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£10k annual licence for INRs

National radio stations Classic FM and talkSPORT will have to pay an annual fee of just £10,000 if they choose to renew their licences, following an Ofcom review.

The regulator says drops in advertising income, rises in digital listening and the future move away from analogue means they shouldn't charge as much for the licences.

The review of Absolute Radio's national analogue licence renewal arrangement is due to be completed by April, meanwhile.

If talkSPORT and Classic FM accept the new terms, their analogue licences will be renewed for a further seven years without the need for a competitive tender process.

The Global station is currently paying £50,000, plus 6 percent of its revenue from advertising and sponsorship, with UTV handing over £100,000 a year at the moment with no percentage of qualifying revenue (PQR).

Ofcom concluded that a hypothetical new entrant would not be prepared to make financial payments in return for the right to broadcast nationally on analogue for the period under consideration – so the current licence holders would likely be able to retain their licences in a hypothetical auction for a nominal amount.

"We have decided to set the financial terms at a nominal amount of £10,000 per annum for each of Classic FM and talkSport (with a nil PQR)," said Ofcom. "This is what we consider a reasonable view of the approach the incumbent licensees would take to making nominal bids, looking at nominal cash bids made by bidders and those set by Ofcom in (real and hypothetical) auctions for television licences."

Classic FM and talkSport have until 18 February 2011 to accept or reject the new financial terms. Acceptance of the terms is required in order for the licence renewal to come into effect. If accepted, Classic’s new financial terms (and licence renewal) would apply immediately, while talkSport’s terms and renewal would apply from 1 January 2012.

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