Select Committee on Culture, Media and Sport Minutes of Evidence


Supplementary Memorandum submitted by the Local Broadcasting Group

BACKGROUND

  1.  The Local Broadcasting Group currently operates six local television stations—at Hertford, Taunton, Bristol, Perth, Stirling and Edinburgh.

  2.  The services vary from text news and information at Edinburgh to a diverse schedule of news, feature, information and entertainment at Taunton. Each station would, when operating fully, provide about 20-40 new local jobs.

  3.  The programme policy of LBG has been to provide for local viewers:

    —  24 hour, 7 days a week local service.

    —  Locally determined programme schedule, with no networking and no opt out.

    —  Programme schedule with extensive local origination, often more than 65 per cent.

    —  Local news, weather and sport for 15 minutes at the top of every hour.

    —  Local news features for a further 15 minutes in every hour, more in night-time, rising to 30 minutes in every hour.

    —  A high repeat factor for local programming to give all demographic viewers the chance to view as many programmes as possible.

    —  Access opportunities for local community groups and other local institutions.

  4.  In December 2000, LBG announced its intention to raise funding to launch up to 40 stations utilising the grant of restricted service licences from the ITC. These licences permit terrestrial broadcasting in local areas in analogue only for a period limited to four years and providing there is no competing need for the spectrum.

  5.  The severe restrictions imposed by current legislation and the lack of a resolution to these issues in the new Communications Bill have been significant factors in LBG's petition for Administration at the end of November 2001. LBG is currently a company operated in Administration by Smith and Williamson.

SUMMARY OF IMPROVEMENTS NEEDED IN LOCAL TELEVISION SERVICES

  6.  LBG has found it impossible to date to prove beyond doubt the effectiveness of the free-to-view distribution of local services or to raise funding to a sufficient level going forward to proceed with further launches for the following key reasons:

    (a)  The licence period of four years is too short.

    (b)  There is no guarantee of continuation of the licence beyond that date.

    (c)  The licences are pre-emptible even during those four years.

    (d)  There is no guarantee of the grant of digital spectrum after analogue is switched off.

    (e)  There is no opportunity for digital simulcast, as enjoyed by other broadcasters

    (f)  The quality of the frequencies allocated is too poor or variable to ensure economic coverage.

    (g)  There is no recognition of local services as providing "public service".

  7.  The roll-out of local television services generally, not just those of LBG, is being held back by an inadequate regulatory framework which inhibits investment. Many attempts to encourage activity in this sector are proving uneconomic because of the regulatory restrictions and uncertainty going forward.

  8.  The Communications Bill as it stands makes no reference to the existence or value of local television services, nor addresses the future of such services.

  9.  LBG, in common with other local service providers, seeks the Select Committee's support in ensuring that the Communications Bill includes a new and helpful legislative framework which will encourage investment and ensure that a high quality and free local public service is delivered across all television platforms.

STRATEGY FOR LOCAL SERVICES

Digital versus Analogue

  10.  LBG understands the current dilemma of frequency planners and regulators in trying to integrate these new and vibrant local services in analogue form, while at the same time encouraging the take up of digital terrestrial services. The spectrum is crowded and frequency planning is difficult.

  11.  For this reason, we accept that no new licences should be accommodated beyond the 65 announced by the ITC to date. We believe the roll-out of these should be honoured as they have already attracted investment which will otherwise need to be written off.

  12.  This would further inhibit investment in the sector and delay the launch of attractive services for local viewers.

  13.  However, to delay the launch of local services until digital terrestrial has reached a critical mass is unacceptable. Local services are new and relatively untested. They need the penetration of analogue in the development phase before migrating to digital in simulcast. They need to be known and recognised by viewers. That means a period of analogue visibility for those licences already in play.

  14.  These free-to-view services will be a driver for the take-up of non-pay digital terrestrial services and should be simulcasted in both analogue and digital as soon as possible.

A Public Service

  15.  LBG's programme schedules emphasise local news, local weather, local information, local entertainment, local sport and local features. We believe a local service should be branded as local and be scheduled locally—not operated as a network with opt-outs like ITV.

  16.  LBG believes local schedules should be broadly accommodating of all local interests. They must deliver elements of "access" within the schedule to ensure local "ownership" of the station.

  17.  Local television services should be clearly identified as public service television in the best traditions of UK services. An appropriate level of content regulation should be acceptable but that regulation should acknowledge the narrow economic base and early stage of development.

Advertiser funding

  18.  LBG believes that local services offer a new opportunity to advertisers who are either too small to afford current television advertising or who operate locally rather than nationally or regionally. This advertising income should form the basis for funding the service.

  19.  Then local advertising market is estimated at more than 2.5 billion and is more resilient in recession than national advertising.

  20.  The market is discreet from that offered by ITV, C4 or C5 or satellite services. It offers an alternative medium to local newspapers and radio.

