Written by Media, TV

Why Local Television Plans Are Doomed

Jeremy Hunt, the Culture Secretary, has just released details on the latest part of his plan to start very local television services in the UK. I talked a little about this earlier in the year. Allow me to expand a little more.
As you may or may not be aware, local TV is something of a hobby-horse of Hunt’s. He’s been talking about it for years – in the past repeatedly drawing comparison with Birmingham, Alabama, which he says has eight local TV services compared to none in the UK.
I always found that somewhat misleading, since the affiliate nature of US television means that all the four major “networks” are built from local affiliates. Indeed, that’s what ITV used to be until they were allowed to effectively drop the vast majority of their local requirements.
In fact, from what I can tell, Birmingham, Alabama has the usual four network affiliates, each of which – like ITV and the BBC – runs local news programming in the mornings and evenings, as well as a PBS affiliate, and a unique service owned by the University of Alabama. Beyond that, other stations available locally do not provide news or local programming, or they duplicate programming from sister networks. The other thing that’s important to note is that the local affiliate nature of those stations means that their local news programme provide a disproportionately high percentage of their incomes.
In other words, Birmingham AL is not the bustling centre of local television production that it’s sometimes presented as.
Anyway, back to the UK and Hunt’s latest proposals.
He’s listed 65 towns and cities which would be technically capable of supporting a local TV service. By that, I mean that there could be space found on Freeview.
Originally, there was the idea that there’d be a national “spine” that could supply the local TV services supplementary programming to fill out the schedule when they were not able to provide local programming. It’d be foolish to believe that any new local services could run local programming 24/7. The problem was that it became obvious that whoever ran the spine probably wouldn’t want to give up prime space to local affiliates during peak time – precisely when those services would want to broadcast their programmes. So rather than get into the internal wrangling that this might introduce, the idea was ditched. Of course any new service still has to find at least several hours a day of nearly free programming to complement whatever it can produce daily itself. A testcard probably isn’t enough.
Now Hunt has devised a framework whereby a multiplex operator can bid to provide the distribution infrastructure for all the services with £25m available from the BBC licence fund. Whether this is enough to support what might be an expensive set of services with a significant number of transmitters isn’t clear. But that’s what’s on the table.
Technically there don’t seem to be many problems with the transmission side of things. The government is suggesting that geographic interleaved spectrum is used. In other words, spectrum otherwise used by Freeview but available in localised patches. The list of areas in this consultation is based on that availability.
However, I do think that the whole scheme has a number of fundamental flaws:

  • DCMS is saying that the new services will “gain appropriate prominance” in electronic programme guides. They talk about gaining a high channel number on Freeview. Just to be clear – beyond 1-5 on Freeview currently, only channel 8 is currently unused in the first 16 slots. That sits between BBC Three and BBC Four. On Sky, it’s a lot harder, and I can’t see that Sky themselves will want to hand over the primary positions they have for Sky One, Sky Living and Sky Atlantic, all of whom they invest significantly in. Furthermore, the DCMS document talks about Sky offering the new services space in its yellow “Anytime+” service. That’s tantamount to burying the service. The service is only available to a sub-set of Sky subscribers since users have to also buy Sky’s broadband offering to take advantage. While IP will undoubtedly form a part of all these services, it’s still early days for IP as a full distribution methodology. Furthermore, slots of Sky are at a premium since the EPG is effectively “full” (Older Sky boxes do not have enough memory to cope with additional services beyond what we currently have). And aside from acquiring – at considerable cost – a slot on the Sky EPG, there are some not insiginificant fixed costs for broadcasting via satellite. Virgin Media isn’t cheap either.
  • There really isn’t much money in this. The money from the licence fee is going to be invested into the actual transmission chain. There’ll be a “beauty contest” to determine who gets the contract. The only other money is a BBC agreement to acquire up to £5m pa of programming from the new services each year for three years. I think we can probably assume that this will come in the form of local news acquisitions. But spread over a significant number of suppliers, that will almost certainly be a low six figure sum for each service. All other income is going to have to come from advertising.
  • ITV used to “local” local. It still does – to an extent in their largely excellent local 6pm bulletins with opt-outs at other times of the day. But financial imperatives have meant that, as the network became a single company, they’ve tried to get out of this as much as possible.
  • These new TV services will need to be advertiser funded, and that’s not something that has become easier to find locally. The internet has wiped out many local newspapers who, in particular have lost much of their lucrative classified advertising. That leaves display advertising – precisely the advertisers these new TV services will target. In cases where the local newspaper group is not the company running the television service, that will lead to diminshed revenues for all parties.
  • There’s a strongly held belief that when the Radio Authority was busy licences dozens of new services in the 90s, they actually introduced too many stations. In recent years we’ve seen groups pressure Ofcom to reverse the trend and allow more networking. Recently that has seen Heart, Capital and Kiss network more and more programming. The profitability is to be found in national and quasi-national networks – not local ones. Note that obviously there are some very good, very local services, but in medium to larger markets, localness in radio is undoubtedly disappearing. What’s more, a significant number of small stations actually lose money, and we’ve seen licences handed back to Ofcom.
  • The initial 65 areas identified for local television services have been determined, seemingly, on a technical level. While it’s entirely defendable that there should be room for a London TV service, there surely isn’t a large enough footprint for areas like Elgin, Bangor, Haywards Heath, Barnstaple or Salisbury to sustain a service? Is the population large enough? Is the advertiser base locally significant enough to support a high cost medium like television?
  • Even when done cheaply, television is expensive to produce. While it’s entirely possible for one person to record the pictures and sound, and even to appear on screen, the time and resources required are significant. And that adds to your costs.
  • National advertisers almost certainly won’t be able to use these services. For them to place their advertising on local services, the stations will need proper research. The BARB data that the television industry works with can only be broken down to a regional level. That’s due to sampling. BARB has something like 5,100 homes. While that seems like a lot, it’s broken out across each of the thirteen TV regions. So you have to have a statistical reliable sample in each region. For BARB to provide data for small local TV services in the same manner as it does for national services, the panel would have to increase many-fold. By way of comparison, the radio ratings body, RAJAR, hands out diaries to 100,000 people a year. While the two numbers aren’t directly comparable as radio respondents only keep their diaries for a week, they only produce numbers four times a year. Either way, the scale of BARB would have to increase substantially, to an unsustainable cost level. The reality is that local television services will miss out.

Set against all these negatives, I realise that there are a handful of local television services around the country that are making ends meet to a greater or lesser extent. Internet delivery is the future, and would strip out the enormous broadcast costs, although IP delivery isn’t free. Especially not for video. Furthermore, there’s the not-inconsiderable issue of rural areas having disappointingly slow broadband connectivity.
It’s possible that local newspaper or radio groups might find a viable way to run their current businesses alongside a television operation. But I don’t believe that this really needs government intervention. I’ve no doubt that expressions of interest will be made. How serious they’ll be and how economically viable is another question altogether.
I’m deeply sceptical.