If You’re A Swiss Commercial English Language Radio Station With Advertising Inventory Sold Out To November, Why Switch To A Public Broadcast License, Dumping The Advertising So The Taxpayers Pay?

Philip M. Stone - May 30, 2007

The 10-year history of English language radio station WRG-FM in Geneva, Switzerland is fascinating for the major players that have had their fingers in that pie and for plans by public broadcaster Radio Suisse Romande (RSR), an equal shareholder with BBC World Service, to get the station’s license switched from commercial to public broadcasting, and then dump the advertising.
Go To Follow Up & Comments

A brief article in Tribune de Genève, a minority shareholder in the station, last week gave some bare details of what is going on, but behind the scenes it’s a fascinating story of how a struggling commercial station tries to survive in a world where the public broadcaster rules the roost.

WRG-FM now operates under a commercial license, one reason why RSR, Switzerland’s French language radio public broadcaster, has always kept is ownership to less than 50%.  BBC World Service, its current partner with an equal 42.5% ownership in the station, wants out (you might well ask the BBC what it was doing buying into a Swiss radio station!) and RSR sees this as perfect timing to bring the Geneva 88.4 FM frequency squarely under its control.

RSR says it intends to expand World Radio Geneva  (WRG) and make it World Radio Switzerland (WRS) by broadcasting it as an English language station nationwide, and hiring another 20 – 25 journalists to improve its news output. On paper that sounds swell, but there are murmurs in the radio broadcast marketplace that what RSR really intends is for the nationwide broadcasting to be via DAB only and that it has its eyes on that 88.4 frequency for a long-dreamed of opportunity to start a French language all news service. If that occurred then WRG or WRS as it would be then, would likely also disappear to the DAB channels – listenership for DAB in Switzerland is not far above zero.

And then there are the English language advertisers, not to forget consumers, who will lose out if WRG does switch to a non-commercial license. Perhaps the largest such advertising sector are the international movers – remember Geneva is the European home of such multinationals as Procter & Gambler and Caterpiller, let alone all of the various non-governmental organizations (NGOs) and, of course, the United Nations. A lot of foreigners, many of whom speak better English than French, have large household incomes – a demographic advertiser’s dream.

Not that the advertising came easy. For many years WRG struggled. English was something new to the local advertiser and with most of the national advertisers having their ad houses located invariably in the German speaking part of Switzerland it was difficult enough to get them to advertise on the French language stations, let alone an English one.

But over the years WRG’s financial picture got better – there were internal memos at the time of its launch that said it could never become profitable – but today it is said to be turning a small profit, but only the RSR accountants really know what and how much is charged where and what the true picture is.

But at least the advertisers finally came on board, many provide prizes for the frequent contests the stations runs, and they are going to lose out big time when the station switches to non-commercial.

In order for there to be a license change there is supposed to be a public discussion period. But when FTM asked the Swiss regulator OFCOM when that would take place we were told there were no such plans to hold such discussions, and, according to the Tribune de Genève, the license switch will be made some time in June.

Switzerland currently has the world’s most expensive TV and radio license fee. It went up in April to 462 Swiss Francs annually (€281, $380). While its television arm embraces advertising its French language radio side does not (there is some question whether that is actually just a choice that it makes and there is no rule actually prohibiting radio commercials on public broadcasting). It’s a fair question to ask if a station is making money from advertising then why not allow it to continue so doing instead of putting its costs on the backs of the taxpayers?

WRG started life with Swiss public broadcasting and Reuters as its major shareholders. It was during a time when Reuters had dabbled in the radio business in London (it got is fingers burned and pulled out) but the feeling in Geneva, Reuters European headquarters, was that if London could do it then why not Geneva? Besides, there was a sizable English language community that would surely tune in? (It later became evident the station proved popular with the Swiss themselves who liked to listen to improve their English, not to forget hearing music and fun not normally part of French language radio). For Reuters it was mostly a branding exercise. It thought it could also persuade its Geneva banking clients to advertise on the station, but soon discovered that wasn’t about to happen.

The trouble in those early days was that neither Swiss public broadcasting nor Reuters had any experience with the radio advertising business so if there were suggestions that more sales people needed to be hired in order to get advertising on to the station it was a message not really understood, or wanted to be heard by the owners. After about five years Reuters had had enough. There were management changes afoot, the station was not adding positively to the bottom line and it was a liability. It needed to be dumped and who should show up ready to enter the fray than the BBC World Service who bought out the Reuters shares.

The BBC had on its minds all those diplomats and such in Geneva who would be able to tune in World Service news and other programs so it was, for them too, a branding exercise. And since they were not familiar with an advertising business they, too, ran into the same problems as Reuters and didn’t want to hear about more sales costs, sales staff or sales management. Not only that but local management did not want to lose the station’s identity as a contemporary music station which meant it would not run all of the World Service programming that BBC World Service in Bush House, London, wanted them to run. It was not a smooth relationship and it was costing more than had been envisaged.

Through it all, however, RSR, remained and it must have sunk a small fortune one way or another into the station.  Now that the BBC wants out it seems the perfect opportunity for RSR to fully get its hands on the frequency, which may have been its long-term goal in the first place.

Meanwhile, the station’s advertising started to take off a couple of years back – it was named Radio Station of the Year last year for its improvement – and now it has its promotional tactics really well entrenched in its culture, and getting advertisers to support those promotions with numerous contests. The listenership has expanded --  whereas it was thought to be around 20,000 – 25,000 listeners the Tribune de Genève story said it was more like 65,000 and that just counts the city of Geneva, not including the suburbs and surrounding France.

