2005 review of the bbc's royal charter: newspaper society submission

Review of the BBC’s Royal Charter:Newspaper Society Submission

11th July 2005

2

Executive Summary

• The Newspaper Society represents the regional newspaper industry. Its members publish around1,300 titles targeting different regions, cities, towns and neighbourhoods across the UK. Regionaland local newspapers play a crucial role for the communities they serve: by providing news andessential information, by enabling local businesses to reach their customers effectively andefficiently, and by leading campaigns on local issues as the voice of their communities. In short, theregional press has a long heritage of building substantial public value without recourse to publicfunding.

• The industry’s ability to sustain this role over the long term is at risk from the BBC’s plannedexpansion in local and regional media. Far from remedying an instance of market failure, thisexpansion will more likely precipitate one. In spite of long standing discussions with both theGovernment and the BBC, as well as a detailed submission to the Graf Review of BBC online, wedo not believe that this risk is widely understood. This document sets out the context behind theseconcerns, as well as the Newspaper Society’s recommendations for safeguarding long-term pluralityin the provision of local news and information services.

1. The regional press at the heart of local communities

• Ofcom, DCMS, the BBC and many consultation respondents have underscored the importance thataudiences attribute to locally-focused news and information. The Newspaper Society concurs withthis view. Our own research and experience confirms that people’s interests and activities remainfirmly rooted in their local communities, in spite of the proliferation of news, information andentertainment from across the UK, and around the world.

3

Executive Summary (Contd.)

• The regional press have long been at the forefront of meeting this need. Local newspapers haveearned the trust of their communities through decades of service to readers and to local businesses.Their commercial model funds an extensive – and expanding – “infrastructure” of over 13,000editorial staff who don’t just write about their communities, but live, work and interact in them. Noother medium is as uniquely positioned to understand and reflect the granularity of local life acrossthe UK. “Ultra-local” is our USP.

2. Evolving local media landscape

• Local newspapers are market – rather than product – driven. Historically, the industry’s ability toserve their local markets with multiple media “products” has been restrained by cross-mediaregulation. Emerging technologies and convergence are eroding these constraints, and offer a richpotential to expand and enhance local media offerings in future. From a broadcaster’s perspective,this could mean far more localised TV services than the analogue terrestrial network could allow.From a regional press perspective, it will mean complementing our traditional content and serviceportfolio of text and pictures with audio, video and interactivity.

• The blurring of media boundaries bring opportunity, but also harsher competition. The regional presshave invested and innovated to meet this challenge, as have many of our competitors in thecommercial arena. While different newspaper groups will pursue different strategies across differentdigital media platforms, the underlying migration from the printed page alone to print alongsideTV/PC or mobile phone screens is a fundamental trend for our industry, and an imperative for itslong term viability.

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3. BBC market impact

• This migration is under threat from the BBC’s “ultra-local” ambitions, and the experience of BBCOnline suggests a track record of interpreting a widely drawn remit as a mandate for dominance of anascent medium.

• Yet it is far from clear that the BBC is best placed to spearhead the development of local digitalmedia – other than by its privileged access to risk-free public funding. Indeed, the BBC does notcome close to matching the depth of resource that local newspapers have deployed in theircommunities for decades. As a result, its “ultra-local” TV service may ultimately resort to sourcingstories from local newspapers, and repackaging them for TV.

• The regional press is therefore less concerned about competition from a BBC striving to offer moreor better local news. It is very concerned, however in how the BBC will compete in delivering thatnews – namely through unfair recourse to scale economies at a national level, guaranteed funding,cross-promotional muscle, privileged distribution, and strong brand association with TV – as well asoccasional forays into local magazine publishing.

• At a stage when local online or TV services are starting to become commercially viable, a largescale BBC rollout could undermine the business case for commercial innovation, and distortinvestment decisions. Over the long term, local digital media could be restricted to effectivemonopoly provision by the BBC, as innovation, choice and diversity fail to develop. This will likelyoccur through a combination of inflating costs, undercutting subscription-based revenue models,and preventing commercial ventures from achieving the necessary critical mass of audiences toattract local advertisers to new digital media.

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4. Safeguarding plurality over the long term

• The Newspaper Society welcomes Ofcom’s aspiration to preserve long-term plurality in local PSB– but would extend the definition to include non-broadcast media that also perform a public servicerole in local communities. We urge DCMS to consider the following proposals for the CharterReview White Paper:

i. Reject the BBC’s proposed model of large-scale rollout of “ultra-local” TV / broadband internet to50-60 cities at this stage of the market’s development.

ii. Deny additional licence-fee funding for either “ultra-local” TV or for further development of theBBC’s “where I live” sites.

iii. Ensure greater transparency in the BBC’s investments in local services through publication ofdetailed accounts for these services

iv. Deploy public funding to research/pilot programmes of local commercial media services on digitalplatforms – and publish the findings in the public domain.

v. Where publicly-funded pilot programmes are conducted by the BBC – such as the Midlands localTV trials – ensure that the BBC both involves local media groups in the design/execution of thepilot, and publishes all findings in the public domain.

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vi. Ensure that any future decisions on extending local BBC services be contingent not only on apublic value/market impact test, but also on the completion of Ofcom’s review of local TV post-switchover and on a public consultation of the role for commercial media in light of its findings.

vii. Confirm that public value/market impact tests be undertaken by Ofcom and not the BBC trust, andthat the process for conducting these assessments be open to public consultation.

viii. Reframe the BBC’s eventual remit in local communities as a cautious and selective intervention incertain areas – be they specific localities, types of service or audience segments – where there isclear evidence that commercial models will not be sustainable.

ix. Define a clear “exit plan” for any new BBC services that are approved – namely a set ofmeasurable and transparent criteria under which the original justification for BBC interventionceases to be valid, and at which point the BBC is compelled to withdraw from the provision ofthese services.

x. Define specific areas where the BBC should offer assistance to local commercial media in theirmigration from traditional to digital media platforms. This might include facilitating distribution,providing access to the BBC’s output and archive on favourable commercial terms, or promotingemerging commercial ventures.

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Contents





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1 The regional press at the heart of local communities

• Life is local. Most of what people do takes place close to home, and people’s interests remain firmlyrooted in their local communities, in spite of the proliferation of news, information and entertainment,through digital media, from across the UK and around the world.

• Regional and local newspapers play a crucial role in meeting these needs for the communities theyserve throughout the UK. They are generally turned to as the first port of call for local news andinformation, and enable local businesses to reach their customers effectively and efficiently throughadvertising that is targeted, credible, and relevant.

• “Local” means different things to different people, and local media need to deliver content andservices that are relevant and distinctive at the level of individual regions, individual cities, and evenindividual neighbourhoods. With approximately 1,300 titles published across the UK, the regionalpress has an unparalleled ability to provide a multi-tiered service through regional titles like theYorkshire Post to “ultra-local” papers such as the Morley Advertiser and Observer.

• With a heritage of decades of service at the heart of regional and local communities, the regionalpress emerges as the most trusted media in the eyes of consumers and businesses. This trustextends to playing a greater role than any other media in helping define a sense of identity for thecommunities they serve.

