Local Digital Television Programme Services Order 2012

Baroness Jones of Whitchurch Excerpts

Monday 6th February 2012 Grand Committee

[Baroness Rawlings]

My Lords, the UK’s media and public service broadcasting is widely regarded as among the best in the world. We enjoy plurality in newsprint at all levels and have a diverse commercial and community radio sector. Yet the UK’s media market has never properly developed in one significant respect: that is, local television. This is despite Ofcom research showing significant interest from UK consumers—80 per cent of people rate local news as important to them.

The Government have carried out extensive consultation and studies to identify how local TV can work in the United Kingdom. This culminated with our recent announcement of the first 20 locations expected to receive a local TV licence this year. The Government are now taking the necessary steps to implement an innovative new framework, some of the components of which are before the Committee today. We are not imposing new burdens on business but, instead, removing barriers to entry and creating new incentives. The two instruments before the Committee today need to be considered collectively. A third instrument to secure electronic programme guide prominence for local TV has also been laid by the Government but is not before the Committee today. We hope that the local television channel will be channel 8 in England and Northern Ireland.

For local TV to feature on the digital terrestrial television platform—that is, Freeview in lay man’s terms—it needs access to suitable spectrum. Therefore, the Secretary of State is directing Ofcom, through the Wireless Telegraphy Act 2006 (Directions to OFCOM) Order, to make sufficient spectrum available for local TV. Spectrum is already available to public service broadcasters. The beauty of our proposals is that we will be using spectrum available in the space between existing transmitters. This “geographic interleaved” spectrum allows different services to be broadcast in different locations—perfect for local television—instead of reserving portions of valuable nationally available spectrum. However, this spectrum does vary in signal strength across the UK. The list of pioneer local TV towns and cities identified by Ofcom are those with good spectrum coverage. Where spectrum coverage is inadequate, the Government expect that local TV services will develop online and, in the future, be carried through internet protocol television as this market develops. This instrument will meet the needs of local TV, which is low-cost and offers incentives to potential local multiplex operators. In most places, the amount of interleave spectrum being made available for local TV purposes is less than 10 per cent overall—meaning that there is plenty of spectrum remaining for other purposes.

The Local Digital Television Programme Services Order modifies the Broadcasting Act 1996 by creating a new licensing regime for local television, administered by Ofcom. The order provides for licensing the operator of the multiplex that will hold the spectrum being made available and for licensing the individual local television services. The multiplex operator will manage the spectrum and associated infrastructure to enable transmission of local TV services. We are preventing the multiplex operator from taking advantage of the local TV providers. It cannot charge local TV services transmission rates above cost recovery. The multiplex licence holder must also co-operate by meeting the minimum coverage obligations. Local service licensees will be obliged to provide content of interest to local audiences, suited to the local population’s needs and public service in nature.

Finally, the instrument provides for the establishment of an industry body for local TV. This could take a number of functions, such as measuring audience viewing numbers, and it could even bid for the multiplex licence if it became available, thereby helping to align the commercial interests of the multiplex operation with those of local TV services.

Collectively, the measures in these two instruments offer certainty of access to spectrum and equip Ofcom to license local TV. I hope the Committee agrees it is essential that we address the local TV deficit in the media marketplace, help create new opportunities for business and give audiences the plurality in content that they desire. I assure the Committee that we are satisfied with the orders and that they are compatible with Convention rights. I commend these orders to the Committee. I beg to move.

[Baroness Jones of Whitchurch]

My Lords, I thank the noble Baroness for her explanation of the two statutory instruments. The theory behind local TV is laudable; people are interested in what is happening in their local community and should be encouraged to become more knowledgeable and play a part as active citizens, including holding their local representatives to account. If local TV can successfully go some way to achieving those objectives, then it should be supported and welcomed. However, decisions like these are not made in isolation: we also have to look at the wider context—particularly as in this case, where there is public money involved through the proposed subsidy from the BBC.

In particular, I would like to explore further whether the demand for this service really exists. Would the service stand any real likelihood of long-term success once the subsidy is removed? Would a local TV service have a negative impact on existing local media outlets? Are there any adverse media ownership and plurality issues? What guarantees of quality would really exist when the scheme is up and running?

