Myers review into Manx Radio John Myers A REVIEW INTO MANX RADIO, COMMISSIONED BY THE SELECT COMMITTEE OF TYNWALD ON PUBLIC SERVICE BROADCASTING. AUGUST 2013 Myers Review – Manx Radio August 2013 Preface In May 2013, I was commissioned by the Select Committee of Tynwald on Public Broadcasting to undertake a review of Manx Radio. The request followed a debate, on the level of funding required to deliver the radio station’s Public Service obligations. This annual subsidy (subvention) is negotiated on a regular basis. Over the past four years, the level of subvention has reduced from circa £978,000 to the present figure of £850,000. Management at Manx Radio feel strongly that this level of funding is the minimum required to deliver its remit. As part of the process, the Select Committee felt an independent review from an experienced radio executive would be beneficial. My brief was: • Examine the working practices of Manx Radio, and provide a view as to its efficiency regarding cost verses output. • Examine the structure of the organisation and its relevance in 2013. • Consider the output of Manx Radio against its public service remit and comment or make recommendations, where appropriate, that might improve the service overall. • Provide feedback on ‘The Berry Proposal’ that is currently being considered as part of the wider review of broadcasting on the island. My fieldwork on this project was conducted between Monday 22nd to Friday 26th July 2013. In addition, a great deal of time was spent prior to my visit on desk research and reading through a large number of papers provided by both the Committee and Manx Radio. As part of the process, I also spoke to a number of media executives including Ron Berry and Juan Turner from 3FM and Energy FM respectively. This report is not intended to be a detailed analysis of the station, but instead, it is a helicopter view of its operations and its structure. My comments and recommendations are based on my long experience within the industry and a fundamental understanding of running local radio stations within a restricted cost structure. I have 2 Myers Review – Manx Radio August 2013 no working or private arrangements with any broadcaster or individual connected with this project. Everyone I met, without exception, welcomed my involvement on this project, and I was given all the access required in order for me to conduct my review swiftly and without pressure or favour. 3 Myers Review – Manx Radio August 2013 Introduction: 1. The population on the Isle of Man is approximately 84,500 with an adult 15+ figure of 71,500. The island, rather surprisingly considering it’s size, is served by no less than three commercial radio stations, namely Manx Radio, 3FM and Energy FM. On purely audience levels alone, Manx Radio is one of just a few successful radio stations enjoying over 50% reach within the UK and Crown Dependencies, winning numerous awards for the quality of its output. 2. Economic growth in the Isle of Man has slowed over recent years, and this, alongside a limited level of available audience, means that profitability for any of the three stations on the island is a challenge, something Manx Radio itself is not designed to be. It is expected to be cost neutral, delivering a public service remit that other stations would find difficult to provide as a sustained service. Nevertheless, and quite rightly, questions are being asked if the station is doing all it can to mitigate its underlying costs, especially as public funds are being provided. 3. Manx Radio receives an annual subsidy from the Manx Government, to broadcast a range of programmes alongside a significant local news service that sits within the widely accepted description of a Public Service Broadcaster (PSB). Running such a service, which relies on content rather than music, is expensive and therefore the station also accepts commercial advertising, a unique model which does not exist in the UK. Nevertheless, it is a successful one and without this combined source of revenue, the government would have to either double its annual subvention or remove the stations commitment to extensive content and news. Neither is a good option. 4. There are a number of touch points where the station receives Government financial support including a programming subsidy of £850,000 and transmission costs of £86,700. In addition, the station is provided with rent- free accommodation on perhaps one of the most sought after locations on the island, although the running costs are included within their P&L. This is clearly a major benefit as even a cursory review of the market suggests this building could be rented out at circa £150,000 per annum. Furthermore, Manx Radio receives an extra £30,000 to broadcast the annual Manx Radio TT and the station is carrying an overdraft of some £130,000. Collectively, therefore the real cost to the taxpayer for Manx Radio amounts to: 4 Myers Review – Manx Radio August 2013 * Subvention 850,000 * Rent free accommodation 150,000 * Transmission costs 86,700 * Manx Radio TT 30,000 Total: £1,116,700 • This does not take into account recent capital investments to improve its building and facilities. 5. While noting the various levels of financial support, my task was to explore if the present output could be maintained for the current level of programming subvention. 6. The level of subvention is not set in stone and this, together with the nature of any commercial income, dictates that planning long term can be difficult. The pressure on commercial income increased, after the government licenced two new radio services a decade ago, namely 3FM and Energy FM. Even though the number of stations on the island trebled overnight, the commercial radio revenue ‘cake’ did not. This competition in the market and pressure on revenues meant Manx Radio has had to change its cost base. While it was reported that staff numbers decreased, the reality is personnel simply moved from a staff position to a freelance role with very little change to the overall number. A classic case of smoke and mirrors! However, it has not been totally without merit. The move in this direction has delivered real cost savings through a reduction in National Insurance and staff pension payments for example, and, as freelancers are generally on a fixed term contact, the company has certainty of costs. Having said that, it should be pointed out freelancers must be properly and legally contracted to ensure the company has the appropriate protection. While the IoM tax authorities are independent of the UK, it is worth noting that the UK has taken a much tougher stance on this area over recent years. The shareholder and the Radio board may want to satisfy itself on this particular point because if the main source of income for a freelancer comes from their duties at Manx Radio, it could be argued that the individual is not a freelancer at all, and instead they are an ‘employee’ of Manx Radio. If this is successfully argued, the company may have a significant 5 Myers Review – Manx Radio August 2013 liability on National Insurance payments alone. In addition, free-lancers may be able to claim staff status and the associated protection this provides. 7. Public service broadcasting, however, is not cheap. Speech is particularly expensive with news content even more so, but this is the raison d’etre of Manx Radio and without such a commitment, there is little difference between it and the other two commercial services. It is therefore essential that most of the public funding the station receives is focused in this direction. 8. Such is the success of Manx Radio, they are widely regarded as the nation’s station, especially when news or a big local story of interest breaks. You do not have to listen to the service every week to appreciate its value, but it’s important that when islanders choose to listen, they do not hear a watered down commitment to the public service remit it is committed to provide. 9. In audience terms alone, few can argue that Manx Radio is not a popular service. Indeed it is worth highlighting that the figures are not just good, they are exceptional. The very latest official audience data, published just last month, indicate 54% of the islands population tune in at some point every week. However, it is the monthly listening figures that are particularly impressive. When this is taken into account, over 74% of the population tune in (more than seven out of ten). 10. Critiquing Manx Radio may therefore appear churlish at the extreme, but there are many instances where successful stations drift into complacency, especially when a financial comfort blanket is provided. The result is that costs are not driven down, and management are convinced of the necessity for a cumbersome and expensive structure. Furthermore, technology has changed radio stations forever across the world, and savings in this area can be productive and effective. 11. While licencing three radio stations in such a small market might be seen to be a reckless act by any regulator, surprisingly, it seems to have worked to the benefit of all. The government has managed to broaden listener choice, while contributing financially to just one. While 3FM and Energy FM might struggle over time, as long as they continue to broadcast, they deliver an enviable choice on the dial compared to similar markets elsewhere. 6 Myers Review – Manx Radio August 2013 12. The phrase ‘it’s different here’, is often voiced by management of companies worldwide, in an attempt to explain away many of their issues, when there is often no difference between one company and another in reality.