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BBC Must Finance Local Multimedia Start-Ups With Over £25 Million

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As well as having to find £340 million to finance BBC World Service, BBC Monitoring and most of S4C in the government’s spending review, the BBC must also finance the start-up of local TV and online services.

In a letter to the BBC Trust, culture secretary Jeremy Hunt says…

“The BBC will play an active role in supporting new local television services through a partnership fund providing capital costs of up to a total of £25m in 2013/14 for up to twenty local TV services, subject to any necessary regulatory approval. The BBC will also commit to ongoing funding of up to £5m per annum from 2014/15 to acquire content for use on its own services from these new services. Should capital costs be required earlier then this will be facilitated by access to the existing digital switchover underspend by mutual agreement.”

As part of the government’s localisation agenda, Hunt wants to energise a new market for local TV services…

Except, as the draft conclusion of a review he commissioned established – and as we forecastthere really isn’t a market for such a thing

Instead, there’s just theory about commercially unsustainable city TV channels, and a load of un-met potential by low-quality hyperlocal would-bes. Hunt is now contemplating not so much full local TV channels as a patchwork of operators, possibly relying on IPTV and YouView, in particular.

So, with no real way of bringing local multimedia/TV enterprises in to being commercially, Hunt is parking their funding mechanism within the guaranteed funding of the licence fee – just as he is with the World Service, BBC Monitoring, S4C and even £300 million of the £530 million cost of installing a next-generation broadband network.

It’s a large-scale top-slicing off a licence fee that is no longer the BBC’s own. And, despite Hunt having told BBC Local not to encroach further in the local media market, it certainly gives the BBC a central role in this area.

In 2008, under pressure from local newspaper publishers, the BBC Trust told the BBC it could not add video bulletins to its network of 65 existing BBC Local websites. Since then, the BBC has offered both to syndicate its videos out to local newspaper sites and to start linking to local publishers’ own videos, both with scant actual take-up.

There is much detail yet to be fleshed out about the new plans. For example, on what basis will the money be given out, to whom, and will existing local operators like commercial news publishers be allowed access to this money?

The final review of the local TV market potential is due on Hunt’s desk in December.

3 Responses to “BBC Must Finance Local Multimedia Start-Ups With Over £25 Million”

  1. “Except, as the draft conclusion of a review he commissioned established – and as we forecast – there really isn’t a market for such a thing…”

    Except that, as digitalle suggests, you were wrong then and you are wrong now.

    The interim Shott Review doesn’t conclude that there is “no market for such a thing”. As they realise full well, and virtually all surveys demonstrate, there is great demand for local content – people care about where they live – the problem is finding a viable business model to satisfy it.

    The problem arises because the advertising revenue in most scenarios is inadequate to support a local commercial operation and all the analyses look only at commercial models. If they were to stop looking backwards and start looking forwards and take a look at the potential of a ‘non-profit distributing’, public service model they might find a totally different answer, as might you.

    Get with the programme man!

  2. Sir, to say there “really isn’t a market” for this type of hyper-local news is both disingenuous, extremely patronising and just plain incorrect. If the “web” has shown us anything, it is exactly this, that niche markets are unbelievably popular….what do you think Facebook is? It is the most hyper-local news feed on the planet, and now one of the most value companies on the planet. It’s an idiotic comment!

    This is exactly the sort of business which the coalition govt. MUST encourage if the private sector is to take up some of the slack of public sector contraction, and should be applauded. As a startup digital media company we are working in this field too, so I have a vested interest, but not just because we want to make money…. Having spoken to some very high up people in tv news recently, their apathy and lack of inventiveness leaves me speechless! So here’s a call to arms for anyone interested in starting one of stations should get right on it, and you want some help with the ” nuts and bolts” get in touch with my firm, Yours sincerely, Rupert Hurley , CEO

  3. We are launching a commercial hyperlocal web tv station in California (it’s virtual an unknown concept here) and the U.K. debate is so frustrating…. like the weather, so much comment, but nobody is DOING anything about it.
    The review Mr Hunt commissioned presented theories, not facts. Facts can be generated only by realities – which I face daily as launch our Pasadena Now TV (PNTV).
    PNTV is the quintessential “shoestring budget hyperlocal TV station” (albeit web not broadcast) in a city of 150,000.
    We have retained 5 salespersons who are street selling, with promising results.
    We are testing the “commercial feasibility” and “sustainability” not in theory but in cold fact.
    PNTV should be examined closely as a real-world illustration of the soundness of Mr Hunt’s proposals – or the lack thereof!