---Apologies for cross-posting---

Source:
http://www.ofcom.org.uk/radio/ifi/rbl/commun_radio/cr_annualrpt0809/

Full report available at
http://www.ofcom.org.uk/radio/ifi/rbl/commun_radio/cr_annualrpt0809/cr_annualrpt0809.pdf


Community Radio: Annual Report on the Sector 2008/2009
Executive Summary

1.1 Community radio stations are a new type of not-for-profit radio 
service, designed to operate on a small-scale and to deliver community 
benefits (‘social gain’) to one or more communities. The legislation to 
enable community radio services to be licensed was introduced in 2004, 
and the first station launched in November 2005. This is Ofcom’s second 
annual report on the sector.

1.2 Ofcom has now licensed 214 stations over two rounds of licensing. 
159 of these are broadcasting, 12 have either decided not to launch or 
have handed their licence back and the remainder are preparing to start 
broadcasting. The second round of licensing is ongoing - Ofcom is 
currently considering 13 applications from groups based in the southeast 
of England (excluding London and other areas within the M25) and a 
further 31 applications from groups based in London or other areas 
within the M25 motorway.

1.3 Community radio serves a wide range of communities; the majority 
serve a general audience in either an urban area (17%) or a town / rural 
area (44%). However, many others serve smaller communities of interest 
including those aimed at minority ethnic groups (14%), young people (9%) 
and religious groups (7%). 170 of the stations awarded a licence are in 
England, 14 in Northern Ireland, 20 in Scotland and 10 in Wales.

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 details how the station will meet these characteristics and 
deliver social gain, including for example, its core aims and 
commitments in respect of training, access and accountability.

1.5 The legislation also provides for Ofcom to set licence conditions 
that limit the amount of income that can be generated from on-air 
advertising and sponsorship. For most stations this limit is 50%; 
however, two stations have a lower limit (25% and 10%) and a further 18 
stations are not allowed to receive any income of this type. The 
additional restrictions are in order to protect smaller commercial 
services with whose coverage areas the community services overlap.

1.6 Every station that has been broadcasting for more than a year is 
required to complete an annual report; this report details how a station 
has performed against its key commitments and also identifies its 
sources of income and expenditure, in part to ensure that the station 
has met the legislative requirements on funding. For the period April 
2008-March 2009 Ofcom received reports from 99 stations (92% of those 
required to complete a return). Seven reports are outstanding in full or 
part (stations that launched during this period or later are not 
included in this report).

1.7 The average station’s income in 2008/09 was around £79,000, although 
the median figure (the mid-point in the distribution of stations’ 
incomes) is significantly lower at £50,000, suggesting a small number of 
stations earn significantly more than the majority. (The reported income 
of the four highest income stations is as large as the 50 lowest income 
stations combined, at around £1.4 million. If we exclude these four 
stations the average income drops to around £67,000, with no significant 
change in the median.) Stations serving particular communities reported 
a higher income then the sector average - those serving general 
audiences in urban areas (an average income of £92,000) and those 
serving minority ethnic communities (an average income of £106,000).

1.8 The average income is down by around 20% on the previous year’s 
reported figures (the average for 2007-2008 was £101,000) and similarly, 
the median income is also down by around 20%. The relative contribution 
of different types of income does not appear to have changed 
substantially in comparison with the previous year. Although we cannot 
be certain as to the reason for the drop in reported average incomes, 
the indications are that the recession has had an impact and community 
radio stations themselves often reported that they believed the 
recession was a major factor impacting not just on advertising but also 
grant income.

1.9 The most significant type of income for the sector is grant funding, 
which accounts for around 41% of the total. Income from on-air 
advertising or sponsorship is the next most important, accounting for 
around 23% of the total (23% of stations in this year’s report did not 
seek income from advertising or sponsorship at all either because (1) 
they choose not to (16 stations) or (2) because they were prohibited 
under their licence from doing so (seven stations)).

1.10 Public sources of funding – usually in the form of grants - account 
for around 43% of the sector’s total income. Local authorities are a 
major source of public funding, accounting for around 17% of the 
sector’s total income whilst the Community Radio Fund, administered by 
Ofcom on behalf of the Department for Media, Culture and Sport, accounts 
for around 4% of the sector’s total income. The Community Radio Fund 
remains the individual largest single source of income for the sector 
although we are aware of a number of other grants in excess of £100,000 
that have been paid to individual stations.

1.11 Community radio stations are, on average, spending a little more 
than their income – on average stations cost £81,000 to run. The major 
item of expenditure is staff at around 52%; premises and technical costs 
are the next most significant items at around 10% each. The sector 
average is a deficit of just under £3,000, but this disguises a wide 
range from surpluses of £83,000 down to a deficit of £133,000. 40% of 
all community stations which have returned annual reports were in 
deficit and 23% of stations had deficits in excess of £10,000. In 
general, large deficits are being funded by parent organisations whilst 
any surpluses are invested in the operation of the service.

1.12 Community radio stations broadcast live on average for around 77 
hours a week, and typically broadcast a further 10 hours per week of 
original pre-recorded material. On average, around 32% of stations’ 
daytime output is speech, featuring a diverse range of local 
organisations and community members. Music output is similarly broad: 
some stations focus on particular genres that are not commonly heard on 
the radio whilst others take a more mainstream approach during the 
daytime but then branch out into specialist genres in the evening.

1.13 The average station has around 75 volunteers – although again there 
is a wide variation, from 1 to 287 – who together give around 222 hours 
a week of their time in total. There are now some 159 stations 
broadcasting and Ofcom therefore estimates that volunteers contribute 
nearly 150,000 hours a month to community radio.

1.14 Ofcom is addressing a number of regulatory issues following receipt 
(or non-receipt) of individual reports. Ofcom is seeking further 
information from three stations with respect to the statutory 50% limit 
on the amount of income that is received from on-air advertising and 
sponsorship, seven stations have not yet returned their reports in full 
or part to Ofcom, which is a potential breach of a station’s licence, 
and Ofcom has written to one station with respect to its ‘key 
commitments’ where Ofcom considers that the station has not provided 
enough information to allow Ofcom to assess whether it is meeting its 
commitments. If we are not satisfied with the steps taken by stations 
then we may consider regulatory action.