Community Radio in the Red

Community Radios are getting poorer as Ofcom report a 19% drop in their average incomes.

The latest statistics come from the broadcasting regulator’s latest annual report on the community radio sector.

Ofcom’s report for the previous year (2009/10) showed a 6% drop in average incomes, so these recent statistics show a significant drop in the financial health the of community radio sector.

But it is also important to take into account the expenditure of these stations. Whilst the income is dropping, the average expenditure is also dropping. Community stations are spending 13% less than last year but despite this, the deficit for the sector has grown since last year, as you will see from the graph below.

As you can see, the average community station has been spending more money than they have coming in for many years now- almost as long as Ofcom have been doing annual reports on the sector. But the graph shows that despite cutting expenditures, stations cannot seem to close the financial gap.

But what effect is this having on the morale of individual stations? For some, these financial difficulties have meant that they’ve cited simply keeping the station alive as their biggest achievement all year! Bristol Community FM said, “The best achievement this year was survival. It has been almost impossible to get any money in to run the station”. Chorley FM in Lancashire said the force of the economic downturn was really noticeable. For them, “The continuing survival of the station should not be underestimated as a major achievement.”

But despite the financial troubles community radio is having, it has not restricted the number of licences being granted by Ofcom, or the number of stations broadcasting. Each year there has been a steady increase, as you’ll see below. However, at the same time the number of licences returned each year is also on the rise.

In the case of this graph, the number of stations broadcasting is a cumulative total adding onto previous years. Taking into account that the number of stations broadcasting is going up in spite of the number of returned licences also increasing, it could be seen as a sign that the sector is experiencing growth: Even with more stations buckling under the pressure, more are finding their feet! However, there is more data to consider in light of this situation. If we break down the figures for ‘number of stations broadcasting’ in above graph and look at the number of new stations broadcasting that weren’t the previous year, we can see a less healthy picture.

According to this data analysis, over the last 3-4 years the gap between new community radio stations launching and the number giving up their ability to broadcast is closing and the 2010/11 data shows a cross-over: there were more stations who returned their license than began broadcasting. This could suggest that the financial conditions which were highlighted earlier in the article are starting to have an effect on the sustainability of community radio across the UK.

In the latest Ofcom annual report, they state that stations may hand back their licence if they decide not to launch in the first place, or, “have handed their licence back, largely due to funding problems.”  The most recent ones to announce their closures include Diversity FM, Rossendale Radio and Cheshire FM. Rossendale Radio said that they closed because the station was no longer viable. It said it had “experienced financial difficulties for the past 18 months. Despite the best efforts of a number of individuals and organisations to resolve the issues, it has been made clear that the problems are insurmountable”

But the sector isn’t just sitting back – It’s thinking about possible reasons for these difficulties and potential solutions. One possibility lies in RAJAR figures (or an equivalent way of measuring audience numbers) for the community radio sector. In their annual reports this year, a few stations suggested that not having a means of audience analysis could be contributing to the battle the sector is facing. Radio Cardiff said that an ongoing difficulty was “the lack RAJAR statistics which prevents some companies from advertising with us, due to company policy”. Hope FM in Bournemouth made similar comment but with reference to how this lack of RAJAR statistics could improve the outlook for community radio: “A challenge that we believe Ofcom and Government needs to face up to is how to implement RAJAR-type research on behalf of community radio that will help sustain the commercially- funded side of our income streams, by providing realistic proof of listenership.”

This suggestion could raise the question of whether the lines between community and commercial radio could become too blurred. Of course there are other forms of funding such as the Community Radio Fund  (UPDATE 27th April- see Community RA+Edio’s new article on this!), however with trends going the way these statistics suggest, commercial revenue could form part of the solution for commuity stations struggling to survive.

So where could the sector be this time next year?

One of the possible key difficulties is that by this time next year Ofcom won’t be compiling a statistical analysis of the community radio sector. The most recent report says that Ofcom consider sector “relatively mature” and as a consequence they won’t be publishing another annual report. Perhaps the worry now is, rather than what difficulties is the sector having, but how will we know how much trouble it is in! However, what we can hope to see is a closing of the gap between expenditure and income (ideally with income outperforming expenditure), and less stations having to give up their licence to broadcast through financial difficulty and therefore a more sustainable community radio sector.

In this article, we highlighted the possibility that a RAJAR equivalent system to measure listenership is something some stations feel is lacking. What do you think? Do you think having these figures would be a big step in the right direction for community radio? Let us know what you think

Click here to read the source of this data from Ofcom’s report on Community Radio.

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