9

Average distance normally travelled for various purposes*2003

Average no. ofmiles traveled

2

4

6

8

10

12

14

LEISURE

Move house13.5 miles

LIVING

SHOPPING

Restaurant8 miles

Average commute13 miles

Theatre12.6 miles

Carrepairs

5.3 miles

Furniture/carpets8.9 miles

Computerequipment8.5 miles

Smallelectrical5.3 miles

Clothes8.8 milers

Majorelectrical7.3 miles

DIY /Garden items

5.2 miles

Cinema6.8 miles

Gym/ health club3.1 miles

Groceries3.5 miles

Lookfor new car13.5 miles

School** 3.1 miles

* Sample of over 2500 in-street interviews ** Secondary school. The average distance travelled to primary schools is 1.3 milesSource: DTR/ ONS/ Newspaper Society/ The Future Foundation

Life is local. Most activities and purchases take place within a dozen miles from home

Home

10

Interest in local events% agreeing that “what interests them above all are things that happen in the town/city where they live”*

* Sample of over 2500 in-street interviewsSource: “Changing Lives”, nVision; sourced from “My UK”, 2003

People’s interests are also local, with close to a majority primarily interested in events in the town/city where they live.While interest in local matters used to increase with age, the gap between generations has narrowed significantly.

0

10

20

30

40

50

60

16-24 25-34 35-44 45-54 55-64 65+

Age Group

1983

2001

Overall, proportion of

respondents primarily

interested in local

events up from 41% in

1983 to 49% in 2001

11

Top 10 genre of interest – Norwich example*Average interest: 1= not at all interested, 5 = extremely interested

* Face-to-face interviews with 735 adults aged 16+ in various locations around NorwichSource: Future Foundation Projects, March 2004 – Provided by Archant

Audiences express the strongest interest in regional/local news – though other topics are also important, andlocal media ultimately need to offer relevant content across a broad range of genre.

2.7

3.0

3.0

3.0

3.2

3.3

3.3

3.5

3.6

3.7

1 2 3 4 5

Sport

Arts

NHS

Education

Environment

Crime

Health/Well-being

National/International news

Weather

Local news

Not at all

interested

Extremely

interested

12

First port of call for local news and information – Leeds Example% of respondents expressing a preference*, 2004

5

10

12

43

All other

media

Leeds Weekly

News

Yorkshire Post

Commercial

TV

Yorkshire

Evening Post

5

5

7

9

13

41

All other

media

Metro

Yorkshire Post

"Elsewhere"

Teletext

Internet

Yorkshire

Evening Post

5

6

11

13

16

29

All other

media

Yorkshire Post

Wharfe Valley

Times

"Other Local

Paper"

"Elsewhere"

Leeds Weekly

News

Yorkshire

Evening Post

Local News Neighbourhood News Leisure & Entertainment info

<5

<5 <5

* In-home interviews of 416 adults aged 15 and over in the Leeds areaSource: Leeds Readership Survey 2004 – carried out by NOP

Local newspapers are generally turned to as the first port of call for local news and information.

Local Newspapers

13

9

10

11

53

All other

media

"Elsewhere"

Internet

Yorkshire Post

Yorkshire

Evening Post

First port of call for local advertising – Leeds Example% of respondents expressing a preference*, 2004

8

9

14

53

All other

media

Yorkshire Post

"Elsewhere"

Internet

Yorkshire

Evening Post

Jobs Property Ads for Local Retailers

<5 <5

<54

7

8

9

34

All other

media

Yorkshire Post

"Elsewhere"

Leeds Weekly

News

Directories

Yorkshire

Evening Post

Local newspapers also play a fundamental role in connecting buyers and sellers in the communities they serve.

Local Newspapers

* In-home interviews of 416 adults aged 15 and over in the Leeds areaSource: Leeds Readership Survey 2004 – carried out by NOP

14

Audience perception of advertising by medium – Cumbria example% of respondents* perceiving that advertising is…

…believable

* Face-to-face interviews with 780 adult residents of the News & Star circulation areaSource: Poynings Research & Consultancy – prepared for Cumbrian Newspapers Group

19

37

25

8

Sat

ellit

e TV

Com

mer

cial

Rad

io

Com

mer

cial

TV

Local n

ewsp

aper

s

They enable local businesses to reach their customers efficiently and effectively through advertising that is perceived byreaders to be credible, useful, and relevant.

31

68

35

10

…useful

15

35

15

4

…relevant

21

12

43

17

…annoying

Local Newspapers

15

What is “local”% defining local as…

Source: Quest, 2001 – sourced from The BBC’s role in representing the Nations and Regions; BBC October 2004

“Local” means different things to different people, with a third of respondents defining “local” as under 5 miles. Localmedia need to deliver content and services that are relevant and distinctive not only at the level of individualtowns/cities, but also at the level of individual neighbourhoods.

5

33

24

20

9

0

5

10

15

20

25

30

35

40

<1 mile 1-5 miles 6-10 miles 11-20 miles 20+ miles

Ultra-local local

16

Interest in issues by locality% interested in hearing about issues and what’s going in in…

32

44

45

47

43

43

6

5

10

20

21

31

32

46

45

30

38

39

-15 5 25 45 65 85

Neighbouring

regions

Neighbouring

counties

Neighbouring

towns/cities

Your region

Your county

The UK

Your nation

Your

city/town/village

Your

neighbourhood

10

9

7

6

4

3

4

3

3

2

2

1

1

3

4

15

1

1

-15 5 25 45 65

Interested: Not interested:

Quite Very Not very Not at all

36

37

44

65

68

74

75

84

84 5

4

4

5

8

9

12

13

19

Source: IPSOS UK – sourced from Reshaping Television for the UK’s Nations, Regions and localities; Ofcom

Indeed, people express their sense of belonging at both a local and regional/national level. The former is generallymanifested most strongly – but needs to be highly targeted, as news for neighbouring towns/counties/regions is of leastinterest.

Local

National/Regional

Neighbouring

Local elicits the

strongest audience

interest…

…followed by

national/regional…

…with least interest in

neighbouring regions

or communities.

17

Yorkshire newspaper footprints

Source: Johnston Press

Regional and local newspapers have an unparalleled ability to cater to this need through titles pitched at different tiersof “localness” – from regional papers such as the Yorkshire Post to “ultra-local” papers such as the Morley Advertiserand Observer.

Yorkshire Gazette & Herald

Evening Press - York

Yorkshire Post

Pocklington Post

Morley Advertiser & Observer

Barnsley Chronicle

Rotherham & SouthYorkshire Advertiser

18

Most trusted media%, 2003

4

6

6

8

9

9

10

11

12

19

20

4

-5 5 15 25

Internet

Satellite/Cable TV

Magazines

Local commercial radio

ITV/C4/C5

National Sunday newspaper

Local BBC radio

National BBC radio

National daily newspaper

Teletext

BBC TV

Any regional newspaper

By businesses By consumers

Source: Business Choice II - NOP World, IPA, The Newspaper Society

12

14

15

16

18

19

19

27

28

30

-5 5 15 25 35

Business directories

BBC local radio

Thomson local

BBC National Radio

National press

Internet

BBC TV

Yellow Pages

Trade magazines

Regional Press

Thus, with their long heritage of service at the heart of regional and local communities, the regional press emerge asthe most trusted media, in the eyes of consumers and businesses.

