News story about criticisms by the UK commercial radio sector of BBC strategies to attract audiences to its national 'Radio One' and 'Radio Two' radio stations, written by Grant Goddard in May 2006 for The Radio Magazine.

1. NEWS: COMMERCIAL RADIO
SECTOR CRITICISES BBC
STRATEGIES FOR 'RADIO ONE'
AND 'RADIO TWO'
by
GRANT GODDARD
www.grantgoddard.co.uk
May 2006

2. The BBC has come under intense fire in the run up to the government’s
decision determining the BBC licence fee for the new Charter period from
2007. Many statements have been made during the last fortnight that criticise
the BBC for its success in attracting radio audiences and its stated plans to
extend its services.
Firstly, the Commercial Radio Companies Association [CRCA] made a joint
submission last week with Associated Newspapers, the Newspaper Society,
News International and The Telegraph Group, which argued that the BBC has
an unfair advantage in the digital sector because of the BBC’s ability to cross-
promote on its radio and television channels. The submission demanded that
safeguards be introduced to stop the BBC “abusing that position at the
expense of the commercial sector”.
Secondly, the CRCA’s submission to Lord Burns’ seminar on the BBC licence
fee concluded that “BBC Radio is currently using public money unnecessarily
to deliver services which damage plurality of provision and commercial
enterprise, by competing for the most commercially attractive audiences, while
providing minimal public purpose benefit.” The document argued that the
BBC’s dominance of radio ratings “has been achieved through the major
repositioning that has taken place at Radios 'One' and 'Two'” involving
“implementation of a concerted strategy to target younger listeners (typically
those of commercial radio), underpinned by budgets significantly in excess of
comparable commercial stations.”
Thirdly, shadow chancellor George Osborne warned the BBC that it should not
be involved in activities that are to the detriment of commercial media.
Speaking last week at the International Media & Communications Summit in
Oxford, he said: "I believe that the BBC must be very careful about not abusing
its privileged position and huge resources to crowd out smaller players. I am
concerned that, in too many of its non-core activities, particularly on the
internet, it is stifling the growth of innovative new companies that simply can't
compete with BBC budgets.” As an example, Osborne cited the BBC’s plans to
launch new local TV stations, and commented: "This might sound like a
reasonable idea, but it could have a ruinous effect on local newspapers and
local radio stations. This isn't in the interests of the British public, who are
denied new products and services, and ultimately, it isn't in the interests of the
BBC, which needs the competition.”
Osborne’s speech followed comments made the previous week by opposition
leader David Cameron that “we need to look at ways of making sure that the
BBC doesn’t over-extend itself”. He added: “We have all seen, in our own
constituencies, small internet businesses, often involved in education or other
information provision, working away to create a market, to make some money,
and then the BBC comes along and squish, like a big foot on an ant, and that
business goes out.”
Lastly, a report published on Monday by the European Media Forum argued
that BBC Radios 'One' and 'Two' should be privatised to create a fairer
News: Commercial Radio Sector Criticises BBC Strategies For 'Radio One' And 'Radio Two' page 2
©2006 Grant Goddard

3. environment for the UK commercial radio industry. It estimated that the sale of
both stations could raise up to £500m.
A flurry of radio industry voices has spoken out in support of these criticisms of
the BBC. David Elstein, CRCA chairman, said: “The BBC will be lucky to get a
bare inflationary increase, plus a bunch of stuff to help pay for the switchover
to digital. If that’s what they get, it will be more than they need.”
CRCA’s Lisa Kerr added: “The BBC’s expansionism is endemic. No matter
how many times an executive says that the corporation is not trying to compete
for ratings, it still does so. Radios 'One' and 'Two' are targeting commercial
radio’s heartland audience with entertainment-based programming during the
daytime. Having news bulletins for a couple of minutes an hour, with the
occasional longer one, is not enough to make them public-service
broadcasting.”
Chris Wright, chairman of Chrysalis plc, said: “[Former BBC director general]
Greg Dyke started it. He did a fantastic job, but he is a very commercial
operator. He made the BBC think competitively. That's not necessarily a bad
thing, but they take enormous pleasure in winning every possible ratings war
against all opposition. Everything about the BBC has changed in that respect.
You can't knock them for that, but they are a public service broadcaster and
the remit of a public service broadcaster is not to compete as aggressively as
possible with the commercial sector. They should do the things we can't.” He
explained: “In the commercial sector, we can't change the music we put out.
We can't play heavy metal on 'Heart'. We're not allowed to because of our
licence conditions. 'Radio Two' was an easy listening station for an adult
audience. Now it's probably dropped its age demographic by about 10 or 15
years. A commercial broadcaster couldn't have done that. Is that fair?”
Tom Moloney, chief executive of EMAP plc, complained: “The reason this
situation has occurred is that the BBC is over-funded and is therefore looking
for things to do.”
Kevin Stewart, chief executive of Tindle Radio Limited, said: “If the BBC goes
ahead with a national roll-out of its ultra-local TV stations, it will distort the
market and we will see some local commercial radio stations handing in their
licences. It would be a bit like Tesco opening up next to the village store.”
A spokeswoman for GCap Media plc said: “It is not the commercial sector that
is driving up salaries. When we lose presenters, generally we know they are
going to the BBC for more money.”
Martin Cave, a professor at Warwick Business School, said: “The BBC’s
motivation is that if they expand, they may be able to get a higher licence fee.
There is also a defensive motive — not to get left behind if the public moves
into non-traditional services, with the risk that the licence fee could be
undermined.”
News: Commercial Radio Sector Criticises BBC Strategies For 'Radio One' And 'Radio Two' page 3
©2006 Grant Goddard

4. News: Commercial Radio Sector Criticises BBC Strategies For 'Radio One' And 'Radio Two' page 4
©2006 Grant Goddard
In a statement defending recent criticisms made against it, the BBC said: "The
new governance arrangements, including the public value test with a market
impact assessment by Ofcom, and service licences setting out clearly the
expectations of BBC services, will ensure licence fee payers receive a quality
public service from the BBC and an extensive choice of services in the wider
commercial market.”
[First published in 'The Radio Magazine' as 'BBC Under Fire From All Sides', #737, 24 May 2006]
Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of
experience in the broadcasting industry, having held senior management and consultancy
roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at
http://www.grantgoddard.co.uk