Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

'Radio Authority Local Licence Award: Buxton' by Grant Goddard

822 views

Published on

Evaluation of applications for the new local commercial radio licence in the Buxton market of Derbyshire in the UK, written by Grant Goddard in July 2003 for The Radio Authority (and edited substantially by management).

Published in: Business
  • Be the first to like this

'Radio Authority Local Licence Award: Buxton' by Grant Goddard

  1. 1. RA PAPER 43(03) 2 July 2003 LOCAL LICENCE AWARD: BUXTON Paper by the Staff MATTER FOR DECISION 1. Members are asked to decide which of the five applicants, two of whom have been identified as the strongest candidates, should be awarded the new local licence for the town of Buxton and other parts of the High Peak district, in Derbyshire. STAFF SUMMARY 2. Buxton and the High Peak district is one of the few remaining areas within England that is presently unserved by local commercial radio, so that any of the five applicants would succeed in broadening the choice of radio programming available to the local population. The rugged terrain presents a challenge to applicants' ability to provide an adequate signal for reception across the entire area, with four of the five applicants addressing the problem by proposing multi-site transmission facilities. Neither is the area a particularly coherent unit, as there is little economic or cultural traffic between the two largest towns, Buxton and Glossop, which are separated by steep hills. Some of the applicants have addressed this problem of serving two towns that have little in common with each other by proposing to establish "contribution studios" in outlying areas of the district and/or by locating the main radio studio roughly half-way between the two towns. As staff marking indicates (shown in full in an Annex to this Paper), two of the five applicants have emerged well ahead of the rest of the field as the strongest candidates for licence award. High Peak Radio (72%) is a genuinely local group whose track record of five Buxton RSLs has been enhanced by the involvement as director/shareholder of Chris Carnegy, a pioneer in small-scale radio start-ups. The group has produced evidence of substantial local support and proposes a full-service station that will emphasise localness and appeal to a wide demographic spread of listeners. The economic challenge of serving a relatively small and disparate TSA has led the applicant to propose a small staff and a relatively high level of automation, whilst its local revenue estimates are the most conservative of the five applicants. Although no radio group is involved, Carnegy's participation and the appointment of Roger Price (ex-The Bear managing director) as launch
  2. 2. RA PAPER 43(03) Page 2 director provide relevant radio management input. In the long run, day-to-day management would pass to the Jenner brothers, who managed the group's Buxton RSLs. FM The Edge (72%) is a combined application from the former managing director of Peak 107 (ILR Chesterfield) Wayne Chadwick, The Wireless Group and a local group whose history of RSLs dates back to 1988. While this group would similarly offer locally-oriented programming designed to appeal to a wide audience, its ILR experience has led it to propose a larger staff complement than High Peak Radio and the highest revenue projections of the five applicants (assisted by The Wireless Group's access to national advertising). Local support has not proved as substantial as that for High Peak Radio, probably because the four RSLs to which the group lays claim were operated under four different names by the local group and Peak 107 (acting alone and in concert). The heritage of the local group appears to have been somewhat subsumed in this application to the ambition of The Wireless Group to develop a cluster around its existing Stockport station, and to the ambition of Wayne Chadwick to re-enter the ILR industry as manager of this cluster. The group's strength is the radio management track record that both The Wireless Group and Chadwick bring to this application. With the agreement of the 'nominated Member' for this licence, Sheila Hewitt, these two applicants have been put forward for Members' detailed consideration, and their proposals are assessed comparatively in paragraphs 24-40. The proposals of the three considerably weaker applicants – Peak AM, Temple FM and Spring FM – are evaluated in paragraphs 9-23. BACKGROUND Coverage brief  Licence offered on FM or AM, but not both.  Designed to facilitate coverage of the town of Buxton and other parts of the High Peak district, in Derbyshire.  Difficult area to serve due to unusually hilly terrain, dispersed population, and potential planning permission problems in area of outstanding natural beauty. 3. Buxton was added to the 'working list' of planned new licences in March 1999. The licence was not advertised until December of last year because of complicated frequency planning issues that needed to be resolved in an area which is difficult to serve adequately due to its scattered pattern of population distribution, its unusually hilly terrain, and the potential difficulty of identifying (and, if necessary, obtaining planning permission for) suitable transmission sites in an area of outstanding natural beauty. In June 2000, staff wrote to the known prospective applicants for the licence to seek guidance on their coverage ambitions and waveband preference. Two possible options were put forward for their consideration. The first was for an AM licence, which potentially would achieve more widespread geographical coverage than could probably be obtained on FM, and would not have the terrain-related limitations on reception that would be inevitable with an FM licence in the area. This is an approach which the Authority has previously adopted in other geographically extensive areas containing sparsely distributed population and hilly terrain, such as the Yorkshire Dales, Mid-Wales, and South Shropshire. The second suggestion was that the Authority could offer a small-scale FM licence for the town of Buxton itself. It was further indicated that, due to the terrain shielding of this and other population centres that
  3. 3. RA PAPER 43(03) Page 3 might potentially come within the scope of a Buxton licence area, one or more frequencies capable of being used for low-powered relay transmitters to serve areas of population in valleys might also be identified. Prospective applicants were cautioned, however, that the feasibility of being able to feed a signal to relay transmitters, given the existence of intervening high ground, would require careful examination. Both of these options attracted a measure of support. In the event, the licence has been offered for a service to be broadcast on either FM or AM, but not both. Up to two FM frequencies are available for applicants choosing this waveband, each of which may be used at one or more transmission sites, but applicants preferring AM were advised to base their proposals on the use of a single frequency at a single transmission site only. For the FM option it was anticipated, as indicated above, that one transmission site would be used to serve the town of Buxton itself and the other, if desired, to serve centres of population elsewhere in the High Peak district. The maximum effective radiated power (e.r.p.) of each FM frequency was set at 500 Watts, while for AM the Authority would intend to seek clearance for the use of the frequency 1521 kHz, at an effective monopole radiated power (e.m.r.p.) of 250 Watts. Applicants' technical proposals  Each of High Peak Radio, FM The Edge and Spring FM would provide robust coverage of the main population centres.  High Peak Radio and Spring FM have the most realistic TSA estimates.  Temple FM would not serve the central part of the licence area and would overspill too much into Stockport.  Peak AM has completely misjudged both its coverage and its TSA. 4. Four of the applicants have applied for a licence on the FM waveband, with just one selecting AM as its preferred waveband. The plans put forward by the FM applicants vary considerably, however. High Peak Radio is proposing to use the most transmitters of any applicant (four, with each frequency being re-used once), yet its likely coverage is not significantly greater than that expected to be achieved by other applicants and its TSA of 66k adults is the second-lowest of those forecast by the five groups. However, in our engineers' view this is an accurate assessment of the population coverage likely to be achieved, and despite their obvious potential to prove onerous, the costs of this technical plan have been thoroughly pre-planned by the group's experienced launch director Roger Price and look reasonable. High Peak's main studio would be based centrally in the licence area in Chapel-en-le-Frith, with additional contribution studios in Buxton and Glossop. Both FM The Edge and Spring FM have proposed the use of three transmitters, one in each of Buxton, Chapel-en-le-Frith and Glossop, with a studio located in the former of these towns. One frequency would be used at both Buxton and Glossop, with the second frequency providing coverage of the central part of the licence area. FM The Edge has anticipated an adult population in its TSA of 95k whereas Spring's prediction is appreciably lower at 60k. This difference is partly due to the fact that FM The Edge intends to utilise all of the permitted 500 Watts at its Buxton site, while Spring has proposed using only 250 Watts at its main site, but is also a function of the differing sites and aerial heights proposed by the groups. Both of these TSA forecasts appear reasonable, though, and either applicant would achieve robust coverage of the main population centres in the licence area. FM The Edge states that it would be interested in implementing a fourth transmitter at a later date, to