First, I would like some further evidence that there is sufficient demand for local TV to make it viable. The Minister said—and it is recorded in the impact assessment—that the Ofcom research identified that 80 per cent of people rate local news as important. I do not doubt that to be the case. However, does this not need to be measured against the evidence of consumer behaviours where local TV has been on offer in the past? The previous experiments with local TV in the UK have all failed, in part because they could not sustain the viewing figures. At the same time, local newspapers around the country are closing or being produced less often. Surely if there really was sufficient demand, this would not be the case.

Given that the Government have supposedly championed evidence-based policy, I am surprised that the department has not carried out more specific research into demand for this model of local TV. The Minister referred to extensive research. I should like more information about that. For example, what proportion of the local population do we know would seek out one or two hours of local TV programmes on a channel on which the overwhelming level of content was unconnected to the local area? Is there a preferred time for local programmes and can these slots be guaranteed when they will be competing with more commercial productions in primetime? If we do not know the answers to these questions, would it not have been safer to pilot the initiative in one or two cities rather than roll out the scheme nationally to 20 providers and then a further 24 conurbations with the associated costs? What research exists and what reassurance can the Minister give us that the scheme is viable?

Secondly, I should like to pursue the issue of the longer-term sustainability of these programmes. As we know, the BBC is providing £40 million over four years, including £25 million start-up costs. As I understand it, this money will be used to set up the infrastructure of the multiplex system, the licensing system and local production start-up costs. Meanwhile, the report from Nicholas Shott identified that, in the longer term, local TV would probably be delivered by internet protocol TV—the Minister made reference to this—and this is a widely held industry view. This begs the question of why we are investing so many of our scarce resources in a local TV system which will be overtaken by changes in digital technology almost before it has had time to become established. Would we not have been better off working with the sector to embrace these changes and be prepared for a new digital age rather than setting up what appears to be a convoluted bidding system, which will then have to go through an awkward transition into the eventual internet protocol scheme?

Incidentally, the Shott report also places great emphasis on the viability of local TV depending on high listing in electronic programme guides—again, the Minister made reference to this. I know that we are not debating this today, but I am not sure that that would be easy to achieve, as the listing system is highly competitive and there are other worthy candidates for front-page listing. I am not sure that we can guarantee that local TV stations would be given a listing on the first page of EPGs.

Thirdly, I should like to explore further the impact of the proposals on existing local media outlets. The reason that many local newspapers are struggling is that advertising revenues are down, as people switch to the internet to access details of local shops and services. I understand the argument that some businesses might be more attracted to advertise on, let us say, Brighton local TV than on Meridian TV, as the catchment area is more aligned to the smaller Brighton area, but we are talking about the same consumers who no longer read the Brighton Argus or look for adverts in it. I am not sure that it would make commercial sense. How will existing media outlets, including local newspapers and commercial radio, avoid fighting over a declining pool of advertising revenue, putting them all at greater commercial risk?

This brings me on to ownership and plurality. In a number of debates in your Lordships' House, there has been a cross-party consensus that plurality in media ownership is the bedrock of a healthy democracy. On the face of it, local TV could add to that diversity, which would be welcome, but is there not a danger that it could have the opposite effect? The relaxation of the cross-media rules, combined with more intense local competition for market share, could result in one organisation or one person controlling all the local commercial media outlets—newspapers, radio and TV. The Shott report seemed to suggest that this would be welcome, as there could be pooling of news gathering and advertising resources. Is that a potential or desirable outcome? Perhaps the Minister can clarify what controls will be in place to guarantee local plurality.

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[Baroness Rawlings]

My Lords, I thank all noble Lords who have contributed to this short debate with many very valid points and interesting questions. I will try to respond to as many as possible.

The noble Baroness, Lady Jones, asked about the declining pool of advertising revenue. Local television is expected to take less than 3 per cent. We are creating new opportunities for existing local media to diversify their business through television. Local television has the potential even to grow in the television advertising market.

