Feeds

Taxpayers shafted as Classic FM gets licence back for peanuts

No need for an auction, says Ofcom

Designing a Defense for Mobile Applications

The richest commercial radio station in the UK has had its licence renewed automatically - avoiding a competitive auction, and depriving the taxpayer of millions of pounds of cash.

Classic FM station has even seen fees cut significantly to a "nominal amount". Talksport's licence was also renewed under similar terms.

The 1990 Act which permitted the creation of both stations required sealed auction bids for all licence renewals.

Classic FM is estimated to gross £20m per year in revenue for owner Global, but now needs only pay £10,000 per year. More significantly, the previous requirement of six per cent of revenue to paid to Ofcom, a condition called a PQR, has been completely scrapped.

Classic FM was granted the first commercial nationwide radio license in 1990, and started transmissions in 1992. Changes in the 1996 Act saw Classic FM pay over £1.5m a year to the Treasury. For the next five years, the station will return less than £1,000 a month.

The decisions were made by Ofcom yesterday, but didn't merit a press release.

"It's a very crude market intervention that stymies other more constructive developments," a senior radio industry source told us, under condition of anonymity.

The Digital Economy Act of 2010 changed the 1990 law, permitting stations a cheap renewal. The Carter Report that floated the policy cited uncertainty about the future of radio as the justification for the incumbent-friendly change.

Ofcom attempted to justify the move yesterday by explaining an auction wouldn't attract any bidders - so why should they bother holding one?

"Our review has concluded that for a hypothetical new entrant these entry costs would outweigh the potential profits available from broadcasting nationally on analogue in the time period we were considering for the licence valuation," wrote the regulator in a brief explanation. Licensees are obliged to simulcast on DAB.

"Renewing Classic FM's its license back has been driving policy," a senior industry source told us.

"FM isn't going anywhere yet," another industry source pointed out, pointing wryly to Ofcom's mission statement:

"We make sure that people in the UK get the best from their communications services and are protected from scams and sharp practices, while ensuring that competition can thrive."

It's hard to see much evidence of any of that with the cheap return of radio's most lucrative prize back to its delighted custodian. ®

Using blade systems to cut costs and sharpen efficiencies

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.