  4. 4. RA PAPER 43(03) Page 4 enhance coverage in the eastern part of the High Peak district. Although this area contains no significant centres of population, a transmitter sited there would make the station's TSA contiguous with that of the Chesterfield service Peak 107, an outcome which would not necessarily be a coincidence (see paragraph 28 for discussion of this). Temple FM has based its proposals on the use of just two transmitters, at Buxton and Glossop, but its plans are not compliant with the coverage brief. The group's own predictions show that, as well as achieving hardly any coverage of towns such as Chapel-en-le-Frith and Whaley Bridge in the central part of the licence area, its signal would be very strong in parts of Stockport and Manchester, areas outside of the scope of this licence. Consequently, a sizeable proportion of the 120k adults in its anticipated TSA live outside of the High Peak district, and it seems likely that such an over-estimation could have a significant impact on the group's business plan (see also paragraph 18). The one applicant proposing to use AM, Peak AM, estimates that its single transmitter located just outside Buxton would cover a radius of 15 miles in daylight hours. However, our engineers believe that in fact it would struggle to reach 15 kilometres (around 9 miles). The group's estimated TSA population of 208k adults is not derived from a coverage prediction, but rather represents the sum of the populations in the three local authority districts that it believes it would serve - Staffordshire Moorlands, Derbyshire Dales and High Peak. Aside from the fact that the first two of these areas are outside of the scope of this Buxton licence, our engineers estimate that Peak AM would in fact serve a population of no more than 60k adults from its chosen transmitter site. Given that the group has made no attempt to determine the extent of reduced after-dark coverage (though its chairman and prime mover Alastair Bates offers a 10-mile radius as "an educated guess") and that its TSA is wildly optimistic, there are clearly ramifications for its business plan (see also paragraph 13). Area details  Area forms core of Peak District National Park.  Tourism and light engineering are the main local industries.  Population is dispersed among several small towns and villages. 5. The High Peak district of Derbyshire forms the heart of the Peak District National Park, a rural area characterised by rugged mountains, windswept moorlands, and limestone caverns. Unsurprisingly, tourism is a key part of the local economy, with more than a third of the UK population resident within 60 miles of the National Park. The traditional industries of farming, textiles and quarrying have now largely been replaced by light engineering and manufacturing companies, with Glossop in particular benefiting from its location just twelve miles from the Greater Manchester conurbation. The area is relatively prosperous, with below-average unemployment and relatively low crime rates, and recent developments like the Glossopdale industrial area and the building in Buxton of a new campus of the University of Derby are helping to create new jobs and attract inward investment to the region. The main population centres are Buxton in the south of the district, Chapel-en-le-Frith, New Mills and Whaley Bridge in the central part, and Glossop (the largest town in the district, with a population of almost 30k) to the north. The rest of the population live in numerous small villages. Buxton is a tourist destination in its own right thanks to its spa, Georgian architecture and arts festivals, while, despite increasingly becoming a dormitory for Manchester, Glossop has recovered well from the decline of
  5. 5. RA PAPER 43(03) Page 5 cotton spinning and retains a strong sense of local identity. The two main newspapers in the area, the Glossop Chronicle and Buxton Advertiser, are both paid-for weeklies, and will provide the main competition for the new radio station in terms of advertising revenue. Around 99% of the local population is white. Local response  Local MP would prefer licence to be awarded to either High Peak Radio or FM The Edge.  Majority of letters sent directly to the Authority are in support of High Peak Radio. 6. Correspondence in respect of this licence from local elected representatives was first received at the Authority in December 1998, before the area was added to the 'working list', when local MP Tom Levitt (Lab., High Peak) and the leader of High Peak Borough Council both wrote to express their support for the establishment of a local radio station in the area. In July 2000, the leader of Derbyshire County Council echoed this sentiment, and further expressed the hope that the licence would allow for coverage of as much of the High Peak district as possible. This latter aspiration was then reiterated by Levitt, who stated that such a radio station could be a "unifying influence" in an area where no existing local media cover the entire borough, and also by two Labour MEPs for the East Midlands. The last flurry of correspondence prior to the advertisement of the licence came at the end of 2001, when four residents of Glossop wrote to request that their town be included in the coverage area of the licence and a Derbyshire County Councillor offered her support to the Radio Buxton RSL group (now High Peak Radio). At the time of the licence advertisement, staff wrote to the chief executives of the two aforementioned local authorities and to Tom Levitt, whose constituency matches the High Peak district and thus the advertised coverage area of this licence, inviting their views. Neither chief executive responded, but Levitt replied to explain that while he would not be supporting any one particular candidate, he hoped that the successful applicant would "feature news and views and not just music" and would "work closely with other bodies to enable the maximum distribution of public information within a diverse framework of entertainment". However, he wrote again in April to state that, while wishing to maintain his impartiality, High Peak Radio and FM The Edge were his preferred candidates on the basis that "both have a strong local base, a commitment to community involvement and diversity as well as the professional expertise ... to see this through". He added that "whilst High Peak Radio perhaps offers a greater degree of listener access to the airwaves, the policy of FM The Edge to using the internet to support their services is to be welcomed." 7. The response from members of the public has been relatively substantial, with a total of 72 letters being sent directly to the Authority. The majority of these (44) are in support of High Peak Radio; the only other applicants to receive backing in this way are Spring FM (eight letters) and FM The Edge (five letters). Most of the letters in support of High Peak Radio were sent during a Radio Buxton RSL; the first batch was received shortly after the group's second trial broadcast in November 1999, with a further flurry around the time of the third broadcast, in June 2000. All of the correspondents appeared to enjoy the programme service provided by Radio Buxton, and many commented on the lack of existing media serving the area. One supporter also assembled a petition containing almost 1,500
  6. 6. RA PAPER 43(03) Page 6 signatures (although the actual document was mislaid by the Royal Mail), while a local businessman who had advertised on the station described Radio Buxton, when compared to the only other group to have undertaken a trial broadcast, FM The Edge, as "the only radio station which has bothered to build up a proper client base and operate professionally". Prominent individuals from whom letters of support for High Peak were sent to the Authority include Philip Whitehead, one of the East Midlands MEPs mentioned in the previous paragraph, and the now-deceased Major Ronald Ferguson who, although not a resident of the area, had been impressed with the group after he was interviewed during one of its RSLs to publicise a charity with which he was involved. Spring FM received the backing of the chairman (who is also a director/shareholder of the group) and secretary of Buxton Football Club, both of whom commented on what they perceived as the group's professionalism and, at a presentation given alongside ones from High Peak Radio and FM The Edge, impressed three people enough for them to write to the Authority in support. One of these correspondents expressed the view that while Radio Buxton (i.e. High Peak Radio) came across as "nothing more than enthusiastic amateurs" and FM The Edge were "too slick for their own good", Spring FM "offer the right balance of local commitment and pre- proven professionalism". Among those offering support to FM The Edge are Buxton Radio Amateur Club, on the basis that the group has "local roots and connections" and "very professional" directors, and a Derbyshire county councillor, who is pleased that the group intends to locate studios in his ward. Most of the remaining letters, including one from Whaley Bridge Town Council, offered generalised support for a new radio station in the area, but three correspondents expressed concern about how much automation the new service might utilise, while another worried that it might interfere with BBC Radio Sheffield. The longest letter of all those sent directly to the Authority was received from a local businessman who attended the public meeting mentioned above, at which High Peak Radio, FM The Edge, and Spring FM gave presentations. After expressing concerns about a possible lack of coverage in the Hope Valley area and the applicants' apparent concentration on music to the detriment of speech output, he concluded that the two sets of proposals which came closest to addressing his concerns were those from High Peak Radio and FM The Edge. In addition to these letters sent directly to the Authority, each applicant has of course assembled its own evidence of local support; this is discussed elsewhere in this Paper. Assessment of applications 8. Four members of staff have been involved in assessing the applications and questioning the groups about their proposals: Grant Goddard as 'project officer,' with contributions from David Burkin on the programming proposals, Andy Causby on finance and Terry Dowland on the engineering arrangements. Sheila Hewitt was the 'nominated Member'. The scores awarded are summarised below, with the full sets of marks attached as an Annex to this Paper.
