Never on 4 (original) (raw)

Channel 4 was supposed to be the saviour of commercial radio's digital ambitions. But with the announcement three days ago that it was abandoning its entire radio project, the broadcaster has blown a gaping hole in them instead.

The broadcaster's chief executive, Andy Duncan, blamed the economic downturn for the decision. Two years ago he promised to bring Channel 4's "risk-taking approach to TV to radio", and appeal to the age group he branded "Generation Lost". But it is Duncan's dreams that have been lost after the risks and costs involved in launching C4's three planned new radio services - including a spoken-word competitor to BBC Radio 4 - were deemed too great.

Three Channel 4 stations were originally due to launch this year on the second national digital radio multiplex, awarded by Ofcom to the 4 Digital Group, in which C4 was the majority shareholder. The music and entertainment station E4 Radio was the last remaining station to be axed, saving the broadcaster an estimated £10m next year, part of its bid to cut £100m in costs across the group.

The remaining shareholders, who include UBC Media and Carphone Warehouse, will hold an emergency meeting this week to decide whether to go it alone or follow Channel 4's lead and call a halt to their digital investment.

Full-scale retreat

Such a full-scale retreat would deal a body blow to the commercial sector, which offers the 7.7 million people who have bought a digital audio broadcasting (DAB) radio set in the UK just one national digital station that is not already available on analogue - Planet Rock.

Fifteen jobs will go because of C4's withdrawal, including the likely departure of its director of radio, Bob Shennan, the former BBC Five Live controller who quit the corporation under a year ago. And what next for Channel 4's other great digital radio champion, its director of new business and corporate development, Nathalie Schwarz?

After last week's decision, not only have the three Channel 4 services been lost, but the other proposed stations run by former partners in the 4 Digital Group - including a spin-off of Bauer women's magazine Closer, UTV's Talk Radio and Sky News Radio - have also been thrown into doubt.

DAB has been on the back foot since the former GCap Media chief executive Fru Hazlitt announced she was pulling the plug on the Capital and Classic FM parent's digital investment in February. The cuts were not enough to keep Hazlitt in a job. She was not the only commercial radio boss to be pessimistic about the future of digital radio, but industry executives have a habit of being rather more cheerful about the platform in public than they are in private.

While take-up among listeners has been encouraging - in the second quarter of this year digital platforms accounted for 17.9% of all radio listening - commercial groups have so far been unable to make their investment pay. C4 estimates that its aborted plans cost less than £5m, although the cost in time and credibility is much higher. Of total digital listening, 11% is via DAB radio sets, with another 3.3% via digital TV, and 2% on the internet, which has become a much more attractive proposition with the launch of the BBC's iPlayer almost a year ago.

Commercial radio bosses had hoped that relatively cheap DAB radios would prove a success at Christmas and believe they can still maintain momentum in the all-important run-up to the festive season, despite C4's withdrawal. About 800,000 sets were sold in November and December last year, and this Christmas will see the first joint campaign across the BBC and commercial radio to promote the sets.

But a DAB radio offering based solely on the BBC's digital services - including the comedy and drama station BBC7 and the Radio 2 spin-off 6 Music - is surely not a long-term option.

Yet Simon Cole, the chief executive of 4 Digital shareholder UBC Media, says at least C4's withdrawal, after months of dithering, removes the uncertainty from the market. "It is very regrettable that Channel 4 caused the excitement that they did, only to dash everyone's expectations in this way, but it doesn't mean the rest of us [have to follow suit]," says Cole, whose company does not yet offer a digital station.

"For the last six months the radio industry has been repiecing the jigsaw of digital radio, and Friday's announcement was part of that. If anything it helps because it creates certainty and that is always a good thing. Difficult times force people together."

When Duncan told staff the news on Friday, the reaction was muted. Given the need for cost-cutting - slashing into the programme budget so deeply that C4 is even considering dropping horse racing - it was seen as inevitable. Yet in private, there was amazement and anger that it had taken so long for Duncan to admit the obvious: the venture had no future. He seemed to have stubbornly backed a dead horse for much longer than anyone expected - but then he had bound himself to it.

Beyond Duncan and a handful of supporters, the diversification had little internal support. An increasingly agitated board, led by the chairman, Luke Johnson, had debated the matter openly in February, and asked for a budget rethink. Digital radio was even seen, rightly or wrongly, as a distraction, perhaps (cruelly) as a displacement activity for a chief executive who came from a marketing rather than television background.

Yet as late as June, the board signed off a scaled-back version, giving permission to launch the Digital 2 multiplex it controls while mothballing Channel 4 Radio, the expensive public service bit.

