Evaluation of application for the new local commercial radio licence in the West Lothian market of Central Scotland in the UK, written by Grant Goddard in April 2003 for The Radio Authority (and edited substantially by management).

1. RA PAPER 24(03)
3 April 2003
LOCAL LICENCE AWARD:
WEST LOTHIAN
Paper by the Staff
MATTER FOR DECISION
1. Members are asked to decide whether to award the local radio licence for West
Lothian, in Central Scotland, to the sole applicant, River FM (Almond Radio Ltd.).
STAFF SUMMARY
2. The group's experience of running two successful RSLs in West Lothian has
generated an impressive groundswell of enthusiastic listener support which bodes well
for the station's future. The applicant benefits from having observed the recent
experiences (some good, one bad) of similar small-scale ILR start-ups in the same
region. It has assembled a strong, keen board of local directors and has secured
funding from a radio group with extensive small-scale station operational experience.
The programming proposals will broaden listener choice by providing news and
information about West Lothian that is unavailable from existing local stations. The
applicant has demonstrated through its market research the affinity of the local
population to its own district, rather than to nearby Edinburgh, and has convincingly
demonstrated the extent of local support for its plans. However, the station's
marketing campaign at launch will need to be effective enough to establish the new
brand name in the audience's mind, and the programming will need to promise and
deliver a palpably 'local' product to capture the attention of long-term listeners to
Radio Forth and more recent competitor Real Radio. The group's revenue projections
are rather optimistic while its budgeted costs, particularly with regard to staffing, seem
high for a station of this size, particularly as the available working capital is limited.
However, the station certainly has the potential to become as successful as Central FM
and Kingdom FM have been within other parts of the Radio Forth TSA, if its financial

2. RA PAPER 24(03)
Page 2
targets can be adhered to during the launch phase. If the licence is granted to the
applicant, River FM would become the second Scottish station in which UK Radio
Developments Ltd (UKRD) holds an interest, the other being Clan FM, whose
coverage area is contiguous to the west with River FM's planned TSA. Clan FM's
performance to date has been dismal, both in terms of listenership and advertising
revenue. Although not proposed explicitly in this application, it is probable that, in the
long run, UKRD might seek to reduce its overheads by sharing some off-peak
programming (see paragraph 10) and combining sales operations between the two
stations. If River FM proves successful, such cost reductions could throw a much-
needed lifeline to Clan FM, which has under-performed consistently since its launch
four years ago.
BACKGROUND
The licence area
3. West Lothian was added to the 'working list' of planned new licences in June
2000, largely as a result of the existence in the area of the River FM group (then
known as Real Radio), which had conducted its first RSL in Livingston in the
previous year. Neighbouring station Central FM (ILR Stirling & Falkirk) had also
expressed interest in providing an opt-out service for West Lothian from its Falkirk
studios, while the local council had urged that a licence be advertised to facilitate
coverage of the whole of the unitary authority area rather than just Livingston. In the
event, the licence was advertised last October for "a service covering as much of the
West Lothian area, in central Scotland, as proves to be technically feasible." The
coverage brief makes two FM frequencies available for the station. The main
transmitter in the Livingston/Bathgate area will broadcast on 103.4 MHz at a
maximum power of 200 Watts, with a relay transmitter providing coverage of
Linlithgow on 107.7 MHz at a permitted power of 100 Watts. The applicant's main
transmitter site at Cairnpapple Ridge will give good coverage to most of West
Lothian, with the exception of Linlithgow, which will be served by a small relay at
Grougfoot Farm. The sensible TSA of 120k adults will cover virtually the whole of
West Lothian. Transmission equipment will be supplied by either NTL, Crown Castle,
SBS or Radica, all of whom are reputable companies, while the £138k budget for
studio facilities, to be located at Livingston Football Club, should prove adequate.
4. In the local government reorganisation of 1996, West Lothian was designated
as a new unitary authority, combining parts of the former Lothian and Central regions
that had been created in 1973. Prior to that, West Lothian was known as the county of
Linlithgowshire. It covers an area midway between Edinburgh and Glasgow, and has a
population of around 160k. The proximity of Edinburgh and Glasgow airports, the M8
and M9 motorways and three cross-country railway lines make West Lothian a
desirable location for industry. The area was traditionally known for its coal mining
and shale oil industry, but the pit closures of the 1980s forced West Lothian to switch
to attracting inward investment, the success of which means it now boasts the fastest
growing local economy in Scotland. Local commercial radio services available across

