In the past 12 years, the IBA (Independent Broadcasting Authority) and now ICASA (the Independent Communications Authority of South Africa) have licensed nine new commercial radio stations (see box, page 31). In addition, many community radio stations, with no fewer than 20 in Gauteng alone, have been licensed.
In light of these developments, has ICASA met the expectations of the marketplace in relation to the licensing of more commercial radio stations, and in so doing has it succeeded in making it a more competitive environment? The skeptics among us will say “no”.
But I believe that to answer this question effectively, one has to look at the mandate of ICASA as it relates to the broadcasting environment. Two of ICASA’s key strategies are:
• To afford more choice to consumers; and
• To create more diversity in the broadcasting sector.
Regarding strategy number one, I would argue that ICASA has succeeded in affording consumers more choice, admitting, however, that more needs to be done in the area of format and genre choice.
On strategy number two, ICASA has failed to create the diversity in ownership and formats that one would have hoped for. Except in Gauteng, format and genre choices are severely restricted and one can only hope that it will be addressed in some way in the next round of commercial licensing scheduled for 2009. At the same time, radio stations are primarily still in the hands of the “big dogs” such as Primedia, Kagiso Media and AME.
As the custodian of broadcast licences, ICASA has to ensure that the market is healthy and sustainable. If the licensing of more radio stations could upset the apple-cart, does the regulator have the right to say “no”?
When deciding on the licensing of new commercial stations, ICASA applies some of the following criteria:
• current radio scenario, including formats;
• financial sustainability of current players;
• market share of current players – both listenership and advertising revenue; and
• the needs and wants of the community a new licensee is to service.
I too am a strong believer in the free market system – “let market forces decide”. But it has to happen in an orderly, structured, sustainable manner. And that is where I see the regulator playing a leading role; in ensuring that competition enters the marketplace in an orderly fashion so as to avoid a dog-eat-dog scenario.
The country can certainly sustain more commercial radio stations, and the huge profits being generated by stations such as 94.7 Highveld Stereo, Jacaranda 94.2, 94.5 Kfm and East Coast Radio, bear testimony to that.
In Australia, for example, a population of just over 21-million is served by approximately 260 commercial radio stations.
This certainly suggests that South Africa, with a population of around 48-million, should be able to accommodate several more commercial radio stations. For this to happen though, a traditional mindset needs to change.
We need to rid ourselves of the idea that to be a viable commercial entity, we must have a million listeners or more.
For example, for many years OFM has operated with a listenership of between 350,000 and 500,000 listeners.
Despite this, it is profitable and a jewel in the crown of its owners.
I strongly believe that instead of merely licensing more and more radio stations in the same markets, ICASA needs to re-look the broadcasting footprints of the current players.
Take 94.5 Kfm, for example: It is licensed to broadcast across and service the whole of the Western Cape.
This includes Mossel Bay, George and Knysna. However, it has actively positioned itself as a Cape Town radio station. Is it not time for ICASA to step in and re-define Kfm’s footprint, and in that way create an opportunity for either a new player or a willing player to enter the very lucrative Southern Cape market?
Or simply to license a new station in the Southern Cape to compete directly with Kfm?
ICASA has the unenviable task of balancing the needs of consumers with the wants of media owners. But it is only when the regulator, radio owners, managers, media planners and advertisers change their way of thinking, that I believe we can see a truly competitive radio environment in this country.
Lyndon Johnstone is a radio management consultant, focusing on empowering media managers to be effective in the workplace. Johnstone also implements policies and processes in the radio environment. Johnstone is a former managing director of OFM, and has 25 years’ experience in the print and electronic media environment. Contact him at LyndonJ@vodamail.co.za.
From 10 to 19…
The licensing of nine new commercial stations since 1996 has brought the total number of commercial radio stations to 19 (including the SABC’s three public-commercial entities, 5FM,
METRO FM and Good Hope FM). The nine are: Classic fM, YFM, Kaya FM 95.9, 567 Cape Talk, Heart 104.9 (formerly P4 Cape Town), Gagasi 99.5fm (formerly P4 Durban), Capricorn FM, North West FM and MPowerFM.
- This article first appeared in The Media magazine (December 2008).