At this point, says Duncan, it seemed to have takers for all the spare slots on the multiplex, which would have provided a rental income. But then they melted away as the recession loomed, leaving the 4 Digital Group.

The venture has left many insiders bitter. "What a mess. The truth is, nobody in programming or advertising sales thought it was a good idea," says a senior executive.

Another simply says: "I am furious about the waste of time. It isn't just the waste of millions of pounds at a time like this."

More experienced hands, including Dorothy Byrne, C4's head of news and current affairs, had long warned Duncan that it would be impossible to challenge Radio 4 and its well-resourced programming with Channel 4 Radio's original budget of around £12m.

But Duncan stands by his argument that the plan was fundamentally sound - it was the ever-worsening economic circumstances that were to blame. "It couldn't have been anticipated. The next 15 months are going to be very grim," he says.

But where does that leave him? Duncan survived a huge professional challenge in 2007 over Celebrity Big Brother, which also knocked Luke Johnson. It is common knowledge that the two men have never really hit it off, but they manage to work together. Duncan has no intention of standing down over an abortive radio bid and, anyway, can point to having the board's backing.

And these are certainly difficult times - not least for the media regulator, Ofcom, which will have its own questions to answer after awarding the licence to a consortium that has fallen apart in such spectacular fashion. Indeed, the owner of the first national digital radio multiplex, Digital One, told the regulator three years ago that it should not issue a second licence at all.

"Unfortunately, there was an over-supply of capacity, which was always the biggest risk to be caused by another national multiplex at a time when the industry quite clearly was not able to afford it," says the former Digital One chief executive Quentin Howard, now president of WorldDMB, a forum to promote the take-up of DAB-based services worldwide.

"There is no pleasure in saying it, but those of us who were close to the industry and understood these things knew this was a likely consequence. It is regrettable that we had to go through all this faffing and instability; it has done short-term damage, no question about it."

Tony Moretta, chief executive of the Digital Radio Development Board - the trade body supported by the BBC and commercial radio - says operators are queuing up to launch a national radio station on DAB. But who exactly? And why have they not already found a berth on Digital One, which has had plenty of spare capacity for some time?

High prices might be to blame, as might the uncertainty caused by Channel 4's dithering. Such was the paucity of interest that a channel playing nothing but birdsong can be heard on Digital One, filling in airtime until a serious operator is found. NME Radio, which already broadcasts online and on digital TV, might be interested, as might Jazz FM, which relaunched online and on regional digital multiplexes earlier this month. But when MediaGuardian pressed one industry executive to name names, they came up with BFBS, owned by the British armed forces. A worthy service in its own right, no doubt, but unlikely to get them piling through the doors of Argos in the hunt for radios for Christmas.

The launch of a new music digital station could cost anything between £5m and £10m in its first year of operation. A speech format, anything between £10m and £15m. If the history of DAB tells us anything, it is that new stations done on the cheap - jukebox broadcasters run by computers out of an empty studio - do not attract advertising.

The BBC's director of audio and music, Tim Davie, who succeeded digital's great champion, Jenny Abramsky, last month, said Channel 4's withdrawal was "disappointing news" for UK radio.

But he said the corporation remained "positive" about the future of digital radio and DAB. "DAB will continue to offer high-quality services that are proven to have significant appeal to radio listeners, and we look forward to working in partnership with all the industry to drive further growth of the platform."

But now the BBC has lost its most high-profile commercial partner. Freeview, which has long been mooted as a model for the relaunch of DAB radio, would not have worked if it had only offered BBC stations. Neither will digital radio.

Tuning Out

July 2007 Channel 4 wins the licence for a second national digital multiplex, taking a controlling 55% stake in a consortium of investors. The broadcaster plans three services - E4 Radio, Pure 4 and 4 Radio, which is to be a speech station to challenge the BBC's Radio 4.

November 2007 The government launches the digital radio working group, "to look at how to promote digital radio and increase penetration".

February 2008 Channel 4's chief executive, Andy Duncan, is directed to go over-budget by the board, amid fears caused by GCap Media's decision to pull out of Digital One.

March 2008 The Guardian reports a split at Channel 4, with most executive directors and senior managers opposed to the move into radio.

Channel 4's Next on 4 public service plans are announced, with only one line about E4 Radio launching "later this year".

April 2008 Bob Shennan, the former controller of Five Live, joins Channel 4 as head of radio. He starts hiring staff.

April-May 2008 The board defers a decision on investing in the transmitters for the network.

October 10 2008 Channel 4 announces that it is abandoning its entire radio project, with the loss of up to 15 jobs.