  21.  LBG sees no reason why such services should be publicly funded and would be concerned at any market distortion created by a mix of advertising and subsidy which would allow subsidised stations to undercut the advertising market.

  22.  However, we also recognise that the business models are unproven and flexibility in the funding mix may be needed during the formative period.

The role of other broadcasters

  23.  LBG believes that a new "type" of broadcaster is required to develop local services and that this should be enshrined in legislation as part of the Bill.

  24.  ITV has established regional and sub-regional services. Some service areas, such as Border or Channel come closest to what LBG intends—and viewer ratings for local services in these areas are among the strongest in the ITV network.

  25.  However, ITV cannot expect to match—and may not wish or be able to justify the diversion of airtime and resources to match—the depth of service which local television can provide. Nor can it provide the focus for advertisers that a one-town or one-city service can offer.

  26.  ITV is increasingly a national brand and may have an international future as a high quality, diverse and still regulated entertainment channel.

  27.  The BBC is active in local radio and has developed its local profile and service. However, we would be concerned if the BBC developed local tv stations if it put further pressure on the level of the licence fee, or if it diverted resources away from the key free national channels, or if it caused the BBC to distort the market by funding local television commercially, or if the BBC's presence limited audience opportunities for private operators.

  28.  There are synergies which may be enjoyed at local level with local radio and local newspaper operators, where such associations do not create local information or advertising monopolies. However, since local television is unlikely ever to match viewing levels of the major channels, due consideration should be given to permitting the early development of local services in tandem with other local news and information providers.

Proposals

  29.  Longer licence period and continuation of licence.

  30.  The four year licence term does not give sufficient time for set-up costs to be amortised and makes venture funding impossible. LBG has consistently met problems with the attitude of potential funders and with service providers, such as transmission companies, because of this key weakness of the licences.

  31.  We believe that, in the Communications Bill, the licence period of the 65 licences published to date should be extended to ensure their attractiveness to investors. A period of eight years would suffice but it is unclear why licences cannot match those of the ITV companies.

End pre-emptibility

  32.  The value of a four year licence is diminished further by the power of the ITC to revoke a licence if an alternative use for the spectrum is found which delivers greater value. In short, the licence can be taken away so that a theatre can use radio microphones.

  33.  This is an impossible restriction on which to build a broadcasting business or provide a public service. Local services are at the wrong end of a long food chain in spectrum access.

  34.  We believe that the Communications Bill should establish appropriate legislative security and create a new class of "Local Television Service" licence with the same protection as other broadcast licences.

A digital future

  35.  There is currently no allocation of digital spectrum agreed for free-to-view local services. Such services will die as analogue is switched off. This issue is highlighted in the recent report of the Parliamentary Office of Science and Technology and we welcome this as the first sign that the inadequacy of the proposed legislation with regard to local television has been recognised.

  36.  We are certain that properly funded local services will be driver for free-to-view digital services and will enhance the speed of the roll-out of digital television. We believe this should be a key factor in the Government's approach to local television, yet it is ignored by the Communications Bill.

  37.  We believe the Communications Bill should make digital spectrum available as simulcast alongside analogue as soon as possible to those 65 licences already established. Future licences should have access only to digital bandwidth.

Better frequencies

  38.  The frequencies which are currently available to local broadcasters are effectively what is left after all other operators have been satisfied. The signal quality is, therefore, highly variable in analogue.

  39.  We believe that the Communications Bill, as part of establishing a sound regulatory framework for local television, should ensure that, going forward, every effort is made to find better frequencies in analogue in the short-term.

Public service status

  40.  There is a lack of clarity in the Bill about what may or may not evidence "public service" to ensure a "must carry" obligation.

  41.  We believe that the Communications Bill should make clear that local services should be classified as "public service television" provided that, when mature, these services deliver at least 50 per cent of content which is locally originated and locally scheduled.

  42.  "Locally" in this context should recognise that some current licence areas are either so small that they need to be managed in conjunction with other licences or are contiguous or offer a "travel to work" area which may extend beyond a single licence area. Some "bunching" should be permissible.

  43.  Equally, due regard needs to be paid in the Bill to a phasing in on the content requirements over a period which we would suggest might be four years.

THE FUTURE OF LOCAL SERVICES

  44.  We believe that the Communications Bill offers a great opportunity to establish a sound framework for television to develop and deliver the local newspapers of the 21st century.

  45.  We believe that the linear TV services we have defined and in which we operate will, in the digital environment, generate new opportunities for interactive services and self-select services of local news and information. They will be a driver for progress.

  46.  However, this may be jeopardised unless the Communications Bill acknowledges the presence of local television services now, recognises the extreme difficulties under which such services are forced to operate, and creates a structure to encourage their further sound development.

  47.  At the moment, the Bill remains silent on all these points and, if it remains so, a great opportunity for new viewer services will be lost.

  48.  In addressing this, LBG seeks the consideration and support of the Select Committee.

31 January 2002


 
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