  7. 7. RA PAPER 43(03) Page 7 I General II Programming III Audience/ Support IV Finance Total [200] [300] [200] [300] [1000] High Peak Radio 170 195 168 190 723 FM The Edge 160 205 160 195 720 Spring FM 88 170 96 155 509 Temple FM 124 145 70 170 509 Peak AM 70 120 64 130 384 The three applications which appear to be the least convincing candidates for licence award, i.e. Peak AM, Temple FM and Spring FM, are evaluated in turn in paragraphs 9-23 of this Paper. The applications of the two groups identified as stronger contenders, High Peak Radio and FM The Edge, are assessed comparatively from paragraph 24 onwards. THE APPLICATIONS Peak AM (38%) History and composition  Only AM applicant.  Poor quality application. 9. Peak AM Ltd. is the only one of the five applicants that proposes to use AM transmission. The group's three directors are: Alastair Bates, who was involved in Stockport station KFM; Graham Symonds, ex-founder and ex-MD of Ludlow AM Sunshine 855; and "business consultant" Nicholas Holmes who worked in finance and sales at Sunshine 855. (Both KFM and Sunshine were 'pirate' stations in the 1980s which subsequently became licensed, and were in due course taken over in the process of radio industry consolidation). None of the three live within the station's proposed TSA, though Bates says he submitted a letter of intent to the IBA for the Peak District in 1990. After his role in setting up KFM, Bates says he "stopped involvement in radio in 1984" to pursue a career as a civil servant, though he says he "has always had an eye for the Peak District." Bates first met Symonds in 1983 when both were involved in their respective pirate stations. The two share a long-time interest in AM transmission, and Bates (who will be the group's chairman) invited Symonds to become the applicant group's managing director. The group only formed in January 2003 in response to the Authority's advertisement of the Buxton licence the previous month, and it is committed to AM transmission above all other factors. "If you wander through the Peak District, it lends itself to AM," explains Bates; "apart from small areas, FM is not really on at all." During staff questioning, Bates waxed lyrically at length about the advantages of AM, but had more difficulty answering staff questions about his fellow directors' past business and radio experience, the group's staffing plans, and the background of the other investors in the bid. (Asked about one of the group's largest shareholders, Bates told staff: "I
  8. 8. RA PAPER 43(03) Page 8 don't know an awful lot about him"). Peak AM's application is of very poor quality and appears hastily prepared, with little substantial content. Staffing and management  Most senior managers would work part-time only.  Community volunteers would assist with news coverage. 10. The station would employ 8.0 FTE (full-time equivalent) staff, including three salespersons (the highest of the five applicants) and two in news, which should prove adequate. The group proposes that its chairman (Bates), managing director (Symonds) and finance director (Holmes) would all work part-time. The only full-time management posts at the station would be the combined station manager/programme controller (who manages one lone presenter) and the sales manager (who manages two salespersons). The group has confidentially identified Alan Thompson, an experienced journalist and broadcaster (although with a less than convincing track-record in ILR), as a candidate for the former of these two posts, but his appointment is by no means guaranteed. Freelance presenters would be employed only "to cover periods of sickness and holiday," but not apparently to relieve the lone presenter of his/her eternal on-air duties. The local news proposals for Peak AM rely on the use of “village correspondents” which the group describes, in response to staff questioning, as “volunteers who file us their village gossip once a week, scan the papers, etc.” Programming  Inadequate programme proposals.  Music categories too rigidly fixed. 11. Peak AM's programming proposals are inadequate to enable the formulation of a meaningful Promise of Performance, or for staff to provide a proper assessment, and follow- up questioning failed to alleviate these concerns. Offering easily the weakest application of the five, Peak AM has provided insufficient information to earn even average marks by any criteria, except for ‘choice’, which it cannot help but broaden because no other ILR service is available within the TSA. The group proposes "a dynamic gold station programmed for the 21st century" targeted at 25-55 year olds. Automated programming would be broadcast from 1900 on weekdays and Saturday, and all day on Sunday. Five hours per week of syndicated US shows are planned. Most of the music would derive from the 60s, 70s and 80s, with a sprinkling of current hits and some songs from the 90s (which the application defines, bizarrely, as "recurrents"). There would be no live local news bulletins during weekends, and the weekday 0630 local news will be pre-recorded the previous day, with the attendant risks which this practice entails. The group’s plans for speech content are as incoherent as other aspects of the application. It proposes a minimum speech content of 20% Monday-Friday and 10% on Saturday, falling to 0-5% during automation periods (which would include Sundays). Each speech feature will be four to seven minutes long, but those that the applicant will commit to in its Promise of Performance are only vaguely defined as “the doctor,” “CAB,” “solicitor,” “gardener” and “care-line,” with no additional information regarding times or frequency. Consequently, it proves impossible to assess
  9. 9. RA PAPER 43(03) Page 9 either the relevance of the proposed content, or whether the group would be capable of maintaining the promised minimum speech levels. News coverage would comprise IRN or agency news hourly in daytime to 1800, with two-minute local bulletins on the half-hour between 0630-1830 on weekdays. The group’s local and regional news will be “obtained by station’s own news staff … in association with local newspapers who will supply local daily news for which they will be credited,” though it confirms that “no negotiations have been undertaken as yet.” The group’s music proposals prove as inconsistent as its other programming areas, with unnecessarily precise figures for each category – 85% of music output is fixed, and there are narrow minimum/maximum bands – leaving little room for future changes. Sunday daytime would have a more ‘middle of the road’ feel, and specialist music shows may be introduced in the future. Research and support  Research only from market stall.  Little evidence of local support. 12. The group's market research amounted to no more than a stall of publicity material in Buxton's main shopping street one Saturday in February 2003. Survey sheets comprising seven basic questions were distributed to passers-by, but the group says it "didn't take formal numbers or percentages" of the opinions expressed. Asked how he knew what the local population wanted from a radio station, Bates could only offer his fellow directors' "experience of Sunshine and the way it has worked down there….. it is quite a similar sort of thing." Bates' attempts to elicit support included sending an e-mail to twelve members of Derbyshire Dales District Council (which falls outside the area which this licence is designed to serve), informing them that the "three other probable applicants" for the licence "would not cover your area" because they all planned to broadcast on FM, rather than AM. Asked by staff how he could make such an assertion before the closing date for applications, Bates argued that "there had been a fair amount of press coverage by that stage as to which areas would be covered" by his competitors. The one noteworthy support letter was written by Sir Nicholas Winterton MP, but his Macclesfield constituency is outside the proposed TSA (and is served by Silk FM). Asked how much local support the group had managed to attract for its application, Bates admits: "It would have been good to do an RSL, but we just didn't have the people at the time [to do it]….. It's fair to say that for some other [applicants], you can see from [their] applications, there is a fair amount of support….. We haven't got so much of that on paper." Bates did manage to produce a support letter at the end of June from Paul Hudson, with whom he had submitted a letter of intent for High Peak in 1990. However, Hudson now lives in Kalgoorlie, Western Australia. The group's projected year-one 16% reach is the lowest of the five applicants, but equates to the largest projected number of listeners due to the implausibly large population in its proposed TSA (see Finance section below). Finance  Greatly over-estimated TSA renders business plan unfeasible.  No justified business case for AM.  Unrealistic revenue forecasts.
  10. 10. RA PAPER 43(03) Page 10 13. Peak AM's business plan hinges on its projected year-one 16% reach which, in its proposed TSA of 208k adults, would give the station 33k listeners per week, the highest audience of all applicants. However, given that the group's AM transmitter seems likely to cover only a daytime population of 60k adults, the potential viability of Peak AM is highly questionable. In addition to this problem, the group argues its case for using the AM frequency on the basis that it would provide better coverage and lower transmission costs than FM, but its application fails to expand the economic argument, or explain how it will successfully sell AM to potential advertisers. Asked about this by staff, the group says it anticipates no problem because the High Peak area is currently unserved by ILR and therefore local businesses will advertise regardless of the new station's waveband. However, staff experience is that local businesses are often reluctant to use the AM band for reasons of both quality and audience demographics (a situation often exacerbated by FM competitors). Even if Peak AM were to meet its target 16% weekly reach, which might be possible given the lack of competition in this local area, it could prove difficult to convert audience into revenue. The business plan is light on such detail, and has not considered the economics of launching a new AM station at a time when AM listening is in long-term decline. Advertising revenue is projected to be predominantly local, but a comparison of Peak AM’s revenue forecasts against existing AM stations (Fresh, Sunshine, Maldwyn) suggests that its £223k revenue forecast (the highest of all applicants) is too optimistic. Peak AM's proposal to lease all its capital equipment reduces its initial cash outlay and keeps cash balances at a high level, providing a cushion if revenue and costs prove under/over- estimated. However, although Peak argues that the use of AM reduces its transmission costs, its cashflow in this area is greater than all competing applicants except Temple FM, and the £8k marketing budget looks lightweight for launching a new station, especially when awareness of its brand has not been established through RSL activity. Total budgeted expenditure of £20k per month seems low in comparison with stations of similar size, and its funding of £150k share capital and £17k leases is the lowest of the five applicants. The high revenue forecasts make the funding appear adequate, but the equilibrium becomes quickly unbalanced when one takes account of the group's huge over-estimation of its TSA. Peak AM was unable to provide finance confirmation letters from shareholders Roy Trevor or Alan Thompson (total £30k) but, in further correspondence during June, did provide alternative letters from Mr M.L. George (£10k) and Forward Media Ltd. (£40k), neither of whom had been previously mentioned. Forward's 27% stake adds some comparative reliability to the application, but the fact that the applicant's list of original investors could not be relied upon must ultimately count against Peak AM. (Incidentally, Alec Craig, a director of Forward Media, is already named as a director and investor in competing applicant Temple FM.) In addition to the three aforementioned directors (Bates, Symonds and Holmes), other shareholders include Tony Buckingham (who founded Fenland ILR service X-Cel, before selling it to UKRD, which has now re-branded the station as Star 107.1) and Roy Trevor who, Bates explains vaguely, "bring an interest in radio listening and finance to the group." 13% of shares would be allocated to unnamed "Peak District investors" through an unspecified share offer.
  11. 11. RA PAPER 43(03) Page 11 Temple FM (51%) History and composition  Former Forward Media managers.  Few local connections.  No history of interest in the Buxton area. 14. Temple FM's name derives from the local heritage site Solomon's Temple, which was built to provide work for the people of Buxton in the 1800s. The key individuals behind the application were all involved in the successful 1993 launch of Morecambe's The Bay – former managing director Kenni James, former news editor Chris Hornby, and former company secretary Alec Craig. The Bay and Owen Oyston's other radio property, Belfast City Beat, were subsequently placed in trust, until James created Forward Media Ltd with venture capital funds to bid for both stations. The trust decided, instead, to sell the two stations to what is now CN Group, and James, Hornby and Craig left The Bay to develop Forward Media independently. As its chief executive, James turned his attentions to Southport's Dune FM, which he bought in November 1999 from David Maker (who is now Forward Media's chairman), and then went on to buy Kettering's Connect FM in March 2000 and Peterborough's Lite FM in March 2001. Subsequently, James says his "view on the way the business should develop began to differ slightly from some of the other shareholders." His initial policy of building two clusters of stations, one in the North West and the other in the Midlands, was replaced with a policy to "purchase radio stations wherever we could find them." Dissatisfied with Forward's new strategy which was, in James' words, "to buy turf," he left the company in 2002, though he still retains a minor shareholding. James then set up BJP Media Ltd., which he describes as his "little operating company," buying radio advertising for clients, managing investments, and offering radio programming consultancy services to clients such as the Spectrum FM group in Spain. The nascent Temple FM applicant group had started while James was still employed at Forward Media. In early 2001, Alec Craig (who remains a director at Forward) had introduced James to successful retired businessman Peter Raymond, who had just left the post of acting chief executive at a technology plc (though he remains non-executive chairman). Despite none of them living within the High Peak district, Craig and James decided to bid for the Buxton licence with Raymond (whose local connection is that he was born in the High Peak District and several of his business interests are based there, although he lives in Cheshire) as the group's chairman. In late 2001, James introduced former Bay and Forward cohort Hornby (who lives in Lancashire) to Raymond as a fourth investor/director. Once James exited Forward Media in 2002, the group started to gather more momentum and "a great deal of time and effort has been expended on continuing to consult with local people and organisations." At the same time as preparing this application, Raymond and James also formed a separate company, Review Radio Ltd., of which they are both directors. It will be a speech/lifestyle radio station, aimed at 35+ year old ABC1 businesspeople, that James promises will launch live on the internet and on the Sky digital platform later this year.
