Channel 4 drops plans to launch three commercial radio stations

Published Friday 10 October 2008 at 12:30 by Matthew Hemley

Channel 4 has withdrawn plans to launch three UK commercial radio stations, claiming the move is part of a strategy to save £100 million, following a downturn in core revenues.

As a result, it said up to 15 staff working on the broadcaster’s radio offering, which would have launched with E4 Radio in the spring of next year, will be made redundant.

Channel 4 announced it was to launch the three stations after a consortium in which it was included - 4 Digital Group - won the licence to run a new national digital commercial radio platform, the UK’s second DAB multiplex.

It is now withdrawing from the consortium but said it would be consulting with its partners “about the implications for the multiplex licence”, which was granted by Ofcom.

The broadcaster said withdrawing from radio will save it up to £10 million in 2009 and contribute towards the £100 million savings it is targeting in response to a 5% downturn in TV advertising revenues.

Channel 4 has already announced proposals to reduce head count by around 150 posts and cut its programme spend by more than £50 million across 2008 and 2009 in response to this decline in revenues.

Chief executive Andy Duncan, said: “We’ve taken this decision very reluctantly. We’ve pursued our radio plans in good faith and continue to believe DAB has a strong future and that we could make a return from radio in the medium term. Frustratingly, our plans have been overtaken by a drastic recent downturn in our revenues and we will have to forgo this future profit stream.”

Responding to the news, Ofcom said: “Ofcom recognises that the economic environment is very challenging and that all organisations need to make decisions in light of the circumstances they face.”

It said it would meet with the other members of 4 Digital Group over the next few days to discuss how they propose to take matters forward.

Ofcom also revealed it is in discussions with other multiplex operators and the BBC to consider how best to “secure a viable outcome which is in the interests of radio listeners and the industry”.

Channel 4’s withdrawal from the radio market will come as a blow to independent drama producers, who had hoped the broadcaster’s offerings would increase opportunity for production outside of BBC stations.

At the time Channel 4 announced its proposals for radio, one of its ideas was to launch a long-running soap that would rival BBC Radio 4’s The Archers.

Facts

• A multiplex licence offers enough space on UK airwaves to run 10 national radio services. Up until last year, there was only one national commercial DAB multiplex, operated by Digital One.
• The 4 Digital Group was awarded the UK’s second 12-year licence in July 2007.
• Channel 4 Radio was the majority shareholder in 4 Digital, alongside other shareholders Bauer Radio, BSkyB, the Carphone Warehouse Group, UBC Media and UTV Radio.
• Channel 4 had been due to launch three stations - a music and entertainment station called E4 Radio, speech station Channel 4 Radio, and a music station named Pure4.