Why media must keep its community spirit

Media owners say a market free of regulation will deliver stronger local news coverage. Media Week analyses what the industry feels about the Digital Britain report, along with the current commercial implications.

Why media must keep its community spirit
Why media must keep its community spirit

At the heart of the Digital Britain report lay a commitment to a "free, independent and active press", and key to that was the "vital civic function" played by local journalism.

Local media is essential to a functioning democracy, making government accountable to its electorate, offering plurality rather than BBC monopoly and delivering news and information beyond the reach of regional coverage.

As the existing commercial model fails, putting the basis of news-gathering under acute strain, the report recommended remedy by policy intervention - although its prescription is contested and remains open to interpretation.

Ben Bradshaw, Secretary of State for Culture, Media and Sport, says: "It would be a disaster for our democratic wellbeing if local media were to die out. Who will hold local authorities, public service providers, the judicial system and business to account otherwise? There is strong consensus about the challenges, with differences of opinion about the solutions."

Despite the frenzy from some quarters, local media will not die out even if the status quo is maintained. Still in existence today are 1,300 local newspapers, 180 local radio stations, 28 regional television stations and a handful of local TV outfits, such as Guardian Media Group's Manchester-based Channel M.

However, media owners believe a market free of regulation will deliver stronger local coverage, giving them free rein to redesign the ownership map and share assets. Moreover, if radical measures are not forthcoming, the ability of local media to sustain a plurality of community voices will inevitably suffer.

Andrew Harrison, chief executive of commercial radio industry body RadioCentre, says: "If the market is not spontaneously providing that plurality, then some degree of public policy intervention is appropriate."

The guardian of local interests has historically been the press, but its survival is terminally undermined by the internet's threat to classified property, motors and job ads, compounded by recession and reduced public-sector spending.

Although 80 regional and local newspapers have closed since last September, and the market has declined from about £4bn to £3bn a year, the local press remains a significant financial player - considerably larger than ITV, as several commentators observe.

David Newell, director of  The Newspaper Society, says: "Local media still has the ability to be profitable, but it needs to adapt. A central paradox is that the audience for regional local news and information is higher than ever before, while our advertising base is declining."

In an independent review, which fed into Digital Britain, former GMG Radio chief executive John Myers warned the radio industry faced "perilous times". UK radio ad revenue is expected to fall below £500m in 2009 for the first time in a decade, potentially forcing more than 50 stations out of business by the end of 2010.

Myers, along with publishing lobby group the Local Media Alliance, called for greater deregulation and media governance in tune with the digital age.

LMA chairman Roger Parry says: "It's ludicrous to pretend that TV, radio and newspapers are somehow different media that need legislation to keep their ownership separate. In practice, media companies already communicate with their audience on a multimedia basis."

Concluding that the current system was "robust and flexible", Digital Britain author Lord Carter declared that primary legislation was unnecessary.

Instead, he recommended media regulator Ofcom be given a bigger role in deciding whether future mergers should go ahead, through carrying out local media assessments.

Carter presented radio with a trade-off between further local content obligations in exchange for commitment to analogue radio switch-off - theoretically in 2015, although not triggered until 2013. Stations will be given greater flexibility to co-locate to cut costs and analogue services will be able to merge to form new DAB operations, although crucially there is no certainty about how network rollout will be financed.

Most controversial is the proposal to "progressively relieve" ITV of its regional broadcast news obligation. Digital Britain proposed that licence fee revenue surplus to digital switchover - stated as £130m - should fund a network of Independently Financed News Consortia (IFNCs) from 2013, subject to three pilot schemes. The BBC is vehemently against the idea, viewing it as a slippery slope to top-slicing.

Bradshaw says: "You couldn't envisage a more transparent, fairer form of funding than a share of the licence fee. If anyone can think of a better way to secure the long-term future of news, we welcome it."

While Digital Britain's goal is widely agreed, its facilitation is frustratingly opaque. Rather than outlining detailed plans to change the current regional format, it asks for a co-ordinated response from government, business and citizens - including "local ownership, community media and non-profit organisations" - on how to restructure news output on a local level.

It seems likely local newspapers will lead the move towards some form of multimedia news bureau, fusing local and regional TV, radio and print into an online digital format - in Scotland, STV proposes to lead the initiative. Nonetheless, the details of finding a sustainable business model through online advertising or the sale of content to other news organisations are worryingly vague.

Stuart Taylor, chief executive of GMG Radio, says: "There are many issues to resolve, but what replaces today's model is a very exciting mix of professional journalism, sponsorship, advertising, bloggers and community involvement."

Enders Analysis founder Claire Enders adds: "The demand for local news isn't in doubt, but the challenge remains to find a way for local media companies to make money from their news effort. Most independent radio stations barely break even.

"None of the measures advanced by the Government will add to the revenues of the local press. ITV obtained a recognition that its commercial environment has dramatically changed, but there are no concrete steps being taken that would put the broadcasting industry on a steady course towards deregulation. The best that can be hoped for local media is that it will just hang on."

There is also concern that Carter's departure from the Government, Conservative hostility to Ofcom and a looming General Election mean there will be no political expediency to drive any aspect of the report forward.

"Digital Britain is a flagship bill in the forthcoming session and a mainstay of the Government's strategy to get through the economic downturn," counters Bradshaw. "The Digital Economy Bill is a top priority and as long as it is given a fair wind in Parliament, there is no reason it shouldn't pass."