  12. 12. RA PAPER 43(03) Page 12 Staffing and management  No locally-based directors.  Proposed station and sales manager has good track record. 15. The group's proposed 7.0 FTE staff and two freelance presenters seem adequate for a station that would rely heavily on automation, although resources in the newsroom look rather tight. The proposed appointment of Simon Walker as station/sales manager (and executive director) is positive, given his experience in finance and radio management since 1995, and his track record of turning Connect FM and Lite FM into profit centres for Forward Media. When asked why the group did not seek to appoint any locally-based directors, James argued that "what gives a station localness is its programming – what it does on air – rather than where the directors themselves come from." However, he admitted that the group "realise, in terms of the heritage of our application, that we are way behind one or two of the others that have been around for ten years or more in various guises." Programming  Basic commitment to speech content.  Barely adequate newsroom coverage. 16. Temple FM would provide “an attractive mix of music from the 1950’s to the present day,” with “full and up to date local information” in a full-service format aimed at 15-65 year olds. Apart from a network chart show, its output will be locally produced and presented, with automation running between 1400-1500 and 1900-0600 daily on weekdays, from 1800 on Saturdays, and from 1900 on Sundays. The group's commitment to speech content is basic, offering 15-25% during daytime on weekdays and 5-15% in non-daytime. However, its sample schedule shows live speech content considerably lower, at 12% Monday-Saturday and 11% Sundays (excluding ‘Hit 40 UK’), while during its automated output the speech reaches even lower levels. In response to staff questions, the group explained that its daytime minima are, in fact, averages across daytime, and that it expects to operate nearer its maximum limits, which only adds to the sense of confusion about its proposals. Temple FM commits itself to seven short speech features: traffic and travel updates hourly (half-hourly during weekday peaktimes); what’s on information six times daily; farming news twice daily; business news twice each weekday; jobfinder and daily public service information in each daytime show; and a weekly charity appeal. Local/national 3½- to four-minute news bulletins are proposed hourly throughout the day, with additional one-minute headlines and sport bulletins on the half-hour during peaktimes, and 30-second headlines on the quarter hours during the weekday breakfast show. Extended seven-minute news bulletins are proposed on weekdays at 1300 and 1800. Responses to staff questioning show newsroom cover to be barely adequate to ensure updates for all the scheduled bulletins and headlines, while future additional cover will be dependent upon “appropriate financial performance.” The breakdown of categories in the group's music policy, a 50s-current mix “with an emphasis on melodic, familiar tracks,” offers the highest aggregate minima of all applicants, at 90%. This not only renders future variations in the music mix almost impossible, but also makes many of the proposed maxima unachievable. The proposed mix of era- and genre-based categories merely exacerbates the problem,
  13. 13. RA PAPER 43(03) Page 13 inspiring little confidence in the group’s ability to have carefully considered its music policies. The proposed minima for the era-based categories effectively render the genre- based categories (easy listening and country) redundant. A weekend automated ‘Non-Stop Country’ hour and a summer roadshow are also proposed. Temple FM would be heavy on automation, suggesting that staff levels would probably be sufficient to cover the proposed output, although, as noted above, newsroom cover would be stretched. Research and support  No market research.  High audience projections. 17. The group commissioned no market research because, it says, "accurate information that would be invaluable for this application could be obtained by our own team and helpers." It claims to have consulted "thousands of people" to determine what they want from a local radio station, through a combination of presentations, e-mails and newsletters. However, little direct evidence was submitted of the 480 responses which the group claims that it received by phone, mail and e-mail, except for some e-mailed programming suggestions from an ex-mayor of High Peak and some entries from the group's website guestbook that merely demonstrate how little traffic it has generated (15 responses in two months). The group says, oddly, that it "did not believe that it was appropriate to ask for letters of support from the public." Its "experience of similar stations launching in a market practically un-served by ILR" has guided Temple's audience projections, which are the highest of all five applicants (24% reach and average weekly listening of 8 hours in year one, rising to 32% and 11.5 hours in year three). This optimism is compounded by the ambitiously large TSA within which it expects to obtain these figures. Despite staff requests, the applicant provided scant statistical evidence to support its spectacular growth predictions of a 92% increase in hours listened between year one and year three. "This will be no ordinary station launch," the group promises. "This is what we do, as operators of small-scale, professional radio stations." Staff are unconvinced. Finance  Optimistic revenue forecasts let down by over-estimated TSA.  Over-confident sponsorship forecasts. 18. Aside from its lack of localness (none of the investors or directors lives within the TSA), the application has a sustainable level of finance, costs are manageable, and revenue projections look to have been based on Kenni James’ experience at Forward Media (though this is not explicitly stated). The proposed station/sales manager, Simon Walker, is currently station director of Forward Media Ltd.'s Connect FM (Kettering) and Lite FM (Peterborough), both of whose revenues have improved rapidly to the extent that the two are apparently now profitable. Projected year-one local revenue of £206k, increasing to £267k in year three, is the highest of the four FM applicants, a direct result of the inflated 120k adult TSA and the high reach/hours audience projections. Whether these would still prove achievable in a more realistic business plan is unlikely. National revenue has been set at a modest level, but sponsorship is unusually high – £75k in year one rising to £126k in year
  14. 14. RA PAPER 43(03) Page 14 three – particularly since these projections are based on Forward Media stations, which currently generate only £60k of sponsorship each. In response to staff questions, Kenni James correctly asserts that Temple FM will need to sell advertising to the wider area of High Peak, rather than to just one or two of the largest towns, and he argues that his experience at The Bay (whose TSA comprises several disparate towns) is directly relevant to this challenge. Projected revenue figures of £2.40-£2.55 per listener per quarter appear to be based upon similar levels currently achieved by the Forward Media group. Such revenues might be achievable, but are more likely to arise in years four or five, rather than during the station's first three years. Cost projections are realistic, and the group has provided a breakdown of its £36k marketing budget, which it views as a very important commitment, alongside a visible involvement in the local community. Temple is funded by a mixture of £200k share capital, £50k leases (mostly studio equipment) and a £100k overdraft that it predicts will not be required. However, the group's over-optimism concerning the size of its TSA and its high audience projections could impact significantly on its capital requirements, particularly during the first three years on air. Spring FM (51%) History and composition  Localness largely rests on the fact that DLT was born in Buxton.  Board lacks any kind of shared history.  TWC FM is more focused on winning a licence in its native Leicestershire. 19. The substantial shadow of ex-Radio One presenter Dave Lee Travis (DLT) looms large over the Spring FM application. DLT was born in Buxton, though he now lives near Leighton Buzzard in Bedfordshire, and currently presents a weekend show on Luton-based BBC Three Counties Radio. DLT's partner in the application is Cliff Sanderson, an IT consultant who has run seven RSLs in the Vale of Belvoir area of Leicestershire since 2000. The two first met in the mid-1990s at a London charity event, when Sanderson was planning his campaign to have the Vale of Belvoir added to the 'working list'. DLT subsequently took a 10% shareholding in Sanderson's company, The Wireless Company FM Ltd. (TWC FM), and presented shows on some of its RSL broadcasts. However, he also hosted a programme for rival applicant High Peak Radio during its final RSL broadcast in June 2001 and, in fact, that group's application includes a letter from him in which he thanks the station's owners, the Jenner brothers, for raising £2k for charity and "restates [his] support and best wishes for their attempt to bring this radio station to Buxton and the High Peak on a permanent basis". After that final RSL in Buxton had evidently fired his enthusiasm, DLT contacted Sanderson in January 2002 and suggested that they submit a joint bid for the Buxton licence based on their shared "passion for radio". However, the board of directors was not assembled until the early part of this year, and only two of its members have any kind of local connections. Successful broadcaster and author Michael Van Straten is a neighbour of DLT (the two have broadcast together on Garrison Radio, which holds long-term restricted service licences at four army barracks), while actress Sherrie Hewson (who plays Maureen Naylor in Coronation Street) lives near Nottingham. Although he lives near Huddersfield, schoolteacher Tony Tomlinson is chairman of Buxton Football Club, and Lance Dowson was until recently the mayor and chairman of High Peak Borough Council, which is based