Regional Press

19

Role of local newspapers in supporting regional identity*2003

* Sample of over 2500 in-street interviewsSource: “Changing Lives”, nVision; sourced from My UK, 2003

This trust extends to reflecting the UK’s cultural diversity and playing a greater role than any other media incontributing to the sense of identity of the communities they serve.

18

24

26

27

37

40

46

Regional beer

Local BBC radio

Local commercial

radio

Regional accent

Regional TV station

Regional paper

Regional industry

Elements contributing to a Region’s identity% respondents stating as “very important”

57

68

-5

5

15

25

35

45

55

65

75

1983 2001

Appreciation of local differences% agreeing with “every effort should be made to

prevent the disappearance of local differences”Regional Press

Other media

20

Contents





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21

2 Evolving local media landscape

• The next 10 years will bring profound changes to the type of content that local audiences demandand to how it is delivered to them. Three broad trends stand out:

• First, audiences will access local media through an expanding array of devices – with an underlyingmigration from the printed page alone to print alongside TV/PC/Mobile screens. Some services,such as local news, will migrate gradually, while others such as local listings or classifieds will do sofar more rapidly. After a false start in 1999/2000, regional newspaper groups are now revitalisingtheir online initiatives to meet the demands of a resurging online advertising market, to reach out tonew audiences, and to deepen their already strong ties to local communities.

• Second, local audiences will increasingly seek out audiovisual content over text and pictures.Various commercial operators and newspaper groups have to date ventured into “ultra-local” TV,and have innovated in the face of significant uncertainty and risk. Many have encounteredcommercial setbacks – a normal experience in an emerging medium.

• Indeed, it will take years of trial and error to determine whether the most sustainable model fordelivering video to local audiences will be through digital TV, broadband PC or mobile devices – orsome combination thereof. It is essential that early pioneers have the freedom do so in a marketenvironment that supports, rather than undermines, commercial innovation.

• Finally, the regional press will continue to face increasingly stiff competition for readers, audiencesand advertisers, and local audiences will ultimately be the beneficiaries of increased choice andinnovation.

22

Regional newspapers: Evolution of services to local communities

Digital video Digital text & picturesPrint

Late 1800s Late 1990s 2005-2010

The next 10 years will bring profound changes to the type of content that local audiences demand and to how it isdelivered to them.

• Clear delineation of boundariesbetween print, radio and TV

• Limited competition betweennewspapers serving differentlocalities

Market

context

Market

context

• Unbundling of classified services• Emergence of interactivity• Proliferation of free content online• Competition from incumbents (eg

BBC) and new entrants

• Bundled service offer – news,information and advertising in onepackage

• Focus on print, due to regulatoryconstraints

• Extension of brands and servicesonline

• New brands created for classifiedservices (eg Fish4)

• Declining cost of producing videocontent

• Expanding options for videodistribution: Broadband, IPTV,DTT (post switchover)

• Proliferation of access devices

• Extend publishing assets into newelectronic channels, as thisbecomes commercially viable

Regional

press model

Regional

press model

Key challenges for local/regional newspapers:

1. Access: Migration from print to PC/TV/Mobile screens

2. Content: Migration from text & pictures to audio/video

3. Competition: Falling barriers to entry & emergence ofnew competitors

• Cross-media ownershiprestrictions between print, radioand TV

• Regulation by distribution channel

• Partial relaxation of cross-mediaconstraints

• Regulation under pressure fromincreasing levels of convergenceRegulatory

framework

Regulatory

framework

23

UK Digital Media penetration% homes

0

10

20

30

40

50

60

70

1998 1999 2000 2001 2002 2003 2004

Internet

Broadband

Digital TV

Source: Ofcom: The Communications Market, January 2005 Quarterly update

First, audiences will access local media through an expanding array of devices – with an underlying migration fromthe printed page alone to print alongside TV/PC/Mobile screens.

24

Regional newspaper circulation trends – Paid-for titlesMillion copies sold annually

0

500

1000

1500

2000

2500

3000

3500

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03

Source: World Advertising Research Center: Advertising Statistics Yearbook 2004

Some services, such as local news, will migrate gradually, reflecting a 20 year trend of eroding circulation across allcategories of local newspaper products.

Total

Daily - Evening

Daily - Morning

Weekly

Sunday

25

Classifieds migration online – US recruiting example%, US$ billion

Other services, such as local listings or classifieds, could migrate far more rapidly online.

96

Newspapers

98 00 02

$6.3b

Online

$8.5b

$11.8b

$8.7b

Source: Borrell Associates

100% =

97%

3%

93%

7%

77%

23%

68%

32%

26

Growth in regional press online

64

110

156

209

275

0

50

100

150

200

250

300

2001 2002 2003 2004 2005E

Growth in traffic – Johnston Press exampleMillion page impressions

44%CAGR

0.9 0.7

3.9

6.3

-23.5

-7.6

-3.8

0.7

-25

-20

-15

-10

-5

0

5

10

2001 2002 2003 2004

Growth in revenue/profit – Trinity Mirror example*£million

Revenue

Operating profit

* Includes National digital services and Fish4Source: Johnston Press; Trinity Mirror 2004 Preliminary Results Presentation

After a false start in 1999/2000, regional newspaper groups are revitalising their online initiatives and achievingsignificant audience growth, as well breakeven digital operations.

27

UK Online advertising by quarter: IAB estimates£m

3.4 4.5 4.86.7

8.4 8.9

12.7

21

26.7

35.1

41.9

49.447.4

42.8

36.633.9

36.6

45.2

51.1

63.8

70.3

81.3

94.6

107.5

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

98 99 00 01 02 03

Source: Interactive Advertising Bureau

Regional newspapers are investing online to meet the demands of an online advertising market growing withrenewed momentum…

28

UK Newspaper online recruitment adspend£m

0

2

4

6

8

10

12

14

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Source: Advertising Association, The Newspaper Society

… as well as playing a key role in the development of the online recruiting market.

National Newspaper Groups

Regional Newspaper Groups

2003 2004 2005

29

Opportunities for user-generated content

2

4

9

11

18

42

2

2

0 10 20 30 40 50

Cars & motoring

Local

entertainment

Local history

Property sales &

rent

Local sports news

Headlines

Births, Marriages,

Deaths

Local news

Top reason for reading local newspapers -Cumbria example% of local newspaper readers*

Community Publishing Tools -Northcliffe’s Beehive example

• Since late 1999, NEP has run theBeehive Online Community Networkand provided the means for thousandsof free websites to be created by not-for-profit groups and organisationsacross the UK.

• Any not-for-profit group, or an individual,can create a Beehive website byregistering online and obtaining apassword that enables them to build awebsite without needing to knowtraditional web design and developmenttechniques.

