Class FM’s licence to expire after 7 years

Published: 1 August 2016

Class FM’s media service licence for 2009-2016 for commercial radio broadcasting with a national coverage, currently operating without competitors will expire this November. With the new call for tenders, the Media Council aims to extend coverage in order to provide access for an increased number of rural listeners in Hungary and to upgrade the broadcasting network. At this week’s meeting the Media Council accommodated Mediaworks’ request for the competent authority’s preliminary consent for the company to acquire control over Pannon Lapok Társasága. The final decision rests with the Hungarian Competition Authority. Other decisions included the approval of a new radio station in Gyula and the evaluation of tenders for small-community radio stations is also underway.

National commercial radio broadcasting licence to expire and preparations for a new call for tenders

The Media Council called on the office of the National Media and Infocommunications Authority (NMIA) to develop a new national commercial radio broadcast frequency plan as the fixed-term licence of national commercial radio station Class FM will expire this November after 7 years. According to the Media Act the licence can be granted for up to 7 years with the possibility of renewal for 5 years upon request. Acting as the body responsible for the efficient and reliable management of the set of frequencies available for media services entrusted to it, the Media Council has the duty and right to decide how radio frequencies are utilised. This is to ensure that changing market conditions, broadcasting practices and technological progress are taken into account in frequency management. In each case when a licence expires, the Council examines the value and composition of the set of frequencies.

An exceptional case of frequency utilisation is when the previous provider is granted the right of use for an additional period. In accordance with the applicable legal provisions, Class FM’s service provider submitted its request for a new contract for the expiring licence in time. Within the scope of exercising its ownership rights, when renewing media service licences the Media Council may decide at its own discretion whether to exercise its right of disposal, i.e. utilise the media service option, or not, and if it does, whether to undertake a tender process or renew the previous media service licence. According to the relevant legislation, the Media Council may consider the request within the powers conferred to it by law and in this particular case it did not accommodate the request.

Parallel to this decision, the Media Council also organized the development of a new tender plan: by the end of the year, a new service with an extended coverage will be available to tenderers, thereby leaving the door open for Class FM’s provider to continue its radio broadcasting activity should its tender be successful. The Media Council called on the Office to explore options to expand the broadcasting network in currently unserviced areas in order to provide access to a national radio station and ICT resources for tens of thousands of Hungarian citizens.

The development of the frequency plan and the draft call for tenders is expected to conclude within a few weeks; the Authority will provide information on the publication site on its website and in a notification. Interested parties will have weeks to submit their opinions regarding both documents. The drafts will be finalised by the Media Council within 45 days from the last day of public display, also indicating the deadline for submitting tenders.

Preliminary consent from the competent authority in the case of Mediaworks and Pannon Lapok Társasága

At its Monday meeting, the National Media and Infocommunications Authority’s Media Council accommodated the request for the competent authority’s preliminary consent to Mediaworks Hungary Zrt. acquiring sole control over Pannon Lapok Társasága Kiadói Kft. The final decision in this matter rests with the Hungarian Competition Authority (HCA). With regard to procedures of the Hungarian Competition Authority for authorising mergers between companies, the Media Council is responsible for conducting a procedure as the competent authority to ensure that mergers between companies on the media market do not cause a situation where one operator gains a dominant position which could lead to downgraded content offering. It is within the remit of the HCA to decide whether mergers can be authorised.

New radio station in Gyula, the evaluation of tenders for small-community radio stations is also underway, notices issued for failure to submit annual reports

In the “Gyula 90.5 MHz” call for tenders for local radio broadcasting, the Media Council decided to award the rights of use for the currently unutilised frequency to the only tenderer, Telekom Békés Kft., for its service planned under the name “Mega Rádió Gyula“. Responding to the “Velence Meleg-hegy 90.4 MHz” call for tenders for local frequency, Fehérvár Rádió Kft.’s tender was deemed formally invalid due to the failure to pay an outstanding media service fee and since this was the only tender submitted, the Media Council established that the call for tenders as a whole was unsuccessful. When reviewing the content of the only tender submitted in response to the “Kisvárda 93.4 MHz” call for tenders for local radio frequency the Media Council called on the tenderer to remedy the deficiencies. When reviewing the formal requirements of the tenders submitted for the conceptual utilisation of small-community radio media service options the Council also called upon every tenderer to remedy the deficiencies.

The Media Council warned 15 radio stations and 3 TV channels and imposed a smaller fine on 5 radio stations and 6 TV channels due to their delay or complete failure in submitting the annual report required from a specific set of media service providers.

Background for the decision on the national commercial radio broadcasting licence

The frequency package used for a single national commercial radio station is the most attractive frequency in Hungary and an important part of national frequency resources. Similarly to other regional or local radio stations, its utilisation may not grant an unlimited licence to any provider. The law sets a time limit for fixed-term utilisation as it is by no means certain that a radio station that submitted a successful tender based on tender conditions specified 7 years ago would also be successful in a call for tenders issued and evaluated in the current media market environment, with several years having passed; however, the rational commercial utilisation of the above frequency requires a predictable medium-term period of at least several years. Licences for the use of frequencies for communication purposes are also valid for a fixed term, but may be extended or made available to the market again. This is the only way to ensure that operators use every part of the limited amount of national radio spectrum available responsibly, as intended, by keeping the objectives of general interest in mind and providing added value, under sound frequency management by the authorities, with the aim of ensuring equal opportunities to all Hungarian citizens in accessing ICT resources.

In the past 7 years, media market conditions have changed to such an extent that it is appropriate for potential tenderers to compete on the basis of tender conditions adjusted to the current situation, as expected in a diverse media system. The initial tender conditions were laid down in a media-market, economic and technical environment significantly different from the one we are experiencing today. During the economic crisis, there were still 2 national commercial radio stations competing for listeners and advertisers; however, Class FM has been the only one operating on the market for 4 years. Should the Media Council enter into a contract with Class FM for another 5 years, it would preserve the conditions that prevailed 7 years ago and hinder the development of the radio market. On the other hand, a different type of utilisation is only possible through a new call for tenders.

A new call for tenders for commercial radio broadcasting with a national coverage area also offers an opportunity to expand the current level of coverage by including new rural frequencies.

Since the entry into force of the Media Act, the radio station has violated media administration laws 12 times, with issues at dispute including major and repeated violations. In the most serious cases, the radio station violated age-rating rules and, in one instance, the rules on respecting human dignity with one of its programmes discussing a crime committed in a freshman camp that caused a massive public outcry.