  15. 15. RA PAPER 43(03) Page 15 in Buxton. Despite claiming publicly that "as Mayor, I clearly cannot support any one of the five [applicant] groups", he nevertheless appeared at a Spring FM roadshow and joined the group as a director, while still in office. This attracted the attention of the local press, who questioned how the mayor's public promotion of Spring FM squared with the council's declared neutrality between the five competing bids, and Dowson subsequently lost his Labour seat in the May local elections. Not only is TWC FM the largest shareholder in the group, but its remaining six individual shareholders all have existing relationships with TWC FM Ltd, either as shareholders, staff or advertisers (DLT is a shareholder in TWC FM, but not in Spring FM). Essentially, there is very little about Spring FM that seems local. It is claimed that DLT would help to train the other presenters at the station, and even that he might move back to the Buxton area, but he says that, if necessary, he could still present his show from the studio at his Bedfordshire home. He adds that "the Buxton station is a chance for me to prove to other colleagues in the radio industry something I have been saying for years about how radio should be produced". However, in staff's view, DLT's likely long-term commitment to Spring FM must be questionable at best, while Sanderson and TWC FM appear to remain focused primarily on their native Leicestershire. Staffing and management  Station manager has no previous commercial radio experience. 20. Spring FM's proposed station manager Mick Wilkojc, who lives in Hertfordshire, is DLT's former producer at Radio One, and has assisted with the business plans though he has no previous radio sales experience. The proposed 8.0 FTE staff are organised in an overly bottom-heavy structure. The programming section has two "senior presenters" but no head, and the sales department has two salespeople but no head, leaving Wilkojc directly responsible for all areas of the station's operation. Given the group's ambitious speech content proposals, the staffing levels seem barely adequate, and there is little consideration given to serving Glossop or other outlying areas from the station's Buxton headquarters. Programming  Unrealistic programming proposals.  Speech content too high for available resources. 21. Spring FM proposes a “unique radio service for all age groups” with “a diverse range of music from the last six decades” and “devoted local news, issues and event coverage.” Programming will be locally produced and presented for 22 hours a day on weekdays and all weekend. Automated output is proposed between 0100-0600 daily for the first two years, when it will be replaced by "an additional full time presenter and part time journalist.” According to the application, daytime output would typically comprise “12 songs per hour (39 minutes) … 4.5 minutes of commercials/sponsorships and … 16.5 minutes of news and relevant speech…” These numbers serve to demonstrate the group's lack of experience in managing a commercial radio station, being unrealistic in terms of track length, the volume of advertising and the achievable speech content. From staff's experience, a typical daytime hour of an average ILR music station comprises ten music tracks (38 minutes), ten minutes of advertising, and 12 minutes of speech. Spring FM's speech content will be a minimum
  16. 16. RA PAPER 43(03) Page 16 20% during weekday daytimes, increasing to 35% and 30% on Saturday and Sunday respectively, levels which, in staff's view, are ambitiously high and unrealistic for a station of this size. In response to staff questions, the group signals its intention to include in its Promise of Performance seven short locally relevant weekday features, plus a one-hour weekday breakfast ‘in the workplace’ feature to encourage listeners “to make requests, dedications and comments.” Weekends would include an equally ambitious two-hour sports programme with 60% speech content on Saturday afternoon; and three one-hour magazine shows on Sunday evening, one of which (‘Spring Culture’) would have an unrealistically high 80% speech content. Bulletins of local news, weather, travel and sport – 2.5 minutes weekdays and 1.5 minutes weekends – would follow the IRN service hourly throughout daytime, with the addition of headlines on the half-hour during peak times. News coverage would be provided by two full-time journalists networking with local organisations and contacts within the TSA. In response to staff questions, Spring FM explained that the newsroom rota would consist of one journalist working weekdays, and the other from Wednesday to Sunday, which leaves inadequate cover on Monday and Tuesday and casts doubt on the amount of careful planning that has been put into the application. Spring FM claims it would broadcast “the most diverse selection of popular music available from the last six decades.” More specialised music output would include a network chart show, a pre- 90s music show ‘Memory Lane’ on Sunday (reminiscent of DLT's Radio One weekend show), a show called ‘Generations’ that selects music from a specific decade, and a children's show ‘Kids Stuff’ on Saturday morning (similar to Radio One's 1970s schedule, but without Ed Stewart). Research and support  No formal market research.  Support confined largely to signatures on petitions. 22. Market research for this application was limited to a questionnaire designed by the directors and distributed by station volunteers to 177 shoppers in Buxton and Glossop, the results from which are wholly uninformative. Asked why no formal market research was commissioned in support of its application, the group responded that "the board considered that the market research undertaken was formal," though admitting that "a specialist was not employed." The evidence of local support for Spring FM is not especially convincing either, consisting largely of 1000 signatures gathered at the group's roadshows, plus around forty e- mails and letters from individuals. The group's audience projections (18% reach and 11 hours in year one, rising to 30% reach and 11 hours by year three) have been calculated by averaging the current performances of seven existing stations with TSAs of less than 85,000. However, two of the stations cited (Channel FM and Island FM) are atypical because they dominate geographically isolated markets, and four of the seven (the two aforementioned plus Vale FM and Delta FM) are hardly start-ups, having been on-air for more than seven years.
  17. 17. RA PAPER 43(03) Page 17 Finance  Little local involvement.  High and unjustified revenue forecasts.  Personality presenter [DLT] may help in revenue generation. 23. Unsurprisingly, given that it is an applicant with no previous commercial radio experience, Spring FM's financial research is poor, its forecasts were not submitted in the required format, and its revenue assumptions are unjustified. Though the business plan has no major omissions, the group's low level of funding could force it to seek additional funding in the station's second year, without any obvious sources of additional finance. Having a 'name' such as DLT involved in Spring FM may carry some weight with potential advertisers, but this modest advantage certainly does not justify the anticipated doubling of local revenue from £156k in year one to £352k in year two, with a further 25% increase to £440k in year three. This is an overly ambitious three-year plan, and the applicant's own description of these targets as "conservative and achievable" demonstrates its apparent ignorance of revenue streams typically generated by new local radio stations. The group's decision to price its local ratecard on a cost-per-thousand basis is particularly unusual for such a small station, and could prove a particularly onerous way to sell advertising to local businesses. In response to staff questions, the group argues that RAJAR audience data is irrelevant to local revenue performance because local customers are more sensitive to price competitiveness, but staff feel that customers might appreciate some stability in prices. The group's cost projections are a mixed bag, with overheads of £30k in years one and two and £34k in year three possibly achievable with good financial management. The cost of the eight staff is high, due to an average salary of £24k which seems out of line with industry norms, but the £21k marketing budget looks reasonable for the launch year. Transmitter costs are a little confused, since the costs are fairly low and diminish in years two and three, which makes little sense. Spring FM has the lowest funding requirement of all five applicants and, worryingly, has no bank facility in place, though its correspondence promises that an overdraft or share issue would make good any shortfall. The largest shareholder, TWC FM, is unlikely to have access to large funds, and the budgeted £220k capital base would produce cash balances of less than £100k in year one. Insufficient attention has been paid to sensitivity issues and contingency plans, so that revenue shortfalls in year two (as experienced by many new stations) would precipitate major cash shortages. Although the directors have offered their services free of charge until profitability occurs (forecast for year two), such financial problems could make them nervous and lead to internal management problems, as has happened before at other small-scale stations. Strongest applications 24. The rest of this Paper assesses the proposals of the two highest-marked applicants under a series of specific subject headings, thereby enabling Members to compare and contrast the groups' respective strengths and weaknesses.
