Written evidence submitted by the BBC
Executive
STRUCTURE OF
THIS RESPONSE
— BBC's role in regional and local media
— Plurality in region and local media
— BBC Partnership Proposals
— Public Policy Interventions
EXECUTIVE SUMMARY
Despite, or perhaps because of, globalisation,
local and regional news has proven to be of enduring value to
UK citizens. Audiences continue to consume it extensively and
value its role in a democratic society.
For over eighty years on the radio, 50 years
on TV and recently online, the BBC has served the public with
independent, impartial and accurate news about their communities.
With its news and other Nations & Regions programming, the
BBC has supported civic life and public debate across the UK and
helped to build a sense of place within communities. This critical
role is captured in the BBC's public purposes to "represent
the UK, its nations, regions and communities" and "sustain
citizenship and civil society". BBC Trust research has
confirmed that licence fee payers regard it as a core part of
the BBC's public service remit[71]
and the Trust has therefore been clear that it must be a priority
of the BBC to serve local and regional audiences well.
The BBC delivers its purposes through a range
of dedicated news output for the devolved nations, English regions
and local communities, as well as network news output that provides
information and analysis for UK-wide audiences. The BBC has a
strong commitment to deliver a range of perspectives and richness
of coverage that reflects the diversity of the nations and regions,
to a UK-wide audience.
In Scotland, Wales and Northern Ireland, the
BBC has sought to reflect the new democratic and cultural needs
created by the process of devolution. Across the English regions,
the BBC's dedicated services explore the major issues facing local
communities and play an important role in the democratic process.
The BBC's nations/regional TV bulletins at 18:30 are the
UK's most watched news programme; on radio, the BBC offers a speech-based
local service to an older audience demographic underserved by
commercial local radio in England as well as dedicated stations
for the devolved nations: Radio Scotland, Radio Wales and Radio
Cymru, and Radio Ulster and Radio Foyle. For the past eight years,
the BBC has provided comprehensive online news and information
to audiences across the Nations and English regions. Going forward,
the BBC remains fully committed to its role in serving local communities
with trusted, independent and impartial journalism, and regards
this as a core part of its public service mission.
The BBC's news provision has been complementary
to that of commercial provision, primarily from local newspapers,
regional commercial TV and local radio. However, digital economics
is now posing major challenges to the business models that have
traditionally supported investment in news by these providers.
It has been widely noted that structural and cyclical factors
are contributing to significant declines in both the circulation
levels and advertising revenues obtained by the local and regional
press. This has led in some cases to a reduction in editorial
staff and investment, with local media groups seeking to make
the transition to digital business models.
These market developments have thrown into focus
the debate over the meaning of plurality within regional and local
media in the digital age: a debate in which Government, Parliament,
regulators and the industry have all engaged vigorously. While
a relative degree of consensus has emerged on what plurality of
provision would entail in some areas, such as maintaining two
public service competitors in regional TV news, in other areas
there is less agreement on the desired public policy outcomes
and means of achieving them.
The BBC has also long been committed to plurality
to meet audience expectations: for example, where it can stimulate
competition for quality, audience choice and act as a democratic
safeguard. Diminishing choice and competition in news is not in
the public's interest.
There is clear public value in the BBC sustaining
investment in news and other content areas that are valued by
local audiences, at a time of reduced investment elsewhere at
the regional and local levels. At the same time, the BBC must
open-up its news infrastructure to support continued delivery
of regional news beyond the BBC. This commitment is at the heart
of the BBC's partnership proposals. The BBC Trust challenged BBC
Management to develop sustainable partnership proposals. In doing
so, the Trust stressed that the proposals should support the delivery
of public service broadcasting, without compromising the BBC's
delivery of its public purposes or its independence, for which
the BBC Trust has a Charter-enshrined duty to protect.
In response to this challenge, BBC Management
has developed proposals. The BBC can act as an "enabler"
of plurality in regional news in the following ways:
— co-operate on the "means of delivery"
to reduce unnecessary duplication and the high fixed costs of
multiple provision; and
— support existing players transition from
traditional to new delivery models and reduce barriers to entry.
We have a good track record to build on. In
Scotland, the BBC's partnership with the Gaelic Media Service
(GMS) has seen the successful launch of the Alba digital TV service
on Freesat, with the hope that it might soon go onto DTT and cable.
The remit of BBC Alba is to serve Gaelic speakers, those learning
the language, and those interested in the language and culture.
