A new future for Local TV in the UK?

Kate Stross, Ofcom Director of ContentLokalrundfunktage 2010, July 7th 2010

A new vision for local television

“I have long believed that the lack of high quality local TV is one of the biggest gaps in British broadcasting.”

Jeremy Hunt MP, Secretary of State for Culture Media and Sport

8 June 2010

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The starting point

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The existing channels

• Wholly commercial channel owned by Guardian Media Group. Now on digital terrestrial, cable and satellite. But programme plans significantly scaled back in 2010

• Community model supported by grants from regional and educational bodies. Mix of professional (mainly freelance) labour and volunteers. Emphasis on training

• Privately owned channel aimed mainly at ethnic Asian community in Leicester. Strong links with broadcasters in India to source content

• Small scale service run on semi-amateur basis. Contains local news and sport.

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• No public subsidies available for local TV

• Thriving local media sector dominated by newspapers and local radio

• Scarcity of suitable analogue spectrum for local TV – and low level of take-up for cable alternatives

• Restrictions on local TV licences - short terms and low-power transmissions

Why has local TV not developed further in the UK?

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UK has well-developed system of regional TV

Map of BBC TV regions Map of ITV TV regions

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• Near monopoly in TV advertising made ITV regional franchises a “licence to print money” (attrib. Lord Thomson of Fleet 1958)

• Broadcasters competed to win licences by making significant public service commitments – including regional programming

• But resulting public expectation of high quality TV programming may have harmed prospects for low-budget alternatives

High quality regional TV supported by “PSB compact” for commercial licensees

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Digital TV and the internet have changed the economics for ITV

Source: Ofcom

Cost Benefit of PSB status for the Channel 3 networkMillions

Ranges between higher and lower values based on current best estimates

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Consumers value local and regional content – especially news

National news on TV

Local/regional news on TV

National newspaper

National radio

Local radio

Local paid for newspaper

local free newspaper

0 20 40 60 80 100

62

54

43

39

38

35

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% saying local and regional content is very important - weekly users

Scores based on respondents importance rating 9/10 on a scale of 1-10. Source, Ofcom research PSB Review 2008/9

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The emerging ambition

• By 2015, credible city-based local network of stations established and broadcasting news and other content on television and online

• Content produced and broadcast on a commercially sustainable basis

• News and content relevant for local audiences contributing to plurality and democratic purposes

• Community engagement and contribution to media skills and training

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22.3

0.80.0

-0.6 -0.6-1.5 -1.9 -2.1 -2.4 -2.4 -2.4 -2.5 -2.7 -2.9

-3.9

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

£ (MILLIONS)

Only London and Manchester could support stand-alone commercial stations in UK advertising conditions (based on achieving a 1.5% audience share)

The economics for fully commercial local TV are challenging

Source: Oliver & Ohlbaum study for Ofcom

Cumulative loss for all 15 cities is (£2.8m)

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Local TV could develop in the UK in a number of ways

Using capacity on an existing or new DTT multiplex

Using new spectrum made available by digital switchover

• Digital capacity could be reserved by Government for a UK-wide local TV network

• Local services could be inserted into a nationwide channel

• Broadcasters could obtain their own local broadcast spectrum either by auction or by reservation

• Opportunity to develop local multiplexes carrying a number of services

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Television regulation measures that might improve prospects for Local TV

Action Comments

Designation with public service channel status

•Order by government could define local TV as “public service” and open the door to the further privileges below

EPG prominence

•Requirement for “appropriate prominence” of PSB channels. on electronic programme guides. Would increase visibility for local TV and encourage investors and advertisers

‘Must carry’ obligations

•Secretary of State has power to extend ‘must carry’ obligations by Executive order for PSB channels.

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Other factors which could help

Factor EffectMedia ownership rules

•Conservative Party has pledged to sweep away any media and/or competition rules that hinder viability of local media

•Could include relaxation of cross-media ownership restrictions

Advertising rules •AVMS offers opportunities for relaxation of some rules for local services (sponsorship, product placement, teleshopping, programme funding etc)

Cost reductions •Increased availability of low cost digital content means local TV can sustain longer services and so increase their credibility

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Next steps..........

• Over the next 12 months Government will examine the economic, technical and regulatory measures, costs and consequences of the various options

• Government has already appointed an independent advisor to build the economic case for Local TV

• Ofcom will provide specific technical and regulatory advice, including in relation to:-– Spectrum issues/DTT capacity issues– Content regulation– Licensing

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Kate Stross,

Ofcom Director of Content

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