Only two independent channels set to be left after licence renewal, as key source of funding for the UK’s network of local TV channels dries up.
- Flurry of independent operators announcing closure or sale of their channels ahead
- Licences expire this November, unless broadcasters apply for renewal
- Key revenue stream disappears at crucial time.
The new year brought a sudden change to London’s local TV service, when London Live announced at short notice that it was closing; its licence would be taken over by Local TV Limited to launch London TV.
Since then, other local broadcasters have quietly handed over the keys to their services ahead of licence renewal. Ofcom was due to scrutinise their plans and financial status as part of that process. It’s now left two companies in charge of all but three of the 34 local channels currently on air. Of the three, one channel will close later this year.
What happened?
Belfast’s NVTV announced at the beginning of the month that it had handed over the licence to That’s TV, which operates the biggest chain of local channels in the UK. Under the terms of the deal, viewers are only guaranteed to see a minimum of 26 hours of NVTV programmes a year on That’s TV’s Belfast service, an average of just 30 minutes a week.
Meanwhile, a company belonging to the That’s TV Group acquired the entity that holds Sheffield’s local TV licence, which operated as an extension of the Sheffield Live community radio station (which remains on air).
Both takeovers coincided with Ofcom’s end of March deadline for local TV operators to submit applications for licence renewal. It followed Notts TV’s earlier announcement that it would cease broadcasting in November. Unlike the other services, Notts TV didn’t opt for a takeover. Instead, Ofcom will determine if the licence will be renewed. That will in part depend on decisions made about the terrestrial network that underpins local TV.
Only Kent’s KMTV and Brighton’s Latest TV currently remain independent of the two big local TV companies who have hoovered up the rest of the network: That’s Media (That’s TV) and Local TV Limited. That’s Media’s subsidiaries hold the majority of local TV licences, including all services in Scotland and Northern Ireland. However, Local TV Limited holds licences for some of the biggest urban areas including London, Birmingham and Cardiff.
Why are local operators selling up?
Local TV channels once launched with ambitious plans, having promised much to win their licences.
Since the first tranche of local TV channels launched on Freeview in 2013-14, funding streams have tried up. This has resulted in most channels abandoning their original proposals for local news and programming (Example of Liverpool’s former operator Made TV Limited asking for a reduction in it commitments). Most local channels now screen programmes found elsewhere on Freeview for the majority of the day.
Local channels were given a boost at launch through temporary funding from the licence fee in return for news stories. They were allowed to carry advertising and they also benefitted from receiving income from subletting spare Freeview capacity that sat alongside the bandwidth used by local channels.
Licence fee support ended after three years on air, leaving channels to fund themselves. The first licence holders exited the market: the owners of Mustard (Norwich) and Cambridge TV among those selling up to That’s Media.
Then the TV advertising market collapsed, rippling through all broadcasters big and small.
Finally, the income received from subletting capacity has almost disappeared. This particular income covered the cost of broadcasting on the UK’s digital terrestrial TV network. Without the income, the cost for smaller operators has become too much to carry.
Why local channels now have to foot the bill to broadcast on Freeview
Freeview is the primary way these channels are distributed to viewers. Some services can be received on cable. London’s TV service is also on satellite. However, the specific licences that Ofcom are poised to renew relate to broadcasts on Freeview. Local TV’s funding model revolves around those Freeview broadcasts.
Local TV is carried on a dedicated Freeview multiplex operated by Comux, which in turn is owned by each of the local channels.
Last month, TV channel Legend Xtra became the last regular broadcast service to leave Comux. The channel switched to the BBC owned PSB3 multiplex – originally intended to carry HD channels. This has left the local multiplex subletting a small amount of capacity (under 1Mbps) to a handful of data services, used for hybrid streaming channels.
Over two thirds of the multiplex capacity is now unused and unmonetised.
Earlier this year, That’s TV warned that the loss of income would mean it (and by default all other local TV operators) would have to start covering the cost of Freeview distribution. Unlike smaller operators, That’s TV benefits from ad-revenues from its national ‘classic TV’ channels. This allows it to cross-subsidise its local TV channels.
Last year, Ofcom told local channels that if they wanted to renew their broadcast licence, they would face a review of their business plans and financial situation. This review would determine if local channels could demonstrate they could continue offering a service until the end of 2034.
▶ Local TV funding
- Initial support from the licence fee. For the first three years, local TV operators received cash from the TV licence fee in return for supplying news items to the BBC. During this time, the BBC showcased a selection of their reports in an iPlayer-only programme called ‘Digital Nation‘.
- Funding from selling spare bandwidth. To allow local channels to broadcast on Freeview, with separate coverage to national channels, a new digital multiplex was set up. The multiplex would contain enough bandwidth to carry the local channel, plus up to four linear channels over the airwaves. The money raised from subletting capacity would cover the cost of distributing the channels.
