Swiss regulator study finds space for “super-regionals”

Michael Hedges August 31, 2004

A study commissioned by Swiss telecom regulator OFCOM and released August 31 finds room for new “super-regional” private, commercial stations.

Market Perspectives for New Private Radio, a study conducted by Berlin-based media advisor GoldMedia, analyzed the economics of the Swiss commercial radio market. OFCOM commissioned the study to compliment debate on revisions in the radio and television law (LRTV), to be formally debated by the Swiss parliament this fall.

The study forecasts good news, relatively, for Swiss commercial radio operators. Referring to Prognos and Media Research Group ad market forecasts, the ad market share should rise to 4.3% by 2008. The radio ad share has been stalled at 3.8% since 2002. A robust increase in print ad demand is expected to end discounts by publishers to advertisers, creating higher ad prices and causing increased demand for commercial radio time, the rates for which are difficult to raise.

The study finds that the Swiss radio advertising market suffers from the competitive disadvantage of poor national or regional coverage, unlike print or television. Advertisers are drawn to the audience targeting advantage currently available from other media. Structures and pricing practices of the various radio sales “pool” were also faulted for complicating advertising sales.

The current system of licensing by broadcast zones, often very small areas, further complicates development of the ad market. Countering this, the study recommends overhauling frequency allocations and allowing “super-regional” commercial stations in linguistically distinct regions.

Currently only channels of public broadcaster SSR-SRG are allowed regional coverage.

Remedies suggested by the study included allowing commercial advertising on SSR-SRG channels and creating “true” pools for ad sales. Study authors observe that allowing commercial advertising on SSR-SRG channels - which consistently draw large audiences - would severely and negatively affect all private, commercial radio and that the possibility of allowing advertising on the public channels lacks political support. Changing broadcast zones would also have a negative affect on some private stations.

Comparing radio markets in Norway, Denmark, Finland and the UK, the study concludes that ad revenues, on the whole, are not negatively affected by the dominance of PSB audiences so long as national or regional coverage and logical ad sales structures exist.

Adding two “super-regional” stations in the German-speaking region and one in the French-speaking region would, according to the studies conclusions, result in an overall increase in ad spending. Ad rates would increase to an average of 9 CHF per second from 7 CHF over 7 years, it forecasts.

The study also suggested that DAB development might enhance the commercial radio market. In Switzerland, public broadcaster SSR-SRG holds a monopoly on DAB networks and the private sector broadcasters have shown little interest.