specifically, Ofcom is required (under section 314 of the Communications Act 2003) to act in the manner that it considers is best calculated to secure:

• that programmes consisting of or including local material are included in such services but, in the case of each such service, only if and to the extent (if any) that Ofcom considers appropriate in that case; and
• that, where such programmes are included in such a service, what appears to Ofcom to be a suitable proportion of them consists of locally-made programmes.

For the purposes of the licensing process, Ofcom does not consider it appropriate to prescribe an amount of local material or a proportion of locally-made programming that new services should contain, as such matters may well vary greatly between different types of service. Rather, it is for applicants to set out in their application the amount of local material and the proportion of locally-made programming they propose to provide, supported, as appropriate, by evidence of demand or support for such proposals. Ofcom will then consider on the basis of the application whether the amount of local material included is appropriate, and whether the proportion of locally-made programming is suitable, for that particular service proposal.

Specific local licence award criteria

In considering the applications it receives for local commercial radio licences, Ofcom is required to have regard to each of the statutory criteria set out in section 105 of the Broadcasting Act 1990. These are as follows:

1. the ability of each of the applicants for the licence to maintain, throughout the period for which the licence would be in force, the service which he proposes to provide;
2. the extent to which any such proposed service would cater for the tastes and interests of persons living in the area or locality for which the service would be provided, and, where it is proposed to cater for any particular tastes and interests of such persons, the extent to which the service would cater for those tastes and interests;
3. the extent to which any such proposed service would broaden the range of programmes available by way of local services to persons living in the area or locality for which it would be provided, and, in particular, the extent to which the service would cater for tastes and interests different from those already catered for by local services provided for that area or locality; and
4. the extent to which there is evidence that, amongst persons living in that area or locality, there is a demand for, or support for, the provision of the proposed service.

The legislation does not rate these requirements in order of priority, but it may be that Ofcom will regard one or more of the criteria as being particularly important in view of the characteristics of the licence to be awarded and the applications for it.

Process for assessment of applications

The North East England licence was advertised on 8 September 2005. By the closing-date of 8 December 2005, thirteen applications were received, as follows:

All Talk FM North East
The Arrow (North East) Limited
Atlantic Radio Northeast Limited (North East One)
Children’s Radio UK (North East) Ltd (97.5 Fun FM)
North East Radio Limited (97.5 Xfm)
Northlife Limited
Original FM Limited
Radio UK Holdings Ltd (Diamond FM)
RockTalk North East
Saga Radio (North East) Limited
Smooth FM
Touch FM
UK Media and Radio North East Limited (3 Rivers Radio)

The membership of Ofcom's Radio Licensing Committee (RLC) for this licence award was as follows:

Ian Hargreaves, Ofcom Board member (Chair)
Tim Suter, Partner, Content and Standards (Deputy Chair)
Matthew MacIver, Content Board member for Scotland
Peter Bury, Director of Strategic Resources
Peter Davies, Director of Radio and Multimedia
Martin Campbell, Head of Radio Content Team
Neil Stock, Head of Radio Planning & Licensing

The applications were circulated among all members of the RLC as well as among relevant Ofcom colleagues. Copies of the non-confidential sections of the applications were made available for public scrutiny on the Ofcom website, and public comment on the local radio needs of listeners in the area, and the type of programme service required, was invited both at the time of the licence advertisement and on the day after the applications were received. The Radio Licensing Committee took all replies into account when reaching its decision.

The Radio Licensing Committee had an initial discussion of the applications at its meeting on 9 February 2006. This comprised an initial presentation by a member of Ofcom's Radio Planning & Licensing team, summarising the proposals put forward by each applicant as they relate to the statutory criteria, followed by an opportunity for the RLC members to highlight any questions of clarification and/or amplification they wished to be put to the applicants.

Shortly after this meeting, each applicant was invited to respond, within a two-week period, to written questions of clarification and/or amplification on aspects of their proposals. The non-confidential questions and responses were subsequently made available for public scrutiny on the Ofcom website.

In line with Ofcom's published procedures, each application was awarded a score (of between 0 and 10) for each of the four statutory criteria contained in section 105 of the Broadcasting Act 1990. These scores provided an indicative picture of the perceived strengths and weaknesses of each application, and were used for guidance only. A summary of the scores was presented to the RLC at its 13 April 2006 meeting, as part of a paper which summarised the issues of relevance for each application under each of the statutory criteria. The information included in this paper was drawn both from the applications and the subsequent responses to questions of clarification and/or amplification.

Points for future applicants

1. Applicants for licences in other areas should note that this licence award was made based on the particular characteristics of the North East of England licence area, and the applications which were submitted. Each licence award will be made on an individual basis, with regard to the factors which, in the view of Ofcom, are particularly relevant to that case.

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