- Advertising. Local channels were authorised to carry adverts. The local nature of the channels opened up opportunities for local businesses who wouldn’t necessarily want to broadcast to the whole country, nor to an entire ITV region.
In addition to financial issues affecting all local stations, Notts TV also fell victim to cuts in the Higher Education sector, having been supported by Nottingham Trent University.
Of the channels that are still on air, their future availability will also be determined by where the signal will be distributed in the future.
Could some local channels disappear?
As part of the licence renewal process, Comux was also required to submit an application to continue running the local multiplex. Like the local channels themselves, it will need to convince Ofcom that it has a viable business plan to keep services on air until the end of 2034. One way of ensuring viability is reviewing its network and coverage, which could mean the end of individual local stations or reduction in coverage of existing stations.
It’s a decision national broadcasters may soon have to make as well. As more viewing shifts online, Ofcom has already warned of a tipping point ahead of a possible formal end of terrestrial TV.
Comux is now effectively controlled by That’s TV and Local TV Limited with their respective bosses appointed as directors of Comux last month. Any change in Comux’s technical plan could provide both groups with a way of dropping barely viable local channels serving small populations.
Small and unviable?
Local channels don’t just cover big cities. Ofcom licenced dozens of stations across the UK, some with coverage measured in the tens of thousands. This includes Local TV Limited’s North Wales TV, with a technical coverage of just 88,000 households around Mold and Denbigh. Of those households, not all will use Freeview, meaning realistic coverage is much lower.
In the case of That’s Media, a number of its local licences have similar low coverage areas, for which it may no longer be financially viable to cover. For example, its Scarborough channel has a technical reach of 43,000 homes. In December, Ofcom found That’s TV hadn’t featured a single item filmed from the Scarborough area in the channel’s local news over the course of an entire year. This speaks volumes regarding the future of some of the smaller channels.
What has Ofcom said?
Ofcom says it “doesn’t expect” to publish any information on renewal applications prior to its decision, unless “there is a particular reason for seeking third party comments”.
It hasn’t commented about recent changes to services in Belfast, London or Sheffield, nor the confirmation that Notts TV would not seek a licence renewal.
Unlike in the early days of local TV when Ofcom published its decisions to approve licence transfer requests, the regulator has ceased to do so.
What could happen to local TV?
The direction of travel is reminiscent of the last days of regional ITV, when just two companies – Carlton and Granada – controlled all but four of the Channel 3 licences.
The two companies merged just over 20 years ago, subsequently taking over Channel TV and UTV in Northern Ireland. Just STV remains independent, controlling two Channel 3 licences in central and northern Scotland.
In this context, a future merger of That’s Media and Local TV Limited would raise no eyebrows.
With the two broadcasters dominating local TV, those channels have until recently become less local…
Broadcasters boost local programmes ahead of renewal
Ahead of licence renewal, both Local TV Limited and That’s Media’s channels have ramped up their local news provision.
That’s TV now for example, screens a long block of local news each evening, up from the single 15 minute bulletin they were screening at one point (and broadcasting the 15 minute bulletin in a loop at other times to make up local news quotas).
In March 2024, Ofcom took broadcasters to task outlining what it expected local channels to provide. For example, it said it was “inappropriate” to meet local news quotas by scheduling news to be broadcast between 00:00 and 06:00.
Local news is for most local channels the only local programme broadcast. With the exception of the last remaining independent broadcasters, plus That’s TV Belfast, community features, arts and culture or local debate shows have vanished from schedules.
Local TV Limited simulcasts programmes from True Crime (formerly CBS Reality), after a brief stint relaying Rupert Murdoch’s Talk TV channel. That’s TV’s local channels simulcast That’s TV’s existing national channel for most of the day.
Streaming future?
The future is undoubtedly streaming. As more viewing shifts online, local channels are noticeably absent from next-generation streaming digital TV platforms. You won’t find them as an internet-delivered service on Freely, nor will you find them on Sky Stream, for example.
Patchy online presence
When Local TV Limited took over London’s channel, its chief executive Lesley Mackenzie claimed London Live hadn’t moved with the times. Her group had gone “digital first”, according to her interview with The Guardian. However, unlike London Live, the replacement service barely has an internet presence, there’s no catch-up, nor clips from programmes. Searching for London TV yields a news site that has nothing to do with the TV station. Other channels operated by Local TV Limited also suffer a lack of online content, whatever Mackenzie says about ‘digital first’.
That’s TV shares a similar digital deficit, with no streaming and a patchy online presence for its local channels. The few remaining independent local channels, including Notts TV, KMTV and Latest TV have the most comprehensive online presence.
If the future is about digital content, then you’re more likely to get more relevant local content from Facebook. Local TV licences may well be renewed this year, but whether the stations can ever become relevant is doubtful.
By: Marc Thornham | Image: Local TV locations – Ofcom