• There’s no charge for hosting, technicalsupport or help and advice by telephoneand email from Beehive staff .

They are also leveraging interactivity to deepen their already strong links in local communities, for example bycreating forums for local audiences to publish and share their own content, building on their readers’ clear interest inaudience-generated information, such as Births/Marriages/Deaths announcements.

* Face-to-face interviews with 780 adult residents of the News & Star circulation areaSource: News & Star readership Survey 2004, Poynings Research & Consultancy – prepared for Cumbrian Newspaper Group; NEP

Audience-generated content

30

Ultra-local TV: Channel M example

Programming

• Programme schedule built around News, Sport and Music

• Channel focused on serving Manchester residents

• Aiming for 10/16 hrs per day of local content

Advertising

• Advertising-funded. Portfolio of 40-50 advertisers, of which 70%are local

• In house production team can produce spots for £1000-2000

Distribution

• Currently distributed on cable and free-to-air to ~500k homes

• Likely to extend distribution to Sky in near term

Partnerships

• Partnership with CHUM International to leverage programmearchive and CityTV expertise

• Relationship with Salford University Media department

Second, local audiences will increasingly seek out audiovisual content over text and pictures. Channel M inManchester is one of the early pioneers of “ultra-local” TV amongst regional newspaper groups.

Source: Channel M website, press search, interviews

31

Challenges for local TV – Channel One example in Liverpool

But innovation brings risks. Some early movers have encountered commercial setbacks in spite of initial signs ofsuccess with audiences.

23

25

28

29

35

36

37

52

25

22Eurosport

Sky News

Sky Sports 2

ITV2

Sky Sports 1

Living

Discovery

UK Gold

Sky One

Channel One

Audience success: Cable channels watched in last 7 days%, 2001 (base of 412 cable subscribers in Liverpool)

Commercial challenges

Distribution

• No RSL available in Liverpool for free-to-airbroadcasts

• Distributed on Telewest – only 30% penetration inLiverpool

Programming

• Rolling news and sport service with some localprogramming

• High cost of updating programmes for a 24 hrschedule

Advertising

• Lack of audience measurement service

• 80% of audience in C2DE range given cabledistribution

Channel closed in 2002

Source: Channel One viewing survey, The Murray Consultancy; Trinity Mirror Regionals

“Ultra-local” channel

32

Local Newspapers offering video on broadband – Boston Globe example

It remains to be determined whether the more compelling economic model for delivering video news to localcommunities will be based on ultra-local TV services or video clips over broadband – or indeed, whether both modelswill coexist aimed at different audiences and different content genre.

Video clips integratedin text-based website

Source: Website

33

Oxford trial of video broadcast to mobile phones

It also remains to be seen whether the provision of local video news and information to mobile phones and hand-helddevices could emerge as a viable model – particularly to attract and retain younger audiences.

• UK’s first trial of TV to mobile phones by NTL Broadcastand O2

• Trial based in Oxford, from July 2005 for six months,involving up to 350 O2 subscribers

• 16 channels available, including Sky News, Sky SportsNews, Sky Travel, Chart Show TV, Discovery Channel,Shorts TV (bespoke short film channel), CNN andCartoon Network

• DVB-H standard, specifically developed for broadcastingTV signals to mobile and other hand-held devices

• DVB-H distinct from, and complementary to, one-to-onevideo streaming service on GPRS or 3G

• Similar trials underway in the US, Germany, France,Finland and Sweden

Promising features:

Potential to target services togeographic communities

Push and pull based model

Precedent of paid-for contentmodels

Established micro-billingmechanism

Source: Press search

34

Emerging competitors in “ultra-local” TV

Content & services Distribution Economic model

Source: websites

• 24/7 broadcasts• News, sport, general

entertainment• Sky News bulletins• Supports community and

charity events through TVcoverage & promotions

• Reaches ~750k homes throughfree-to-air broadcasts (RSL)and carriage on Isle of Wightcable

• Full programme schedulestreamed online

• News archive available on VoD

• On-line content provided free• Targets local advertisers with

TV/online packages• Non-profit status

Isle of Wight

• 24/7 broadcasts• Targets Asian community in

Leicester• Broad range of local

programmes as well as contentsourced through alliance withSAB TV of India

• Reaches ~180k homes withRSL licence and carriage on ntl:cable

• MATV national channel carriedon satellite

• Advertising packages on localand national channel forbusinesses targeting the Asiancommunity

Leicestershire

• Local news, sport, currentaffairs, music, general interestand local informationprogrammes

• Broadcast free-to-air inColeraine, Derry, Limavadyand Strabane

• Signal received in 69% ofhomes within broadcast area –weekly reach of 105,000 adults

• Advertising funded modelNorth West of

Northern Ireland

Local newspapers will also face competition from new entrants in local TV, as illustrated by some of the newbusinesses built around RSL TV service.

35

Contents





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3 BBC market impact

• The BBC’s statements on “ultra-local” TV, as well as the experience of BBC online, raise a seriousconcern that the Corporation, free of commercial constraints, will set out to dominate the nascentmarket for ultra-local video news, as the first port of call for local TV viewers.

• Ofcom’s apparent support for the BBC playing a greater role in regional broadcasting appears to begrounded in the concern that the high cost of delivering regional programmes across a national TVnetwork will lead to a continuing erosion of regional output and audience for ITV.

• However, rapidly declining costs of creating and distributing digital video are paving the way for smallerscale players to offer locally-targeted programmes on TV and on broadband – and audience demandshould evolve sufficiently gradually for viable commercial models to emerge.

• Furthermore, it is far from clear that the BBC would be best placed to spearhead the development oflocal digital media. While licence-fee payers value the BBC’s Nations and Regions services, they rarelysingle out local programmes as what they value most about the BBC. Indeed, most of the BBC’scurrent services in the regions are more than matched by the commercial sector in general, and theregional press in particular.

• Ultimately, the BBC does not come close to matching the depth of journalistic resource that localnewspapers have deployed in local communities for decades. As a result, its “ultra-local” TV servicemay ultimately resort to sourcing stories from local newspapers, and repackaging them for TV.

• Nevertheless, in spite of its more limited footprint in local communities, the BBC’s scale economies,licence-fee funding, brand and cross-promotion (including to/from BBC local magazines) could preventemerging commercial ventures from achieving critical mass with audiences and with advertisers. Thismay extend choice in the near term, but at the expense of plurality and innovation over the longer term.

