Bidder offers pounds 3.8m for radio franchise: Six contenders for speech-based service

TALK RADIO UK, which hopes to launch a 24-hour mass-market national talk station for 25- to 45-year-olds next year, yesterday made the highest bid, of pounds 3.82m a year, for the licence to run a third commercial station beside Classic FM and Virgin 1215.

The bid, for medium-wave frequencies previously used by BBC Radio 1, astonished rivals. It beat by a huge margin the bids of five other contestants, including Newstalk UK, backed by Associated Newspapers ( pounds 2.75m), Apollo Radio, backed by Chiltern Radio ( pounds 2.27m) and LBC, the news and talk station (2m), which loses its London franchise next October.

The bids, submitted to the Radio Authority, will be assessed for financial viability, before the award is made in June. Neither of the two previous national franchises went to the highest bidder. On top of the cash bid, which goes to the Treasury, the licence holder must pay an annual fee of pounds 400,000 to the Radio Authority and a 4 per cent levy on income to the Treasury.

The difference this time is that radio advertising is booming - it grew by 27 per cent last year to pounds 180m - and is pushing up its market-share by attracting national advertisers. After being stuck at a 2 per cent market share during the Eighties, radio is projected to take a 5 per cent share in 1995.

The BBC is starting its own news and sports station, Radio 5 Live, on March 28, targeting roughly the same youthful, largely male audience.

Christopher Turner, finance director of Talk Radio, said the proposed station would appeal to social groups C2DE, skilled and unskilled working-class people. 'Think of a cab driver in London talking to a cabbie on Merseyside,' he said. 'That would be interesting.'

Goodbye Radio 5, page 24