Commercial Radio's Last Chance

Michael Hedges April 2, 2009 Follow on Twitter

Commercial radio broadcasting lives and dies on its ability to monetize its brand and program. There is risk and it is not new. With public broadcastings built-in advantages the precarious balance between public and private sector media is ready to tip.

If nothing happens “very soon” national commercial radio in Denmark could disappear, says an article in Jyllands-Posten (April 1). Without Danish government action now, it said, public broadcaster DR will have no counter-voice on the radio bands. One national commercial broadcaster has already cut half its staff and the other is threatening to shut down.

Culture Minister Carine Christensen is “deeply concerned” and will “endeavor to provide the commercial radio industry new life,” quotes Jyllands-Posten.

As usual it’s a variety of issues that perplex commercial broadcasters from concession fees to digital radio. Underlying it all is the market dominance of Denmark’s public broadcaster. And it is not an uncommon complaint by commercial radio broadcasters, particularly in the UK.

Spectrum allocation is a major point of contention, to which commercial broadcasters have appealed to the Danish government. DR operates four national FM channels with broad coverage while there are two national commercial channels – 100FM and Nova FM. Commercial broadcasters are asking for parity on the FM band, possibly taking frequencies away from DR’s arts and culture channel P2 to allow a third national commercial channel and significantly improve existing channels coverage.

This would require, to a great extent, reallocation of all FM frequencies in Denmark. DR’s media manager Lars Grarup, quoted by Jyllands-Posten, says the expense of reallocating FM frequencies would be a waste and commercial broadcasters should concentrate on DAB… while DR keeps its four national FM channels.  He would concede to improving coverage for 100FM and Nova FM.

100FM Managing Director Jim Receveur has a quite different idea. Two weeks ago, quoted by MarketWatch.dk (March 16), he proposed the Danish government create a third national commercial channel by taking DR P2 frequencies, sending P2 to DAB, and ending concession fees paid by commercial broadcasters when licenses are renewed in 2011. And if he doesn’t get an answer from the government soon he’ll shutdown 100FM and sister station Radio Soft. 100FM and Radio Soft are owned by Talpa which also owns the Det Danske radio sales-house serving several local and regional commercial stations.

The same week SBS Radio (ProSiebenSat) fired half the employees at Nova FM, The Voice and Radio City. An internal communication, reported by Politiken (March 19), said “things are not going as expected.” Copenhagen station Radio City ceased to exist and The Voice became wall-to-wall music. The company cited high music rights license fees and lower ad spending.

In 2005 News Corporation walked away from its Sky Radio license citing government failure to fulfill coverage guarantees.

As precedent, Receveur cites government action to save bankrupt television channel TV2.

In the most recent weekly TNS Gallup national radio audience research (March 23-29) DR’s aggregated market share is 72.8%, at or near the top of public broadcasting radio national market share in Europe.

DR, of course, has been around for more than 80 years. More than half of all radio listeners in Denmark hear the 8 o’clock morning newscast Radioavisen Monday through Friday broadcast on DR’s FM channels, according to a DR press release. When the morning Radioavisen newscasts comes on the air “the world stands still, ” said DR research director Dennis Christensen. The DR brand is unambiguously strong.

And, too, DR aggressively developed digital radio channels, adopting the DAB standard and running with it when commercial broadcasters turned up their noses. DR broadcasts, at last count, 14 DAB-only channels and 13 Web-only channels. Digital radio uptake in Denmark is the equally unambiguous leader in Europe.

DRs strength, however, invites criticism, particularly among media watchers wary of and fatigued by overwhelming dominance by public sector media. So far, Culture Minister Christensen’s “concern” about media plurality has not translated into action.