37

BBC Statements on “ultra local” TV and online services

• “We see that the provision of high cost, high quality news, current affairs, local interest, community interest,nation’s interests, national interests and so on for the British public is going to be less and less by theprivate sector. This is a key role for the BBC going forward.”Michael Grade, Transcript of BBC evidence to Select Committee*, 15th March 2005

• "The big new idea is local TV…It is about using our existing infrastructure of local radio and digitaldistribution to deliver a whole new tier of television news services across the UK… It is exactly what we didwhen we launched local internet services. Now the big idea is to build from that with local TV.“ Andy Griffee, Controller of English Regions, Broadcast, 3rd December 2004

• “We will make television news as local as our local radio offer currently is, with up to 60 areas across theUK being offered tailored news and information throughout the day and on demand”The BBC’s Role in representing the Nations and Regions, October 2004

• “We will explore the relative costs and feasibility of launching this service on digital TV, including Freeview,and on Broadband … The BBC now has five times the number of cameras covering local stories comparedwith two years ago, and we intend to use them to provide a unique service that will reflect the lives andconcerns of local communities”Building Public Value, June 2004

• “Developing our Where I live sites to enhance their distinctiveness and so that they become truly local” The BBC’s Role in representing the Nations and Regions, October 2004

* Based on an uncorrected transcript of evidence taken in public and reported to the House. Neither witnesses nor Members have had the opportunityto correct the record

BBC statements raise a serious concern that the Corporation, free of commercial constraints, will set out to dominatethis nascent medium, as the first port of call for local TV viewing – as was the case with BBC online.

38

Apparent Rationale for BBC’s ultra-local service*

Key arguments

• Unattractive economics of broadcastingregional programmes across a nationalnetwork

• Unmet audience demand for more/betterlocal and regional programmes

• BBC currently serves regional audiencesthrough rich mix of TV, radio and onlineservices

• Through its independence and licence feefunding, the BBC can offer a rich portfolioof services that the market alone would notprovide

• Local TV services are currently onlyavailable in a handful of communities –there are few services to distort

• Public benefits and market distortion canbe quantified and compared ex ante

Our observations

• Cost of local broadcasts declining with lowerbarriers to entry in production and lowerdistribution costs

• Unclear evidence of current unmet audiencedemand.

• Demand for local news and information invideo will increase – but this will likely begradual

• BBC does not match the Regional Press’slong-standing heritage and depth ofjournalistic resource in local communities

• Much of what BBC provides in localcommunities already catered to bycommercial sector

• “Ultra-local” is the Regional Press’s USP• The BBC risks distorting key growth

trajectory for the industry over the coming 5-10 years

• Concerned about a potential market impactassessment at an early stage thatoverestimates public good andunderestimates market distortion

1. Market failure in regional/local broadcasting

2. BBC best placed to servethis need

3. Public benefits likely tooutweigh any risks ofmarket distortion

The rationale for “ultra-local” BBC TV appears to be grounded in the belief that the market will fail to meet emergingaudience needs, that the BBC is best placed to respond to this failure, and that the public benefit of doing so willoutweigh any risks of market distortion.

* Interpretation based on review of documents in the public domain – not discussed with the BBC

39

BBC Nations & Regions: The last line of defence for regional broadcasting?

1

1

1

42

42

Sky

Five

Channel 4

BBC

ITV

Which broadcaster provides the bestprogrammes about my area/region*%, 2004

Audience share for regional news – early evening broadcasts**%

* Survey of 2068 adults aged 16+ from across the UK, interviewed face-to-face in their homes ** Data points estimated from Ofcom time series chartSource: MORI – sourced from What you said about the BBC, DCMS; Ofcom: “The Communications Market 2004”

Ofcom’s apparent support appears to be driven by the concern that the BBC could emerge as the only viable regionalPSB, in light of ITV’s eroding audience share and output in regional news.

43

21

1994 2003

34

30

1994 2003

ITV 18:00-18:29 BBC 18:30-18:59

-51%-51%

-12%-12%

40

Economics of Regional content£000 per network hour, peak time, 2003

* Total cost of different versions for each Region, aggregated across the networkSource: Ofcom: The Communications Market 2004 - Television

These trends are underpinned by the high cost of broadcasting multiple regional slots across a national TV network.

86

418

Network original

programmes

Regional slots across the

network*

ITV

x 4.9x 4.9

117

466

Network original

programmes

Regional slots across the

network*

BBC

x 4.0x 4.0

41

White label video production services – PA example

• Multimedia newsroom supplying audiovisual content for avariety of platforms

• Complement to traditional text newswire services

• Several packages available – entertainment, news,business, regional information

However, declining costs of creating digital video content, as well as “white label” services, such as those offered byPA, are paving the way for smaller scale players to offer locally-targeted programmes on TV and on broadband

Source: Press search, PA website

42

Expanding options for digital distribution

Digital satellite channels

• 30-50 channels launched each year on Sky platform

• Channel space available, formalized channel set up process in place

• Declining cost of carriage

“Slot rental” market

• Slot auction mechanism available on Sky

• Potential to negotiate with channels on DTT or Cable for broadcast slots

IPTV

• Early stage opportunity, pioneered by Home Choice in UK

• FastWeb in Italy one of the leading European pioneers

Broadband

• Declining prices and rapid takeup of 1Mb connections

• Declining speed threshold required for video streaming

This will be reinforced by the expanding options for, and declining costs of, digital distribution on TV or on the web.

43

Reach and demand by type of programme% respondents who watch television*, 2004

* Base of 2045 respondents from a survey of 2068 adults aged 16 and over, from across the UK, interviewed face-to-face in their homesSource: MORI Research to support BBC Charter Review – sourced from What you said about the BBC, DCMS

Surveys suggest that audiences are broadly satisfied with the current level of regional TV programmes, given thecomparatively low reach and limited demand for additional programmes focused on the viewer’s own region. Changes indemand should be sufficiently gradual to allow viable commercial models for “ultra-local” TV to emerge.

-50

-40

-30

-20

-10

0

10

20

30

0 10 20 30 40 50 60 70 80

Films

ComedyDrama

Documentaries

National &internationalnews

Soap Operas

Reality TV

Sports

Lifestyle programmes

Arts/culture/music

Chat shows

Game shows

Personal interests

Own region

National events

ReligiousChildren’s

Reach% audience who currently watch each type of programme

DemandDifference between% respondents whowould like to seemore programmes &% who think thereare too many

44

Most valued aspects about the BBC (spontaneous)% responding to “Thinking about the BBC in General, what do you personally value most about the BBC?”

Source: MORI Research to support BBC Charter Review – sourced from “What you said about the BBC”, DCMS

Furthermore, it is far from clear that the BBC would be best placed to provide “ultra-local” TV. While licence-fee payersvalue the BBC’s Nations and Regions services, they rarely single out local programmes as what they value most about theBBC

1

2

2

2

3

5

6

6

6

7

7

8

10

10

13

14

Good website

Good regional programmes

Good sports coverage

Independent of government

Educational programmes

Entertainment programmes

Unbiased

Free from commercial pressures

Variety/broad range of programmes

Independence generally

Factual

High standards

Reliable

Lack of advertising

High quality news programmes

High quality programmes

45

Differences in output across local media – Leeds exampleNumber of stories published*, 13-19 May 2005

Indeed, a comparison of story counts across different “local” media in Leeds illustrates how the BBC’s current servicesin the regions are more than matched, in volume terms, by those provided by the commercial sector in general, andthe regional press in particular.