Why do we include London, which has a large population compared to many other places? London’s local licence is separate from the BBC and ITV regional offer. London TV will be required through licence obligations to meet the needs of local London viewers. Like all such programmes, they will be tailored to local needs and requirement.

Regarding ownership of local television services, the Ofcom beauty contest, which will be starting quite soon, means that the bidders offering content that is most relevant to local viewers will be more likely to win a local licence. Licence conditions will include localism criteria, so that licensees will need to provide content of interest to local audiences that will support local democracy. Any local cross-media mergers will be subject to competition law and to the media public interest test.

The noble Baroness asked several questions about regulating the content of local TV. The broadcasting code will apply to local TV services, which will therefore have to make certain that any news programmes are impartial and accurate—the same as applies to other television news programming. These new services will be a way to increase the provision of quality local content supported by licence conditions imposed by Ofcom.

Regarding the impact on the wider local media, we do not expect local television to take away large amounts of local newspaper advertising revenues. Research by Enders Analysis, which the noble Baroness might have seen, suggested that local TV could take approximately 3 per cent of the existing local advertising market. We also expect that local newspapers may well be interested in bidding to run local television services as a way of diversifying their portfolios.

The noble Baroness asked about quality and impartiality. Ofcom’s scrutiny process will produce incentives to competition and to bidding for local television licences, thereby driving up quality. All news shown by local television will have to be impartial and comply with the broadcasting code, which is very important.

The noble Baroness asked whether there was demand and why previous attempts failed. Ofcom research clearly shows high demand for local content. As she mentioned, Nicholas Shott looked very carefully at commercial validity. Previous local television providers were available but low on the EPG list, and on analogue. Our proposals secure high EPG listing and create incentives through the spectrum and licensing. This is a new framework, which was not previously available.

What happens when the BBC funding runs out? We have worked hard to understand the issues around commercial viability for local television. The framework that we are putting in place offers the best chance for viability, with assistance from the BBC, EPG prominence, an appropriate licensing framework and the reservation of spectrum. With all these factors in place, and an enthusiastic local market, we expect local television to be viable.

My noble friend Lady Bonham-Carter asked about audience measurement. Through the licensing regime, we are enabling the creation of and participation in a local TV body. This body will be able to invest in audience research, such as BARB. My noble friend also asked what will happen after three years. Local television will be in a commercial position and the advertising offer should be in place after three years to make long-term sustainability certain.

My noble friend Lord Clement-Jones asked about timing. No decision has yet been made. Whether local television will be entitled to seven or nine minutes of advertising an hour is a matter for Ofcom. It will rule on that, along with all the other areas on which it will be rule.

Finally, I reiterate that this legislation creates new opportunities for businesses and audiences. The strategic framework being put in place means support from the BBC, prominence on electronic programme guides, allocated spectrum and a new fit-for-purpose Ofcom licensing regime. This will help local television to become a fundamental part of the broadcasting landscape in the UK, which will in turn support local democracy, increase local public service content and act as a driver for growth in the local media market. I am most grateful for all the clarifying questions that the noble Baroness asked.

[Baroness Jones of Whitchurch]

Could I press the noble Baroness on one point, which I asked about but which I do not think she answered? I understand that when the licences are given out, it will be to a provider who will then be able to broadcast 24 hours a day. The local element is envisaged to be only ever a couple of hours a day, give or take one to three hours. Certainly, the provider will not just broadcast local news over that 24-hour timescale. I am still not clear as to what controls will be on the producers to guarantee quality for the other—let us say—20 or 22 hours a day. They could end up on the front page of the electronic programme guide for producing cartoons or something of poor quality—not what we would regard as decent-quality public service broadcasting. I just want some clarification on what controls there will be on that element of a channel’s broadcasting.

[Baroness Rawlings]

That is a very important point and one that should be considered. This will vary according to the local TV provider and Ofcom will assess bids on the basis of the offer. Local content could run over 24 hours but there are quality controls, and this will be part of the Ofcom licensing regime. If there are any further details that I have not addressed fully, I shall of course write to the noble Baroness. I commend the order to the Committee.