Under the partnership, the BBC supplies news content to the channel.
In Wales, the BBC and S4C have collaborated in a successful three-year
Strategic Partnership since 2007 and a renewed partnership
is in development.
To help preserve plurality in regional news,
the BBC has formulated a comprehensive partnership offer whereby
it will make available—either to ITV plc or, under a new
model, to a replacement set of news consortia supplying news on
Channel 3—its own facilities including desk space, studio
and gallery time, technology and a common picture pool. The scope
of the partnership offer is set out in the joint Memorandum of
Understanding with ITV plc. The partnership should be more valuable
to new providers of regional news on Channel 3 without ITV's
existing infrastructure and cost base. Taken together with the
benefit left to ITV from its regulatory assets post-2012, alongside
the advertising available for the slots, the total benefit should
be sufficient to fund a viable, high quality regional news service
on Channel 3.
In addition to the BBC's regional news partnership,
we are developing a range of options that could help support diversity
in the provision of news at a local level. As outlined in our
response to the Government's Digital Britain report, we
are aiming—subject to Trust approval—to share the
BBC online video news content with newspapers. We will provide
the rest of the industry with access to the BBC's College of Journalism
online training resource from this summer. The BBC is also exploring
the scope for partnership with local TV and sharing some BBC local
audio content with local community and commercial radio, as proposed
by the Myers review for Government. In developing the options,
we recognise the need to be sensitive to the potential impact
of partnerships on the wider market.
While the BBC itself is not immune from the
pressures of the current economic climate, it recognises that
access to public funding brings with it a responsibility to help
the wider creative sector. But the scale of the challenges facing
local media means that BBC partnerships should be part of a long-term
solution that involves the transition to new business models and
the use of existing regulatory assets to support new suppliers
of regional news.
THE BBC'S
ROLE IN
REGIONAL AND
LOCAL MEDIA
For over eighty years on the radio, 50 years
on TV and recently online, the BBC has served the public with
independent, impartial and accurate news about their communities.
With its news and other Nations & Regions programming, the
BBC has supported civic life and public debate across the UK and
helped to build a sense of place within communities. This critical
role is captured in the BBC's public purposes to ''represent
the UK, its nations, regions and communities '' and ''sustain
citizenship and civil society ''. BBC Trust research has confirmed
that licence fee payers regard it as a core part of the BBC's
public service remit[72]
and the Trust has therefore been clear that it must be a priority
of the BBC to serve local and regional audiences well.
The BBC is therefore strongly committed to offering
high quality, relevant journalism that reflects the issues which
are important within a devolved UK. This is demonstrated in our
range of dedicated news output for the devolved nations, English
regions and local communities, as well as network news output
that provides information and analysis for UK-wide audiences.
The BBC's investment in the nations & regions across the UK
supports a comprehensive range of multi-platform services:
— dedicated news, current affairs and political
programming for the nations and English regions. On TV, the BBC's
nations and regional news bulletin at 6.30pm is the UK's most
watched news programme;
— 40 local radio services in England;
— 6 nations radio services including
Welsh and Gaelic stations; and
— 60 BBC local websites plus Welsh,
Gaelic and Irish language websites.
The ability of the BBC's nations/regional TV
news to connect with audiences—especially during times of
emergency—was recently highlighted with the early February
snowstorms bringing 8 million adult viewers to the 18.30 bulletins
across the UK. However, reach to BBC's nations/regional news on
linear platforms is under pressure as audience consumption patterns
change.
At the UK-wide level, the BBC has recently put
in place a new strategy to improve the clarity, range and richness
of its network news coverage of the devolved nations, following
a BBC Trust review.
Given the challenges to the regional/local media
ecology (see below), the BBC's continued commitment to well-resourced,
high quality services for the nations and regions is vital.
The BBC will continue to aim to deliver news
in a distinctive way that complements commercial media. This is,
in part, through the nature of its service portfolio and editorial
offer. For example, the BBC's impartial news has complemented
the strong editorial presence audiences often want from their
newspapers; BBC speech-led local radio contains a richer news
offering compared to the more music-driven commercial offer; and
the BBC local websites , trusted on news, sport, weather and information,
seek to link to those provided by local newspapers online. In
part, the BBC can complement commercial provision in its target
demographic (contrast commercial radio's audience, two-thirds
under 45 [73]
with BBC local radio's specific duty to target older listeners).
