The ABA has resisted pressure to delay the next round of commercial FM licence auctions and will begin with the auction of a new Adelaide frequency shortly.
The decision is a victory for DMG radio, which will be a keen bidder for the new licences around the country. It is a defeat for established networks Austereo and ARN, which were lobbying for a delay, saying that economic circumstances have changed since the first licence area plans were issued.
New licences are available in Adelaide, Sydney, Brisbane and Melbourne and are scheduled for auction within the next 12 months.
The ABA board was “not persuaded that there has been such a significant change in market conditions… that it should consider deferral of the licences.”
The ABA says it’s decision will “result in a greater choice for radio listeners in the four cities.”
The ABA is satisfied that the overall trend in capital city FM revenue has remained positive since the determination of the relevant licence area plans. “This has occurred against a backdrop of sustained growth in each of the relevant State economies and the national economy. The ABA notes that growth in the national economy is projected to continue at around three per cent over the next couple of years.”
The ABA’s decision follows consideration of submissions on whether to consider varying the licence area plans and defer allocation of further commercial radio licences.
The ABA received seven submissions in relation to deferring the availability of spectrum for further commercial radio licences in the four markets. The submissions were from:
Austereo Group Limited (Austereo),
APN News & Media Limited (APN),
DMG Radio (Australia) Pty Ltd (DMG),
Star Broadcasting Network Pty Ltd,
Clemenger Communications Ltd,
Mr Phil Dobbie
and Mr Brian Chew.
Austereo and APN argued that there has been “a severe change in economic conditions and no improvement in program diversity since the determination of the relevant licence area plans and opposed the allocation of the licences.” Austereo recommended a minimum two-year deferral and APN recommended deferral in favour of an industry review.
DMG argued that “radio revenue markets have grown and there has been an increase in program diversity since the release of the licence area plans.” DMG supported the allocation of the licences in accordance with the timing announced when the licence area plans were determined.
Clemenger Communications Ltd supported the deferral of licence allocations in the four markets and Star Broadcasting Network Pty Ltd supported the deferral of the licence allocation in the Brisbane market. Mr Dobbie supported all of the planned allocations and Mr Chew supported the planned allocation of the licence in the Brisbane market.
The crucial question to be resolved for each market was whether circumstances in the market (or similar markets) had changed in some significant way since the release of the licence area plans such that proceeding with the allocation now would fail to promote the objects of the Act and the economic and efficient use of spectrum. The ABA made its decision after focusing on this question.
The ABA examined trends in the relevant State economies and in commercial FM radio revenue and found that the overall trend in capital city FM revenue, as measured by the ABA’s Broadcasting Financial Results (BFR), has remained positive since the determination of the relevant licence area plans.
Revenue levels did fall in 2000-01 and 2001-02, but this fall was off an increase in 1999-2000 that was above the long-term trend rate. Data from the Commercial Economic Advisory Service of Australia (CEASA) provides evidence of a recovery in advertising levels since 2001-02.
The commercial radio industry’s share of advertising expenditure has been a constant 8 per cent between 1993 and 2002. In real terms, radio advertising grew at an average 2.6 per cent per annum.
The ABA’s analysis suggests that the State economies, as measured by gross state product, have continued to grow since the determination of the relevant licence area plans. Analysis of the BFR shows that FM revenue in all capital cities has also grown over this period. This has occurred against a backdrop of sustained growth in the Australian economy, which is projected to continue at around 3 per cent over the next couple of years, so the ABA concluded there had not been significant change in the circumstances of any of the relevant markets, therefore requiring no change to the planned auction schedule.