Local TV feels like a licence to lose money

Dominic Mills is bewildered by some of the cities bidding for Local TV licences, but is London somehow different? After hearing what the bosses behind the Evening Standard’s London Live had to say, he assesses the future of the project.

It was the Canadian media baron Roy (later Lord) Thomson who in the 1950s described the winning of an ITV regional franchise as a “licence to print money”.

Nearly 60 years on, it feels like the winning of a local TV franchise is a licence to lose money – and probably your sanity too.

I don’t know what else to think having read about Ofcom’s latest solicitation to whatever loonie feels like having a go in cities…er, sorry, towns like Salisbury, Guildford, Barnstaple, Basingstoke, and, yes, the humming metropolis of Limavady.

Limavady? Well, you get a prize for knowing it’s in Northern Ireland. Yet even my wife, who is from the blessed province, couldn’t pick it out on the map.

I can’t tell you much about Limavady either, except that it is in the north-west corner of Ulster, close to Lough Foyle and about 20 miles from Derry and, according to the latest NI census data, has a population of 33,536.

Hmm. That doesn’t seem much to build a local TV station on does it? Judging by the fact that it does not have a dedicated local radio station either – although residents can access Belfast’s Downtown Radio and another commercial radio station, QFM – I am not the only one who thinks there is little or no media or advertising mileage to be had from the 33,536 good citizens of Limavady and surrounding areas.

Is that harsh? Well, the advertising economy, such as it is, does support a local newspaper, the Limavady Chronicle which, together with three other editions covering neighbouring towns, offers a combined circulation of 13,725.

Now there’s no fool like a wannabe TV tycoon, but I sincerely hope there is no-one daft enough to destroy themselves on the rocks of one man’s vanity project – that man being former DCMS secretary of state Jeremy Hunt – by bidding for the franchise for Limavady, Basingstoke, Barnsley or pretty much anywhere else. (And, by the way, can someone explain to me the logic of separate licences for both Limavady and Derry?)

But what about London? It is, of course, many miles (literally and metaphorically) from Limavady.

Some time in the next month we will get an idea of what the schedule for London Live TV, part of Alexander and Evgeny Lebedev’s Evening Standard/Independent/i-owned newspaper group, promises.

Attendees at MediaTel’s Future of National Newspapers conference last week will have heard Chris Blackhurst, the publisher’s group content director, explain that he was currently hiring up to 60 people for the TV operation (having just made over 20 redundant from the print side) in order to fill up the 16.5 hours a day they will be broadcasting.

Phew. That is a lot of airtime, of which some 4.5 will be news and the rest commissioned or acquired entertainment/reportage. It doesn’t matter which, it’s all expensive to fill.

And all at a time when as Blackhurst candidly admitted, the flagship Independent is losing £11 million a year. The good news is that that is half the level it was when the Lebedevs took over, since when they have also returned the Evening Standard to profit (as for i, we don’t know, since its p&l, even if separate, must be deeply intertwined with that of the Independent).

But the bad news is that’s still a whacking drain on financial resources at a time when the group has to buy a ton of programming.

As Blackhurst pointed out, however, London as a local entity is not currently well served by TV – can’t disagree with that – and, in financial and economic terms, is effectively a country and economy in its own right. “I don’t recognise the London I know and live in from what I see on TV,” he said.

Yet, as my fellow columnist Ray Snoddy has pointed out, defining what is local news to Londoners – real locals as well as expat bankers, lawyers and oligarchs – is problematic. In fact, it’s a damn sight harder than in Limavady.

Still, in a nutshell, that is the basis of the editorial and advertising proposition: TV focused on London and Londoners with an ad sell that exploits their wealth and disposable income.

But is that enough, or is London Live just another vanity project? Given the performance of the Evening Standard and i, group managing director Andrew Mullins is clearly a canny operator.

TV, however, is a different medium and, along with buying a no-hope Premier League team, one of the easiest ways of emptying your bank account.

If London Live can get a proven audience – a big if, I would say (and we all know about those niche channels that just don’t even get a BARB score) – it may be able to exploit the synergies with the Evening Standard to sell airtime (no conditional selling there, Andrew!) to advertisers wanting to top up reach and frequency.

That, however, may mean it is forced to live off the scraps from ITV, C4 and C5, and you can bet they will be using every trick in the book to ensure London Live is strangled at birth. Meanwhile the BBC and ITV will up the quality of their local news and content.

London radio stations will raise their game to in order to protect their audiences. Whether they are vulnerable to advertisers jumping ship is another matter. The two media are not directly substitutable in any case, and it will also depend on how many advertisers are radio-only or radio and TV combined. Radio-only advertisers will be harder to shift if they also have to meet the cost of making TV ads.

To succeed, London Live has to bring in new advertiser money. But in an era when advertisers are spoilt for choice and budgets are static, that is a big ask.

Which makes you wonder: maybe Limavady is a better bet.