News

128

258

285

50

419

563

146

65

0 200 400 600

BBC Look North

ITV***

Radio Aire

Real Radio

BBC Radio Leeds

Leeds Weekly

News

Yorkshire

Evening Post

Yorkshire Post

28

101

261

2

182

201

77

23

0 200 400 600

Sport

Newspapers

Radio

TV

* Items appearing throughout the day have been counted once. Story progression accounted for with updates recorded as new items. ** Events/reviews, weather, road/traffic, opinions, general items *** ITV bulletins only tracked for 17-19 May, results pro-rated by factor of 7/3 to allow cross-media comparisonSource: Yorkshire Post, McCallum Layton research and marketing consultants

21

23

45

20

197

149

17

15

0 200

Other**

46

Geographic mix of stories – Leeds example% of stories published, 13-19 May 2005, news and sport genre

Not only do the BBC’s “local” services generate a lower volume of output than commercial counterparts, but the mix ofoutput is also far less localised

12

18

6

13

32

7

45

94

85

77

25

27

13

43

32

2

3

5

57

49

42

41

21

4

0

0

12

11

13

9

2

0

ITV*

BBC Look North

Real Radio

BBC Radio Leeds

Radio Aire

Yorkshire Post

YEP

Leeds Weekly News

Leeds

Regional

National

International

* ITV bulletins only tracked for 17-19 May, results pro-rated by factor of 7/3 to allow cross-media comparisonSource: Yorkshire Post, McCallum Layton research and marketing consultants

Newspapers

Radio

TV

47

Fundraising and campaigns – Yorkshire Evening Post example

Regular/annual sponsorships

• £2,273,008 (to date) - Half and Half Appeal for two Leeds hospices (£156Kpresented last year alone)

• £48,000 - three-year corporate sponsorship of Leeds Rhinos and LeedsTykes rugby clubs

• £35,000 (raised this year) - Yorkshire Women of Achievement Awards (last19 years)

• £3,000 - Leeds Sports Federation - Leeds Sports Awards.

• £2,150 - NCH - Sponsor award category in Yorkshire Young AchieverAwards (10yrs)

• £400 - Heartbeat Appeal - Table at annual Heartbeat Ball

• £550 - Glitter Committee - Table at Valentine Glitter Ball (last 5yrs)

• £1,250 - Lineham Farm Pony Club

• £250 - Leeds and District Amateur RL - Sponsorship of Evening PostFloodlit Trophy

• £210 (last year) - Middleton Park Equestrian Centre - sponsorship forfundraising dinner (last 4-5 yrs)

• £150 - Leeds and District Bowling Association - Sponsor Men's MeritCompetition

• £150 - L & DB & S Snooker League - YEP Shield and Ken Garnett Trophy

• £100 - Local Community Cricket - sponsorship.

• £100 - Thornhill Cricket and Bowling Club - sponsor Open PairsCompetition.

• £100 - Tockwith and District Show - Sponsorship of YEP category at annualshow (10 years).

• £20 - Ossett and District Snooker Club. Bills and snooker.

• £50 (a time) - YEP Citizen of the Month Award

Public campaigns

2005

• He Must Never Go Free: Home Secretary effectively rules out theYorkshire Ripper's release after huge campaign by the YEP backed bythousands of readers.

• Blair Brought to Book: 11 readers chosen to speak to Tony Blair at anexclusive YEP Q & A session.

• See You in Court : YEP backs victim's fight to make Lottery rapist pay forhis crimes.

• Batesgate Tapes: YEP reveals how a Leeds United director was offered a£250,000 'incentive' to halt Ken Bates's takeover.

• Save Mount St Mary's: Hundreds back the YEP in its bid to save one ofthe best-performing primary schools in Leeds.

2004 (partial list)

• Love and Betrayal - The Roberts Diaries: YEP exclusively obtain tapediaries of Sgt Steven Roberts detailing the problems faced by ill-equippedsoldiers - a problem that ultimately led to his death. 'UK Scoop of the Year'in the 2004 Regional Press Awards.

• Give The Kids A Hospital: Campaign for a new children's hospital forLeeds. Three thousand readers signed a coupon supporting the bid - and itworked.

• Ban The Doorstep Cowboys: A campaign to outlaw cold calling forproperty repairs . Pressure leads Government to announce a taskforce toinvestigate the extent of the problem.

• Taking A Stand: Campaign to rid the city of anti-social behaviourculminated in a summit chaired by YEP.

• Stricter on Solvents: Campaign/investigation to highlight the growingproblem of solvent abuse on the streets of Leeds.

In addition to their portfolio of local news, information and advertising, many local papers play at least as important apublic service role as the BBC, through fundraising and public campaigns, without recourse to public funding.

Source: Yorkshire Evening Post

48

Editorial staff deployed in local communities

Ultimately, the BBC does not come close to matching the depth of journalistic resource that local newspapers havedeployed in local communities for decades.

8,032

13,020

1996 2003

Regional Press* BBC Nations & Regions

* Based on headcount. Total staffing of 12,032 in 2003 on a full-time equivalent basisSource: The Newspaper Society Annual Industry Survey; BBC Annual Report, press search

• Total staff of 3,056 in BBC EnglishRegions – Editorial staff numbers notdisclosed

• 735 job cuts announced in Nations &Regions – primarily in programmemaking roles

• Total BBC journalist staff of 3500 (basedon NUJ membership elegible to beballoted for the recent strike)

49

Overlapping stories between Local newspapers and BBC RadioAnalysis of identical stories reported in Yorkshire Evening Post and on BBC Radio Leeds, 13-19 May 2005

As a result, the BBC’s “ultra-local” TV service may ultimately resort to sourcing stories from local newspapers, andrepackaging them for TV – while nevertheless undermining the commercial viability of local newspapers’ investmentsin their newsgathering operations. Indeed, there are some indications that this may already be taking place.

• 11 from emergency services calls• 7 from sports update reviews/previews• 5 from courts/inquests/hearings• 3 from press releases• 2 from press agencies

• All generated through exclusivecontacts of YEP editorial staff

Story origin:

28 by BBC Radio Leeds

12 by Yorkshire Evening Post

First covered by:

Sample of 40overlapping

Stories*

* Stories reported by both media at the same point of progression and where one medium clearly published/broadcast before the other.Only Leeds/Regional news and sport stories measured (national & international news and sport, as well as “other” content excluded)

Source: Yorkshire Post, McCallum Layton research and marketing consultants

50

Backup: Overlapping stories broadcast first by BBC Radio Leeds

13/5/0514/5/0516/5/0513/5/0514/5/0516/5/0516/5/0518/5/0519/5/0516/5/0518/5/05

13/5/0513/5/0517/5/0518/5/0513/5/0517/5/0516/5/05

13/5/0513/5/0516/5/0517/5/0517/5/05

16/5/0518/5/0513/5/05

13/5/0517/5/05

Date

08:0006:0006:0010:0006:0006:0011:0010:0006:0012:0007:00

06:0006:0006:0006:0014:0008:0006:00

06:0014:0015:0014:0015:00

06:0015:0006:00

17:0016:00

Time

3 men arrested in connection with brutal attack on Leeds teenager Joel McBrinPolice questioning 3 people in relation to brutal attack on Leeds teenager3 people due in court after attack on Joel BcBrin on Kirkstall Road8 year old critically ill after knocked off bike45 year old Leeds man died after being hit by a car near Armley Prison, 2 people arrested24 year old man due before magistrates for murder of 52 year old man in LeedsPolice swoop on football hooligans in LeedsWarehouse blaze drama – KirkstallPassengers praise pilot of plane which overshot runwayPolice in Bradford make biggest ever drug bust of over £300k street value30 fire-fighters tackle blaze at derelict property on A168 near Wetherby

