Ever-changing legislation, rapidly developing technology and untapped advertising markets mean the radio industry’s need for legal input can only increase, writes Lucy Trevelyan

Video killed the radio star… So sang The Buggles back in the late 1970s. How wrong they were. Video didn’t kill radio; nor did TV, DVD, the Internet or the MP3 player – all of which pundits predicted would lead to radio’s demise, as they and other new entertainment forms entered the public arena.


Far from being cast aside by media such as the Internet and satellite television, radio has instead become an integral part of some of these platforms, or at least an important adjunct to them.


Since 1995, the number of analogue radio stations has grown from 218 to 326, while revenues have almost doubled from £600 million to £1.1 billion. There are 210 radio stations available on digital radio, 85 on digital satellite, 30 on digital terrestrial television (DTT) and hundreds available on the Web.


Jason Chess, media partner at Wiggin in Cheltenham, says: ‘Radio is extraordinarily robust. It is cheap to operate and the content is cheap. It’s also easier to make money out of radio than TV at the moment. Advertising revenue on TV is under pressure because there are so many channels on satellite, so the money available is being divided.’


He says the most interesting thing about radio at present is the take-up of digital radio, which is increasingly launching radio on to alternative distribution media.


‘You have now begun to see radio brands spawning TV brands such as Classic FM TV. You just wouldn’t expect a culture which is so concerned with graphics to embrace this kind of thing. It’s extraordinary that brands are coming out of the radio sector – it is a huge success story,’ he says.


John Enser, partner at London media firm Olswang, says the move from FM to digital means that people are increasingly using new devices – such as satellite and the Internet – to access radio. He says: ‘The value of the FM licence is not the only determining factor of how successful a radio station is any more. One of our clients based in London and the south-east gets as many listeners through Sky and the Internet as it does through terrestrial distribution.


‘The Internet has given radio the opportunity to do more things. It’s not just about getting one DJ any more – you have things like pod-casting and multi-channel radio.’


He explains that aside from corporate – the biggest fee-generator in the radio law sector – there are three main types of radio law work: regulatory, commercial and litigation. Regulatory involves ensuring things are done in accordance with the Office of Communication (Ofcom) codes, while commercial work can include helping radio stations to make money through advertising and sponsorship contracts and tie-ins, signing presenters and negotiating with music rights societies, and assisting clients with the technical side of things – actually getting material on the air. Litigation often involves managing defamation risk.


He says: ‘The regulatory job has not really been affected by the change in medium – except that the Internet is not regulated by Ofcom. But if you’re talking Sky or terrestrial, it’s still the same. Defamation has changed slightly because radio stations can now be received throughout the world.’


Mr Enser says the commercial side of the radio lawyer’s job has changed significantly because of evolving technology, both in terms of advertising and sponsorship.


‘It’s not just about filling a 30-second break any more – it’s more about competitions, tie-ins, brand promotion and building closer brand association. We are at a very interesting point in the development of the radio business. It used to be easy: buy a licence, devise some content and sell some ads. Now radio stations are much more creative in the way they are selling advertising, working with brands and using sponsorship.’


Mr Enser adds: ‘The rights position is also much more complicated now. UK collection societies can’t always offer global licences. The whole thing is in a state of flux. All the local collection societies are working together to find a solution that satisfies competition law principles. They are negotiating with Brussels.’


Daniel Sandelson, partner at magic circle firm Clifford Chance, agrees that recent big changes in the radio industry have changed the skills required of radio lawyers. ‘Consolidation and technical advances have moved our clients’ requirements from traditional media-law skills to a more regulatory, competition law and M&A focus,’ he explains. ‘What is important is being able to handle issues cross-border. Also, the skills developed in IT law are becoming very relevant, as issues such as data privacy move into the radio sphere, with radio stations gathering audience data and offering download services.’


Radio has certainly undergone a sea change in recent times. The regulatory function was transferred from the Radio Authority to Ofcom in 2003, and the Communications Act 2003 relaxed the rules on ownership.


The Act was widely expected to lead to a deluge of foreign radio stations entering the UK radio market. Indeed, Clifford Chance advised US media company CanWest Global Communications on the first radio licence to be awarded by Ofcom to a non-EU company last month, when the Solent Regional FM radio licence was awarded to one of CanWest’s subsidiaries, Original 106 (see [2005 Gazette, 15 September, 6). But thus far, the floodgates have not been flung open to foreign radio stations.

Clifford Chance’s Mr Sandelson says: ‘Our foreign ownership rules are much more liberal than certain European countries, and certainly more liberal than most emerging markets, but that is to be expected. Liberalisation of foreign ownership rules is beginning to occur in emerging markets as they see that the perceived fears of foreign takeovers of broadcasters are generally unfounded, as many other utilities become foreign-owned.’