The geography of commercial and BBC offers also
differentiate their provision. This is evident in the BBC's 60 local
websites, serving around 1 million users on average, in contrast
to the 1,100 local newspaper websites tending to serve a
far smaller "ultra-local" geographic area. It also applies
to radio: Ofcom recently concluded that commercial radio stations
serve fairly tightly defined areas "which are in most cases
considerably smaller" than BBC local areas.[74]
It is important that the BBC's approach is sensitive
to the wider market while delivering strong public value. The
BBC's Local Video broadband plans had been designed to meet audience's
desire for improved regional and local services from the BBC,
as identified by BBC Trust research. However, the proposal raised
market impact concerns in the current climate. Its rejection by
the BBC Trust under the Public Value Test framework should give
commercial media breathing space in the transition to new online
business models. The Trust asked the BBC Executive to respond
to the remaining challenges of ''representing the UK, its nations,
regions and local communities'' with a series of smaller, targeted
interventions focused on improving the BBC's existing TV and radio
offering for communities across the UK.
PLURALITY IN
REGIONAL AND
LOCAL MEDIA
These challenges facing regional and local media
have thrown into focus the debate over the meaning of plurality
within regional and local media in the digital age: a debate in
which Government, Parliament, regulators and the industry have
all engaged vigorously. While a relative degree of consensus has
emerged on what plurality of provision would entail in some areas,
such as maintaining two public service competitors in regional
TV news, in other areas there is less agreement on desired public
policy outcomes and means of achieving them.
There remains a strong demand for news about
"where I live". Overall, over 90% of adults use media
to source local information on a regular basis.[75]
Among other sources, this usage ranges across regional TV by ITV
and the BBC (where each region typically serves audiences of 4million)
to city-based local TV such as Manchester's Channel M, from the
BBC's 45 local radio stations (typically with a 60km radius)
and the c 340 commercial providers to over 100 community
radio stations (typically a 5km radius), and from the BBC's 60 Local
websites to the 1,100 offered by the UK's 1,300 local
newspapers.
The UK has a mixed news economy, reflecting
different editorial approaches and audience expectations. Channel
3 licensees have supplied commercial TV news to audiences
in the nations and regions as an alternative to the BBC. The PSBs'
impartial news has complemented the different editorial approach
audiences often want from their newspapers. A plurality of content
has traditionally been supported by complementary revenue streams.
All the research suggests that audiences attach
a high value to the availability of a wide range of high quality
news sources at the national, regional and local level.[76]
The model of competition between the BBC and ITV has widespread
public support: three quarters of those questioned in Ofcom's
recent research agreed that it was important that more than one
of the main TV channels provides nations/regional news.[77]
TV news sits alongside newspapers, radio and the internet which
offer additional choice often at a more local level. A plurality
of nations and regional news suppliers is also an important democratic
safeguard. Local media play a vital role overseeing/scrutinising
public life and making voters better able to hold those in power
to account. Separate news for the nations of Scotland, Wales and
Northern Ireland is necessary to reflect their different political
institutions and cultural make-up. The new politics that devolution
has brought about requires a vibrant, widely accessed media to
report and help sustain them both at a nation-wide, and a more
local, level.
Across virtually all age groups, people's interest
in locality and the area that surrounds them has increased significantly
over the last two decades, particularly so for those under the
age of 45.[78]
Source: Redefining Regions. The Future Foundation
(September 2004)
This is supported by Government[79]
and Ofcom research.[80]
The importance people attribute to the "regional"
and "local" are matched by their active interest in
news: audiences continue to consume it extensively and to value
it for its role in democratic society.
MARKET CONTEXT
Despite this continued interest in and use of
local media by UK citizens, economic trends are putting pressure
on many existing business models and their ability to meet the
demand of consumers. Above all, the digital revolution has seen
the revenues of traditional media diminish as audiences and advertisers
migrate online, while also demanding increased investment to meet
new, digital patterns of consumption. These structural shifts
are now combined with a severe cyclical downturn in revenue. Although
the digital revolution does present some opportunities to providers
of regional/local media (eg citizen journalism), there is a growing
industry consensus that the overall picture is one of real financial
difficulty.
The continued provision of ITV's regional news
is under pressure from a range of factors: growing competition
for audiences from multi-channel, the reducing value of analogue
spectrum and the current downturn in advertising. As a result,
ITV plc has scaled back its commitment to regional news in order
to save costs.
