Drop the DAB donkey, says analyst
Digital burden is killing radio
OFCOM should relieve British radio of its costly obligation to support digital as well as analogue broadcasts, a leading analyst company advised this week. If it doesn't, the commercial radio sector will die.
Enders analyst Grant Goddard doesn't pull his punches. Broadcasters are obliged to make a digital commitment, he notes, but the albatross of DAB is seeing costs rise dramatically. Radio "is facing financial death as the costs of DAB transmission contracts erode increasingly meagre operating profits in a business dominated by fixed costs," he writes.
A national DAB station costs £1m a year in transmission charges, and overall transmission costs are now 10x what they were in the analogue-only era. Radio revenues are declining by 10 per cent - but it's the yet-to-be-built second multiplex that has forced the issue to a head.
A group headed by Channel 4 was awarded the national licence last year, but is reportedly considering piggy-backing onto the existing multiplex to save costs.
The Department of Media, Culture and Sport whose investigation into the digital debacle is set to report by the year end, may shake OFCOM out of its complacency. The analyst group slams OFCOM for failing to accept "the uncomfortable truth" that a digital switchover remains as far away as ever.
An analogue "switchback" might make more sense at this stage. ®
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