C4 multiplex could face two-year delay

by Emma Barnett, Media Week 29-Apr-08, 07:30

LONDON - The second national digital radio multiplex might be mothballed for as long as two years, as its owner 4Digital Group looks at options that could lead to its stations launching on Digital One instead.

It is understood that 4Digital chairman Nathalie Schwarz is trying to negotiate a deal directly with Global Radio chief executive Ashley Tabor that would involve the owners of the two digital radio multiplexes taking equity stakes in each other's businesses, with all DAB stations being housed for the foreseeable future on Digital One under one central management.

It is believed that Tabor has been granted permission to conduct the negotiations by GCap Media, even though Global's acquisition of GCap, which owns a 63% stake in Digital One, has yet to be ratified.

Without a share-swap deal, Schwarz may be forced to launch the stations on Digital One without having any stake in the platform.

This would likely tie the stations into two-year contracts on that multiplex and would leave 4Radio bereft of a landlord's income from leasing out digital capacity, leaving its business plan in tatters.

A source close to Digital One said: "Channel 4 is wobbling like mad at board level over the launch of this multiplex.

"It is entirely logical to launch its radio services onto Digital One, but it wouldn't be a short-term deal, as Digital One's licence comes up in 2011 and it would want to secure a full platform for as long as possible."

Channel 4 chairman Luke Johnson told Media Week: "Our platform is in a state of flux at the moment. Therefore, we are open to possibilities that might improve our offering and help our economics."

4Digital has convened its first board meeting since February for tomorrow (Wednesday) to update shareholders on the talks with Global and the options for launch.

Another possibility could involve reconfiguring capacity on local digital multiplexes for use by 4Digital's stations.

Talks on this have been held in the presence of media regulator Ofcom, which is believed to be amenable to the idea of delaying the launch of the second multiplex until economic conditions and demand for capacity improves.

A source close to the discussions said: "No one wants to start waving contracts around and forcing companies to do things by due dates just because those were the original deadlines - especially if there is a better way forward."