The BBC also recognises the significant economic
challenges facing the provision of English language news media
in Scotland and Wales. In Scotland, research suggests people identify
most closely with their local area—more closely than with
Scotland and more closely than with the UK. Scotland itself has
been defined as a "nation of regions". In Wales, it
has been argued that there is a growing "information gap"
characterised chiefly by:[81]
— The high penetration of London-based
print media, and a weakening indigenous newspaper market, with
only 14% of the Welsh population take a local daily morning paper;
21% take local evening papers and 7% paid-for local weeklies.
— The declining contribution of ITV Wales
across English language news provision.
— The generally poor portrayal of Wales
across UK PSB and commercial networks, which the BBC is addressing
through a substantial increase in targets for network TV production
from the nations.
The pressures also exist in Northern Ireland
but are perhaps less severe at the moment. UTV itself believes
that its news service could be provided on a commercially sustainable
basis for the foreseeable future. UTV has recently expanded its
news/current affairs output.
Local TV has, to date, seen slow growth and
limited provision. Some stations, such as Solent TV have closed
(in 2007) and others, such as Six TV and GMG's Channel M have
seen profits/operating margins fall.[82]
Ofcom is creating more opportunities for local TV by releasing
the interleaved DTT spectrum. It may be the case that local news
content can also be delivered efficiently via broadband and on-demand
platforms.[83]
In radio as in TV, commercial services, including
local stations, have seen revenues fall. Revenues have been declining
by an average of 2% per year in the past five years[84]—largely
as a result of declining listening hours. This has contributed
towards consolidation in the sector and some parts of the industry
looking towards a networking model. New digital activity does
offer some opportunities to the sector. Ofcom recently forecast
that online revenues could more than double to over £45million
in 2012-13 and already 57% of radio stations now offer podcasts
or on-demand radio.[85]
However, new opportunities appear insufficient to offset declining
listening and revenues. This picture of the local radio sector
is complemented by community radio services. Typically serving
an audience over a 5km radius, Ofcom have issued licences for
178 of these "ultra-local" services, of which 118 have
now launched.
The impact of the digital revolution and current
market conditions on the regional/local newspaper sector has been
particularly stark. They are facing a severe cyclical downturn
in revenues combined with a structural shift of classified advertising
to the internet. In 2003, regional newspapers had over £2billion
classified advertising spend—almost five times more than
the equivalent spend on the internet. In 2009, it is estimated
this figure will have declined to under £1.5billion and will
be nearly as low as one-third that of online.[86]
This decline has been driven by competition from new market entrants
in specialist national classified advertising online, such as
autotrader.co.uk, monster.co.uk and rightmove.co.uk. The consequences
of the pressures on circulation and revenues are already visible:
60 newspapers closed in 2008 and there were around 900 editorial
staff redundancies.[87]
The sector has already moved towards consolidation.
On a national level, the top 10 newspaper groups account
for 90% of regional/local newspaper circulation. At a local level,
in many areas the market is more consolidated: Johnston Press
has 96% share of circulation in Leeds, Archant has 82% share in
Norfolk, and GMG has 63% share in Manchester (along with its TV,
radio and local news and information website offers in Manchester).
However, in some areas it is relatively unconsolidated.[88]
Against this backdrop of great challenges ahead,
there is some evidence that evolving digital offers could offer
some future revenue streams to regionals. These include "ultra-local'
websites. Trinity Mirror has launched 30 "hyper-local"
websites and Northcliffe's "micro-site" strategy has
generated 19 such sites for Croydon. The Hull Daily Mail
has 30 journalists available to record video and Johnston
Press states it is already publishing 1,300 videos per month
on its 323 websites.[89]
Ofcom forecast that if regional/local newspapers continue to evolve
their offers (including, for example, by more effective targeting
of advertisements), they might treble their Average Revenue Per
User (ARPU).[90]
However, the digital opportunities are very unlikely to compensate
for lost print revenues.
BBC'S PARTNERSHIP
PROPOSALS
The structural challenges facing the regional
and local media sector will necessitate new commercial combinations
and partnerships that were unimaginable several years ago. Public-private
partnerships will also have a role to play. The security of licence
fee funding, not enjoyed by the rest of the media market, places
a responsibility on the BBC to work with others to help create
a sustainable future for local media. The BBC Trust challenged
BBC Management to develop partnerships to support the wider PSB
ecology. In doing so, the Trust stressed that the proposals should
create value and so enhance the delivery of public service broadcasting,
without compromising the BBC's delivery of its public purposes
or its independence, for which the BBC Trust has a Charter-enshrined
duty to protect.