3. RA PAPER 24(03)
Page 3
the whole of the applicant's TSA are the two Edinburgh services – Forth One (FM), a
contemporary and chart music and information station for under-40s, and Forth Two
(AM), a full-service station aimed primarily at over-35s – and the two Central
Scotland regional FM stations – Real Radio, an adult contemporary music and speech
mix, and Beat 106, a fresh dynamic mix of new rock and dance music for listeners
below 40. Within their TSA, the two Forth stations have a combined listening share of
18%, though the West Lothian TSA will form only a tenth of this area. No specific
RAJAR data are available for the West Lothian area, but the applicant's own market
research has shown that "radio listening in West Lothian, as in Scotland as a whole, is
far less London-centric than in other parts of the UK" and "it is clear that radio
listeners in West Lothian prefer Scottish-based radio services" (p.46). Neighbouring
Clan FM, launched in 1999 in North Lanarkshire, has failed to achieve a listening
share above 4%, whereas Central FM in Stirling and Falkirk and Kingdom FM in Fife
have both quickly become market leaders. The ratings success of these latter two
stations demonstrates the potential that exists to develop new locally-focused stations
within a part of the Radio Forth TSA.
Local response
5. At the time of the licence advertisement, staff wrote to the area's MPs (Robin
Cook and Tam Dalyell) and the relevant local authority inviting their views. No
responses were received, and neither were any unsolicited letters received from the
public. However, the applicant has of course assembled its own evidence of local
support. This is discussed in paragraph 15.
Assessment of application
6. Four members of staff have been involved in the assessment of the application
and the questioning of the group about its proposals: Grant Goddard (Development
Officer), Janet Lee (Programming), Gary Carey (Finance) and Terry Dowland
(Engineering). Thomas Prag provided valuable insights as the 'nominated Member' for
this licence. As the licence is uncontested, marking was not undertaken.
THE APPLICATION
History and composition
7. The prime mover behind River FM, Jimmy Young, has lived in West Lothian
since 1961. He was a founder member in 1989 of Radio Grapevine, West Lothian's
Hospital Radio service, becoming chairman in 1993, and successfully expanded the
station from a nine hours per week service to a 24-hour operation serving three
hospitals. In December 1998, Young arranged a meeting with Russell Rodger, founder
member of the Clan FM group which was about to apply for the new radio licence in
neighbouring North Lanarkshire. In early 1999, Young called an open meeting in
Livingston to discuss the idea of a new radio station for West Lothian, inviting local
business people and professionals. According to the applicant, "initially much of their

4. RA PAPER 24(03)
Page 4
interest arose from their desire to have a medium through which they could
communicate with their customers in the West Lothian area," but soon "it became
apparent that, apart from the commercial advantages to them, such a station would
have a great local appeal." Almond Radio Ltd was created, a board of directors was
appointed and UKRD (which already held a controlling interest in neighbouring Clan
FM) became involved as a shareholder and investor. The board decided to involve
UKRD, rather than other potential radio partners whom it had approached, because
"the difference was significant in terms of cost" and "we thought we were getting a
better product," according to chairman Paul Gebal. In May/June 1999, the group
organised its first 28-day RSL under the name of 'Real Radio.' The station used the
facilities and presenters of Radio Grapevine, playing a broad mix of music during the
day, and local magazine programmes and specialist music shows in the evenings. The
local paper West Lothian Herald & Post provided assistance to the four-person news
team, and the resultant coverage of local news established good working relationships
with local emergency services and community organisations. The success of this first
RSL broadcast encouraged the group to organise a second 28-day RSL a year later in
May/June 2000. Using the same team of broadcasters, the format was more finely
tuned, reflecting feedback received from listeners to the first RSL. 80% of advertisers
who had bought airtime during the first RSL re-booked airtime on the second. During
late 2000, the 'Real Radio' brand name was sold to Guardian Media Group and the
new name 'River FM' was adopted, reflecting the preponderance of rivers in the West
Lothian region. Since then, the applicant has organised more than 45 consultative
meetings to explain its campaign for a local radio licence, and has distributed pre-paid
survey cards at local events to build local support.
8. The board of nine directors has a long collective history, having met 35 times
during the last four years. All of the directors are resident in Central Scotland, with the
majority based within the station's TSA. However, staff consider the size of the board
may prove too cumbersome, as the number of directors merely reflects the share capital
having been divided nine ways. Furthermore, the two largest shareholders (UKRD and
John Boyle), with a combined shareholding of 50%, command only two votes out of
nine, whilst only three directors offer previous full-scale commercial radio experience.
Russell Rodger's track record as a founder director and shareholder of Clan FM is not
particularly inspiring, considering that station's poor performance, but John Collins'
present responsibility as managing director of Clan FM gives him radio management
experience, and four of the group's local directors (including Jimmy Young) were
recently included in a local newspaper's list of the "100 most influential people in West
Lothian." UKRD has a 64% shareholding in neighbouring Clan FM. Although the
Cornwall (formerly Guildford)-based company's shareholding in River FM is limited
to 25%, there is a substantial crossover of interest with Clan FM. Three of the
applicant's nine directors are either directors or shareholders in Clan FM (plus Jimmy
Young presents programmes on the station), while 55% of the shares in the applicant
group are held by parties with a financial interest in Clan FM (plus Jimmy Young's
5%). Asked by staff about the close relationship between the applicant and Clan FM,
chairman Paul Gebal, whose own background is as a lawyer, explained that the
contribution of directors from Clan FM/UKRD was "in terms of looking to their

