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15 December 2000

At its meeting on 14 December, the Radio Authority decided the terms of the licence renewal for talkSPORT's national analogue licence following its commitment to a digital simulcast service. If talkSPORT accepts the offer, the new licence will come into effect on 1 January 2001.

The Authority has therefore now set the financial terms for the Additional Payments (a cash bid and a percentage of qualifying revenue (PQR)) for the new licence period which are in line with those which would be obtained if the licence were re-advertised and awarded to the applicant submitting the highest cash bid. All Additional Payments are payable to the Treasury.

The new cash-bid sum is: £500,000 per annum (which will be adjusted annually by the change in the R.P.I.) and is payable from 1 January 2001. Currently talkSPORT pays a cash bid of £4,251,660. Its original cash bid, which it submitted when it applied for the licence in 1994 (and has since been revised by the R.P.I.), was £3,820,000.

The new PQR is 6% per annum and is payable from 1 January 2001. Currently, the PQR is set at 4%.

In setting the level of these Additional Payments, it is the intention of the Authority to place a relatively greater emphasis on the PQR component than on the annual cash sums. The Authority believes that with changes in the broadcasting sector, particularly the launch of digital services, such an approach is likely to enhance the stability of the industry.

These figures were determined by the Members of the Authority who were advised by PricewaterhouseCoopers (PwC). The terms have been set with reference to the analogue licence. The Broadcasting Act 1996 precludes any costs and revenues associated with the launch of the digital simulcast service being taken into account.

On receipt of an application for an Independent National Radio (INR) renewal, the Authority must set the Additional Payments at a level which takes into account the amount that could be received if the licence were re-advertised and awarded to the highest cash bidder.

In February 1998, the Authority consulted on the way in which the Additional Payments for the three INR licences would be calculated for their new licence periods. In May 1998, having considered the responses to its consultative paper, the Authority published the principles for determining these financial calculations. These were updated in March 1999 and an addendum was published in November 1999.

On 6 October 2000, the Radio Authority received an application from talkSPORT for renewal of its licence. The application from talkSPORT is made under the provisions of the Broadcasting Act 1996 which permit an INR licence to be renewed if the licensee’s service is to be simulcast on the national digital multiplex.

Assisted by PwC the Authority analysed the application in detail, with extensive input from talkSPORT.

The licence has been offered to talkSPORT which has the option of either accepting or rejecting it. If the licensee decides not to accept the offer then the Authority will re-advertise the licence and award it to the highest cash bidder, with a PQR of 6% as established for talkSPORT.

1. A general synopsis of talkSPORT's application for renewal of its licence is available for viewing by appointment at the Radio Authority, Holbrook House, 14 Great Queen Street, Holborn, London WC2B 5DG.

2. Part of the process the Authority used as a base for determining talkSPORT's new Additional Payments was the historic financial performance of the existing analogue licence.

3. talkSPORT also pays an annual licence fee to the Authority which is currently £305,067.

4. talkSPORT paid a non-refundable application fee of £50,000 to the Authority for renewal of its licence. The station’s existing licence expires in February 2003.

5. Classic FM's licence was renewed in October 1999 (press release 129/99). Virgin Radio's licence was renewed in April 2000 (press release 52/00).

6. 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.