There are three Independent National Radio (INR) licences issued by Ofcom under the Broadcasting Act 1990 (“the 1990 Act”). They are the licences for Classic FM (held by Classic FM Ltd), Talk Sport (held by talkSPORT Ltd) and Absolute Radio (held by Absolute Radio Ltd).
All three licences are due to expire in 2018. However, under the Broadcasting Act 1990 (as amended), all three licences qualify for a further five-year renewal. This means that each licensee can apply to extend their licence, rather than having to re-apply for their licence in an open competition.
The licences were originally awarded by an auction process, and the licensees are required to make annual financial payments to the Treasury. These financial payments consist of a cash bid amount, and a specified proportion of the revenue obtained by the licensee. This latter payment is known as the percentage of qualifying revenue, or ‘PQR’.
As the licence renewal process means there is no actual auction of the licences (and therefore no cash bids), Ofcom is required to set new financial terms for each licence. These financial terms consist of an amount which, in our opinion, would have been the cash bid of the licence holder if the licence had been auctioned for the renewal period, together with a PQR.
When the financial terms for these licences were last determined by Ofcom in 2011, they were set at a nominal amount of £10,000 per annum for each of Classic FM, Absolute Radio and Talk Sport (with a nil PQR).