5. RA PAPER 24(03)
Page 5
expertise, rather than letting them drive the enterprise."
Management and staffing
9. The staffing plan accounts for ten full-time staff, three part-time staff and four
freelance presenters (14 full-time equivalents). The news team comprises a full-time
news editor with one full-time and one part-time journalist. A station director post will
be taken on a part-time basis by Jimmy Young (who will maintain his existing career
as an IT service manager) "as a mentor, guide and sounding-board for the day-to-day
management team," working alongside the full-time station manager/head of sales
(p.18). As founder of the group, Young's continuing involvement in the station will be
critical, and he explained to staff that his day job was too lucrative to give up for a
full-time position in River FM. The staffing levels look to be rather on the high side
for a station of this size (see paragraph 16), though the applicant argues that this
number is required "to deliver a quality programme schedule and achieve our intended
revenue projections" (p.18). The group says it plans "to work closely with our
neighbours at Clan FM" though it "does not currently have plans for any formal staff-
sharing arrangements" (p.18). Rather, Clan FM managing director John Collins'
presence on the board "will provide a good deal of help and advice during the set-up
stage" and thereafter "there will be a mutually beneficial exchange of ideas and know-
how" (p.18). In addition, it is proposed that UKRD will provide back-office functions
to River FM "on an ongoing basis."
Programming
10. River FM plans to "provide a full-service local radio station for the people of
West Lothian" in which "news and information about West Lothian will be the
foundation" and "classic pop tracks familiar to a broad 25+ audience will make up the
bulk of [the] playlist" (p.22). The applicant rightly believes that "the key to capturing
the hearts of the West Lothian listeners will be to provide high quality, locally focused
speech content" and notes that "existing radio services audible in the area carry very
little pertinent news and no relevant local information" (p.22). The station's ability to
deliver this promised 'localness' will be the key to its success. It promises that its
programming will be "wholly locally produced at launch," but then adds guardedly
that it has "the intention of remaining forever locally produced, at least during
peaktime" (p.24). Locally originated programming is promised for the minimum
periods of weekdays 0700-1900 and weekends 0800-1400, on the grounds that
industry conditions "in coming years may make it appropriate at some future point in
time to share some programming from other sources" (p.25). In response to staff's
concerns that such arguments could open the door to an element of simulcasting
between Clan FM and River FM, the applicant stated that "it is unlikely that River
would take live local programming from a neighbouring station unless there was a
regional event or a particular show that made a compelling audience case for sharing."
The applicant asserts that "it would almost certainly be more economic to produce
local 'voice-tracked' output instead of arranging to network particular dayparts."