  18. 18. RA PAPER 43(03) Page 18 History and composition of the applicants  High Peak Radio has conducted five RSLs in Buxton, and FM The Edge three.  Both groups include individuals with small-scale ILR experience.  High Peak Radio has more cohesive history and composition. 25. High Peak Radio (72%) has a track record of five RSLs in the area since June 1999. The force behind the group are Derbyshire brothers Steve and Paul Jenner who, under the name Broadcast Brothers Partnership, have operated a total of 14 RSLs within the Midlands region since 1996. They made an unsuccessful bid for the Chesterfield licence in 1998, which was awarded to Wayne Chadwick's Peak 107. The failure of that Chesterfield application (which had slightly out-scored Peak in the staff's marking) forced the Jenner brothers to turn their attentions to the neighbouring Peak District where, five years later, they find themselves competing for a licence against the very same Chadwick, now no longer involved in the Chesterfield station. To their credit, the Jenner brothers have a greater claim to High Peak "localness" than does Chadwick. Paul Jenner lives in Buxton and works as a self-employed "entertainments business manager" after building his own career as a nightclub DJ and then as an agent for other DJs. He also appears to possess sales skills, claiming to have generated £17k revenue from the group's last four-week RSL during June 2001 in Buxton. He will take the role of full-time sales director at the station. Brother Steve Jenner also lives in Derbyshire, just outside the station's proposed TSA, and works as a secondary school Deputy Head of English. His people and management skills have been employed in organising the RSL broadcasts and he will take the role of part-time operations director, becoming full-time if and when the station can afford it. Soon after their disappointment in Chesterfield, the Jenners started recruiting local people to their board for this application. Local businesswoman Jennie Ball had already been a board member for the Chesterfield bid, conveniently lived within High Peak, and has served on the boards of the local Enterprise Agency and NHS Trust. Retired civil servant and Buxton local historian Dr Mike Langham joined in 1998, and brings his experience as a former management consultant and management college assistant director. Buxton solicitor Tim Oddy joined the board in 1999, having already lobbied the IBA for a Buxton licence as early as 1988, when he incorporated the company Radio Peak Ltd with "veteran High Peak community radio campaigner" Tony Francis, who will be chairman of the group's Feedback Panel. Buxton resident and Conservative Borough Councillor Clive Beattie was recruited in 2000 to be the group's chairman; he combines business experience (ex-group MD for National Freight, six local business start-ups including a Buxton nightclub) with civic duties (chairman of the Buxton & District Civic Association, director of High Peak Theatre Trust). 26. Four of the five Buxton RSLs between 1999 and 2001 used the name Radio Buxton, confusingly the same name as adopted in 1988 by another local group for its first Home Office-licensed temporary broadcast, which competitor FM The Edge [see below] now incorporates into its heritage. FM The Edge claims that the Jenner Brothers used the name "without agreement," whereas High Peak Radio chairman Beattie argues that his fellow board member (and solicitor) Oddy incorporated a company of that name in 2000 specifically for the RSL. For the Jenner Brothers' fourth RSL in 2000, the name was changed to 'Radio High Peak' because the transmitter site was re-positioned to offer coverage to a wider area of the district, although the studio remained in Buxton. The subtle
  19. 19. RA PAPER 43(03) Page 19 change to 'High Peak Radio' for this licence application is a result of "people's usage of the terminology locally," according to Beattie. A lifelong Buxton resident, Beattie demonstrates an understanding of the difficulties faced by a single radio station serving the whole High Peak district, from Glossop in the north to Buxton in the south. He believes that the group's decision to base its main studios in Chapel-en-le-Frith, between its two proposed radio contribution centres in Glossop and Buxton, helps resolve the issue that "Glossop people need to feel that it is their radio station, as much as Buxton people need to feel it is their radio station." Beattie replaced Trevor Gilman as chairman, who held the post from 1998 to 2000, but did not wish to make a substantial investment in the group, which had become, as Beattie explains, "a lot more serious than he had thought." The "serious aspect" of running the radio station had been highlighted when the Jenner brothers were successfully sued for £8,000 compensation by a Buxton RSL listener who, having won a Renault Clio in an on-air competition, was surprised to be given a four-inch toy car as the prize, a story which attracted national press coverage. Beattie says the group learned directly from this experience "how important it is to control the station output." In 2000, Chrysalis Radio had agreed to make an investment (of 40-50%) in the group and also sought to involve a Manchester newspaper as an additional shareholder. However, in Spring 2002, Chrysalis told the local group that its development strategy had changed and the investment would no longer be made. According to chairman Beattie, the group "had to act very quickly when they did pull out," and the Jenner brothers contacted potential investors to replace the Chrysalis holding. A positive response was received from Chris Carnegy, owner/MD of SouthCity FM (Southampton) and former chief executive of The Local Radio Company and Spire FM in Salisbury (before its sale to Radio Investments). Carnegy first met the Jenner brothers in 1996 and had been a shareholder in their failed bid for Chesterfield in 1998. He, in turn, introduced the Buxton group to Roger Price, who had worked as deputy PD within the Capital Radio group, chief engineer at GWR FM Swindon, and wrote The Bear's winning licence application for Stratford-upon-Avon where he worked for five years as MD. By October 2002, Carnegy and Price had together agreed to replace Chrysalis' investment, with Price becoming the group's largest single shareholder. Price wrote the licence application and will be employed as station launch director for a six-month period. The group's final director, Sylvia Green, was added to the board in February this year as a representative of Glossop, in the north of the proposed TSA, where she is director of the town's Volunteer Bureau and an ex-Labour councillor. 27. FM The Edge (also 72%) is a combination of two distinct elements. The first is a group of local radio activists who have been trying to bring local radio to Buxton since the 1980s. The second is radio executive Wayne Chadwick, with a little investment help from The Wireless Group. Chadwick applied unsuccessfully last year for the Barnsley licence in partnership with Radio Investments Ltd. He has been a station manager without a station since 2001, when he sold Peak 107 to Forever Broadcasting for £4.8m (10% in cash plus three million Forever shares). Forever promised that Chadwick would stay on "to help build our business as the number one station for Chesterfield," but the two parties fell out and Chadwick exited immediately. Since then, there has been a very public war between Chadwick (who, with fellow ex-Peak directors, holds 17% of Forever) and Forever's management team over the alleged £800k per year overheads of its Newcastle-upon-Tyne headquarters, though Chadwick claims that a ceasefire prevails since the resignation of Forever managing director Eric Lawrence earlier this year. Chadwick's association with The
  20. 20. RA PAPER 43(03) Page 20 Wireless Group was forged when both attended meetings as significant shareholders in Forever ("as concerned shareholders, not as conspirators," explains Chadwick). This application's heritage derives from two acts of triumph over adversity. The first is Chadwick's track record of success at Peak 107 between its 1998 launch and 2001 sale, which is why the application gushes about that station's "substantial audience figures," "profit at the end of its first full year," and "achieving double the projected sales figures." The second is the Buxton radio group's pioneering RSL in 1988 under the Home Office Special Events licensing scheme. How the two came together in FM The Edge is a matter of some conjecture. The application explains that "in March 2001, the [Buxton] group formally joined forces with Peak 107," but the merger could equally be interpreted as a reverse takeover, initially by Peak 107, then latterly by Wayne Chadwick individually once he had left the station. The local group's history started in 1987 when Buxton resident Printz Holman assembled a team of people interested in the idea of starting a local radio station. Holman's background in offshore radio, radio commercial production and broadcast training proved useful to the group's success in organising the town's first radio broadcast as Radio Buxton to cover the 1988 Buxton Festival. After its initial success, the group held public meetings to gather support for a permanent licence, one of which was attended by over 200 people, and set up a small radio production studio in 1990 which has trained local students continually since then on a work experience scheme organised by Derbyshire County Council. However, it was not until radio licences for two nearby areas were advertised in 1997 that interest in a radio station for Buxton was stimulated once more. Holman's group merged with both High Peak Broadcasting, who had been campaigning separately for a licence in the New Mills area, and with a local hospital radio group who were considering a licence bid. In May 1998, Silk FM launched in Macclesfield, 12 miles to the west of Buxton, and five months later, Peak 107 launched in Chesterfield, 24 miles east of Buxton. Peak 107 had expressed interest in securing a low-powered relay to extend coverage to the towns of Matlock and Bakewell in the Peak District, and Authority staff agreed that an additional FM frequency could be made available without jeopardising any other anticipated licence awards in the region. These developments understandably frustrated the Radio Buxton group, who were fearful that their decade-long effort to secure a local licence might suddenly be upstaged by Peak 107. 28. At the start of 1999, Holman and Chadwick met and reportedly found some common ground, yet the two continued to pursue their own separate plans for a future licence application. Chadwick wrote a Peak 107 letter of intent to the Radio Authority in January 1999 and, in March, Buxton was one of the areas added to the working list. Chadwick agreed to provide Peak 107's outside broadcast facilities for Holman's group to stage an RSL to cover the Millennium festival in Buxton at the end of 1999. In the meantime, Chadwick pressed ahead with his own plans for a Peak 107 application for the Buxton licence, recruiting Buxton businessman Mike Watson as his group's chairman. Chadwick and Watson were already co-directors of a separate company, FM Interactive Ltd, that the two had established to build interactive web sites for radio stations (neither is involved in the business today, and its current chairman is Peak 107 chairman Barrie Evans). To strengthen the localness of the board, Chadwick approached long-time associate Michael Fay, Yorkshire regional officer at the ITC, while Watson enrolled High Peak resident Liz Stillo who he knew through the local Chamber of Commerce. While Holman and Chadwick were busy planning their strategies, in mid-1999, the Jenner brothers broadcast their first
  21. 21. RA PAPER 43(03) Page 21 RSL in Buxton and adopted the same 'Radio Buxton' name that Holman had first used in 1988. Holman was forced to adopt a new name 'The Edge' for his Millennium RSL broadcast. Two further RSLs followed, in 2000 and 2001, both with different names. The 2000 RSL, as 'Team Edge,' was a combined Holman/Peak 107 venture, with Chadwick's station providing news resources, commercial production and some finance. The 2001 RSL was named 'Peak FM' to reflect the fact that Peak 107 was now firmly in the driving seat and viewed the licence as a trial for its own application for the Buxton licence. Chadwick explains that Holman's local group "helped us considerably with the Peak FM RSL," and the application says that "members of Team Edge were actively assisting with the RSL," which is why "Printz Holman accepted an offer from Wayne Chadwick to join the board of this group." Chadwick admits that, had he remained at Peak 107, any further RSLs would have been organised under the station's aegis. Chadwick's plan for Peak 107 to bid for Buxton ended abruptly on his departure in 2001, and the station's new owners Forever became too preoccupied with Peak's subsequent ratings decline to maintain its own interest in a Buxton application. Only then did Chadwick refocus the Buxton application around Printz Holman's group, rather than Peak 107. The vexed question of whether it is Chadwick or the local Buxton group leading this application is illuminated by Chadwick's response to one question from staff: "If Printz [Holman] was sitting here, he would say he was supporting me ostensibly." However, Chadwick and his chairman Mike Watson insist they have done everything possible to involve the local group in the application process. Chadwick also told staff that he has no burning ambition to buy back Peak 107 from Forever. However, if awarded the Buxton licence, it is proposed that Chadwick would become managing director of both FM The Edge and The Wireless Group's Imagine FM in Stockport. The planned fourth transmitter mentioned in the group's application for the eastern part of the area would ensure that FM The Edge's TSA becomes contiguous with that of Peak 107. It would then appear to make perfect sense for The Wireless Group to purchase neighbouring Peak 107 from the ailing Forever group and reap economies of scale from owning three contiguous stations in Stockport, Chesterfield and the High Peak district. The Wireless Group already sells national advertising for the Forever stations, and this licence alone would fill a useful gap between Imagine FM and Peak 107 on its sales map. Staffing and management 29. The staffing proposals of the two strongest applicants are as follows: High Peak Radio FM The Edge Presentation: 2.3 4.0 News: 1.6 2.0 Sales: 1.5 2.0 Management/administration: 1.2 1.0 TOTAL: 6.5 9.0 Note: Numbers shown are Full Time Equivalents (FTE). Jobs encompassing more than one role (e.g. managing/sales director) have been split 50/50 unless otherwise stated in application. Part-time posts have been arbitrarily allocated FTE of 0.5. Table portrays 'total manpower on site'; hence, no distinction has been made between staff and freelance personnel.
