Paul Römer lobbied in The Hague for months, but the director of television and radio at media group Talpa did not manage it. John de Mol’s company has to pay more than 29.3 million euros over the next three years to keep the FM license of three radio stations. In addition to being Talpa boss, Paul Römer is also chairman of the Commercial Radio Association (VCR), an organization that defends the interests of commercial radio stations.
Römer thought he had cultivated understanding in the House of Representatives to reduce the amounts for FM licenses. Not so. In December, in the last days of his term of office, outgoing minister Stef Blok (VVD) ignored two parliamentary motions that urged this.
Neither Talpa nor publisher DPG receive a ‘corona discount’ and have to pay millions extra for the FM frequency of radio stations QMusic, Radio 10, Sky Radio and Radio 538.
Talpa has to dig deep into the pouch. For the FM transmission of Sky Radio, Radio 538 and Radio 10, Talpa has to pay 3.7 million, 3.7 million and 2.3 million per year respectively; DPG, the publisher of de Volkskrant† Fidelity and The Paroolis assessed annually for almost 3.8 million euros for the FM frequency of QMusic, according to an announcement in The Government Gazette†
Payment for the first year must be received by the Agency for Telecom before February 15, otherwise the licenses will expire on September 1. The new FM frequencies will run until September 1, 2025.
The distribution of and fees for the FM radio frequencies has been a point of contention for nearly twenty years. Commercial broadcasters have to pay a fee when they want to carry their radio signal through an FM frequency.
The fact that costs now have to be made is a setback for Talpa and DPG. 2020 was a crisis year for most commercial channels. Due to corona, the advertising market collapsed by 50 million euros, Römer calculates. “The radio market will have recovered well in 2021, but the corona tick is far from catching up.” Römer believes that the market is paying ‘seven to thirteen times too much’ for the extension of the FM frequencies.
Herbert Visser of RadioCorp, publisher of FM stations 100% NL and Slam FM, agrees with Römer. He points out that the number of FM listeners is rapidly declining due to the rise of digital competition. “People can listen to radio via the internet and flat screens.” Due to the arrival of DAB+, a technology that makes it possible to digitally transfer a terrestrial frequency, the demand for FM is decreasing. “The national FM packages of the commercial stations have a reach of about 60 to 70 percent of the population; DAB+ really reaches all of the Netherlands. So it’s weird to maintain prices while demand is decreasing,” says Visser.
When allocating FM frequencies, the government takes into account the size and programming of a station. A distinction is made between stations with a (musical) profile, such as SLAM FM (dance) and Sublime FM (soul and jazz) and BNR Nieuwsradio (business) and stations that are allowed to broadcast ‘unconditionally’ such as hit stations Sky Radio, Radio 10, 538 and QMusic. The ‘unqualified’ are not tied to a music genre and can target a mass audience with a free repertoire. These stations have to pay a higher FM fee than ‘qualified stations’ that serve a niche market and therefore have a more limited earning capacity.
“The profit margin has been limited in this business for years: 5 to 10 percent,” says Visser of Radiocorp. “We have to compromise to keep everything operational. You need a lot of passion and love to keep it up.” The mandatory costs for FM transmission, together at least 1.5 million euros per year, weigh heavily on the budget, says Visser.
Future Earning Capacity
“When operating a commercial channel, you depend on only one income stream: advertisements. These can be booked quickly, but can also be canceled quickly. You are vulnerable with a small market share,” says Tom Klerkx, who is responsible for the exploitation of Sublime at publisher Mediahuis (market share 0.7 percent).
The Ministry of Economic Affairs engaged a research agency to determine the new price for extending the FM frequencies. Based on future earning capacity, this resulted in a valuation for the lots. Conclusion: niche channels do not have to pay extra for renewal, the unconditional channels do. Talpa protested and is considering an appeal. DPG’s QMusic declined to comment.
The prices for the FM frequencies are a fraction of the amounts paid in 2003 when the government auctioned the FM lots. That sale then yielded 287 million euros.
At the time, De Mol was still lobbying himself and went out to dinner with outgoing State Secretary Cees van Leeuwen (LPF) to inquire about the procedure. To appease the deputy minister, De Mol offered Van Leeuwen free tickets for a concert by The Rolling Stones in Vredenburg later that year. Van Leeuwen declined the offer. De Mol ultimately paid 80 million euros for a frequency of Noordzee FM. That channel no longer exists.
A version of this article also appeared in NRC on the morning of February 14, 2022