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Local TV is a costly dead end

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13 April 2011

"I'm an optimist!" declares 'Channel 6' bidder, Nigel Dacre, tacitly admitting that everyone else is feeling Eeyore-ish about Jeremy Hunt's proposals for a new local TV network.

Actually, Dacre isn't alone. The DCMS has received more than 50 initial expressions of interest. Most are determinedly amateur and ultra-local - the Batley and Birstall Civic Society! - but others have ambitious plans for a national network of affiliated local stations and big name backers, Greg Dyke and Luke Johnson amongst them.

A creditable aspiration underpins Hunt's plan to have 10 to 20 new local stations on air by 2015; there is a danger of a deficit in democratic accountability as media business models break down, undermining funding for local journalism. Hunt has levers to pull. He has the option of gifting Freeview capacity to create a national 'spine' for the new network and a 'must carry' mandate to ensure a prominent EPG slot. Up to £25m from the BBC's licence fee can support start-up costs.

And yet... every bone in the emaciated body of ad-funded TV cries out that there isn't a sustainable business model here and no pot of gold for independents, even those such as Tinopolis and Two Four who've formed bid consortia.

One bidder forecasts it can match C5's ad revenues (£300m) and programme budget (c. £150m), forgetting about £500m of unrecouped investment. Even if enough national advertising were generated to help support a large number of local opt-outs, how local would such a network be? The word is of budgets of £2k an hour, prompting real concerns about quality and relevance.

The precedents aren't encouraging. Channel M in Manchester is a cautionary tale of over-investment in local content of unproven public appeal. For years ITV has been trying to stem losses on its regional commitments. Hunt's adviser, Nicholas Shott, suggests the future of local video is IPTV via superfast broadband. New digital providers are already taking advantage of the low costs of entry; hyper-local and small scale, they will surely grow.

Creating this local TV network will be a stopgap. Given that so much time has been spent fruitlessly debating how to fund public service plurality, it feels like another costly and time-consuming dead end.

Matt Baker is a freelance writer and consultant

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