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ftm Radio Page - July 11, 2014

Classical music channel to shift platform
“The future (ta-boom) is digital (ta-boom)”

Bavarian public radio classical music channel BR Klassik will move from FM to digital platforms in 2018 allowing digital-only youth channel BR Puls FM coverage throughout the German Federal State. The Bayerischer Rundfunk (BR) Broadcasting Council gave final approval to the switch, first proposed last year, with a few caveats. German private sector broadcasters were, as they have been, not pleased.

“After a difficult and lengthy decision-making process, the Broadcasting Council approved the planned frequency swap of BR Klassik and BR Puls by a large majority,” said Council president Lorenz Wolf, quoted by kress.de (July 11). “Bayerischer Rundfunk is acting to thwart generational disruption and to meet its public service mission. This decision is a signal that digital broadcasting is the future.”

Public broadcasters – certainly not limited to Germany or Bavaria – have worried quite publicly about the aging audience of their radio channels. The average listener age of BR radio channels is over 50 years. The concern is not simply that public radio listeners will follow the aging population. Germans reaching retirement age are no longer obligated to pay the household license fee. Digital channel BR Puls targets listeners 14 to 29 years.

German private sector broadcaster association VPRT was “disappointed.” Private sector broadcasters in Bavaria – including RTL Group, owner of market leader Antenna Bayern – opposed the switch of BR Puls to the FM band and were joined by the German Culture Council and other classical music support organizations. “Above all, it hides the foreseeable development of DAB+,” the VPRT statement continued. “It is unrealistic that we will have DAB+ (distribution) equivalent to FM by 2018.” (See VPRT statement here - in German)

The original proposal by BR general director Ulrich Wilhelm to switch channels and platforms has gone through several iterations from the BR Broadcasting Council. The switch-over date moved from 2016 to 2018. The latest change focused on BR Puls, which will now be ad-free “with a high proportion of speech and musical color, not focusing on the charts.”

 

The future in digital vice
Long-term worries

A digital future for radio broadcasters is certainly a moving target. Industry forecasters, a mere decade ago, showed convincing PowerPoint charts of the digital trajectory eclipsing analogue platforms within days, hours, minutes. Like reading that Mayan calendar, it didn’t happen quite on schedule. The chant remains the same: “The future (ta-boom) is digital (ta-boom)”.

At a members-only conference hosted in London last week by commercial radio support group RadioCentre, UK Communications and Culture Minister Ed Vaizey – often referred to by UK tech portal The Register as Minister of Fun – offered plenty of goodwill and less immediate gratification. The UK government, he said, isn’t quite ready to announce a plan for digital radio switch-over. Maybe they’ll be ready by the end of this year.

But digital platform switch-over – more thoughtfully expected in the middle of the next decade – isn’t the big worry for UK commercial broadcasters. Analogue licenses – where the money is - will begin expiring toward the end of 2017 after being “rolled over” in 2010 as part of the UK Digital Economy Act, which will not be repeated.  FM and AM/MW will be operating for another ten years. (See more about digital radio here)

“I am sympathetic to this issue and appreciate the long-term worries it is causing the sector,” said Minister Vaizey. “I can assure you that this is something that is very much on my radar.” As it stands now regulator OFCOM will be offering national licenses analogue to the highest bidder and local licenses based on a variety of criteria including content quality.

Coincident with the RadioCentre meeting, OFCOM announced the tender for a second national digital multiplex. Minister Vaizey mentioned a new government grant to OFCOM for testing “small scale DAB” multiplexes, which sounds suspiciously like the quite successful layer three DAB+ multiplexes operating in Switzerland.

“We are still working toward a digital future,” concluded the Minister of Fun.

Hardware business model attracts investors
Nothing beats cash flow

When European governments began licensing privately-owned radio stations, mostly completed twenty years ago, there was a big caveat. Transmission systems – towers and transmitters – would continue under State management, typically through State-owned telecoms. Private sector broadcasters received concessions from one State agency and a bill from another State agency for transmission systems.

In many countries this hasn’t changed much. Market liberalization in the last decade has brought new competition to State telecoms, including broadcast transmission services. In Germany, broadcaster Regiocast set-up tower and transmitter subsidary – Derutec - in 2005, mostly for new concessions it had received, becoming the first to challenge State monopoly on FM transmission systems. RTL Radio Deutschland has been a Derutec shareholder since 2009. (See more about media in Germany here)

As every observer of private-commercial broadcasting knows, there’s a lot of money in the transmitter and tower business. In purely financial terms, they are guaranteed cash flow businesses. This has propelled many of the State-owned telecoms across borders offering technology transfer in exchange for cash.

The business model – even with digital broadcasting slow to take hold – is quite attractive to investors. Under the German Telecommunications Act set to further liberalize transmission services competition in 2016 allowing broadcasters greater choice among providers. Deutsche Telecom got out of the broadcast transmission services business in 2008 when acquired by French telecom TDF, forming Media Broadcast GmbH, which has held a near-monopoly.

Last week Derutec was effectively acquired by an even newer transmission systems provider, Uplink Network, launched last year. “Bringing together the two companies brings a decisive contest to the German FM transmitter network and supply operation because virtually all private radio stations in Germany are still forced to broadcast through a single provider that emerged from the State,” said Regiocast executive Rainer Poelmann, in a statement. Regiocast, he said, “will still concentrate on analogue and digital content production as well as marketing our radio and audio content.” Regiocast’s ownership has shuffled somewhat over the last half year and with that greater emphasis on station management and marketing.


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