BBCLicence Fee deal may put smaller radio stations at risk

by Amanda Lennon, Media Week 28-Feb-06

The BBC Licence Fee settlement could put 9,000 jobs and £1.1bn of economic value at risk in the commercial radio market, warns a study commissioned by the Commercial Radio Companies Association.

The BBC is proposing a 2.3% per year increase in the Licence Fee, 17% of
which is spent on radio. Five more BBC local radio stations are planned.
The CRCA says smaller, local, commercial radio stations will feel the

impact, with many ceasing to broadcast over the next 10 to 15 years.

Paul Brown, chief executive of the CRCA, said the smaller operations
outside big cities were most at risk if the BBC is allowed to expand. He
said the BBC could waste millions of pounds when there is no need for
additional publicly-funded radio stations. Brown added: "These services
are already provided by the commercial radio sector."

He pointed out that, although the market is protected from private
sector dominance, with only two private players allowed in each area,
there is no constraint on the BBC.

Phil Riley, chief executive of Chrysalis Radio, said: "This distortion
from a state-funded player must be checked."

The research is being released ahead of the Government White Paper -
expected in early March - on the renewal of the BBC's Royal Charter.
There will be a consultation process involving the commercial sector on
the appropriate level of Licence Fee increase.