Bidders set to change the face of DAB

C4 and other major names in the TMT industry will apply for the second digital multiplex but, whatever the outcome, it will have ramifications outside of radio. Caitlin Fitzsimmons reports.

Applications for the second digital radio multiplex will not open for several months, but behind the scenes, the courting and wooing of potential bid partners is already taking place.

So far, only Channel 4 has declared itself in the running, while other likely bidders are playing their cards closer to their chest. C4 upped the ante last week, announcing a "strategic partnership" with Universal Music. The record label behind acts such as U2 and Keane will not provide a branded radio station on the multiplex, but "will help identify opportunities for music exploitation on digital platforms, new radio and music formats, cross-promotion and content exploitation."

C4 is also believed to be in talks with BSkyB about a bid partnership. The satellite TV broadcaster is keen to diversify into new digital platforms and may be interested in using the spectrum for mobile TV services.

So far, C4 has been unsuccessful in its overtures to radio companies to join its bid and there is talk of a rival bid from a consortium of these companies who may fear C4's potential dominance of the multiplex.

Currently, the only radio stations with a national DAB licence are four GCap stations - Classic FM, Planet Rock, Capital Life and Core - plus Virgin Radio, UTV's TalkSport and Oneword, in which C4 is a majority shareholder.

Strategic considerations

GMG Radio has ruled out a bid either individually or in a consortium, with chief executive John Meyers saying the company had decided it had enough digital capacity to meet its needs. Phil Riley, chief executive of Chrysalis, says his company is "still thinking about it" and will make the decision based on long-term strategic reasons.

GCap, majority shareholder in the existing multiplex, Digital One, has dropped its opposition to the creation of a second, after Ofcom ruled the intention was to provide complementary services to Digital One and that GCap would be entitled to bid.

Whatever the shape of the eventual bids and counter-bids, one thing is clear: it is not just about radio. The fact that BT Movio now has 20% - soon to be 30% - of the Digital One multiplex for wholesale mobile television and radio services, provides a precedent for a similar carve-up on the new multiplex.

Some radio companies accuse C4 of not being serious about radio and that its interest in the multiplex lies in the opportunity to launch mobile and other digital spin-offs to its TV programming. These suspicions were aroused when, three weeks ago, it announced its first "radio" initiatives, which effectively amount to podcasts of shows such as Richard & Judy and Big Brother.

Yet C4 is firm about its commitment to radio. "We're bringing our risk-taking, public-service approach to the radio sector," insists Nathalie Schwarz, director of radio at C4 and a former strategy development director on the board at Capital Radio.

Schwarz says the beauty of DAB is its potential to be ubiquitous, from the radio in the kitchen or the car, to a mobile phone. She acknowledges that C4 is considering possible mobile applications of the spectrum in addition to its radio plans.

The truth is that in an era of convergence and renewed excitement about digital media, mobile services are likely to form a part of all the bids, not just the one led by C4. Insiders at radio stations admit this privately.

Foreign bids

If BT believes in its business model for BT Movio on Digital One, it is likely to have other ideas about what it could do with additional spectrum. Equally, rivals such as Vodafone are unlikely to want to sit back and let BT be the only telco with DAB capacity. Meanwhile, there are rumours of foreign bids from the likes of Clear Channel and Viacom.

If radio is to prevent a carve-up of digital spectrum by telcos and TV broadcasters, it needs to invest in its future. The sector has been widely criticised for failing to invest in digital radio. Many of the stations on DAB are merely unmanned radio jukeboxes, with computer-generated playlists of music and news bulletins.

The situation is not lost on Schwarz. "There needs to be some people willing to invest in quality content, great programming and strong marketing." She adds: "That's how Sky built its platform, how Freeview got off the ground and DAB needs that impetus and energy."

OFCOM's GUIDELINES

- Ofcom is expected to publish its final guidelines on applications for the new digital radio multiplex next month. The Broadcasting Act stipulates that at least 80% of the spectrum should be used for radio as opposed to data services - but the DCMS is considering lowering this to 70%. This applies to Digital One and the new multiplex.

Ofcom's original proposals published at the end of last year said it would:

- Focus on population rather than geographical coverage, but that this would not be measured by numbers alone

- Consider how the proposed line-up of services would appeal to tastes and interests, distinct from those catered to on the existing multiplex

- Consider how the award of the licence would promote digital sound broadcasting in the UK, including factors such as coverage area, launch timetable and programming appeal

- Expect applicants to at least match the original commitments on coverage and timing made by Digital One for the first multiplex, although it was not empowered to specify minimum coverage

- When judging how distinct the proposed services are, Ofcom indicated it could take into account digital radio stations with quasi-national coverage through a patchwork of local DAB licences.

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