UK local TV will need subsidy, report finds

UK ministers’ plans for a network of local television companies can be achieved, but a subsidy will be required if inevitable teething problems are to be overcome, a report commissioned by Jeremy Hunt, culture secretary, has concluded.

The government initiative to inspire dozens of companies to provide local television programmes in towns and cities across the UK was described as a “vanity project” by his Labour shadow, but those charged with investigating its chances in the market have signalled it is viable. Nicholas Shott, head of UK investment banking at Lazard, said in his report that local television could only succeed in the long run as an Internet-based service because of its limited size, and this was impossible until high-speed broadband was available more widely. In its early years, therefore, it would require subsidies to run on digital terrestrial television, or Freeview, he said. The plan envisages 10 to 12 local companies based in major cities, using a “backbone” in the form of a national channel broadcasting general content, which would slip in and out of local television. Two hours of low-cost but high quality programmes each day would be the norm, Mr Shott said. However, local television programming could not survive in isolation, the report says, because the costs of transmission are too great. Financial help would be required from existing broadcasters, while the backbone channel would need a prominent position on the electronic programming guides of Freeview, British Sky Broadcasting and Virgin Media, the report says.