Government to relax FM radio licence rules

MATHEW HORSMAN

Media Editor

The Government is poised to relax the one-licence limit on FM radio, industry sources said last night. The move, expected to be confirmed when the Broadcasting Bill is debated in the Commons starting next week, will benefit leading commercial radio companies such as Capital, Emap and GWR, which have been campaigning for the change.

Under current rules, companies are limited to a single FM licence in each relevant region, in a bid to protect diversity and choice. But sources said the Government has been convinced of the need for liberalisation, particularly in highly competitive markets such as London and in very small regions, where separately owned licences are difficult to sustain.

The Radio Authority, which regulates the industry, has lobbied hard against the change. It insisted last night that the battle had not been lost, and the Government was still debating the issue. It argues that other promised liberalisation, including the eventual replacement of the total licence limit by a ceiling of 15 per cent across the industry, provided more than enough scope for growth.

A spokesman for the Department of National Heritage, which is sponsoring the Bill, said the issue was under review and no announcement has been made. But at least two large radio companies have been told the concession will be granted. The Government is now considering how best to implement the change.

An amendment will be difficult to draft because of the huge variation in the radio licence areas. London, the largest market, sustains 28 radio stations, and is considered in a separate category. Allowing two FM licences per company in the capital is believed to be acceptable to the Government. In other markets, the case is harder to make, particularly if diversity and choice are to be maintained.

Large broadcasters have tended to broadcast a contemporary hits service on FM and a "Gold" format on AM. Following a relaxation in the rules, these companies could seek a second FM licence to broadcast their Gold service.

There are very few FM licences still to be awarded by the Radio Authority. The last for London was advertised this year, and is expected to attract considerable interest, particularly once the one-licence limit is lifted.

Companies could also buy other licence holders, but would be forced to accept all the licence conditions originally agreed with the Authority. After eight years, licences are put up for auction once again, allowing new buyers to bid.

Many broadcasters are eager to migrate away from AM, which is dogged by poor reception, particularly in built-up areas. Said one senior radio executive: "You get to hear the courier's radio messages and then the sound is lost altogether when you go under a bridge."

Publicly quoted companies such as Emap and Capital could see their shares rise on news of further liberalisation.