Dutch stations ask listeners for license fee

Michael Hedges February 25, 2009 Follow on Twitter

Always creative, Dutch broadcasters have serious fans. And, in times of need, turning to the fans for financial support could be one way to make it through the day. One broadcaster is doing just that and hopes to raise a few million in short order.

This week on Arrow Classic Rock and Arrow Jazz FM listeners are hearing, in addition to their favorite tunes, a rather blunt appeal. The company’s owner needs about €8 million before March 11th or it’s shut down time. “Put your money where you ear is,” says the promo. For €15 supporters will receive a special CD.

The Dutch Radiocommunications Agency (Agentschap Telecom) notified Arrow Media Group owner Ad Ossendrijver to clear the arrears license fee amounts, by noon March 11th, or the transmitters would be shut down the next day. The Agency said €6.85 million is owed for Arrow Classic Rock and €2 million for Arrow Jazz FM. The annual fee charged by the government for using the FM frequencies is €4.2 million for Arrow Classic rock and €1 million for Arrow Jazz FM. The Agency began pursuing the debt last November.

“We're in discussions with the government over changing the payment regulations so that they're acceptable in this time of recession,” said Ad Ossendrijver to Radio Netherlands Media Networks’ Andy Sennitt. (February 18). “So I'm very disappointed at this rigid measure.”

When the overdue license fees become public knowledge last year Ossendrijver denied being in financial difficulty. In January the company indicated its intention to launch Arrow Talks in the second quarter this year. Arrow Media Group announced plans last August to start a music TV channel. Apparently, Arrow Media Group has had difficulty making the license fee payments since 2007. Even if the fates work in the company’s favor and it meets the current obligation a new round of annual payments will come due in April or May.

Ossendrijver is the original owner and station manager of Arrow Classic Rock, launching it as a cable-only station in 1996. He took on Dutch publisher PCM as an investor and shareholder in 2006. PCM wanted to leverage its newspaper as a news service on the radio channels. That didn’t work and Ossendrijver bought back the shares a year later.

In 2007 Ossendrijver acquired FM frequencies for Arrow Classic Rock from SBS Broadcasting, which had been operating a station called Caz!. Citing disappointing results, SBS, now known as ProSiebenSat.1, exited radio broadcasting in the Netherlands. Caz! launched in 2006 after SBS acquired and rebranded Yorin FM. RTL Group sold Yorin FM citing disappointing financial results. Both SBS (ProSiebenSat.1) and RTL continue to operate television channels in the Netherlands. RTL owns top rated radio channel Radio 538, which it acquired from John de Mol in 2007.

Private sector radio broadcasting in the Netherlands has been in near constant turmoil since it was legalized in 1988. Depending on your perspective, turmoil has been part of the Dutch radio landscape even longer with pirate stations operating from boats upset authorities from the 1960’s. Several well-known media figures got their feet wet, literally, with pirate radio stations; Endemol’s John de Mol being just one.

After a few years developing the Sky Radio franchise across Europe, News Corporation exited in 2006. The Sky Radio brand in the Netherlands was sold to the Dutch publisher Telegraaf Media Groep (TMG) and ING bank. TMG also operates Radio Veronica.

When radio and any other telecommunications licenses are offered by the Dutch government aspirants place their bid in the official envelope and drop it off at the Agentschap Telecom office. The next round for radio broadcasting licenses will start in September 2011. If the Arrow stations default and are shut down Agentschap Telecom will readvertise the licenses, all bidders welcome, for barely more than a two year period.

The Euromonitor estimate of radio ad spending in the Netherlands for 2008, released in mid 2008, was €290 million, about 7% of total ad spending. The European average is closer to 5%; meaning, Dutch radio broadcasters are punching above their weight. No forecasts for 2009 ad spending, in any sector, are reliable due to the current economic climate but it is likely that radio broadcasters in the Netherlands will maintain, roughly, the same percentage of ad spending.

All governments charge all broadcasters something for the rights to use the public airwaves. One Dutch observer described the ‘sealed bid’ system as “greedy.”  The unintended consequence, presumably, chases broadcasters out of a market. All private sector Dutch broadcasters call the current system unfair. The regulator, however, is unflinching: pay up or get out.

(Ed. Note): Radio Netherlands Media Network analyst Andy Sennitt contributes significantly to my understanding of the Dutch licensing system. See his blog here.