Jeremy Hunt's field of TV dreams

SAIL Amsterdam 2005 Local TV (2)Image via WikipediaThis was published originally on TheBusinessDesk.com on August 19. I republish it here for archhival purposes.

THIS week I found myself chairing the first ‘Local TV Summit’ organised by the government as part of culture secretary Jeremy Hunt’s mission to get a TV station in every town and city in the UK.
Hunt has set his DCMS civil servants a pretty ambitious goal of creating sustainable markets for local TV where there currently is none, within a timetable that demands that at least some of the new stations are up and running in time to cover the next general election.

With all the engineering and techie stuff paid for by a £25m ‘gift’ from the BBC, and owned by a single ‘multiplex’ company, the belief is that shoestring local stations will come forward to run services for as little as £500k a year, covering local news, sport, and culture at a community level that existing regional TV stations can’t reach.

At this point I should declare my various interests and prejudices that together probably disqualify me from making any sensible observation on these latest plans for local TV.

As a former newspaper journalist and manager, I was part of the campaign that spiked the BBC’s scheme a few years ago to provide hyperlocal TV services via its regional websites, on the grounds that these would distort the commercial market for the nascent online video efforts being made by local newspapers. Then, in 2010, I was on a panel appointed by the last government as part of a process to replace existing, economically challenged regional ITV news with content provided by bodies called Independently Funded News Consortia. IFNCs would bring together TV companies, newspapers groups, local websites and bloggers to produce multimedia content, much of which would fuel local TV services. The panel reported two days before the General Election was called, and the hostile incoming administration lost no time in discarding our findings. I’m also, obviously, part of TheBusinessDesk.com, which depends to a very large part on revenue from local advertising budgets.

These experiences have made me a confirmed sceptic over the current drive for local TV, but I love to have my prejudices overturned and am always happy to change my mind when someone makes a convincing argument.

I am convinced, for instance, on the need and demand for local content to inform communities about what’s going on at a neighbourhood level and provide them with a means to be connected and have their voices heard. ‘Local TV’ is undoubtedly one way to achieve this.

However, after hearing some very passionate and well-argued views aired at the summit, I have to say my two main worries over local TV remain. They are:

Obsolescence: Jeremy Hunt admitted that the long term future is TV over the internet, which makes TV signals via aerials obsolete, and you no longer need a process to allocate spectrum and  licences etc. Why, then, invest in all the complex and costly engineering to deliver local TV terrestrially when we won’t need it after five years or so?

Revenue: Hunt is admirably refusing to prescribe exactly what business models and structures should deliver local TV, but says the average station will turn over around £500k a year. This would deliver basic TV services with around two hours per day of unique content. Debra Davies, boss of City TV, one of the groups hoping to win the Birmingham local TV licence, says her station would deliver far, far more, with several hours of news, business content, cultural coverage and local sport, and would therefore cost a lot more. (Aug 26 update: Debra reflects on this 'Rolls Royce' model here.) But Birmingham is a big city and offers more opportunities for advertising, sponsorship and even product placement, she says. First year revenues would be around £3m in the first year, and more than twice that after 12 months.
DCMS says the evidence is that this would be new revenue, stimulated by the very arrival of a local TV station, and wouldn’t cannibalise existing local advertising budgets.
When challenged with the fact that local and regional advertising spend across TV, radio and newspapers have been in freefall for years, proponents claim all of this has gone to Google and is just waiting to be enticed back by local TV.
I’m staggered at this mix of wrong-headed assumptions and extraordinarily naive optimism.
Most local advertising lost by newspapers to Google (and the web generally) consists of job and car classified ads that can’t transfer to TV, and I question where former regional TV advertisers will suddenly find the budgets for new local services.
In my view, City TV will sooner find the Holy Grail than £7m of new revenues in the Birmingham advertising market.
Of course, if the revenue forecasts are right, but the size of the local advertising cake is finite, then local TV can thrive only at the expense of existing local media. This will of course, lead to a further decline in local radio and newspapers, and the government’s aspiration to help local media generally to thrive will have a net benefit of precisely zero.
So do I think Jeremy Hunt’s ‘field of dreams’ is a busted flush? Not completely.
There will always be a demand for TV-like services, but the current approach, despite nodding towards the TV-online future, is so firmly rooted in old models that it smacks of a re-enactment society trying to recapture the TV glory days.
The proposed transition model – wedded to old transmitters, spectrum allocation and regulatory obligations - takes the restrictions of the old world and projects them into the new. This will do nothing but hobble real innovation in internet TV services where only a less restricted market will allow communities and media entrepreneurs alike to develop the models of the future.
The government should make the brave move of removing terrestrial transmission from the local TV equation, and divert the £25m into improving broadband connectivity and creating a seed fund for truly local internet TV enterprises working within a loose public service broadcasting remit.
Here, all interested parties – new and old – can compete on a level playing field, trying new approaches, failing at some, but ultimately letting services come to the fore that can fulfil what communities genuinely want.
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