Leeds Rhinos travel to play Leigh in super leagueFarsley Celtic playoff game against Whitby will go ahead following collapse of legal battleIt's going to be a big night for FarsleyDisappointment for Farsley Celtic who lost their playoff finalsYorks crickets stiff task as leics declareYorkshire v Worcestershire in 2nd round of c&g cricket cupCricket: Yorkshire lose to Durham by 51 runs in first loss of season

Patients body left on the floor of Leeds hospitalLeeds man who battered girlfriend to death jailed for lifeMan denies murdering Halifax priestJudge refuses request to ban a Yorkshire woman to protest at an American base in OtleyA learner driver involved in hit and run has been given 28 days youth custody in Wakefield

Leeds first academy school to open in seacroft next yearLeeds woman who helped pc Ian Broadhurst is commended3.5 million art gallery sneak preview and opens to public tomorrow

Business news-Morrisons lose market share since Safeway takeoverLeeds tykes Ian Bolshaw pulls out of tour

Headline

Emergency services callsEmergency services callsEmergency services callsEmergency services callsEmergency services callsEmergency services callsEmergency services callsEmergency services callsEmergency services callsEmergency services callsEmergency services calls

Sports update reviews/previewsSports update reviews/previewsSports update reviews/previewsSports update reviews/previewsSports update reviews/previewsSports update reviews/previewsSports update reviews/previews

Courts/inquests/hearingsCourts/inquests/hearingsCourts/inquests/hearingsCourts/inquests/hearingsCourts/inquests/hearings

Press releasesPress releasesPress releases

Press agenciesPress agencies

Origin*

* YEP assessment of most likely sourceSource: Yorkshire Post, McCallum Layton research and marketing consultants

While “overlapping” stories broadcast first on BBC Radio Leeds can be traced back to public sources…

51

Backup: Overlapping stories broadcast first by Yorkshire Evening Post

13/5/05

14/5/05

13/5/05

17/5/05

14/5/05

16/5/05

17/5/05

19/5/05

18/5/05

13/5/05

16/5/05

19/5/05

Date

Curfew on Hunslet fly-tipper

Curtain up on bid for Lottery cash - Lottery grant for City Varieties

Top architect to talk on the Leeds Boom - conference address by Sir Terry Farrell

Cannes do attitude is a star attraction -regional film hopefuls.

United unveil warm up plan (United pre season)

Tykes ace signs: Hooper new deal

Thomas joins Tykes (Wales international)

Tykes land Scots skipper - Gordon Bulloch signs

RFL probe abuse claims- Rhinos racial taunts

Ritchie lands Barnsley top job - Former Leeds Academy boss gets Barnsley job

Hoggy returns to bolster Yorkshire (Cricket)

Tigers capture ex Featherstone forward - Castleford

Headline

Self generated

Self generated

Self generated

Self generated

Self generated

Self generated

Self generated

Self generated

Self generated

Self generated

Self generated

Self generated

Origin*

* Stories carried exclusively by the YEP, where the source of the story has not spoken to anyone else before publicationSource: Yorkshire Post, McCallum Layton research and marketing consultants

… those published first by YEP, and subsequently broadcast on BBC Radio Leeds originate from YEP-specificsources.

52

Potential threat to the commercial sector

Nevertheless, in spite of its more limited footprint in local communities, there is a real risk that the BBC’s scaleeconomies, licence-fee funding, cross-promotion and brand will either undermine existing new business ventures ordeter additional investment.

• Develop compelling new content orservices, through trial and error,ahead of proven revenue potential

• Build audience awareness of newservices and brands with limitedfunds

• Strike a careful balance betweenoffering free content to buildaudiences – while exploring paid-forcontent revenue models

• Negotiate with powerful platformoperators for distribution

• Convince advertisers of the merits ofcommitting to an emerging medium

Challenges for commercially-fundedinnovators in local media…

• Compete for talent and content withpublic funds

• “Bundle” new content/services withcontent from BBC archive or nationaloutput

• Leverage BBC’s unparalleled brandawareness in TV and cross-promotional muscle

• All content and services providedfree at point of consumption

• Leverage privileged distribution onDTT, digital satellite, and negotiationstrength with other platforms (e.g.Mobile, broadband)

• Compete “head on” for audienceshare

… exacerbated by the potential for“unfair” competition from the BBC

Drive content costs above

commercially-sustainable

levels

Drive up costs of marketing

and promotion to offset

BBC’s share of voice

Undermine the development

of new funding mechanisms

Drive up distribution costs or

suffer from limited audience

reach

Prevent critical mass of

audience demanded by

advertisers

53

OFT submission to Green Paper consultation – Issues raised

These risks have been noted by the Office of Fair Trading in its recent response to the Green Paper.

• “In recognising this uniqueness, however, it is important also to recognise that, as well as leading to

programmes that may be uniquely valued by the public, it can also produce outcomes that are uniquely

damaging to effective competition and to commercially funded innovation on media markets, due to the

BBC’s unique scale, scope, status and ambition.”

• “As a result, the systems by which the BBC is governed and generally held accountable must be able to

provide sufficient safeguards for those whose legitimate interests may be harmed by the BBC’s activities.”

• “The BBC should consider withdrawing from some of its public service activities if it is no longer adding

value to what the commercial market would provide.”

• “The BBC’s commercial services raise the additional issue, however, of whether the BBC should be

engaging in such activities at all, given that, by definition, they do not arise from the BBC’s exercise of its

public service mission and could often be provided equally well by the commercial sector. Furthermore, the

provision of such services by the BBC raises inevitable questions about whether they enjoy an unfair

competitive advantage…”

• “…when assessing whether such commercial services should be provided by the BBC at all, it cannot be a

sufficient justification that the activity concerned generates money for the BBC.”

Source: DCMS website

54

Advertising share lags audience share% commercial audience share*, % TV NAR

* Audience of advertising funded channelsSource: Ofcom, Zenith Optimedia

Business cases for emerging media need to account for a significant lag between building audiences, and translating theminto advertising revenue. Head on competition from the BBC at an early market stage could prevent new ventures fromachieving critical mass, and fatally undermine their commercial viability.

