Bidding for the Next National Multiplex

We’ve just announced our involvement in bidding for the new national digital radio multiplex. I wanted to write a little history of how we got there. There’s lots of people involved in the application – this is just my personal take, it’s not the corporate line.

I’m very lucky to do the job I do. I’m a fan of radio and digital media and through our company, Folder Media, I’m able to explore many different ideas. We’re a small team but everyone has lots of different skills which means we can make a decent go at the things we put out minds to.

When we set up Folder it was to bid for some local digital radio multiplexes. It’s one of the things that we previously did for GWR/GCap. We were pretty good at it. We learned to combine the benefits of being part of a big group, creative ideas for digital radio and relationships with different organisations into winning bids. We were successful, but not incredibly happy. We thought that there were lots of new opportunities out there but as part of a big company we couldn’t do exactly what we wanted. We decided to therefore have a go at this bidding business on our own.

At that point (2007) DAB was going in the right direction, but not everyone was involved. The costs were too high for the smaller radio groups. We created MuxCo as a vehicle where the smaller radio groups were able to get involved, knowing that the larger groups would begrudgingly tag along. We were also keen to do transmission and management in a different way so we worked with National Grid Wireless, the competitor to NTL/Arqiva. They were hungry for the business, as were we!

So, how did it go? Well, we won 9 of the 13 multiplexes we went for, though our transmission partner changed to Arqiva as they had bought National Grid Wireless. But we had to pause our launches a little as the BBC and Commercial Radio were only keen to commit to roll-out when there was some policy statements and funding from the Government.

In the meantime we had the opportunity to acquire Fun Radio from Global who were keen to reduce their portfolio of radio stations. Initially we saw it as a shop window – the ability to run a radio station in a different way to demonstrate our skills to consultancy clients and also potential multiplex clients. A strange thing happened though. The station kept building and building.

I’ve learned more about the modern media world through Fun Kids than anything else I’ve ever done. We’re over the moon that it’s able to support itself whilst expanding each year. It really is a truly multi-platform business. The broadcast radio side is the business’s bedrock for audience and revenue. It’s supplemented by the streaming and the website (along with YouTube and Podcasting). In fact the online output is now a key product in its own right as we do over a million page views a month and hundreds of thousands of audio downloads and video plays.

Its main success however comes from DAB Digital Radio. Without it there’s absolutely no way it would still be in existence. Our London coverage and the high degree of DAB take up means we have a business of a certain scale that can be supported by advertisers.

It’s one of the reason I’m such a digital radio fan. I’ve seen first hand how a new radio product can delight listeners whilst creating a sustainable business for a new entrant. It takes a lot of work too of course. And a great deal of luck. But it’s all built on DAB.

It’s also why, with MuxCo now on-air in eight of our nine multiplex areas, that I’m proud we’re able to work out ways to broadcast a whole cross-section of stations. We have new entrants like Trash Can Radio, community stations like Pulse in Somerset, smaller commercial stations like Sunshine Radio, the BBC locals as well as stations like Heart, Smooth and Capital from big groups like Global.

Providing a platform for a variety of stations at a local level is great, but we’ve also been keen to see if it’s something that can do on a national level too. As such we’ve spent the last two years looking at different ways of doing a national multiplex and earlier today our work (and the work of many others) was able to see the light of day.

DAB is in good shape at the moment. 18million people listen to it each week and it accounts for around 25% of all listening. I think it’s important for the radio industry that DAB’s successful because the stations it provides, the ease of tuning and interference free reception means people get to like radio more. It helps the sector by giving listeners a good experience of our medium – it literally makes them happier customers. It also generates the scale of listening that means companies are able to invest in content – presenters, shows etc.

I think it’s great that those stations are then on DAB, Digital TV and the Internet. Really I don’t mind how people tune in – a pair of ears is a pair of ears – but I know that if they weren’t on DAB, the lack of scale DTV and the Internet have means none of them, that’s none of them, would be able to afford any real investment in programming and that would mean a poorer experience for listeners, and for radio as a medium.

The 18m people who listen digitally do so because it offers them a benefit – it might be a better radio, it might be more choice. That’s 18m people who would be less satisfied if it wasn’t there. I’m keen that we grow that 18m further. I want more listeners to get more enjoyment out of the radio with more things that are relevant to them.

