ACMA is negotiating with the NSW state government about the troubled AM transmission site at homebush according to a new report about the evolution of AM broadcasting released this week.
The report, which analyses ratings, profit and transmission characteristics of the AM industry, has also confirmed that AM stations make less profit than FM stations. Metro AM stations in the 2002/03 financial year grabbed only 7% of total radio industry advertising revenue, while their metropolitan FM counterparts got 49%. In regional areas AM stations had 9%, while FM stations had 22% of radio industry revenue.
In 2002–03, the AM sector of the radio industry generated $228.9 million in revenue, of a total of $774.2 million generated by the entire radio industry. The sector made a profit of $8.9 million, of a profit of $106.2 million for the entire radio industry.
A range of issues surrounding AM transmission has been worrying both owners and regulator for some time now, including the encroachent of housing too close to transmission towers in capital cities, and increased electrical ‘noise’ in cities which reduces AM’s coverage and transmission quality. While AM operators have been aware of these problems for some time, radioinfo has been told off the record by several operators that they have not wanted to speak publicly about these problems for fear of decreasing advertising and audience confidence in AM radio.
Melbourne is the worst hit for interference because of its electrically operated trams and overhead tram lines, making it almost impossible to hear AM radio stations in many Melboure CBD buildings or in cars driving around the city.
AM transmitters are much more expensive to operate then FM because of their higher electricity requirements.
While the report makes public some of the worries of the AM operators, it is by no means signalling that AM transmission is terminal, with the report concluding:
“The steady market of AM licences for sale over time, and the inclusion of some high performing stations over the period would suggest that the AM sector is not in terminal decline.
In America, where AM companies had the same worries a few years ago, AM has had a resurgence with the greater fragmentation of under 40 markets and the growth of a new generation of news and talkback personalities. Th same demographic trend is also evident in recent Sydney and Melbourne ratings results.
ACMA intends to continue monitoring commercial AM market share, the industry’s financial situation, and ownership and control issues affecting AM services as it moves towards the coming of digital radio and planning for future natioonal spectrum use.
Acting ACMA Chair Lyn Maddock has told radioinfo: “The report shows the AM radio market continues to evolve. Talk formats on metropolitan AM radio continue to perform relatively well in terms of audience share and profitability. At the same time however, there has been a shift of listeners from AM to FM and greater competition for audiences with the introduction of new FM radio services.”
The report also examines the future for AM stations in a digital environment, and Maddock believes Digital Radio “offers the potential to solve some of the problems experienced by AM services in the analog environment, including offering higher sound quality. Any conversion of regional analog AM to FM ahead of digitalisation needs to be considered within the framework for the introduction of digital radio recently announced by the Minister.”
The report, which explores both Eureka and DRM digital transmission, may further encourage AM operators to hurry their progress towards digital radio.
In capital cities, Southern Cross controls the most AM stations, owning 6 stations in various cities. Data and Comemrce owns two stations, Melbourne’s 3MP and SEN, as does John Singleton’s Macquarie Radio network, with 2CH and 2GB in Sydney. ARN also owns two stations, with its Brisbane station 4KQ and Adelaide station 5DN. Six other owners have one AM station each in various cities.
In regional Australia (see diagram top right), Macquarie Bank owns the largest number of Amstations with 28% of transmission sites, followed by Bill Caralis’ Broadcast Operations with 16% of AM sites. Next comes Rob Gamble’s AMI group, which has nearly 9% of stations, Ace Radio with nearly 7%, then Grant Broadcasters and Rural Press.
The report was prepared for the Communications Minster Helen Coonan by ACMA (formerly the ABA. It concludes that, at this stage, there is no need for AM specific changes to the regulatory settings governing control of commercial radio licences, particularly in metropolitan areas where AM services perform well in competitive markets.
ACMA does not have any view on the merits of changing the control rules in relation to commercial radio broadcasting services generally.
In relation to the conversion of regional AM services to FM, ACMA notes concern among some metropolitan broadcasters that this would create a precedent for conversion to FM in metropolitan areas as well. However, the analysis of the differences between regional and metropolitan AM radio services does not support a nationwide conversion policy.
The findings are intended to assist in broader consideration of issues affecting AM radio.
For the full report click below.