0

5

10

15

20

25

30

35

40

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Multi-channelaudience share*

Multi-channeladvertising share

Five audience share*Five advertising share

55

Contents





.……… Page 8

……………………………… Page 21

.…………………………………………… Page 36

.……………… Page 56

56

4 Safeguarding plurality over the long term

i. Reject the BBC’s proposed model of large-scale rollout of “ultra-local” TV / broadband internet to50-60 cities.

ii. Deny additional licence-fee funding for either “ultra-local” TV or for further development of theBBC’s “where I live” sites.

iii. Ensure greater transparency in the BBC’s investments in local services through publication ofdetailed accounts for these services.

iv. Deploy public funding to research/pilot programmes for local commercial media services on digitalplatforms – and publish the findings in the public domain.

v. Where publicly-funded pilot programmes are conducted by the BBC – such as the Midland localTV trials – ensure that the BBC both involves local media groups in the design/execution of thepilot, and publishes all findings in the public domain.

vi. Ensure that any future decisions on extending local BBC services be contingent not only on apublic value/market impact test, but also on the completion of Ofcom’s review of local TV post-switchover and on a public consultation of the role for commercial media in light of its findings.

vii. Confirm that public value/market impact tests be undertaken by Ofcom and not the BBC trust, andthat the process for conducting these assessments be open to public consultation.

The Newspaper Society urges DCMS to consider the following proposals for inclusion in the CharterReview White Paper:

57

4 Safeguarding plurality over the long term (Contd.)

viii. Reframe the BBC’s eventual remit in local communities as a cautious and selective intervention incertain areas – be they specific localities, types of service or audience segments – where there isclear evidence that commercial models will not be sustainable.

ix. Define a clear “exit plan” for any new BBC services that are approved – namely a set ofmeasurable and transparent criteria under which the original justification for BBC interventionceases to be valid, and at which point the BBC is compelled to withdraw from the provision ofthese services.

x. Define specific areas where the BBC should offer assistance to local commercial media in theirmigration from traditional to digital media platforms. This might include facilitating distribution,providing access to the BBC’s output and archive on favourable commercial terms, or promotingemerging commercial ventures.

58

Commercial sector participation in ultra-local TV pilots

Audience preference

• Mix of news vs. general interest and information?

• Preference for TV vs. broadband distribution?

• For TV service, preference for standalone local channel vs.inserts within a regional/national service?

• Preference for linear vs. on-demand model?

Impact of publicly-funded services commercial media

• Impact on consumption of existing national and local media –TV, radio, online

• Extent that this varies by demographic group

• Impact on advertiser perceptions of the effectiveness of localmedia

Alternative models for commercial partnerships with the BBC

• Test options for incorporating branded content from localcommercial media – eg: “local news bulletin brought to your bylocal newspaper brand”

• Test options for co-branding with local media groups – eg at theoverall service level vs. at the level of individual programmes

DCMS should consider public funding of research/pilot programmes of local media services on digital platforms.Where these are conducted by the BBC – such as the Midland local TV trials – the BBC should involve local mediagroups in the design/execution of the pilot, and publish all findings in the public domain.

Illustrative issues

i. Involve local media groups indesigning pilot methodology andrecruiting test participants

ii. Structure pilots to allow variousmodels of BBC collaboration withlocal media to be tested –adjusting pilot timetable if need be

iii. Ensure that all findings from thepilot are published andincorporated into subsequentpublic value/ market impactassessments

59

Public value & market impact tests – potential concerns

Data sourcing

• Will all supporting data be open to public scrutiny prior to finalassessment?

• What will be the mechanism for external participants to submitalternative/competing evidence?

• Under what circumstances should bespoke primary research becommissioned?

Analytical methodology

• How will sensitivity analysis be undertaken and incorporated into thefinal assessment?

• Where estimates are made under uncertainty, these should err on theside of conservative (i.e. low-end) assumptions for public value, butaggressive (i.e. high-end) assumptions for market impact – in effect apresumption of “guilty until proven innocent”

• How will dynamic considerations (e.g. long term vs. short term marketimpact) be reflected in the analysis?

Decision-making process

• Will final decisions be the responsibility of individuals or committees?Under the latter, what voting rules will apply?

• Will a market impact “ceiling” be defined, above which no approvals willbe granted – regardless of public value?

• How will appeals be handled?

Public value/market impact tests should be undertaken by Ofcom and not the BBC trust, and the design andimplementation of these assessments should be open to public consultation.

The decision to ground future approvalsof new/amended BBC services on fact-based analysis is a welcome one

However, the Graf review highlighted thedifficulty of conclusively proving ordisproving market impact – particularlyin nascent markets

As a safeguard, this process should beiterative, open to the public and open toappeal – and based on a “default”assumption of market impact

60

BBC Contribution – Options to explore

Issues faced by new ventures

• Facilitate distribution on Freesat platform

• Provide capacity on Freeview platform

• Carry local inserts from commercial providers on BBCServices

• Low-cost access to news headlines (as provided by Sky)

• Low-cost access to BBC archive – particularly Regionalnews and non-news programmes

• Promotion of emerging services on BBC TV, Radio orOnline services

1. Distribution constraints

2. Programming for a 24x7schedule

3. Building audience andadvertiser awareness

Potential BBC Contribution

The BBC could still play a crucial role in providing distribution, programming and promotional support to emergingventures – but as an enabling partner for local media groups, rather than as the principal gateway.

61

Initiating partnership discussions with BBC:Disguised Regional Newspaper group example

SepAugJulJunMayAprMarFebJan

31/1CEO letter toBBC DG

15/2BBC DGresponse

21/2Chairmanlunch withBBC DG

10/3CEO email toBBC COO –Immediateresponse

22/3CEO follow-up letter toBBC DG

18/4CEO email toBBC Nations& RegionsDirector –Immediateresponse

7/9Preliminaryworkingmeetingscheduled

Need for a more structured process for initiatingand conducting discussions with the BBC onprospective partnerships, that specifies:

Source: Log of email and correspondence

Under this model, the BBC’s obligations to prospective partners – as well as the process for responding to approaches– will need to be formalised and enshrined in the BBC’s service licences.

• What support can be expected from the BBC andunder what terms

• Who needs to be approached and the formalprocess for doing so

• An expected timeframe for securing a response

62

Summary Newspaper Society proposals to DCMS

Reject BBC model of “ultra-local” TV

Deny additional licence-fee funding

Publish detailed BBC accounts for local services

Consider public funding for research/pilots

Ensure that local media groups are involved in Midlands pilot

Ensure future decisions on extending local BBC services are contingent on publicvalue/market impact tests, on Ofcom’s review of local TV and on a publicconsultation of the role for commercial media.

Public value/market impact tests undertaken by Ofcom and not the BBC trust

Reframe the BBC’s eventual remit in local communities as a cautious and selectiveintervention in limited areas

Define a clear “exit plan” for any new BBC services that are approved

Mandate BBC support to local commercial media ventures

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About the author

Echobox founder Ian Mombru has been advising leading corporations inthe US, Europe and in Asia for over 11 years, eight of which as aconsultant with McKinsey & Company. As an industry specialist inMcKinsey’s global media & entertainment practice, Ian has led over adozen consulting assignments for broadcasters, publishers, and contentproducers in several countries and across a broad range of strategic andoperational issues.

Ian is devoted to deploying this experience, through Echobox, to helpmedia and entertainment companies around the world tackle their mostchallenging business problems.

Ian holds an MBA with distinction from INSEAD, an MSC from StanfordUniversity, a B.Eng from Bristol University, and is trilingual in English,French and Spanish.