In response to this challenge, BBC Management
has outlined a series of partnership proposals designed to create
sustainable financial and other benefits across the broadcast
sector and wider creative economy. The BBC can act as an "enabler"
of plurality in regional news in the following ways:
— co-operate on the "means of delivery"
to reduce unnecessary duplication and the high fixed costs of
multiple provision; and
— support existing players transition from
traditional to new delivery models and reduce barriers to entry.
We have a good track record to build on. In
Scotland, the BBC's partnership with the Gaelic Media Service
(GMS) has seen the successful launch of the Alba digital TV service
on Freesat, with the hope that it might soon go onto DTT and Cable.
The remit of BBC Alba is to serve Gaelic speakers, those learning
the language, and those interested in the language and culture.
Under the partnership, the BBC supplies news content to the channel
and makes a contribution to its overall funding. In Wales, the
BBC and S4C have collaborated in a successful three-year Strategic
Partnership since 2007 and a renewed partnership is in development.
Partnerships are an important feature of the BBC's work in Northern
Ireland including commissions with other broadcasters (including
RTE and TG4) and collaborations on cultural, educational and sporting
projects with a wide range of local partners.
Over recent months, we have been developing
ways to open-up our existing news infrastructure and assets to
support provision beyond the BBC. The development of partnership
ideas has been shaped by a number of key principles:
(i) the BBC's independence, delivery of public
purposes and the quality of its news output must be maintained;
(ii) they must create value not simply transfer
it;
(iii) they must not undermine plurality and distinctiveness
of news provision; and
(iv) they must have sufficient flexibility to
enable the evolution of regional/local news as technologies and
audience behaviours change.
We also recognise the need to be sensitive to
the potential impact of partnerships on the wider market. Any
partnership arrangements will need to comply with competition
law and State Aid requirements.
Sustaining Regional News
To help preserve plurality in regional news,
the BBC has formulated a comprehensive partnership offer whereby
it will make available—either to ITV plc or, under a new
model, to a replacement set of news consortia supplying news on
Channel 3 (see below)—a comprehensive range of resources.
The scope of the partnership offer is set out
in the joint Memorandum of Understanding with ITV plc. We recognise
that ITV is now talking about retreating entirely from its regional
news commitment. Should they do so, the BBC believes that it should
offer the partnership to new providers. We estimate that the partnership
could be more valuable to new providers of regional news on Channel
3 without ITV's existing infrastructure and cost base. Benefit
to consortia in operating costs is likely to be at least £10 million
p/a at full roll-out (this assumes that the BBC charges at incremental
cost for the majority of services/facilities under the partnership).
The proposed partnership would also enable regional
television news providers to access a proportion of BBC's infrastructure
and facilities including desk space in the main news centres and
local bureaux; studio and gallery time; and production technology.
The partnership offer is focused on England and Wales. The creation
of large regional news centres could facilitate, over time, the
participation of other partners, such as educational, community
and training bodies.
The partnership would also enable ITV's regional
news programmes to share some basic raw material gathered by the
BBC's regional news teams. Exclusive stories and features would
not be pooled to preserve the distinctiveness of both parties'
regional news output.
In Scotland, the BBC and STV are currently in
discussion about a wide-ranging partnership, including sharing
resources, technology and training. The BBC hopes to sign a joint
MOU with STV formalising this partnership shortly.
BBC Northern Ireland is committed to working
with other news providers to secure a cost-effective and sustainable
outcome for audiences. Discussions about precise partnership arrangements
are at a different stage of development, reflecting UTV's assessment
of its ability to maintain its television news programming and
the issues which it has identified around resource-sharing with
the BBC.
The BBC remains of the view that a partnership-based
solution is the best way to maintain plurality in regional news,
maximising the value of the BBC's long-term investment in infrastructure
and facilities around the UK and increasing the efficiency of
public investment.
Sharing online content and improved linking
In addition to the regional news partnership,
the BBC is developing a range of options that could help support
diversity in the provision of news at a local level. As outlined
in our response to the Government's Digital Britain report,
we are aiming to support the newspaper industry via a range of
initiatives including syndication of BBC News video online and
improved linking.
