Business Update

Government extends frequency payment terms for radio broadcasters

The recent economic downturn has caused a number of advertising-dependent commercial radio broadcasters to reassess business plans, and some licensees may have difficulty paying the currently contracted one-off lump-sum renewal payments for their 20-year spectrum licenses, due next year.

Cabinet has therefore agreed to offer an alternative payment option to the affected commercial radio broadcasters.  This will allow a series of no more than five annual payments incorporating interest at 9.5 percent, plus inflation, in order to make the alternative offers revenue-neutral to the Crown. The 9.5 percent is Treasury’s published discount rate for technology projects.

There will also be appropriate mechanisms for the Crown to have first security over any licenses paid for in this manner until the payments are completed.

Mr Joyce said that this option is designed to provide the radio industry with some short-term flexibility to assist it during the current economic downturn.  It does not represent a decision to move away from lump sum payments when settling other spectrum purchases.