TV: Injecting more localism into core broadcast service
The BBC Trust is fiercely opposed to using the contestable fund to restructure regional and local news. But since the DCMS, ITV and Ofcom, plus commercial radio and newspaper groups, are behind the proposal, there is enough pressure to see the pilot schemes off the ground.

The Local Media Alliance's Roger Parry says: "Any injection of taxpayers' money should only be used to fund transition, not as an ongoing subsidy. Funds are needed to kick-start a new type of news provision and should include training - for example, for journalists to produce video and podcasts - and the purchase of contracts for local video material."

No one is fooled that the Independently Financed News Consortia (INFC) offer a panacea for the industry's woes. It is understood that future news provision must operate on a predominantly commercial basis, but with increased volunteer involvement at community level.

Carolyn McCall, chief executive of Guardian Media Group, says: "We believe overwhelmingly in local media with an advertising or subscription base, but there is a need to experiment with forms of public information gathering that are separate from state and local authorities. The danger is that if local media can't sustain itself commercially, then who knows where content will come from?"

Parry believes hyper-local news provision will take hold among consumers, given the right culture. He says: "The key is volunteer journalists who become coordinators for user-generated content, along the lines of the model practised in US cities."

David Rushton, director of the Institute of Local Television, believes the licence fee is already a form of subsidy and that Digital Britain is a chance to redress the balance away from large-scale news aggregators. He says: "The mass of people participate in matters that most affect them at a local level and any subsidy should be aimed at maintaining and fertilising grass roots that larger organisations have dispensed with as uneconomic."

Meanwhile, ITN believes the IFNCs, if run correctly, will help local newspapers survive, and that partnerships with local media organisations are the key to breathing new life into regional news services.

Chief executive John Hardie says: "There is a real opportunity to inject more localism into the core broadcast service by working with the local press. Local newspapers have a grass-roots, scoop-driven news ethos and an array of journalists with close ties to their communities. This is potentially a huge asset from which regional television news could benefit."

Newspapers: Sustaining local news and information
The hollowing out of local newspapers has not been universal, with pockets of excellence continuing to exist. However, Sean Kelly, managing director of community website aggregator Neighbour Net, believes that if cost-cutting hits editorial talent, local newspapers will go into "a vicious circle of decline, with poorer content meaning less revenue".

A chief threat, which Kelly describes as "state-funded propaganda", is the publishing activity of local authorities - an issue recognised by the Office of Fair Trading and one that Digital Britain pledged that the Audit Commission will review.

Sly Bailey, chief executive of Trinity Mirror, says: "Not before time, Parliament will look at the travesty of local councils using taxpayers' money to masquerade as and compete directly with local papers. This must be tackled with urgency."

David Newell, director of The Newspaper Society, adds: "Digital Britain attempts to identify income streams that will sustain local news and information in the face of internet and state-run competition. Finding a model that attracts advertising revenue and subscription revenue online is difficult and one faced by all media sectors."

Publishers are launching hyper-local websites to counteract decline. For example, in July, Associated Northcliffe Digital, the digital consumer division of Daily Mail & General Trust, launched a pilot network of 50 hyper-local websites in the South West of England. But while Lord Carter acknowledges hyper-local sites' role in the future news environment, advertising is in short supply and websites will face an uphill battle to wean eyeballs from the BBC.

Newell notes: "Digital Britain could have paid more attention to the way the BBC has made it hard for regional and local newspapers to develop a paid-for model."

Overall, Carter recognised a number of the serious issues facing local media and that the existing merger regime designed for the narrow definitions of print markets is no longer fit for purpose.

Last month, Ofcom published a consultation on liberalising the local cross-media ownership rules, so the only restriction is on owning all three of a local newspaper, a local radio station and the regional Channel 3 licence. The regulator will present its final recommendations by 13 November.

Radio: Scaling back local commercial radio regulation
Digital Britain recommended radically scaling back the existing system of local commercial radio regulation - including cross-media ownership - in a move that was roundly welcomed in the industry as not before time.

Following the Government's Digital Britain report, Ofcom has published proposals to allow regional stations to share their programming in return for providing a version of that station on a national DAB multiplex, and to allow local stations to co-locate with other stations to share costs. Stations could also ask to reduce their hours of local programming in return for an increased commitment to daytime local news.

GMG Radio's chief executive, Stuart Taylor, says: "Local media is suffering a crisis and needs legislation pushed through urgently. Co-locating resources is essential for the survival of local radio. Local voices are vital, but it is not necessary to physically produce programmes in the area you are covering to deliver quality output."

The RadioCentre's Andrew Harrison notes: "The principle of balancing the local news imperative with a more liberal regulatory regime is sensible. The regulators should concentrate on assessing quality of output as opposed to input - how many hours are generated within a local area."

However, Carolyn McCall, chief executive of Guardian Media Group, observes that although Digital Britain set 2015 as a target for switchover to DAB, it "didn't say how to get there". She says: "The report seems to indicate that commercial operators will fund [switchover], when they absolutely cannot."

Meanwhile, Jason Bryant, director of Town and Country Broadcasting, is pleased that calls for a free market approach have finally been heeded. He says: "In future, smaller commercial and community radio stations will merge, probably on FM, with DAB for national and larger local stations. Parts of the UK will remain impossible for DAB to penetrate, so local stations must be able to stay on FM if they choose."

He concludes: "There will always be a demand for local media, and local radio remains the most effective and efficient medium to convey commercial messages to a local audience."

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