In August 2007, the BBC Trust published the
overall BBC syndication policy, stating that "there will
generally be public value in the syndication of content and it
is in licence fee payers' interests that content be made available
as widely as possible". Such syndication is not only
in the interests of licence fee payers but can also bring benefits
to partner organisations.
The aim—subject to BBC Trust approval—is
to share a sub-set of the BBC's UK video news content with newspaper
websites. The content would be embedded in external sites allowing
organisations to supplement their coverage with BBC credited material.
The intention is for a phased roll-out to UK newspapers in the
next few months, before extending the offer more widely to include
regional and local newpapers.
In addition to sharing content, the BBC should
more effectively promote and support online local journalism through
increased linking. Ensuring easy access to and "discoverability"
of local content will become increasingly important in a digital
age. The BBC should harness the strength and popularity of BBC
Online to drive reach and usage of other local content across
the internet. Existing links are already generating over one million
click-throughs a month to external sites, equivalent to one click-through
for every six unique users.[91]
We are improving the prominence of external links on the BBC
Local sites to other local organisations as well as enhancing
"in-story" linking. Links to "local papers"
and "elsewhere on the web" now appear prominently on
the frontpage of BBC's local sites (eg http://news.bbc.co.uk/local/bristol/hi/).
The BBC's other online partnerships should also
benefit providers of regional/local news. These include the proposal
to open-up access to the successful iPlayer technology on a commercial
basis and, subject to BBC Trust approval, stimulate the uptake
of broadband-connected TV by promoting a standards-based open
approach.
Enriching the skills base of local media
The BBC's College of Journalism, developed as
a comprehensive online resource for internal training purposes,
will be made public in the summer. The website includes skills
advice, video and guides to all aspects of journalism—from
interview techniques to in-the-field reporting. The availability
of this editorial training resource will benefit other news organisations
and could help lower the barriers to entry for providers at the
local level.
Partnerships with Local TV and commercial radio
We are exploring which aspects of the proposed
regional news partnership could be extended to local TV operators
if a sustainable network were to emerge. There is a willingness
to share picture material with local TV news operators (as well
as ITV) and, subject to capacity constraints, other news infrastructure
facilities. Partnerships with the BBC could help reduce barriers
to entry for local TV news providers and also create the opportunity
for more diverse and differentiated coverage.
As suggested in the recent Myers report on commercial
radio for the Government, the BBC is exploring, with the industry,
the idea of sharing BBC audio content with community and local
commercial radio operators—for example, pooling material
on diary news stories to reduce duplication.
More widely, the BBC and commercial radio have
announced a new partnership designed to help secure radio's digital
future. This partnership will establish a new forum, the Radio
Council, to lead a range of joint initiatives including proposals
to develop an online radio player that creates one place for all
UK radio to be listened to on the web, and development of a common
standard for radio on all devices (mobiles, in-car screens, at-home
screens, DAB sets).
Acquisition of local news content
The BBC already supplements/complements its
UK and international newsgathering operation with text, picture
and audio-visual material from news agencies such as Reuters and
the Press Association. The provision of core coverage of diary
stories and non-exclusive events from agencies allows the BBC
to focus resources on its own distinctive journalism. News agencies
can also provide access to a wider range of complementary material.
Where these tests are met, the BBC will consider acquiring video
footage of local news stories from third parties as an input to
its own broadcast and online output.
The BBC's other partnership proposals will also
offer potential benefits to providers of regional/local news.
These include proposals to open-up access to iPlayer technology
on a commercial basis and, subject to BBC Trust approval, stimulate
the uptake of broadband-connected TV by promoting a standards-based
open approach.
PUBLIC POLICY
INTERVENTIONS
Maintaining a plurality of news sources and
enhancing quality local journalism should be the priority of public
policy intervention. There are a range of options under consideration
including:
1. Reform of the regime for regional and local
media mergers and cross-media ownership restrictions
2. New models for television news at the regional
and nations level
Regional and local media mergers
As regional and local news providers have been
subject to greater market pressures there has been a trend towards
consolidation of ownership, both within sectors and across the
media as a whole. However, a number of regulatory rules governing
media mergers at a local level remain. In light of the changing
environment, it is appropriate that the Government has asked the
OFT and Ofcom to examine the regime for regional and local media
mergers and cross-media ownership rules. Key issues for consideration
include:
— does the merger regime for local newspapers
need to change to reflect the potential for competition for both
audiences and advertisers from other media platforms such as the
internet; and
— are the current blanket restrictions
on cross-media ownership at a local level still necessary? Or
does the application of the Public Interest Test to mergers on
a case-by-case basis provide an adequate safeguard for maintaining
a diversity of voices in local news provision?