  22. 22. RA PAPER 43(03) Page 22  High Peak Radio proposes significantly lower staffing level than FM The Edge. 30. High Peak Radio's 6.5 FTE staff would work in a cross-functional environment that covers the necessary departmental functions – news, programming and sales – within the station. This is the lowest staffing level of the five applicants, but should prove feasible, particularly given Carnegy's track record at Spire FM productively organising such relatively small numbers of personnel. Launch director Roger Price has directly relevant skills and, when he leaves after the station's first three months on air, either Steve or Paul Jenner would assume the role of full-time station manager. FM The Edge's proposed 9.0 FTE staff is the highest number of the five applicants, although its first year salary costs are only the third highest of the five, partly because managing director Wayne Chadwick's salary would be shared with Imagine FM. The organisational structure, with a sales manager and programme controller reporting to Chadwick and providing day-to-day supervision of the other staff, would provide the station with an effective management system. Programming 31. Significant aspects of the two strongest applicants' programme proposals which are quantifiable are as shown below: High Peak Radio FM The Edge Primary target audience (age) 25-54 25-64 Daytime speech (%): weekdays weekends 20-35 15-30 (Sat) 10-25 (Sun) 15-30 15-25 Local news: weekdays weekends 06.30-18.30 08.00-12.00 07.00-18.00 08.00-13.00 (Sat) 08.00-12.00 (Sun) Automation (hours per week) 100 76  High Peak Radio proposes higher level of automation.  FM The Edge proposes more contemporary music mix.  Both offer similar weekday daytime speech content. 32. High Peak Radio proposes a full music and information service for adults, with “something local in every link,” aimed at 25-54 year olds. It promises that “over 97% of regular programming will be locally produced and presented,” the exceptions being a networked chart show and “certain one-off special programmes [that] may be originated from outside the High Peak” in the form of live outside broadcasts. The group's intention to automate its weekday afternoon programme (1300-1700) represents the first occasion on which an applicant's proposals have contravened the Programme Code which states that "as a general rule, FM stations with a Measured Coverage Area with an adult population of more than 50k should not broadcast more than two hours of automated output during
  23. 23. RA PAPER 43(03) Page 23 daytime hours." However, one of the main grounds for exemption from this rule is the level of daytime automation indicated at the time of application, and a licence award to High Peak Radio would need to be made on the understanding that the station would broadcast four hours of automated output during daytime hours. The group would also schedule automation between 1900-0600 on weekdays, 1800-0700 on Saturday and 1900-0600 on Sunday, although it wishes "to reserve the right to reduce automation in future.” The music policy would comprise hits from the last four decades, with 25-35% current hits, 5-10% recurrents (6 to 24 months old), 25-40% 80s/90s and 25-40% 60s/70s. This would give the station a less contemporary feel than proposed by competitor FM The Edge, but leaves little flexibility for its programmers. ‘High Peak Party’ on Saturday evening “will feature a variety of up-tempo songs,” while ‘Love Town’ every other evening would be non-stop love songs. Speech content is proposed to comprise a minimum 20% of weekday output, 15% on Saturday and 10% on Sunday. Eight locally-oriented short features would be included in the Promise of Performance: weather reports following all news bulletins/headlines, 0600-2100; travel news twice an hour during peak periods; ‘Park Life’, a weekend breakfast feature for outdoor pursuits including a notice board for Peak Park Rangers and regular park users; at least three daytime what’s on roundups; a weekday mid-afternoon ‘News Focus’; twenty daily local community group appeals and/or information; a weekday mid-morning ‘Insiders’ local expert slot; and a twice-daily ‘High Peak Performance’ showcasing local arts events. IRN news would be appended by two-minute local news bulletins during weekday peak times, supplemented by 90-second headlines and one minute of sport on the half-hour. ‘Action Afternoon’, a Saturday afternoon music-led show with local sports features and score updates, would also be included in the Promise of Performance. High Peak Radio's application offers a large dose of enthusiasm, but its proposals should be deliverable within the resources outlined, particularly in light of the above-average commitment to automation. 33. FM The Edge offers a variation on the standard small-scale ILR format of classic hits mixed with local news and information. The group has given itself enough flexibility to vary its music mix in order to meet changing tastes without the risk that it could lose its broad character of a classic hits station, while its proposals for speech content would guarantee a range of locally-relevant features throughout daytime output. FM The Edge would be almost entirely locally-produced and presented, and would be automated during non-daytime periods only. At 15%, the group is offering a lower minimum commitment to speech content during weekday daytime than its main rival High Peak Radio. However, its sample programme schedule suggests that in fact speech would never fall below 20% during this key period, and more than enough features are proposed to enable the station to maintain such a level. In response to follow-up questioning on this point, the group stated that the 15% minimum was to allow for occasions when an "abnormally low advertising load" might lead to one additional music track being played in any hour, and thus the percentage of speech falling below 20%. Given that Promises of Performance and Formats allow for a degree of flexibility in respect of minimum speech content levels, staff believe that FM The Edge would be prepared to commit to a 20% minimum if this was suggested. In addition to the standard features such as travel, weather and what's ons, the group is also committed to broadcasting a range of short items, many with the opportunity for audience participation, and longer items such as outside broadcasts (which would appear monthly) and exposure for local charities. In response to a staff question regarding its claimed recognition of children and family values, the group offered additional commitment (i.e. for
  24. 24. RA PAPER 43(03) Page 24 inclusion in its Promise of Performance) to its weekday evening output, which is specifically aimed at teenagers, and its Sunday breakfast show, which is proposed to have "an emphasis on the local family at home." A fairly standard news schedule would see bulletins including local stories broadcast hourly throughout weekday daytime and until lunchtime at weekends, with an extended 10-minute bulletin at 1800 each weekday. This output would be produced and presented by the two in-house news staff, each of whom would work six days a week. It is stated in the application that additional support would be provided by local news agencies, but in response to follow-up questioning the group revealed that no such agencies exist in the High Peak area. Musically, FM The Edge is offering what appears to be a more contemporary service than its rivals, with current and recent hits likely to form the largest proportion of the daytime output. Its proposals have enough flexibility that songs which were hits between one and forty years ago could form a majority (60%) of the output, but given the widespread popularity of current music in the group's research and the lack of any ILR competitors in the area, it seems unlikely that the station would seek to adopt this approach. The two proposed specialist music programmes, country and soul, both proved popular when included in the group's RSLs and were also well received in the research, while the 'Local and Live' programme scheduled for Sunday evenings would provide exposure for local bands and feature live sessions. All three are for inclusion in a 'Promise of Performance'. Market and audience research  High Peak Radio's research is flawed.  FM The Edge's research provides useful insights. 34. High Peak Radio's audience research was commissioned from Nichola Atkinson, who has provided an unfathomable analysis of results that merely state obvious generalisations which would be applicable to any radio market. Respondents said they wanted lots of local news and information, classic hits, professional presenters and mostly music. The net effect of the research is to detract from, rather than add to, the application, particularly with bar graphs that reach 240%, tables that show respondents choosing Radio 5 for its music output, and questions about music preferences that offer two-decade tranches (such as "80s/90s"). Asked by staff to explain this last anomaly, the group replied that it was "keen to keep things simple" and was "mindful that respondents are unlikely to be aware of precise music history," seemingly regardless of whether the resultant data might be of any use when programming the station. FM The Edge commissioned higher quality market research from Keith Gorton Services that offers true insights into the district. Respondents' answers from 500 street interviews demonstrate that the largely rural High Peak lacks cohesion because the two largest towns are fifteen miles apart, at opposite ends of the local authority area. Buxton, in the south, is geographically closer to Macclesfield (which already has its own ILR station) than it is to Glossop in the north, and Glossop itself is closer to Manchester than Buxton. The group's research shows graphically the lack of intercourse between the two towns, with very few residents travelling from one to the other for work, leisure or major household purchases. Inhabitants of Buxton and Glossop appear to have little in common except that both clearly look to Manchester, and particularly to its southern suburb Stockport, as their metropolitan centre, and both are technically unserved by ILR. The group has addressed the need to attract audiences at both ends of the TSA by providing
  25. 25. RA PAPER 43(03) Page 25 a contribution studio in Glossop that will support its main studio in Buxton, but has not proposed opt-outs or split programming. Substantial proportions of Glossop residents named their local radio station as Piccadilly/Key 103 and BBC GMR (40% and 29% respectively), which reveals a degree of out-of-area listening, whereas Buxton residents correctly believed their local radio station to be BBC Radio Derby (31%). More significantly, 43% of Buxton residents named their local station as one of the nine RSLs that has broadcast in the town since 1988, a reflection of the collective impact that short-term licensees have made despite their temporary nature. Audience forecasts 35. The weekly reach and average hours forecasts for years 1-3 of each of the two strongest applicants are as follows: High Peak Radio FM The Edge TSA population (adults) 66,250 95,000 Year 1: Weekly reach Average hours 24% 9.5 21% 9.5 Year 2: Weekly reach Average hours 27% 10.5 22% 10.0 Year 3: Weekly reach Average hours 30% 11.0 24% 10.5  Both propose reasonable audience forecasts.  High Peak Radio's choice of TSA size is more realistic. 36. High Peak Radio based its forecasts on findings from its survey and also "the actual recent experience of young, small FM stations in underserved English local radio markets." The average hours performance of South Hams Radio is cited as a comparable example, as the Devon station currently obtains a 33% weekly reach in a TSA almost identical in population terms to that proposed by High Peak Radio. FM The Edge's forecasts were also based on research findings, but the existing stations it studied as comparators (Hallam FM and Orchard FM) do not seem at all relevant to this Buxton market. That said, the steady growth projected to year three seems attainable. Questioned by staff about the new station's effect on existing listening patterns, the applicant asserts realistically that "most listeners will view FM The Edge as an addition to the bouquet of services available in the area, rather than as a replacement for any existing station." Local involvement and support  High Peak Radio provides greater evidence of local support.  Most of FM The Edge's support is in the form of pre-printed postcards.
