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Ofcom’s third annual report on the British community radio sector

November 20, 2010

Ofcom, the UK’s communications regulator, has just released their third annual report on the Community Radio sector.

The Brits passed enabling legislation for community radio in 2004 and the first station launched in 2005. Over two rounds of licensing, Ofcam has so far issued 228 licenses. 181 stations are currently on air, thanks in part to over 170,000 volunteer labor hours per month. That’s over 2 million per year. A third round of licensing is currently under consideration.

An embed of the full report is further down. Here are the passages from the executive summary, generally related to funding, that most interested me.

1.4 The legislation governing community radio sets out the characteristics of community radio services and defines social gain. Each station has a set of ‘key commitments’, which forms part of its licence and sets out how it will meet these characteristics and deliver social gain. It includes how a station will make itself accountable to its target community and ensure access, its programming aims and its commitments in respect of training and other social gain objectives.

1.5 The legislation also requires that Ofcom sets licence conditions limiting the amount of income that individual stations can generate from on-air advertising and sponsorship. For the majority of stations this limit is 50%, however, two stations have lower limits (25% and 10%) and a further 17 stations cannot take income from on-air advertising and sponsorship at all. These additional restrictions have been put in place to protect existing smaller commercial services whose coverage areas overlap with the community services.

1.9 In 2009/10 the average (mean) station’s income was around £74,500. The median figure, the mid-point in the distribution of station’s income, was considerably lower at £44,500. This is because a small number of stations are earning significantly more than the majority.

1.10 The total reported income of the four highest earning stations, each reporting over £250,000 income for the reporting period and earning a total of just over £1.6m, equates roughly to the total income of the 66 lowest income stations. If we exclude the four highest earning stations’ income then the average income drops to £62,000. The median figure remains relatively similar at £42,000.

1.11 Stations targeting a community of interest (rather than a geographic community) reported a higher income than the sector average. For example, services targeting minority ethnic communities had an average income of £80,000. Stations serving a general audience in an urban area reported a higher average income than town/rural stations (£83,000 as opposed to £56,500).

1.13 When compared to previous years, the proportion of income from specified sources to any significant extent appears similar. The most significant type of income for the sector is grant funding which accounts for 35% of the total. Income from on-air advertising or sponsorship accounted for around 22% of total income across the sector. Thirty stations (24% of those from which we had financial returns) had no income from advertising and sponsorship. Of these, 19 stations chose not to take this type of income as a matter of choice or policy. The remaining 11 stations were prohibited under their licence from doing so.

1.14 Public sources of funding accounted for 37% of the total sector income. Local authorities accounted for around 8% of the sector’s total income. 25% of income came from other public bodies such as the Arts Council, health providers, educational establishments and various national lottery award schemes.

1.15 The Community Radio Fund, which is administered by Ofcom on behalf of the Department for Culture, Media and Sport, accounted for £348,000 (around 4% of the sector’s total reported income). The Community Radio Fund continues to be the largest single source of income for the sector although a small number of individual funders made grants or entered into service level agreements (SLAs) – negotiated agreements between two parties where one is the customer (e.g. the local council) and the other is the service provider (the station) – of more than £100,000 in the year under review.

1.16 Community radio stations, on average, are spending roughly the same as their income. Stations cost, on average, around £74,500 to run. This has declined by 8% compared to the previous reporting period. The median expenditure for this reporting period has remained stable compared to the 2008/09 period.

1.17 The highest cost for community radio stations remains staff expenditure, which accounted for almost 50% of stations’ costs. Premises and technical costs, as in previous years, account for the next most significant outlay.

1.19 Community radio stations broadcast live for around 80 hours per week on average, and, in general, broadcast a further 10 hours per week of original pre-recorded material. On average around 31% of daytime output is speech and this can feature a wide range of local organisations and community initiatives.

1.20 Some stations focus on particular genres of music, while those serving a geographic audience generally broadcast more mainstream music during daytime programming, often moving to specialist output in the evening.

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