Can local television work in Wales?

Whatever else may be said about Jeremy Hunt, he has shown an extraordinary doggedness in pursuing his goal of delivering local television to the UK, even in the face of widespread scepticism, not least from his own advisers. He has been touring the country to sell his plans, and last week turned up at Newport University’s smart new Usk-side campus to sell it to a Welsh audience perhaps more pre-occupied with threats to our existing television services.

He will, I fancy, have gone away rather cheered by his reception, notwithstanding the usual polite Cymdeithas yr Iaith honour guard at the door protesting about S4C. For although there has been public opposition to local television from some politicians and trade unions – the former more worried about national services for Wales, and the latter concerned about better paid jobs – it was evident that many in the industry believe that if it’s going to happen Wales should not refuse to come to the table.

Hunt has been surprisingly bullish on his progress around the UK, suggesting that 20 local services will be licensed in this first round, and perhaps 40 more the following year. This suggests that he thinks that licences could be offered in almost all the 65 ‘pioneering locations’ announced earlier this month, that might cover some 60 per cent of the UK population through direct terrestrial transmission. If that is to happen there will have to be some very creative thinking about business models.

His own adviser, the banker, Nicholas Shott, was more cautious. His report had said: ‘…local TV will not be financially viable distributed by DTT in sparsely populated rural areas. It may, however, be possible to sustain 10 to 12 local TV services around major conurbations’. But the 65 areas announced this month do contain surprisingly small areas, many quite rural.

Of the six areas identified for Wales, only two might be regarded as heavily urbanised areas that get above a population figure of 200,000:

• a licence covering Cardiff, Newport, Barry, the Vale of Glamorgan and Bridgend, and stretching patchily up into the lower valleys including Pontypridd and Caerphilly
• a licence covering Swansea (but not the Swansea valley) and Llanelli.

The other four must be more marginal:

• North east Wales – an essentially rural area taking in the small towns of Mold, Ruthin and Denbigh (plus an area outside Wales south of Chester), but excluding the north east’s biggest town, Wrexham.
• Menai Straits – an area comprised of Bangor and south Anglesey, including Llangefni, and part but not all of Caernarfon.
• South Carmarthenshire – an area including Carmarthen and Ammanford, and north to Llandeilo and south to Kidwelly but excluding Llanelli.
• Mid Pembrokeshire – an area taking in Haverfordwest and not much else other than the south side of the Preseli hills. Even Pembroke and Tenby are excluded.

The interesting question for Wales is whether local television stands any chance beyond the capital. The DCMS envisages that Cardiff would be in the first tranche, along with London, Birmingham, Manchester, Leeds, Glasgow and Belfast, leaving room for another dozen or so to be selected for Hunt’s first twenty.

Michael Wilson, Managing Director of UTV,  and still the owner of radio interests in Swansea, wondered whether licensing a cluster of Welsh local services would give you scale. Hunt was not enthusiastic, although he saw nothing wrong with local services collaborating with each other.

The Shott Report had envisaged that the new local services would amount to only about two hours a day which, at about £1500 per hour, would amount to £1.1m per annum for programmes and another £0.5m for indirect costs. His report also envisaged the 10-12 stations forming a network. Initially, the government toyed with creating a Channel 6 television network, into which these local stations would slot, but the prospect of an enduring tussle between the local and central interests – as happened in ITV, especially from the early 1990s – led to its abandonment in favour of free-standing local services.

Some of the descriptions of the local services in the Shott report hark back to the kind of linear public television services that we have grown up with, and it was always difficult to see how a new local service spending £1500 per hour, would pull people away from channels spending anything between 10 and 30 times that amount on programmes.

By now the emphasis is on local services, not a local station, envisaging something more akin to non-linear web-based content. Even so new estimates that £500,000 per annum might be the minimum cost of each local service, still poses a stiff challenge in terms of revenues. Hunt talked about advertising revenues of £10,000 per week, which would conveniently cover the half million. However, few will be confident that that amount of local advertising revenue will be available in any of the Welsh licence areas, and while it is possible that the new services will grow the advertising cake, others worry that it will be simply be money switched from other local media.

What is clear is that plenty of local interests are desperately keen to see this new outlet emerge as a community resource, especially as, in the terrestrially transmitted version, it is seen as a transitional solution until internet-based television (IPTV) takes over.

At the Newport meeting Ian Hargreaves, now Professor of Digital Economy at Cardiff University, thought that it was essential that Wales generated a strong proposition, rather than constantly lamenting our media weaknesses. Cardiff University’s journalism school would be a resource that could be a player in the sort of partnership arrangements that Hargreaves thinks will be necessary. He also thought that sport would play a crucial role in any service, and that a new layer of local sports rights would have to be negotiated. Jeremy Hunt said he had already spoken to the Premier League.

Professor Gillian Youngs, Academic Director of the Institute of Advanced Broadcasting at Newport was explicit in saying that these local services would need to harness the talents within Newport’s highly regarded film school.

Much will depend on the view taken by the major media players: Tinopolis and Boomerang, the two big independent television production companies in Wales; UTV, who have shown a sustained interest in Wales, despite their Northern Ireland base, even winning the contest for an independent news provider for ITV in Wales – the IFNC’s thought up in the last years of the Labour Government and scrapped by the coalition because they required an element of public funding; Town and Country Broadcasting, who own eight radio stations across south Wales, and whose Managing Director, Martin Mumford, made it quite clear that the synergies with his existing radio business meant that he would certainly be in there bidding.

The one disappointment for Jeremy Hunt, about which he was quite open, is that local newspapers have not responded positively. He thought that newspapers had missed the digital boat once and might do it again. He thought the industry was divided, with some interested and some saying, ‘over my dead body’. The latter may include Trinity Mirror, owners of the Media Wales, despite their significant investment in a new building in Cardiff that is fully equipped for multi-media operation.

In an interview as late as June this year, Georgina Harvey, managing director of Trinity Mirror Regionals, was reported as being convinced that the economics of local television did not stack up and that local television, with the benefit of some short term subsidies diverted from the BBC licence fee, would divert revenues away from newspapers. At the same time she was scornful of the idea that local television was needed to assist local democracy arguing that ‘that’s what the regional press have been doing since God was a boy’.

A lot of people will have a lot to prove over the next year.