173/00

24 November 2000

A copy of the full assessment is below.

The Radio Authority is responsible for licensing and regulating Independent Radio in accordance with the statutory requirements of the Broadcasting Acts 1990 and 1996. It plans frequencies, awards licences, regulates programming and advertising, and plays an active role in the discussion and formulation of policies which affect the Independent Radio industry and its listeners.

Applications were invited on 26 May 2000. By the closing date of 5 September 2000, three applications were received, as follows:

Compass FM (Compass Radio Ltd.)

Haven FM Ltd

Southbank FM Ltd.

The licence was awarded to Compass FM, to run for eight years from the date the service commences broadcasting.

The Authority had great difficulty reaching a decision on this award, primarily because, whilst meeting the requirements of the Broadcasting Act, there were significant weaknesses in each application. However, after close scrutiny, Members considered that Compass FM on balance best fulfilled the statutory criteria.

Compass FM used very thorough audience research to demonstrate that its target audience, of the over thirties, was currently underserved by existing independent local radio stations in the area. Members considered that the programme proposals, specifically the intention stated in the application to provide a service with particular appeal to the 45-64 year-old section of the target audience, would genuinely extend choice in the area. Members would be concerned if, once the licence had been awarded, the station veered towards the centre ground of a younger age group, thus effectively reducing choice. Compass FM will provide a "full service" station consisting of 20-35% locally relevant speech during weekday and Saturday daytimes. The music broadcast will contain tracks from the 1950’s to the present day, a minimum 10% of them being from the soft soul, country and easy listening genres. The music output will also include ‘Compass Spice’ a selection of tracks from the pre-rock and roll era, musicals and popular classical pieces.

Whilst Compass FM collected a smaller number of support letters than the other applicants, of the twelve letters sent directly to the Authority to express support for specific candidates, eleven were in favour of Compass FM’s bid.

As a wholly-owned subsidiary of Lincs FM, the local licensee for Lincolnshire and a company with a proven track record of running small stations successfully, Compass FM has the benefit of financial and managerial support from its parent company. This convinced Members that Compass FM’s proposals were credible on a long-term basis.

The Authority is required by section 85(3)(b) of the 1990 Broadcasting Act to discharge its functions as regards the licensing of radio stations in a manner

calculated to ensure fair and effective competition in the provision of radio services. Because Lincs FM plc already operates a service, Lincs FM, which entirely overlaps the Grimsby market, Members considered the award of this licence specifically in the context of section 85(3)(b). It was Members' view that, due to the alternative outlets for Grimsby advertisers offered by stations with significant market penetration owned by Emap and Chrysalis, and the existence of daily and weekly local newspapers, there was insufficient evidence to presume that an award to Compass FM would result in Lincs FM plc being able to abuse its market position. Members noted that the degree of plurality of ownership in the local radio market would be consistent with proposals the Authority had submitted to government for the future of radio regulation.

In addition, under the Broadcasting Act 1996, a company cannot hold two licences on the same waveband that share an audience, unless the Radio Authority determines that the holding is not against the public interest. To look at this matter, the Radio Authority conducted a radio-specific public interest test separately from its consideration of the Compass FM application. The public consultation element of the public interest test yielded no material concerns. After examining the issues, The Authority found that plurality and the range of programming provided in the Grimsby area would not be reduced if Compass FM were to hold the licence. However, in order to safeguard diversity in the sources of information and opinions expressed, Members sought an undertaking from Compass FM that a journalist be based at the station’s studios in Grimsby and that the local news bulletins on Compass FM be written, compiled and broadcast exclusively for Compass FM. Similarly, in order to ensure fair and effective competition in the area concerned, Members imposed a condition prohibiting conditional selling between Compass FM and any other Lincs FM plc station. The Radio Authority’s positive public interest determination, and hence the licence award, was therefore subject to Compass FM’s acceptance of these two conditions. Compass FM has accepted both conditions.

When licensing Independent Radio services, it is the duty of the Authority under the Broadcasting Act 1990 ("the Act") to do all that it can to secure the provision within the UK of a range and diversity of local services (section 85(2)(b) of the Act). Furthermore, under section 85(3) of the Act the Authority must discharge its functions in the manner which it considers is best calculated to:

Under section 105 of the Act, the matters to which the Authority shall have regard when determining whether, or to whom, to grant a local licence are:

While the requirements of sections 85 and 105 of the Broadcasting Act 1990 will invariably form the basis of all awards, each licence award will be made on an individual basis, with regard to the factors which, in the view of the Authority, are particularly relevant to that case.

When it advertised the availability of the Grimsby local licence the Authority invited public comment on the local radio needs of listeners in this area, and the type of programme service required. Copies of the non-confidential sections of

the applications were made available for public inspection in Grimsby Central Library and Cleethorpes Library and at the Authority’s offices in London. A notice was issued on 5 September 2000 inviting public comments on the applications. The Authority took all replies into account when reaching its decision.

All of the applications have been considered carefully by the Authority in accordance with the Act, and as against the advertised criteria set out in the Authority’s Notes of Guidance for Local Licence Applicants and the coverage brief for this licence, issued at the date of the licence advertisement. The applicants were invited to respond to written questions on programming, audience and support, and finance. Telephone interviews were conducted on the composition and history of the applicant groups.