  26. 26. RA PAPER 43(03) Page 26 37. While its market research lacks substance, High Peak Radio's local support proves to be more significant. The five RSL broadcasts attracted substantial local press coverage and the group commissioned independent research reports (not from Nichola Atkinson) after the two 1999 broadcasts which showed that 75% and 92% respectively of respondents had listened to the RSLs. The first RSL alone elicited 1700 phone calls from listeners; the third RSL raised £2000 for a local cancer hospice; the fourth RSL broadcast information for residents about local floods; and the fifth RSL provided a live, ten-hour General Election special preceded by a pre-election debate between local candidates. Devoted Buxton RSL listener Sheila Smith organised a petition of 1,434 signatures asking the Authority to grant Buxton a permanent licence, while one independent Buxton newsagent organised a petition that attracted 130 signatures. Additional support letters were received from 301 individuals, 64 businesses, 41 community organisations and 26 public bodies. Letters specifically supporting this group's application were received from Tom Levitt MP (Labour, High Peak), three East Midlands MEPs, two county councillors, two borough councillors, eight parish councils, Buxton Opera House, Federal Mogul (the area's largest private employer), Glossop residents Wayne Fontana (of Mindbenders fame) and Eric Haydock (of the Hollies), and actor Bruno Langley (Todd Grimshaw in Coronation Street). Despite its legacy of Buxton RSLs, FM The Edge provided significantly fewer press cuttings than competitor High Peak Radio to demonstrate the impact of its activities. 1222 pre-printed postcards were returned by supporters (without the incentive of a competition prize). 245 letters of support from local individuals and organisations were received, with specific endorsements from Tom Levitt MP (again; he is well disposed towards both of these applicants), the High Peak Council for Voluntary Service, Derbyshire Learning & Skills Council, Castleton Chamber of Commerce, Glossopdale Community College, Freemasons Buxton Lodge, and actor Nick Cochrane (Andy McDonald in Coronation Street). Financial proposals 38. The major shareholders of each of the two strongest applicants are as follows: High Peak Radio FM The Edge Roger Price 26% Wayne Chadwick 35% Chris Carnegy 15% The Wireless Group 30% Steve Jenner 14% Mike Watson (chairman) 10% Paul Jenner 14% Clive Beattie (chairman) 10%  High Peak Radio is the most local applicant with good contacts.  FM The Edge financially reliable with few omissions.  High Peak Radio proposes achievable revenue forecasts, though costs underestimated. 39. Deriving about 40% of its funding from within the proposed TSA, and having conducted five RSLs, High Peak Radio is easily the most local of the five applicants. Consolidating its already impressive local support in the area, the group contacted former advertisers from its RSLs to determine their interest in a full-time station, and claims to have received more than forty positive responses from local businesses keen to advertise on
  27. 27. RA PAPER 43(03) Page 27 High Peak Radio. Such advertiser support should not be underestimated when it comes to launching a local station, with Radio Pembrokeshire providing an excellent example of how such relationships with local businesses have helped generate an estimated £450k revenue in year one. High Peak Radio has run sensitivity tests on its business plan and finds revenue to be the key driver. Consequently, the group has ensured that its cost base can be fine-tuned by, for example, employing a part-time operations director whose hours can easily be adjusted. The business plan has taken into account the economics of the TSA (e.g. much consumer spending power is diverted to Manchester) and understands the need both to deliver an audience and to communicate the benefits of radio to potential advertisers, especially those outside the immediate TSA. High Peak Radio's local revenue forecasts are by far the most prudent of the five applicants – £124k in year one rising to £161k in year three – and should be easily achievable, as should the £50-70k sponsorship income. National revenue has sensibly been set to zero for the first three years. The group has already identified 17 local businesses who would be expected to spend £70k per annum in total, and should have no trouble reaching its £232k income forecast for year three. High Peak Radio has taken care to keep its costs low by proposing multi-skilling, minimising fixed overheads (through equipment purchase), avoiding leasing and interest charges, and using technology (i.e. automation). The £100k cost of the 6.5 FTE staff is considerably lower than competing applicants, while the marketing budget of £33k is sensible and fits with the group's stated marketing strategy. Nonetheless, a cost base of £17k per month seems too low, even with high usage of automation, when small commercial (i.e. not community) stations typically cost £30k or more. Asked to explain why its forecast costs are so low, the group cites Connect FM's launch in 1990 with a cost base of £15k, and says “we suspect there has been deflation in small station costs since then.” However, the costs of Connect (and Spire FM and Vale FM, who are also cited) are currently more than £40k per month (although there are stations, such as Waves Radio Peterhead, which are known to operate on a figure as low as £17k per month). The station would be funded by a healthy £272k of share capital, the majority from Chris Carnegy and Roger Price who, with carried interest, would hold 15% and 26% respectively of the shares. The group's investors are considered reliable, since South City FM (which Carnegy controls) issued a further £150k share capital in May 2003, most of which was purchased by Carnegy. Overall, the level of funding is not necessarily too low, but both revenue and costs seem somewhat underestimated. 40. FM The Edge's national revenue forecasts of £8k in year one, rising to £25k in year three, are justifiable because shareholder The Wireless Group would handle national sales through its Impact subsidiary (as an example, nearby Peak 107's national sales are currently £70k). The group's local revenue forecast of £179k in year one, rising to £236 in year three, should be manageable, given Chadwick’s ILR experience and the proposed team of two salesmen. The station could potentially benefit from joint sales with TWG-owned stations in nearby areas, such as Imagine FM in Stockport which also serves a 'Manchester fringe' district. Sponsorship income is forecast at a constant 21% of income, which is comparable to similarly-sized Wireless Group stations. The group's year three income projection of £390k seems a little optimistic, but that target is much more likely to be achieved by FM The Edge than by Temple (who predicted the same amount). As local advertisers will not have used radio before, the group sensibly intends to offer simple spot packages, making it considerably easier to see what you would get for your money than Spring FM's reliance on
  28. 28. RA PAPER 43(03) Page 28 a cost-per-thousand basis. Because functions such as engineering, sales traffic, credit control and management accounts will be contracted to The Wireless Group, the group's cost base of £30k per month will be put to productive use, allowing the station to focus on editorial and sales decisions. FM The Edge is proposing more staff – nine FTE (seven full-time, four part-time) – than other applicants, and is rightly expecting them to work flexibly. The marketing budget of £31k for the launch year compares well with competing applicants (Wave 102, The Wireless Group's station in Dundee, was launched with a budget of £33k in a market already served by ILR). The group's £233k capital outlay is large because it plans to purchase all its equipment, which is effective in reducing its ongoing costs, but produces negative cash balances almost immediately that will strain the £150k overdraft facility that proves necessary throughout the first three years. The group's combined £300k share capital and overdraft provide the highest level of funding of the five applicants. Because the operational cost base has been set at a realistic level and, because revenues do not appear over-estimated, the financial structure of the application does not appear clumsy. The group has opted to use its overdraft to fund working capital before its cash returns become positive in year four, which is sensible and common practice at other stations (i.e. few profits and continued borrowings, well after the three-year forecast period). Both The Wireless Group and Chadwick are considered to be reliable investors – the latter has cash from the sale of Peak 107, and the former, despite continuing losses, is improving its results and has an estimated £4m unused on its credit facility. There is perhaps an over-abundance of small individual investors in the application, who were probably included to increase its localness and, while the small amounts involved give no cause for concern, these investors seem unlikely to be involved for longer than the short term. Grant Goddard 2 July 2003

×