6. RA PAPER 24(03)
Page 6
11. River FM would provide 15-35% speech content during weekday daytimes,
falling to 10-15% between 1900 and 0600. Three-minute news bulletins will be
broadcast 0630-1800 on weekdays, and weekend mornings. The applicant's news staff
will produce their own bulletins incorporating IRN audio at peak times, whilst IRN
national bulletins will be broadcast at other times. Sports reports will be added on the
half-hour in weekday peak times, and a Saturday afternoon sports show will "be
broadcast live on occasion from some of the many local sports grounds and facilities
across the county." The applicant promises that this will cover "not just the fortunes of
Livingston Football Club" (which holds 10% of the applicant's shares, and is
represented on its board) but also amateur and minority sports (p.23). Through its RSL
broadcasts, the group says it has established a good working relationship with the
West Lothian Courier with which it will pool news stories and will run on-air
activities in support of the paper's community campaigns. A similar agreement has
been forged with West Lothian's internet news site owner/editor Eddie Anderson. In
addition to the standard features of weather, travel and what's on, River FM has also
committed to broadcasting three-minute help and advice features with local experts
discussing topical issues and twice-daily community issue items. Collectively, these
speech elements should help the station to convey a distinctive local identity.
12. Musically, the station would provide a daytime mix of hits drawn from the
1960s to the current chart, with an emphasis on tracks from the 1990s. Four specialist
shows at weekends would provide exposure for the genres of country, rock and dance
music, but the applicant does not regard these shows as "integral elements in the
character of the River FM service" because it may wish to vary the specifics during
the term of the licence (p.33). Asked by staff how its music programming will broaden
listener choice in West Lothian, the applicant explained that "the inclusion of
specialist strands and student-produced programming will allow the station to feature
genres like rock and folk which don't feature on either Forth 2 or Real Radio."
Scottish music will be included as "a part of the natural music mix" rather than as a
specific genre. In response to staff concerns as to whether there would be some
similarity in programming with Clan FM, the group states that "River [FM] will be
distinct to Clan FM in that music will be locally selected and scheduled……. Current
thinking suggests a slightly older mix [of music] than Clan's with more 60s titles than
currently on air on Clan."
Market research
13. The applicant's monitoring of the weekday output of local and regional
commercial stations audible within its TSA demonstrated that their programming
included scarcely any editorial or advertisements directly relevant to the West Lothian
area. Additionally, two market research projects were commissioned in 2002 that
involved interviews with respondents from across the West Lothian region in the
Almondvale Shopping Centre, Livingston. The most listened-to stations were found to
be Real Radio, Forth One and Beat 106. The research also found that residents prefer
to eat out, go to the cinema and purchase major household items in Livingston rather
than Edinburgh, leading the applicant to conclude convincingly that "the people of the

7. RA PAPER 24(03)
Page 7
area overwhelmingly opted for Livingston, despite the proximity and allure of the
Scottish capital" (p.47). Asked what changes they would like to make to the radio
station they listened to the most, around two thirds of respondents seemed remarkably
satisfied with existing music content, news coverage and sports news. Similarly, two
thirds said that the launch of a new station would make no difference to the amount
they listened to their favourite radio station, while only 28% said they would listen to
their favourite station less. Asked by staff whether it was disappointed with the level
of satisfaction respondents expressed with existing services, the applicant argued that
lower levels of satisfaction were demonstrated within specific constituent
demographics. It added, somewhat confusingly: "Far from disappointed, we therefore
found these results encouraging, reinforcing our view that local content, in particular,
would be the key to River FM's success." These results do illustrate, however, the
challenge of launching a new radio station in an area where two long-established ILR
stations (Forth One and Two) are audible and have loyal audiences, BBC Radio
Scotland is strong, and two newer regional services (Beat 106 and especially Real
Radio) have already made a strong impression. It will be important for the applicant to
commit itself to a substantial and ongoing off-air marketing campaign if it is to make
an impact on the natural inertia of radio listening habits illustrated in this research.
The River FM launch will also need to overcome the hindrance that the 'Real Radio'
name it had used for both RSL broadcasts now belongs to the Guardian Media
Group's station, against which it competes in the market.
Audience forecasts
14. The group's projections of its likely audience (a first-year weekly reach of 22%,
rising to 26% by year three) are based on a sensibly-sized TSA population of 120k
adults (aged 15+), and were calculated "by reference to actual audience figures
achieved by a number of local stations launched in recent years in markets with
populations up to 200k" (p.51). It argues that "by projecting audience figures in the
mid-range of those achieved by these stations, we believe we are being realistic and
prudent" (p.51). However, its choice of stations (Bath FM, Star 107.7 Weston Super
Mare and 2BR Burnley) and the RAJAR quarter (which in all cases was simply the
most recent figures prior to the application) is quite selective. If the applicant had
performed a more in-depth analysis, it would have found a much wider spread of
station start-up performance in their first and second years on-air. More surprising is
that the applicant neither analysed nor referred to the ratings track records of Scottish
stations such as Clan FM, Central FM and Kingdom FM which are much closer to
home than the three English stations it selected. Questioned by staff about these
omissions, the applicant responded that "similarity in terms of TSA size made them
better yardsticks for comparison than Clan or Kingdom which, while in Scotland,
were much larger radio stations." It added: "Clan FM and Central FM, for differing
reasons, both experienced launch problems and have only in the last few years turned
the corner. Kingdom has a unique listener base that is fiercely protective of Fife as a
region." But, in terms of its programming plans, the applicant acknowledged that "the
experiences of Clan and its RAJAR results since launch were taken into account –
particularly in putting 'localness' at the heart of the brand." Asked which existing