Mr Chess says the introduction of the Communications Act, rather than immediately attracting foreign radio stations, instead allowed domestic station owners to get their houses in order. ‘Basically the focus ended up being on how UK players were going to consolidate. When the Communications Act first came in, it was like something out of Gunfight at the OK Corral. All the main players stood and eyed each other for a while, hands hovering above their six-shooters, and everyone was waiting to see who was going to shoot first. It turned out to be Emap and Scottish Radio, followed by Capital merging with GWR.


‘US companies had a look and were interested in coming in, but didn’t want to chuck a lot of money at things just because they wanted an “in” to the UK market. These are business people at the end of the day – it’s not like the Japanese trying to get a car brand established.’


Mr Enser acts for large US and Australian media companies as well as an assortment of niche radio stations including gay and lesbian station Gaydar Radio. He also helped Chris Evans buy and sell Virgin Radio. He says the Communications Act marginally reduced the ‘hideous’ rules on how many stations a company can own in a particular area, and predicts that more foreign companies will come into the UK market.


‘By international standards, UK radio is still seen as relatively underweight as an advertising medium. If you look at other international markets, across the world many take around 8-10% of the total advertising spend. In the UK, it is somewhere nearer 5-6%. That’s why it’s attractive to foreign investors – UK radio is seen as a “Cinderella” advertising medium that is at present relatively unsophisticated, and has the opportunity to become more important than it is.’


Solicitor Natalie Schwarz, consultant with Emap radio and former director of strategy and development at Capital Radio, says that Ofcom has been a ‘refreshing change’ since it took over from the Radio Authority.


‘They are very bright, very forward-thinking, very strategic and commercially minded. I think because they regulate across the whole of the TV and telecoms sector, they can take a big-picture view and make strategic decisions for the industry as a whole.’



Mr Enser gives the regulator a slightly less enthusiastic appraisal. He says: ‘Ofcom is doing OK in terms of content regulation, where it is pretty relaxed. In other areas it is involved in – mostly connected with television – the jury is still out. In general, it’s not as light a touch as some optimistic people thought it would be – it is a bit more interventionist – but regulators always end up being so, because they have to justify their own existence.’


Mr Sandelson adds: ‘Ofcom is doing very well in my view. There is a new, evidence-based and business-aware approach which is improving the relationship between regulator and regulated. Whether Ofcom will be true to its word and take a step back from content regulation remains to be seen, but the signs – such as delegation to the Advertising Standards Authority – are encouraging.’


He says, however, that the whole issue of substitutability between radio and other advertising media still needs to be worked through. ‘The driver for change in the radio industry is, in my view, the Office of Fair Trading and the Competition Commission.


‘The Vibe/Chrysalis/ GWR decision, which prohibited a radio station sale on the basis of a very localised market share impact, had a number of lawyers scratching their heads, especially as it was followed by the Carlton/Granada decision which took a more liberal approach, albeit at a national level.’


Mr Enser says that although ‘changes in the law are good for lawyers’, he hopes, like Mr Chess, that for the industry’s sake, the Communications Act will be the last of a raft of legislation that has hit the industry in the last 15 years.


Mr Chess says: ‘We had the Broadcasting Act 1990, which was revised and then revised again – in response to EC directives – by the Broadcasting Act 1996, which was colossally complicated. Then the 2003 Act brought in a lot of new rules. We have enough to keep up with at the moment.’


He says that media types are generally not overly litigious. ‘People in the media are pretty good at sorting things out in the Groucho Club over a vodka. For most of my radio and TV clients, things have to fall apart pretty substantially before they sue each other.’


That said, Ofcom may have a legal battle its hands with GCap – which was formed through the merger of Capital Radio and GWR – in a row over digital radio ‘multiplex’ licences. GCap claims it had reached an understanding with the Radio Authority in 1998 that it would be the sole owner of national digital capacity, and had invested in a network of new wave-transmitters on that basis. However, rumour has it that Ofcom now plans to grant multiplex licences to other providers.


Helen Hurley, head of legal at Virgin radio, says: ‘From the radio station’s point of view, that would mean potentially more choice and a stronger negotiating position, which is good. But it is by no means a definite, so we’re watching and waiting.’


Whatever the outcome of that dispute, the lawyers questioned feel that radio has a rosy future – and they are enjoying their part in it. Mr Sandelson says: ‘There is likely to be more cross-border investment and growth of emerging markets. Also, music download services run by radio stations will grow, but whether they will compete with iTunes and other download services remains to be seen.’


Mr Enser says: ‘One of the best bits of being a media lawyer – especially for someone like me who’s a bit of a muso in their spare time – is that you can blag tickets to concerts. But it’s also nice to be involved in something that is connected to the real world.’


Ms Hurley agrees: ‘Things can get a bit frantic, especially around the time of the Isle of Wight Festival and the V Festival in the Summer, when we have literally scores of artists performing and being broadcast on Virgin Radio, and there are a lot of agreements to get drafted, agreed and signed. The great thing about this job is that if you’re into music, this is the place to be. Virgin is on in the building all day, and many artists come in to visit the DJs or record session tracks for broadcast. It’s a lot of fun.’


Lucy Trevelyan is a freelance journalist