The UK's local TV revolution: Is online the TV platform of the future?
Patrick Smith @ TheMediaBriefing Experts' Blog - on 13/8/12
The government is fostering a revolution in local TV, but is it the one that the UK needs? Today is the deadline to bid for licences to run up to 20 TV stations in large cities and conurbations across the UK, broadcasting on Freeview - not via the internet - with the stations launching by 2015, with the BBC contributing some £40 million to fund the technology and original content.
Here's my quick take on Five Live this morning.
I spoke to two companies involved in the bidding process and more on that below, but first here's the rub:
-- Public service deficit: This is the Coalition's solution to the diminishing amount of public service broadcasting (PSB) in regions and local communities. ITV is cutting back its daily regional bulletins and the BBC is under huge budget pressures thanks to a frozen licence fee and a 16 percent real-terms cut in funding. In order to get a licence, the broadcasters must provide "public service" content including news. How that's defined is anyone's guess.
-- Freeview doubts: Ofcom admits that only 74 percent of the population can receive Freeview transmissions and the government's proposal admits this plan will only reach a maximum of 60 percent of UK people (entire areas, such as Hull and Bradford, can't received the signal). By contrast the current government is committed to offering universal broadband of 2MBPS by 2015 (although that's slower than the 3MBPS needed to watch IPTV service YouView). Have the Coalition backed the wrong technological horse?
-- BBC bashing?: Running through the heart of this policy are two treasured Conservative threads: moving power and influence away from London and into UK regions and increasing media plurality, i.e. investing in PSB that isn't the BBC. The plan should be mildly welcomed by BBC bashers such Rupert Murdoch, but whether these channels will be available on BSkyB and other TV platforms remains to be seen.
-- Business models: While there will be some financial support, the independent broadcasters are on their own and will have to build private, advertising-funded media businesses from the ground up. Ask anyone involved in Channel M, the local Freeview TV station for Manchester which closed this year ahead a decade of modest success, and they'll tell you that's quite a tough task.
YourTV's consortium bid
Lin Glover, who has written for TheMediaBriefing on this issue, is a director at Your TV, which is applying today for eight separate licenses, including Birmingham and Manchester. She thinks the project can work and says that her board's stellar cast - including former BBC Trust chairman Sir Michael Lyons - and its experience of commercial radio, will win through.
Advertising will form the basis of the company's revenue model, but Glover stresses that it's not the only way to make money: "Sponsorship and events are going to be as key as advertising. Sponsorship is really undervalued on local TV and with events we have already been thinking about formats," she says.
She suggests that a reasonable target for a local TV station would be for the target audience to tune in for just over one hour a week - which is what Channel 5 currently gets, according to BARB, compared to seven hours, 30 minutes for BBC1.
Glover says there will be an emphasis on original, live programming but only two of Your TV's proposed stations will broadcast 24 hours a day. Much like radio stations, they will have a mixture of programmed and live material produced by professional staff.
There are a mix of bidders for these licences, from genuinely local startups and experienced broadcast industry players like Your TV. And there is apprehension from some that licences will go to companies based outside the areas they are bidding for. That's why Grange Hill and Brookside creator Phil Redmond is launch his own company, Our-TV to bid for the licence in his native Liverpool (YourTV claims it has established local boards in each city it's bidding for).
Oxford startup: 'I want my IPTV'
The licences are popular with a rumoured two to four bidders in every area, but not everyone sees the benefit of applying. Gavin Hyatt is a director at Oxford Television Ltd, the publisher of internet TV service Oxbox.tv. For months he had been planning to bid for Oxford's licence through the Ofcom process, but last week he decided against it and pulled out. Freeview, he says, is becoming a platform of the past.
Hence all Oxbox's video's are published online on the station's own platform and YouTube:
"By the time these services get up and running IPTV will be the main thing," says Hyatt. "4G will be up and running by then and people will watch online. There is an option to go on cable or satellite but that's going to be costly. Plus, you can already watch us on an (internet-enabled) Smart TV."
Hyatt says the unknown costs involved in the whole project make bidding a gamble. And that kind of investment isn't needed for him to grow his audience: "We already have more viewers (online) than we would on Freeview - we got 30,000 in the last month - it's going really well.
"We may as well launch on longwave radio or AM, or launch a print title - that's what I'd compared it to."
Despite the prediction from Lazard's banker Nicholas Shott in his review of the project that stations could survive on costs of £1 million a year - but Hyatt says it would be closer to £2.5 million over two years.
My take
It is still potentially an exciting time for local TV but the story includes so many missed opportunities that one can't help wonder if we'll look back on this as another one.
Hyatt's fears have an air of legitimacy - it doesn't represent a great opportunity for businesses, especially smaller operators, even though the whole scheme is designed to empower local startups.
This was always designed as a stopgap measure before universal broadband and before a business model for local IPTV emerged. As the Lords Communications Committee put it, the case for local services to be delivered online is "overwhelming".
There's nothing stopping local broadcasters innovating and launching online services too - but audience behaviour moves much faster than government regulation and this plan may feel out of date before it's even been put in action.