Shott report recommends £25m trial for dozen local TV stations

Local television stations should be set up in 10-12 city areas at an anticipated cost of £25 million per year to trial a local TV network in the UK, according to a report for the government published today.

The Shott report, which was commissioned by culture secretary Jeremy Hunt (pictured) in June to help the government assess the potential for local television in the UK, says the trial services should provide at least two hours of "high-quality local content" per day.

Ofcom should be asked to look into the technical options for delivering local TV, according to the report, which suggests that local TV could be delivered via digital terrestrial television (DTT) in the short term and via IPTV [Internet Protocol Television] services in the future.

In a letter to Hunt introducing the report, Nicholas Shott says that the prospects of IPTV have recently improved given industry regulator Ofcom's decision no to investigate the proposed launch of YouView and the government's commitment to installing superfast broadband across the UK by 2015.

"The steering group has discussed this technology with various parties and, although it may take some length of time to achieve worthwhile market penetration, we are encouraged by the very widely held belief that it will do so (and, indeed could overtake DTT as the principal means of television delivery in the UK) and that it will lend itself naturally to local TV," the letter reads.

"This is so because when the government's broadband ambitions are achieved, it will be possible to deliver local TV services to even the most sparsely populated areas at considerably lower cost than DTT."

IPTV local TV services could also encourage greater participation from audiences through its "non-linear nature" and can benefit local or regional media businesses with "a different and healthier business model", Shott adds.

"To seize the opportunity, we believe that existing operators will need to think of themselves no longer as newspaper or radio or television businesses, but rather as providers of news, entertainment and other content, delivered to customers when they want it and in whatever form they want it," says Shott in the letter.

Additional revenue streams must be found to fund local TV on DTT in the short term, he adds, so as not to build a TV business funded exclusively by local advertising. The network should seek a national advertising sales contract with a third party worth a minimum of £15 million a year and use the BBC's pledge of £5 million a year until 2016/17 to purchased local TV content and local advertising revenues to fund the operation. The local TV servies must also work together to form "a national backbone" to avoid duplication of content and costs and to promote one another, he says.

In terms of ownership of local TV services, the report states that a third party or parties, including existing broadcasters, could own up to 49 per cent of a services

"Taken together, these suggested ownership structures of the local services and of the national backbone are designed to provide stability for local TV services (we have considered other structures ... but we are concerned that, in some instances, the national backbone might take on a life of its own and seek to abandon the local services it is designed to support)," says Shott in the letter.

Speaking in a statement on the Department for Culture, Media and Sport website, Hunt thanked Nicholas Shott and his steering group for preparing the report and said he will publish a plan early in 2011 setting out the next steps for local TV delivery in the UK.

The report also says that public service broadcasters, such as the BBC, could promote local TV services and suggests using "on screen red-button prompts or insertion of local programming into a national channel’s regional schedule".

"The BBC and the trust support plurality in broadcasting and as part of the licence fee settlement the BBC has agreed to play an active role in supporting new local TV services. We welcome the Shott report's recognition of the benefits that the BBC's involvement could bring. We look forward to further discussions with the government on its local media plans and the nature of the BBC's support in the months ahead'," a BBC spokeswoman told Journalism.co.uk.

Photo of Jeremy Hunt by The Department for Culture, Media and Sport on Flickr. Some rights reserved.

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