Feeds

Taxpayers shafted as Classic FM gets licence back for peanuts

No need for an auction, says Ofcom

Secure remote control for conventional and virtual desktops

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. ®

The essential guide to IT transformation

More from The Register

next story
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.