Media: Stations waiting for a gravy train: Contenders are queuing up to make money from local radio frequencies, but Jim White wonders if listeners will benefit

YESTERDAY 48 fat brown envelopes landed in the in-tray of Lord Chalfont, chairman of the Independent Radio Authority. Over the next three months, his Lordship and a small team of researchers will become well versed with their contents as they decide which of the senders will be awarded what is potentially one of the most profitable media opportunities in Britain.

Up for grabs are eight commercial radio frequencies in London, the most populous local radio area in the country. Two former BBC AM frequencies have been allocated to the commercial network and the six frequencies occupied by Kiss FM, Jazz FM, Melody, Spectrum International and LBC (which has two: Newstalk on FM and Talkback on AM) are up for renewal.

'The percentage of listeners tuning in to commercial radio in London has rocketed from 27 to 54 per cent in the last four years,' explained Douglas McCarthur of the Radio Advertising Bureau. 'There is no doubt this is the media growth area. Get it right, and there is real money to be made.' To underline his point, Capital Radio made pounds 4.6m profit on pounds 16m turnover last year.

Get it wrong, however, and you can end up in the kind of financial plight that has dogged LBC, the station whose chairman is Dame Shirley Porter, former leader of Westminster Council. LBC's problem is that its appeal is generally thought to lie with the over-50s, taxi drivers and phone-in callers from Dagenham, which is not the most attractive of markets for advertisers. As the most vulnerable of the existing licence holders, it is likely to lose one of its frequencies. Charlie Cox, the station's managing director was clearly not convinced of his organisation's chances. He resigned five days before the bids were due.

Fortunately for those bidders hoping to fill LBC's wavelength, the radio franchise round is not as byzantine in its workings as that for television licences last year, which reduced Bruce Gyngell, chairman of TV-am, to tears. There will be no sordid financial auction extracting huge licence fees like those that have hamstrung new television operators such as Carlton. Instead each bid has been accompanied by a cheque for pounds 2,500 - an entrance fee which, in the fashion of election deposits, is there to deter time-wasters and loonies (the bid from a station called Radio Barking, incidentally, is as blue chip as any, and is backed by, among others, Angus Deayton.)

The bidders have also had to provide business plans indicating how they will keep their stations financially solvent for the eight-year period of the licence. Several, backed by wealthy media conglomerates - Emap, Reuter, Associated Newspapers - will have no problems meeting that stipulation as they scramble for a place on the dial. But Lord Chalfont, a free marketeer and historian of the Cold War, has another criterion on which to make his pick: will the new stations extend listener choice? His selection is not, as has been implied in the build-up, a straight one between two media doyennes, Joan Bakewell and Lynne Franks, and their bids aiming output predominantly at women.

'That is a typical male fantasy,' said Ms Bakewell, chairman of London AM, the consortium backed by the publishing group Emap. 'A sort of media mud wrestling. There is a lot more to it than that.'

Indeed. As well as the Bakewell and Franks consortia (the latter backed by the literary agent Debbie Owen), others hoping to impress Lord Chalfont include a Christian station backed by Cardinal Basil Hume, at least five rock outfits, three country and western teams, an all-sport station supported by Sebastian Coe, 13 ethnic operations, a couple of heavyweight news efforts, the comedy station Radio Barking, and one from London Transport giving details of its services, 24 hours a day.

And will choice be extended? Well, if you are between 30 and 45 and reasonably affluent, these people are after your ears, offering you everything from non-stop humour to non-stop sport, via non-stop adult rock and non-stop news.

'Ours will be the kind of station I want to listen to,' said John Lloyd, inventor of Spitting Image and Blackadder and the man behind Radio Barking. He is in his early forties.

'Ours will be the station for people like me,' said Sarah Greene, the television presenter and a director of London AM. She is in her mid-thirties.

'London Rock Radio has identified a huge number of people not presently served by radio - people like me,' said Paul Smith, whose adult music consortium is backed by Jasper Carrott and Time Out magazine. Mr Smith is 46.

'Those born between 1946 and 1964 are the most fertile area for new radio,' said Tim Schoonmaker of London AM. 'They have been ill-served up till now, they are media literate, used to making their own choices, and they are happy to set the agenda.'

They are also, and this is no coincidence, the kind of people advertisers want to reach. London AM has invested huge amounts researching this market, discovering its foibles and interests and tailoring its output to accommodate them.

'Obviously you don't let research design your product,' said Mr Schoonmaker. 'But we have got back a lot of stuff from research - little nuggets of thought - which have really shaped our thinking.'

If you are over 50 or under 18, the choice is less extensive, although John Lloyd maintains that his comedy channel is extending everyone's choice. 'Not everyone is interested in sport, not everyone is interested in women,' he said. 'But everyone wants a laugh.'

The problem for niche stations such as London Country Radio or Sunrise, the Asian operation which currently broadcasts in a limited area of west London, is that while they clearly offer a different kind of choice, they are less able to meet Lord Chalfont's other requirement of sustained commercial performance. They might well end up like LBC.

'Radio is a difficult medium for advertising agencies to plan and buy for,' explained Dominic Mills, editor of Campaign, the advertising trade magazine. 'Agencies are not really interested in being given 100,000 dedicated country and western fans. They are much more interested in big numbers. Those who can promise and deliver a big audience, such as Capital, are the ones that will prosper.'

And so, although some bids have come up with ingenious ways around a potential shortfall of advertising revenue (London Christian Radio will appeal to the committed for subscriptions, London Arab Radio is backed by Gulf potentates), the likely outcome is that the big conglomerates will win, and start broadcasting next April. Which is an interesting interpretation of expanding choice.

(Photograph omitted)