Further consolidation in local media could support
the ongoing transition of existing groups to digital business
models. Subject to protecting competition for audiences and advertisers,
consolidation could facilitate the development of stronger, cross-media
groups with coherent geographical areas of influence and a critical
mass in advertising. At the same time, there is a risk that consolidation
reduces the diversity of voices available to the public in a given
area/s and that is why there remains a need for a regime that
considers the public interest implications of media mergers.
New models for regional news
Ofcom has suggested a new model for news provision
in the nations and regions based on "independently funded
news consortia" (IFNC). The proposal is that the consortia
would have access to the regional news slots on Channel 3 and
be integrated into the wider local media ecology. Contracts could
be awarded by a national and/or regional tender process.
The BBC has had initial discussions with the
industry about how its partnership offer would work with the model.
Ofcom has suggested that an "IFNC"
replacement for the ITV news service would cost "in the region
of £40-60 million" per annum[92]
and has suggested that additional public funding is required.
Our initial analysis suggests that Ofcom has underestimated the
likely revenues and public assets that are available to support
"IFNC":
Costs
— Cost synergies: IFNCs are likely
to bring in other news providers from related media (eg newspapers/radio/local
TV/news agencies) who could offset some of their newsgathering
and production costs across a range of outlets, not just commercial
television. The capacity to leverage existing news assets should
improve the efficiency of regional news delivery.
— BBC partnership: The partnership
should be more valuable to local media who do not have ITV's existing
infrastructure and legacy cost base. Third parties without access
to news production facilities/technology could significantly reduce
start-up costs as a result of the partnership. All third parties
should benefit from access to the BBC's newsgathering operation
including local news bureaux, picture material and potentially
live facilities. Benefit to consortia in operating costs is likely
to be £10 million per annum at full roll-out (this assumes
that the BBC charges at incremental cost for the majority of services/facilities
under the partnership).
— New editorial models: if desired
over time, IFNCs could develop new, more flexible editorial approaches
to regional news that offer greater choice and bring in new audiences.[93]
The consortia could, for example, provide a route to more broadband-focused
delivery of local news given changing consumer behaviour.
Assets/Revenues
The new model could have two sources of funding:
Channel 3 advertising and existing regulatory assets.
— Linear television advertising revenues:
the consortia could be given access to the advertising revenue
that can be generated in and around the slots. If ITV transfers
the significant cost burden of regional news to a third party,
then there is a case that it should also transfer the value of
the airtime and or an equivalent sum.
Nations and regions news programmes currently
attract a strong viewing share in the Channel 3 schedule,
although the revenues earned from regional news are currently
constrained by the transfer of advertising minutage to higher
performing peak-time slots. Independent analysis estimates that
ITV currently earns c£16million in advertising from the 6-6.30pm
regional news slot.[94]
The allocation of the maximum ''average'' advertising minutage
to the slot could generate c£25million pa.
— Regulatory assets: Ofcom has previously
estimated that the value of regulatory assets to ITV—such
as access to broadcasting spectrum—is worth c£45million
per annum by 2012. The assets support public service obligations
on ITV; regional news is the largest of these. Ofcom has already
suggested in the PSB review that ''part or all of these [assets]
could be reassigned at the end of the current licences, to ensure
the value of these public assets is being maximised''. Regional
news is ITV's most important public service obligation and it
is reasonable to argue that a proportion of ITV's regulatory assets
should be used to support replacement providers of regional news.
There should be a discussion about the best vehicles to do this.
One potential mechanism would be to charge ITV for access to its
DTT spectrum and use the revenue to support the new providers
of regional news.
— Cross-media advertising revenues:
In a changing market, there is a potential revenue upside to the
new consortia from selling regional/local advertising at premium
across multiple platforms.
Under the new model, there are a range of business
models that could work and be tailored to meet the needs of different
areas. It is important that we avoid a ''top-down'', prescriptive
approach to the budget and spec of the ''IFNC'' as this would
allow little room for innovation and flexibility. There should
be an opportunity, with third party providers, to assess the most
efficient and effective means of newsgathering and production.
