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Cautious approval for local TV

14 December 2010

There’s clearly good money to be had in producing weighty reports on the state of the TV industry.

No less than three major reports on broadcasting are published today.

- Nicholas Shott’s long awaited report for Media Secretary Jeremy Hunt on the viability of local TV stations is out today. You can find the full report here. In a nutshell, Shott’s team concludes that local TV could be commercially viable - but only when IPTV gains sufficient market penetration (see below for more detail).

- Never to be outdone on report writing, the BBC has unveiled the final conclusions of its Strategy Review. It pledges a financial review to help it find the savings it needs to make in light of the recent licence fee settlement, and says it will be more open on costs for its services, talent and senior managers. There’s also a typical BBC commitment to put ‘distinctiveness’ at the heart of programme commissions. The report can be found here.

- Finally, the House of Commons Culture, Media and Sport Committee has produced its Channel 4 annual report. It concludes that the previous management ‘overplayed its hand’ when it claimed C4 had a major funding gap, saying that C4’s recent decision to pursue a strategy of self reliance is the right one. And it says that former boss Andy Duncan was paid too much. The report is here.

In fairness, all three reports are worth reading as they reveal much about the direction of travel at the BBC and Channel 4.

But Shott’s report is the most significant, as it gives Hunt a greenlight to press ahead with his cherished plan to introduce a network of local TV stations in the UK in the face of widespread industry cynicism about the idea.

The key line in his report states: “In the long term, local TV can be commercially viable, as and when IPTV gains sufficient penetration.”

Shott, who was initially cool in his assessment of the prospects for local TV in an interim report in the autumn, now seems to think it can work.

He says that’s because the prospects for IPTV have improved in recent months, with Ofcom’s decision not to investigate the launch of YouView in 2011 and the government’s announced plan to roll out superfast broadband to every community by 2015.

IPTV, it’s clear, is the future for local TV. Its non-linear nature means viewers can access the content they want, when they want it. And it’s far more economic than DTT.

He concludes that there’s scope for launching ten to twelve local TV services in the UK and that the cost to do so would be around £25m a year.

A national advertising sales contract between all stations could raise a minimum of £15m, leaving a gap of £10m a year. This could be closed thanks to the BBC’s pledge to acquire locally generated news content for up to £5m a year. And Shott also thinks that local ad revenues could exceed £5m a year. In time, profits could be ‘acceptable’ rather than huge.

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