Ofcom has issued revised prices for all three national commercial analogue radio licences, which will come into effect when when the licence periods are extended over the next few years.
The troubled state of the radio advertising market has revealed a silver lining for the operators, convincing Ofcom to reduce the cost burden on analogue broadcasters. The second factor in Ofcom's thinking was the growth of digital radio platforms, which have made TalkSport and Virgin Radio's AM platforms in particular less attractive and resulted in increased competition for ad revenue.
Classic FM will be the first to benefit as its current licence period runs out in October 2007. Like the other two stations, it can then apply for a four-year extension.
It currently pays £1.161m plus 14% of national advertising and sponsorship revenue, but the new terms slash that to £50,000 plus 6% of national advertising and sponsorship revenue.
Ralph Bernard, GCap's chief executive, said: "The team here at GCap have worked hard making the case for these revised terms and I am pleased with today's result."
Scottish Media Group-owned Virgin Radio's current licence runs out in April 2008. It currently pays £1.125m plus 12% of national advertising and sponsorship revenue, which will change to a flat £100,000 fee.
SMG said it wanted to discuss the possibility of Ofcom applying these terms at an earlier date. It said the reduction would save it around £2m per year.
UTV-owned TalkSport's current licence runs out at the end of 2008. It pays £563,000 and 6% of national advertising and sponsorship revenue, which will also change to a £100,000 flat fee.
The operators have until August 4 to tell Ofcom that they wish to accept the terms.
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