Based on our initial analysis, it is not clear
that additional public funding is necessary to support Ofcom's
new model of regional news. The extent to which the new model
could be sustainable using existing assets at Ofcom's and Government's
disposal, alongside the BBC partnership, must be explored in much
greater detail. Taken together with the available advertising
revenue in the Channel 3 slots, the total benefit should
be sufficient to fund a viable regional news service under the
new model. Additional public funding should only be made available
as a last resort.
The licence fee has been suggested as a possible
source of any new funding required for regional news. In the current
economic climate there is no guarantee that either the overall
level of the licence fee from 2012-13 will be maintained,
or that the element currently ring-fenced to aid delivery of the
BBC's sixth public purpose will remain.
A decision to use licence fee funding to support
commercial organizations raises significant risks that the BBC
has previously outlined. First, it would risk breaking the unique
link between licence fee payers and the BBC. BBC research suggests
that the public understand what they are paying for under the
current model: 70% of the public spontaneously mention the BBC
when asked which broadcasters are funded by the licence fee; prompted
awareness rises further, to 86%. Second, it would require that
strong accountability mechanisms be put in place for new recipients
of public money. Third, it would mix public funding and advertising
revenue within commercial organisations, potentially weakening
commercial incentives and advantaging some commercially funded
news operators over others.
In conclusion, the BBC is committed to working
with others to find a practical and sustainable solution for the
future of regional news. In our view, a partnership-based solution
is the best way to maintain plurality in regional news, maximising
the value of the BBC's long-term investment in infrastructure
and facilities around the UK and increasing the efficiency of
public investment. We favour models that enhance value rather
than simply transfer it. The Government and regulators must also
consider the most effective use of existing regulatory assets
to support regional news. At the same time, commercial media must
develop new, sustainable business models and approaches to journalism
that work across different platforms and match audience expectations.
June 2009
71 Survey of 4,500 licence fee payers. BBC Trust
Purpose Remit Survey (BMRB, Feb 07), base: all adults 15+. Back
72
Survey of 4,500 licence fee payers. BBC Trust Purpose Remit
Survey (BMRB, Feb 07), base: all adults 15+. Back
73
Ofcom's CMR, August 2008, pp 279-280. Back
74
Market Impact Assessment of the BBC's Local Video Service (Ofcom,
Nov 2008), p 88. While this comparison discussed the proposed
BBC Local Video areas, these were based on BBC local radio areas
and were near identical. Back
75
Ofcom's Media Tracker (Apr-Oct 2008); also see similar
findings in Market Impact Assessment of the BBC's Local Video
Service (Ofcom, Nov 2008). Back
76
Ofcom PSB survey, 2007. Back
77
Ofcom, New News, Future News report, July 2007, p 48. Back
78
Redefining Regions. The Future Foundation, 2004. Back
79
Citizenship Survey statistical release, Department for
Communities and Local Government, 2008 found that people
feel increasingly connected to the places they live and work in,
with 75% now feeling that they belong strongly to their neighbourhood,
up from 71% in 2003. Back
80
Ofcom, New News, Future News, July 2007, p 24. Around 50%
of consumers say they are personally interested in events in 'my
region/nation' or 'events where I live'. Back
81
Beaufort Research (November 2007) ; Electoral Commission's 2006 report
on Assembly election participation. Back
82
ibid, p 121. Back
83
Ofcom PSB review, Final Statement and Recommendations, Jan 2009. Back
84
RAB Commercial Radio revenues. Back
85
Market Impact Assessment of the BBC's Local Video Service (Ofcom,
Nov 2008), p 18 and p 88. Back
86
Ofcom presentation on local media (29 March 2009) citing
Advertising Association figures. Back
87
Ofcom presentation on local media (29 March 2009). Back
88
Market Impact Assessment of the BBC's Local Video Service (Ofcom,
Nov 2008). Back
89
Ibid, pp 52, 56-57. Back
90
Ibid, p 12. Back
91
Sage/BBC figures (Jan 2008). Back
92
Ofcom Chief Executive (Ed Richard) speech to Government Local
Media Summit, 28th April 2009. Back
93
Analysis suggests that the unique audience to ITV1 regional
news is limited: c5% of the annual audience to regional news only
watches it on ITV1 (the vast majority (77%) watches regional
news on both BBC One and ITV1). Back
94
Ofcom has previously estimated that the revenues from the advertising
around ITV1's nations and regions news are c£15 million
per annum (New News, Future News, June 2007). Back
| 
