Castle FM hopes for a warm reception to its licence bid; Arthur

Sunday Herald, The, Mar 21, 2004 by Arthur MacMillan

THE battle to secure the next FM radio licence to be awarded in Scotland will intensify this week when Castle FM begins a month-long test broadcast in Edinburgh tomorrow.

Castle FM is among the bidders hoping to win approval from media regulator Ofcom, which recently announced that Edinburgh will be the first city to gain one of 16 new FM licences being awarded across Britain. The test broadcast, which runs on 106.9FM until April 18 will be conducted from studios at Napier University's school of communication arts.

The broadcasts are expected to feature a mix of classic hits and new music, local news compiled by broadcast journalism students at Napier, local travel, weather and competitions.

The Castle FM bid is being backed by a consortium of Edinburgh business people, including Sir Tom Farmer, founder of Kwik-Fit, and Sir Angus Grossart, vice-chairman of the Royal Bank of Scotland. It also has the support of broad-casters Sheena McDonald and Andrew Neil, publisher of The Scotsman and Scotland on Sunday, who is a shareholder in the group.

Both Neil and McDonald are directors of Castle FM's holding company, Edinburgh Radio. Emap, the radio and publishing group, who earlier this year acquired a 27% stake in Scottish Radio Holdings, is Castle FM's strategic partner.

McDonald said: "Edinburgh hosts one of the biggest arts festivals in the world, two football teams and is home to the Scottish parliament.

"An FM licence for Glasgow was awarded last year [to Saga FM], and London has loads of them, so a commercial radio station is long overdue in Edinburgh."

But Castle FM, who have appointed Ian McAteer of the Union Advertising agency, as an adviser, will face stiff competition. Donny Hughes, who is heading a bid by Red FM (Radio Edinburgh), led Castle FM's bid before leaving the consortium amid disagreements with other directors, last July.

He said Red FM's three test broadcasts, the latest of which took place in December last year, had shown it was capable of giving a new voice to Edinburgh. "We want to be involved in setting up a radio station that is going to work in the long term for the benefit of the city," said Hughes, who is being backed by Kingdom Radio Group, the Glenrothes-based owner of Kingdom FM, which also holds licences for Clan FM in Lanarkshire,and River FM in West Lothian.

Kingdom FM had an 18% stake in GO-fm, one of the consortiums that bid for the Glasgow FM licence awarded to Saga last November, and it is seeking to expand its market presence.

Last week Castle FM appointed former Scotland rugby captain Gavin Hastings as leader of a supporters' forum which intends to generate public backing for the licence application. However both it and Red FM will face a battle from major commercial radio stations when Ofcom advertises the new Edinburgh licence in June.

Guardian Media Group, the owners of Real Radio, is expected to bid, alongside GWR, which owns Classic FM and 32 local radio stations, but has yet to establish a radio station in Scotland.

Scottish Radio Holdings, which won the first commercial radio licence in Scotland in the 1970s, and is the operator of Radio Clyde, Tay and Northsound, is also expected to bid for the Edinburgh licence, which will be awarded before the end of 2004. SMG-owned Virgin Radio, another failed bidder for the Glasgow licence last year, may also join the bidders. Industry figures believe the winner of the new licence will sell it on for a quick profit, as happened with Beat 106, which was sold to Capital Radio for (pounds) 33 million, only eight months after it launched in 1999.

However, a spokeswoman for Ofcom said the winner of the Edinburgh licence, which will run for 12 years, would continue to be bound by all licence conditions laid down by the regulator.

"If it became apparent that a licence was to be sold on we would immediately conduct a review," she added.

Meanwhile, Radio Forth, also owned by SRH, will tomorrow launch a new billboard and bus shelter advertising campaign across Edinburgh, West Lothian, Falkirk and Fife.