Media 1986: A revolution on the airwaves
30 years ago commercial radio was finally starting to prosper. Torin Douglas explains how a pivotal year changed the airwaves forever.
If 1986 was a revolutionary year for newspapers and a game-changer for television; chaotic for the BBC and ground-breaking for magazines; it was also highly significant for commercial radio.
It was the year when the Government gave the green light to attempts by the radio companies to wrest power from the regulators and rid themselves of the requirement to be 'public service' broadcasters, as Tony Stoller, former chief executive of the Radio Authority, records in his book Sounds of Your Life: The history of Independent Radio in the UK.
(The name 'independent', as with ITV, had been chosen by the industry's founders to signify that the services met a social as well as a market purpose.) Over the next few years, the radio companies would become purely commercial, putting profits before programme obligations.
"They were pivotal years, preparing the way for the shift from 'independent' radio, as well as ushering in satellite television and the beginning of multi-channel broadcasting," wrote Stoller. "All the basic assumptions about private radio were starting to be recast."
30 years ago this month, Radio '86 took place in Marbella, bringing together most of the commercial stations with advertisers and agency media directors - and I chaired one of the sessions.
For five years before joining the BBC, I presented a weekly programme called Advertising World for the London news station LBC, and it was decided that we should broadcast live from the conference stage, linking up with radio stations all over the world.
We knew this would be a bit of a challenge, not just for me but for the LBC engineers who, from a hotel in southern Spain, would have to establish live radio contact with Radio WOR in New York, CFNY in Toronto, the Hong Kong Commercial Broadcasting Company, 2GB in Australia and LBC's Moscow correspondent Martin Walker - not to mention London.
We wanted advertisers to hear in particular from stations and advertisers in Canada and Australia, where commercial radio was a thriving business. Moscow not so much.
Introducing the programme, I harked back to one of radio's most popular shows from the BBC Light Programme: "There's an element of Six-Way Family Favourites about the programme today. It's 2.40 in Marbella, it's 1.40 in London, and it's 8.40 in the morning in New York, where we have our first live link-up..."
Despite our misgivings, the half-hour broadcast went without a hitch and at the end I thought we deserved a standing ovation. Unfortunately, it had gone so smoothly that some of the audience presumed it had been pre-recorded.
In that month, November 1986, commercial radio was starting to prosper, after years when it became known as 'the 2 per cent medium' because its share of the ad market failed to climb any higher. Four years before, the stations had been hit by new competition from TV - first from Channel 4 and then from TV-am.
Now, after strong lobbying by advertisers and the radio companies, the Home Secretary Douglas Hurd and the Independent Broadcasting Authority had begun relaxing the restrictions and reducing the costs of regulation.
In March 1986, the Government had removed the Treasury levy on radio company profits. The Home Office encouraged the Independent Broadcasting Authority to interpret the rules on programme sponsorship more flexibly and the regulator came up with the concept of "co-funding", allowing event-based programmes to be paid for by the sponsor of the event.
"Many stations simulcast a concert by Queen in July 1986 which was 'supported' by TDK," wrote Stoller.
"Everyone seemed to turn a blind eye to the evasion of previously sacrosanct principles. Selkirk's shareholdings in Independent Local Radio, including a majority stake in LBC/Independent Radio News, were sold to an Australian company, Darling Downs Television. It would have been unthinkable for an overseas company to have controlled ITN (the TV news provider)."
In July 1986, the Government also abandoned a two-year experiment in community radio - which the commercial stations had strongly opposed - and the Peacock Committee came up with a radical proposal for radio in its report on the future of broadcasting.
Having rejected the idea of advertising on BBC Television, which was widely presumed to have been what Mrs Thatcher wanted, a majority of the committee recommended that "Radio One and Two should be privatised and financed by advertising".
In practice, this suggestion didn't get very far but the Report also proposed that "IBA regulation of radio should be replaced by a looser regime", to the joy of the commercial radio companies.
The IBA's chief executive, John Whitney, who previously ran Capital Radio, reflected the changing mood in his diary for July 1986. He said the radio companies' annual congress "turned out to be a more civilised affair than I had imagined...
"Revenue from advertising was creeping forward and the latest figures showed that audiences of ILR had increased and now placed ILR in first position over the BBC. Some of the gloom was giving way to very cautious optimism."
Financially, ILR was at last emerging from recession. Stoller records: "In the year to September 1986, two-thirds of the 40 Independent Local Radio (ILR) companies then on air reported profits, with Capital increasing its pre-tax profits by 80 per cent to £1.7m."
The Radio '86 conference built on this feel-good factor and gave radio advertising a real boost.
"By the spring of 1987, buoyant advertising and cost-cutting, together with the IBA's forbearance on rental and the removal of the Treasury levy, saw the share prices of Piccadilly and Clyde double in a year, and Radio City’s treble," wrote Stoller.
The IBA was persuaded to allow an extra two minutes of advertising per hour, linked to the morning news bulletins which were provided as part of the Independent Radio News (IRN) service.
Sold as Newslink, this was to be a major revenue earner and would eventually turn IRN from a costly expense for the stations to a source of profit. Commercial radio was on its way.
Next month: BSB wins the battle for the first satellite TV licence