The CMA welcomes several significant improvements as follows:
- the provision for holders of a community radio licence to extend their licence twice.
- the provision to allow one organisation to be the holder of a local digital television programme service licence as well as to hold a community radio licence.
- the provision to allow certain community radio stations to receive income from the taking of remunerated advertising or sponsorship of their programming output that were previously prevented from doing so.
The most significant change to previous restrictions on advertising and programme sponsorship revenue is the introduction of a threshold of £15,000 commercial revenue, below which the restrictions will no longer apply. This has two important effects.
First, it will allow 18 stations that were previously prevented from receiving such revenues, to receive up to £15,000. This applies to stations in areas substantially overlapping with small scale services whose coverage is less than 150,000 adults. The restrictions were designed to protect such small scale commercial stations and have consistently been criticised as unfair and unnecessary by the CMA and stations affected. There is no evidence these protectionist measures were needed and to the extent that the changes amount to a relaxation, they are to be welcomed. The CMA believes, however, that this particular restriction should have been removed in its entirety, in order that all community radio stations operate under the same rules without regard to the commercial sector.
Second, the threshold will also apply to around 200 other stations that were previously permitted to carry advertising and programme sponsorship but were still subject to a general restriction limiting these revenues to not more than 50% of total income (including a provision for the value of volunteer contributions). The threshold operates as an allowance that will permit an additional £15,000 in advertising or programme sponsorship to be earned before the 50% rule applies. There is a only a small number of community radio stations that will actually benefit from this change as most do not currently reach the ceiling permitted by the 50% rule. The effect of the change on this second group of community radio stations may be to encourage them to seek more commercial revenue.
The amendments also allow the Secretary of State to ask Ofcom to undertake reviews from time to time to establish whether the £15,000 figure remains appropriate.
Continuation of unfair restrictions on access to advertising and sponsorship
The CMA is disappointed that the Community Radio (Amendment) Order 2015 has not gone further to permit all stations to raise at least 50% of their revenue through advertising and sponsorship. We see no reason why all community radio stations should not operate on the same playing field. From consultation with our membership, the consensus is that the restriction that prevented some community radio stations from taking any income from on-air advertising or sponsorship if they overlap with a commercial radio licence whose coverage area includes 150,000 adults or fewer should be completely removed. Removing this restriction in its entirety would provide those affected community radio stations the opportunity to generate additional revenue and improve their sustainability.
The Community Radio (Amendment) Order 2015 still amounts to an unfair, unnecessary and arbitrary restraint of trade on a community radio licence which overlaps with a small commercial station. Community radio stations in this category will still only be permitted to raise up to £15,000 per annum from advertising or programme sponsorship.
CMA analysis indicates there to be 88 commercial stations broadcasting to a population of fewer than 150,000). Out of these 88 stations only 20 can be considered to be ‘genuinely independent’ i.e. have no commercial association with one or more other stations. Some of these groups consist of just two stations but the largest is considerably bigger.
It is our view that all community radio stations regardless of location should be permitted to raise up to 50% of their annual income above the £15,000 threshold from advertising or programme sponsorship.
Furthermore, it is the view of the CMA and its membership that the threshold of £15,000 is so low that its net effect on the income and viability of the relatively small number of stations that are reaching the limit of the 50% rule will be marginal.
The full policy briefing document may be downloaded here.