8. RA PAPER 24(03)
Page 8
station it believed would lose the most listeners to the proposed West Lothian station
the applicant nominated Real Radio, which its market research showed to be the
market leader.
Local involvement and support
15. The applicant's interaction with the local community is particularly impressive.
Its main promotion and publicity activity took place around the two RSL broadcasts in
May/June 1999 and May/June 2000 under the 'Real Radio' brand and elicited 5,000
letters, phone calls and response cards from listeners. The broadcasts received
extensive, positive press coverage in the local press. As noted previously, however,
the station will need to overcome any potential confusion which has been caused by
its rebranding to River FM. Through its association with Radio Grapevine and Jimmy
Young's experience in organising outdoor events, the applicant has had a high profile
at gala days and roadshows within West Lothian, and has made extensive
presentations to local organisations since 1999. Last year, the applicant sponsored an
award in the JobCentre Plus New Deals awards, formed a listeners' advisory panel that
has met twice to date, and organised a seminar 'The Beginners' Guide To Radio
Advertising' at Livingston Football Club in association with the West Lothian
Chamber of Commerce and the Federation of Small Businesses. Letters of explicit
support for the application were received from, among many others, numerous
members of staff of West Lothian Council, Robin Cook MP (Lab., Livingston), Alex
Salmond MP (SNP, Banff & Buchan), Mary Mulligan MSP (Linlithgow), Fiona
Hyslop MSP (Lothians), West Lothian College and two West Lothian Councillors. A
short, more general letter of support was received from Tam Dalyell MP (Lab.,
Linlithgow), the Father of the House. When added to the almost 4,000 letters received
in response to the two RSL broadcasts, this is convincing evidence of widespread
local support for River FM.
Finance
16. The assumption behind the business plan is that an emphasis on 'localness' will
enable this small station to differentiate itself from larger, established competitors in
the market. However, experience suggests that this model can often lead to financial
difficulties, as budgeted revenue streams are difficult to achieve in the face of strong
competition and the high cost of creating local identity (usually news resources) can
delay the prospect of profitability even longer than envisaged in the business plan.
Nevertheless, River FM has demonstrated, through its market research, that the West
Lothian population has a strong affinity with Livingston, rather than nearby
Edinburgh, and this could prove critical to this type of small station's ability to attract
both audience and advertisers. At £379k per year, the proposed cost base of the
applicant looks too high, primarily because of the 14 full-time equivalent staff. In a
station of this size, seven to ten staff is more customary, and the main excess appears
to be in the programming and news departments which comprise three journalists and
five presenters. However, the group argues with some conviction that these resources
are a prerequisite to achieve 'localness.' Although the group is likely to have a sizeable

9. RA PAPER 24(03)
Page 9
profile in the local area from its history of RSLs and attendance at public events,
marketing expenditure of £6k over the first three years seems under-funded, and no
provision has been made for local sales commissions. In addition, the cashflows show
that working capital will be stretched and the danger exists that these budgeted
amounts may prove insufficient, given UKRD's apparent inability to control costs at
Clan FM (currently £600k per annum and 50% above forecasts). Between its launch in
1999 and September 2002, Clan FM lost £915k. The group's revenue projections, like
its audience projections, are based upon the track records of Bath FM, Star 107.7
Weston Super Mare and 2BR Burnley, and seem too optimistic. The year-one
prediction of £2.56 per adult is high, even compared to these stations' performances,
and is massively higher than the £0.55 per adult achieved by Clan FM since launch.
17. In terms of funding, staff have some concerns about one of the applicant's main
shareholders, UKRD, whose last accounts (September 2001) show an annual loss of
£2.1m on operating activities and cash reserves of £4m (a result of a £4m share issue).
Only recently has the company adopted any semblance of a coherent, long-term
corporate strategy, under the leadership of new group managing director William
Rogers. The other main shareholder in River FM, John Boyle, is a director and investor
in TV production company Wark Clements. However, he also was the chairman and
majority shareholder in Motherwell Football Club when the club was put into
administration in April 2002, and his ability to provide further funding if necessary is
unknown. Boyle's shareholding in the applicant is represented at board level by non-
executive director Bryan Burnett, the Glasgow-based TV/radio broadcaster who is
already a director of Clan FM and also prospective applicant group Glasgow FM.
Members might wish to note that Clan FM launched with a similarly diverse
ownership structure, until high losses and the reluctance of smaller shareholders to
take up their entitlement to rights issues forced UKRD to increase its shareholding
from 48% to 64%. However, a licence award to River FM could help to improve the
financial position of Clan FM by enabling the two neighbouring stations to share
resources, and the strong local identity felt by residents of West Lothian augurs well
for the success of a radio station in the area.
Grant Goddard
3 April 2003