Amanda Andrews: Media analysis
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When GCap announced in February plans to exit DAB digital radio, the industry cried “foul” at the commercial radio leader's failure to give the medium a chance. Within hours of the announcement, the BBC and Channel 4 spoke out in favour of DAB.
While an agreed takeover of GCap by Global weeks later put an end to the Capital 95.8-owner's shock plans, the announcement by Fru Hazlitt, GCap's chief executive, has served as an awakening for the industry, with leading figures realising that digital radio was not as popular as they previously believed and an immediate solution is necessary if DAB has any hope of a future.
Aside from the slow consumer take-up, the medium has faced further challenges in recent weeks and a rapid solution is needed to ensure the medium's survival.
Last week, Jenny Abramsky, director of audio & music at the BBC, and the most important woman in radio, announced plans to step down in September. Ms Abramsky has been one of digital radio's most important champions, investing heavily in the medium with the launch of five digital stations at the BBC.
Ms Abramsky was not the first DAB supporter to go. Ralph Bernard, one of the biggest investors in digital radio, is also out of the limelight since stepping down as the chief executive at GCap last year.
Further pressures can be found at Channel 4, another of digital radio's biggest supporters. The broadcaster, which is to launch the second digital radio multiplex in a year, is in the middle of funding crisis.
Last month Channel 4 spelt out what it needed to continue to provide “challenging, provocative and sometimes controversial programmes,” because it does not believe that it can generate enough advertising revenue to support its £500 million-a-year programming costs. That subsidy was up to £150 million a year. Not exactly the ideal foundations for the launch of Digital Two, as the second radio platform is known.
With numerous forces working against the success of digital radio, the key to finding a solution to the digital radio debacle must lie in industry collaboration.
This does not mean industry leaders coming together for a chin-wag every week for the rest of the year and bouncing a few ideas off each other. A digital radio working group has been set up to discuss the future of the medium, but no obvious progress has been made.
Regulator-style consultation periods are also a waste of time. As GCap demonstrated recently, keeping digital radio running is expensive and, if digital radio is to survive, the industry must act fast.
If the industry wants to make DAB a success, it needs to start by showing the outside world that it believes in the medium. This is the only way the motoring industry, the real catalyst in the fight to make a success of DAB, will take the platform seriously.
A number of car manufacturers now provide DAB as an optional extra in some cars, but it is a long way from being offered as a standard feature. Who can blame car manufacturers, who witnessed Britain's largest commerical radio group make the snap decision to close digital stations and exit the medium? They will not invest heavily in a medium that could become void within two years.
The industry needs the support of Global Radio, because it will become the largest commercial radio group through its agreement to acquire GCap. Ashley Tabor, the chief executive of Global, has stayed quiet on his intentions for the GCap stations post-acquisition, but he should be more open about his plans for DAB, as this will have industry-wide repercussions.
Global's recent request to the Takeover Panel to stop GCap from selling its stake in Digital One to Arqiva indicates some commitment to DAB, but a clearer picture is needed.
A rapid decision also needs to be made on the launch of Digital Two. Is there really a need for a second digital platform, now that stations on the first platform are being closed? Channel 4's roll-out of Digital Two now looks likely to be delayed further - possibly until 2009.
News that the owners of the two digital platforms are to enter discussions to explore ways of combining their digital radio transmission services, is positive, because this could save on management costs and be a much more efficient way of operating. Such a move will also take the burden off of the individual owners, such as Global Radio, if DAB eventually fails.
While a merger of the two platforms is a good idea, this is a long-term plan, because Global Radio, part-owner of Digital One, is preoccupied with its acquisition of GCap. A short-term solution is needed to enable some innovation in digital radio, which has this year been plagued by station closures and negative sentiment.
One idea could be to launch one of the stations planned for the second multiplex, such as E4 Radio, on Digital One. This will put across the right message - to show the outside world that the radio industry has not lost faith in DAB and wants to keep innovating.
Discussions need to take place immediately and the likes of Global Radio must be willing to collaborate with public service broadcasters as well as its commercial radio rivals.
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