The share of listening DAB gets (25%) is also a good measure. The more time people spend with their digital stations is a good proxy for satisfaction. If it stays flat it just means the new stations are competing with other. If it grows it means that more people have greater engagement.

We know that certain stations attract people to digital radio. 6Music, Planet Rock etc provide new reasons to tune in. Content-led reasons. I think many of the ‘Extra’ stations and spin-offs play to the established crowd, they’re mainly good for people who understand them and are already digital listeners. I know Smooth Extra will add more hours to Global Radio’s group total but is it distinctive enough to bring new people to digital radio?

It’s something that’s driven a lot of our thinking in the Listen2Digital bid. We’re going to broadcast 18 radio stations. Which is a lot. We’ve tried to create a line-up that has some mainstream formats and some specialist formats. The mainstream formats should provide alternatives to existing stations with solid programming teams and a varied output – definitely not jukeboxes. Our specialist stations are there to scratch individual itches. Whether it’s the Christian and Asian stations or RTE and Gaydio, we think these are stations that speak to significant audiences who rarely have a radio home that reflects their community and culture. Other specialist stations speak to particular music fans whether that’s jazz or country.

From a Folder Media point of view we’re excited that our two radio brands – Fun Kids and Upload Radio – will have a national home. The way that we’ve been able to set up Listen2Digital has created a cost-structure that allows us to broadcast these stations nationally. Up until now we would not have been able to do that – and stay solvent! I know that this structure has enabled many other stations on our bid to do the same.

Part of the reason we’ve been able to keep the costs down is that we’re predominantly using a different transmission company. Rather than using Arqiva we’re opting for Babcock International. They’re a huge engineering company who do a massive amount of broadcasting, looking after much of the military’s communications in the UK and also broadcasting the BBC World Service to hundreds of millions of listeners around the world. However, we’re unable to do it all without Arqiva, we’ll still be broadcasting the multiplex from their big sites.

I’m particularly excited that we’re broadcasting four stations in the new flavour of DAB, DAB+. From our Fun Kids DAB+ trial earlier in the year we discovered a large audience that was able to pick the station up on in-car radios as well as many home sets. It made us realise that we’re entering a phase where the number of DAB+ receivers starts to make commercial sense for broadcasters. But these things are always chicken and egg – you just need to get going with it! We’ve therefore come up with a way to support four stations in DAB+ in the early days to break that chicken and egg cycle. They’re also specialist stations that can really shout about what you need to receive their services in DAB+ – Gaydio, Chris Country and RTE Radio 1. Oh, and Upload Radio.

Upload Radio has been a big project for the Folder Media team. We’ve been building a system that will let anyone create a programme, buy a one hour slot, and have their show broadcast on DAB digital radio, online and mobile with listen again for 30 days. The local version is going to roll out later this year and then hopefully it will be nationwide on DAB+ if we win this bid.

It would be great to be able to paint our competitor for D2 as rubbish and terrible. But that’s not the case. We work closely with people at Bauer, UTV and Arqiva all the time. They’re diligent, committed and have some great ideas. If they win the multiplex their line-up will be a fine addition to digital radio in the UK.

However, we’re still pleased that we’ve done something different. We think there’ll be value for the whole radio industry in having these new stations from our new operators. DAB has great scale, there’s never been a better opportunity for new stations to make a success of it. The fact they’re not from big radio groups and that success is so important for them will mean they will work harder and shout louder to ensure their businesses do well. I’m as excited about their enthusiasm as I am about their radio stations.

I also think it’s time that a new multiplex operator is added to the fray. At the moment if you want to broadcast nationwide you have a couple of options. Option 1 you can broadcast on Digital One – which is owned by Arqiva. Option 2 is you can broadcast to a selection of local multiplexes. Right now Arqiva, UTV and Bauer control over 80% of the local multiplexes in the UK and they have a shareholding in all but 2! I don’t think it makes much sense to add as Option 3 – Broadcast though Sound Digital (owned by Arqiva, UTV and Bauer).

I am, however, clearly very very biased.

What I would ask you to do is to read both the bids, make up your own mind about which is best and why, and then perhaps drop Ofcom a line to tell them. This is our public spectrum, we all should have a say in what happens to it and where it goes.

My multiplex colleague, David Lloyd, talks here about what taking Gem national means for them.