Public broadcasting is a very powerful force within Europe and Switzerland is no exception. So the odds are that RSR will gets the license transferred, the advertisers will lose out, the listeners will lose out, the taxpayers will lose out, and RSR finally gets the frequency it has craved for so long.

A perfect example on how things are done in the European public broadcasting world.

ftm Follow Up & Comments

Radio Suisse Romande and WRG FM Officials Respond - May 31, 2007

We are delighted to print below in its entirety, personal attacks notwithstanding, a statement received today from Radio Suisse Romande and WRG-FM relating to our WRG story published May 29.
We have decided not respond point by point, tit for tat. Rather we are very pleased to have their position on the record. Time will tell.

Reading followthemedia.com is proving to be an interesting journalistic experience. The site, which bills itself as “a knowledge base for media professionals ” falls rather short of its self proclaimed standards in its reporting about the transformation of WRG under the headline “ If You’re A Swiss Commercial English Language Radio Station With Advertising Inventory Sold Out To November, Why Switch To A Public Broadcast License, Dumping The Advertising So The Taxpayers Pay?” The knowledge in this case is at best spotty when not totally absent, an all the more surprising fact given the prior commercial association of at least one of ftm’s founders and publishers with WRG!

Our willingness to contribute to ftm’s knowledge not to be doubted nevertheless, here are the facts:

• Contrary to ftm affirmation, Tribune de Genève is not a minority shareholder in the station. BBC World Service does not own 42.5% of the shares but, like the RSR, 40% and again, sorry ftm, the BBC does not want out. It has in fact already expressed his willingness to maintain and develop its partnership with the future WRG once the current shareholding structure is modified. The other shareholders are Journal de Genève 8%, Genève Place Financière 5%, Reuters 5%, and WRG Community Association 2%

• The rumor that RSR is planning to switch WRG’s distribution to DAB only and secure its FM frequency for “a long-dreamed of opportunity to start a French language all news service “ is pure fiction. WRS will continue to be distributed indefinitely around Lake Geneva on FM. Starting in November, WRG will start simultaneously broadcasting on DAB in all the French and Italian -speaking cantons of Switzerland. It will be available by satellite and on the web.

Early in 2008, it will be distributed on DAB, on cable and satellite all over the country. It is worth reminding the “knowledge base” ftm that neither the public channels nor the commercial broadcasters in Switzerland can freely decide what programs to distribute on any frequencies. The authorization to broadcast, and the attribution of the frequencies is regulated by Ofcom and under the strict surveillance and oversight of the Communications Ministry: RSR could simply not highjack the 88.4 fm slot. The development plans of RSR do not involve the FM frequency but will be concentrated on DAB, Internet, cable and satellite distribution. /p>

Since the piece is largely based on this completely baseless “conspiracy theory”, ftm’s entire argument collapses under the weight of its incoherence.

• Will the advertisers really lose out? Well, we are quite happy to report that a large number of our current and prospectives advertisers have expressed their strong interest in sponsoring some of the future programs of WRS. And of course they will always be able to advertise in On-Air, our companion magazine. As for the listeners, we are quite confident that they will continue enjoying listening to us when we have more content, new shows and new programs, including continuous access to the BBC World Service flagship news and information programs.

• On profits: The truth is, it came close to it, but WRG never made a profit. For a long period of time, the financial situation was dire. Things got better under a new management after 2001. In 2004, when the license was renewed, Communications Minister Moritz Leunberger recognized WRG’s  « particular role in the Swiss media landscape » stressing « its dedication to the integration of the international community ». Yes, WRG would have had to close down several times had it not been able to count on  the financial support  of Ofcom, the BBC,  the Canton and City of Geneva in addition to the advertisers and shareholders. Ofcom, by the way and contrary to ftm assertion, did hold public consultations about the transformation of the station. Made public, the results, were overhelmingly positive. For all of you interested, the documents are still accessible on Ofcom’s site. And more importantly , Ofcom audits WRG and the Swiss Broadcasting Corporation (SBC), which of course includes the RSR. Under the auditors binding guidelines, cross-subsidizing channels within the SBC is forbidden.

• The taxpayers: Turning WRG into WRS will not be done at the taxpayers’ expense. The funding for WRS will come from the current operating budget of the national radios of the SBC. At no extra cost for the taxpayer whose radio license fee will have seen no increase between 2000 and 2010. Sixteen radio channels in four languages are currenty available.

A couple of final remarks: for reason of his own,  largely guilty of crass negligence in his most basic fact checking duties, author Philip Stone has chosen  to cast his tale in black and white simplistic terms, calling it a “fascinating story of how a commercial station tries to survive in a world where the public brodcaster rules the roost.”  Inaccurate  again: from the very beginning WRG was a commercial radio station of a particular kind, borne out of the desire of the SBC to provide meaningful, quality content to a diverse English speaking audience. It is this very idea that convinced the BBC to, later, partner with the RSR. It is this lofty and ambitious goal that explains why the BBC will remain a partner come November 1.

Today, more than ever given the  growing number of people, foreigners and Swiss alike living in this country who need or like to listen to an English-speaking radio station, we believe it is the duty of public service brodacasting to continue providing them with this  invaluable service.

Gérard Tschopp                                            Philippe Mottaz

WRG Chairman of the Board                         Director

General Director, RSR                                   WRG