BBC’s Radio 2 Extension Stream Impacts Fair Competition: Ofcom

Undated photo showing a logo of Ofcom, the UK's broadcast and communications regulator. Yui Mok/PA

The launch of an online only music service, catering to older listeners, on the BBC Sounds app could have a significant adverse impact on competition, the UK media regulator has found.

Ofcom has directed the BBC to stop carrying out the proposed Radio 2 extension changes.

The three new music streams, proposed by the broadcaster, include BBC Sounds only Radio 1, Radio 2, and Radio 3 extensions.

After reviewing the proposals, Ofcom said on Tuesday that the launch of one of them constitutes a “material change” to the BBC’s output.

“We have concluded that the planned launch of the Radio 2 extension stream on BBC Sounds may have a significant adverse impact on fair and effective competition. As such, we consider it does represent a material change,” the review said.

The Radio 2 stream targets listeners aged 55+ who are seeking “a more comprehensive nostalgic experience.”

Ofcom said that its launch may have an a significant impact on independent radio stations, such as Boom Radio.

Boom Radio also serves older listeners (baby boomers) and offers a mix of nostalgic and newer music.

An overlap with the target demographic of the Radio 2 extension means that Boom Radio could lose a high percentage of its listeners, if BBC was to carry on with the launch.

The BBC’s own assessment found that the effect on competitors would be limited, given the low proportion of listening hours each competitor would lose.

However, Ofcom said that the impact would be different for independent stations and larger commercial groups.

The two largest commercial radio groups in the UK are Global and Bauer Media. They own a portfolio of stations and together they account for 45 percent of all radio listening time and 83 percent of all commercial radio listening.

Ofcom noted that Boom Radio would be less able to mitigate the potential impact of the Radio 2 extension stream and the station’s ability to invest in new content would be reduced.

“Independent stations may be less inclined to invest and enter into a new area if they believe that they would be adversely affected by the BBC launching a similar offer at a later point in time,” said the review.

Where Ofcom disagrees with the BBC’s assessment then a public interest test (PIT) is required. After the regulator receives the BBC’s PIT, it plans to carry out a competition assessment within six months.

This will determine whether the BBC my proceed with the proposed changes.

Accountability

The CEO of the industry body for UK commercial radio, Radiocentre, Matt Payton, called the Ofcom’s decision “an encouraging first step.”

“This decision represents a significant shift by Ofcom, as it is the first time that it has accepted that an online-only BBC radio service could have a material impact on competition. This stands to reason considering the rapid growth in online radio listening and the importance of online revenues,” Mr. Payton said.

He said that Radiocentre also wants to see the new government focus on BBC accountability and market impact.

Elsewhere in Ofcom’s review, the regulator greenlighted the proposed Radio 1 and Radio 3 extension streams on BBC Sounds, as well as changes to the existing Radio 1 Dance stream.

The Radio 1 extension focusses on younger audiences aged 15-34 and offers a broad mix of hits from the 2000s and 2010s.

The Radio 3 extension will provide a “calming and relaxing classical music experience.”

Ofcom said that taken together the two streams are unlikely to have a “significant adverse impact on fair and effective competition.” These extensions will result in the loss of listening across the commercial groups of less than 1 percent, the regulator said, adding: “As such, it is our view that the Radio 1 and 3 extension streams together do not constitute a material change.”

The Epoch Times has contacted the BBC for a comment but hasn’t received a response at the time of publication.