Ofcom today accused GCap Media of a "gross failure" of senior management and of obstructing its investigation into a phone-in scandal, which contributed to the communications regulator hitting the radio group with a record £1.11m fine.
The regulator said that GCap's conduct during the investigation and lack of full disclosure of the facts had meant the financial penalty was greater than it otherwise would have been.
In a devastating critique of the radio company's management, Ofcom said GCap's behaviour had been "inexcusable" and it had shown a "fundamental disregard" for its broadcasting obligations.
GCap was landed with the biggest ever fine imposed on a UK commercial radio company for its competition, Secret Sound, which ran on 30 of its "One Network" group of stations in January last year.
Ofcom was alerted after a whistleblower alleged that GCap had deliberately selected entrants with wrong answers to go on air, thereby prolonging the amount of time the competition ran and encouraging more people to pay to enter.
In one of the most serious charges levelled at GCap, Ofcom said the commercial radio group had hindered its investigation by refusing to provide details and submitting information that was ambiguous.
"This was the first case of its kind in which the behaviour of the licensee (or as in this case, the parent company acting on behalf of the licensees) had effectively hindered Ofcom's investigation," said the regulator.
Ofcom added that GCap's efforts to remedy the breaches of its licence obligations were also "entirely inadequate".
"GCap was neither as full or as frank as it should have been either with Ofcom or its listeners," it concluded.
Ofcom said GCap had made matters worse by its behaviour after the incident had come to light.
The regulator said the company's internal investigation "did not appear… to have been either thorough or extensive", with no formal written report produced and GCap's board given only a "verbal report" of what had happened.
Ofcom said GCap had promised to offer listeners a refund, but no details were published of how they might do this.
In the event there was a single listener refund of £2, which the regulator dismissed as "wholly inadequate".
Ofcom found the practice of deliberately selecting entrants with wrong answers to go on air for the Secret Sound competition had been agreed at a programme meeting by a "director" with operational responsibility for the content and production of network syndicated programming.
GCap said the "director" was a "mid-ranking employee" and not a member of its senior management.
The regulator concluded the intention had been to not to generate extra revenue but "increase the 'entertainment value' of the competition".
"Ofcom took the view that the production team's actions were calculated and deliberate, and evidenced a complete disregard for those listeners who paid to enter, as well as the audiences overall. This was inexcusable," it said.
Ofcom added that a total of 297,215 entries were made to Secret Sound, generating total revenue of £104,536.
GCap, which has recently been taken over by Global Radio for £375m, received 41% of this - £42,852 – although the actual cost to competition entrants would have been greater because of additional operator charges.
In a statement, GCap Media said today: "The competition ran over 16 months ago. Since then GCap has undergone two senior management changes and a change of ownership, now being wholly owned by Global Radio.
"Today's ruling is taken extremely seriously by GCap. The new management and owners look forward to building a strong future for the commercial radio industry where the trust of its listeners and of its regulator is of the highest importance. "To that end the new management are already putting in place new measures to build on the already improved controls implemented at GCap and the company has not run premium rate competitions of this kind for the last 12 months."
The 30 stations that ran the competition are:
2CR FM Two Counties Radio
97.6 Chiltern FM (Dunstable) Chiltern Radio Ltd
96.9 Chiltern FM (Bedford) Chiltern Radio Ltd
Beacon FM (Shropshire) Beacon Broadcasting Ltd
Beacon FM (Wolverhampton) Beacon Broadcasting Ltd
Broadland 102 Radio Broadland 102
Wirral's Buzz 97.1 Marcher Radio Group Ltd
Champion FM Marcher Radio Group Ltd
Coast 96.3 Marcher Radio Group Ltd
Fox FM First Oxfordshire Radio Company Ltd
Gemini FM (Exeter) Gemini Radio Ltd
Gemini FM (Torbay) Gemini Radio Ltd
GWR FM (Bristol) GWR (West) Ltd
GWR FM (Swindon) Wiltshire Radio Ltd
102.7 Hereward FM Hereward Radio Ltd
Horizon FM The Milton Keynes Broadcasting Co Ltd
Lantern FM Lantern Radio Ltd
Marcher Sound (Wrexham) Marcher Radio Group Ltd
Mercia FM GWR Group Plc
Mercury FM (Crawley) Radio Mercury Ltd
Northants 96 The Northamptonshire Broadcasting Co Ltd
Orchard FM Orchard FM Limited
Plymouth Sound Plymouth Sound Ltd
Q103 FM Cambridge and Newmarket FM Radio Ltd
RAM FM (Derby) GWR Group Ltd
Severn Sound FM Cotswold Broadcasting Ltd
SGR Colchester East Anglian Radio Ltd
SGR FM (Ipswich) Suffolk Group Radio Ltd
Ten 17 Harlow FM Ltd
Wyvern FM Radio Wyvern Plc
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