At least three major countries in Europe (the UK, France and Spain) are currently reviewing their public policies and frameworks for regional and local TV (in contrast to national TV). Discussions on related issues are also underway in Germany and Italy. The debates are wide ranging and the options being considered are very different. However, all of these countries support the case for diversity within their respective boundaries, and in France, Spain, Italy and the UK DTT transmission and associated spectrum availability and costs are fundamental elements of the debate.
- The UK has had much more limited experience of local TV than Germany, Spain or Italy. A public report suggests that only around 10 to 12 commercial local TV channels could be sustained in the UK, with perhaps the notable exceptions of Scotland, Wales and Northern Ireland (which could run larger regional public service broadcasting (PSB) TV channels more aligned with their greater cultural ambitions). These regional PSB channels in Scotland, Wales and Northern Ireland could be closer to the regional PSB channels already operating in Germany and Spain. For the local TV channels, it has been agreed that they will receive a share of the BBC’s licence fee. Overall, the debate is also likely to be affected by the review of the PSB obligations of national TV channels like ITV and C4.
- In France, there are already around 45 local DTT channels. In terms of their scale, there is a very clear distinction between channels in the Paris region and those in the rest of the country, which has an impact on their underlying economic models. In particular, there are concerns about the economic sustainability of some of these smaller local TV channels, and a consultation is underway into the key success factors and any potential changes to the regulatory and licensing framework that could maximise their chances of
long-term sustainability.
- Spain has many local and regional TV channels with one or two multiplexes per area for local TV plus one or two multiplexes per area for regional TV. There are two aspects to the debate. Firstly, there is a debate about the quality and long-term sustainability of the smaller local TV channels. Secondly, at the regional level there is a question about the size of regional PSB and the funding mechanism (currently a combination of subsidies and commercial advertising) following the elimination of advertising on national PSB channel RTVE.
- In Italy, recent debate has focused on the value to local TV channels of securing a prominent position on the electronic programming guide (EPG). A review is also being held into the level of subsidies and the rules used to allocate funds to local TV channels. The new rules seem to place greater emphasis on the production of local content. On the negative side, a law has been passed that removes spectrum in channels 61 to 69 from local TV channels, to be used for the benefit of mobile broadband.
- In Germany, although the regional PSB TV channels are well established, most local TV stations are still making losses due to the difficulty of developing their commercial advertising revenues. For example, there have been recent press reports speculating on the future of NRW.TV, a chain of regional TV stations in North Rhine-Westphalia which are reportedly having difficulty supporting their losses. Despite the rationale for some national ‘umbrella’ or association of local TV channels to ‘syndicate’ their advertising, various initiatives have failed to materialise.
Although large regional broadcasters in Germany and Spain have established successful businesses with associated public spending, smaller regional and local TV channels in many other countries have had a much more challenging time. For example, last year Channel M (UK) and Angers 7 TV (France) went bankrupt and large media groups are exiting the local TV business. However, there are examples of success stories in the local TV business that provide an insight into the key success factors for commercially run smaller regional and local TV companies, such as 8TV in Barcelona.
The challenge of assessing the regional or local TV business in general is that it might respond to very different public policy objectives, such as promoting local content, providing a voice to the local people, attracting sizeable audiences or being commercially profitable. It is not generally possible to achieve all of these objectives simultaneously, and so there is a need for a clear decision regarding priorities, based on key public policy criteria. This guidance is essential in order to make a comprehensive independent technical assessment of the potential options available in a given country. For instance, although a local TV channel may attract sizeable audiences by broadcasting ‘blockbuster’ US films, these can be costly to acquire and so limit the profit they could generate; moreover, such an approach would not meet an objective of promoting local content.
Therefore, when policy makers are assessing the key success factors for a local TV business, it is important to first define the criteria against which success in local TV will be measured. For example, success could be measured on the basis of any of the following factors:
- impact on the public (i.e. size of the audience)
- size of the structure (i.e. revenue level)
- profitability (i.e. profit margins)
- independence from public financing (i.e. share of public financing in revenue)
- promotion of local content (i.e. volume of local programming).
The factors that policy makers use to assess the success of local TV will affect the licensing terms and dictate the level of interest from potential independent investors, which are essential elements in supporting these regional and local ecosystems.
We reviewed the markets for regional and local TV channels in seven countries (Belgium, Canada, France, Germany, Italy, Spain and the UK), with a view to discussing key lessons for France. From this review, we identified three wide typologies of regional and local TV broadcaster:
- Purely commercial broadcasters – such as CityTV in Canada, which covers a large population and broadcasts attractive American shows. However, this model is largely supported by the large audience covered by the channel, and so is less relevant in Europe
- Highly subsidised broadcasters – such as the regional broadcasters in Germany, Spain and, to some extent, the UK, which broadcast a very large share of local content but rely on public subsidies to fund their operations
- Low-cost broadcasters – such as 8TV in Spain, which provides limited local content, numerous programme repeats and has a relatively large population coverage for a local TV channel.
These three typologies were then assessed against five key success factors, as shown in Figure 1 below.
Figure 1: Assessment of three typologies of regional and local TV broadcaster against five key success factors [Source: Analysys Mason, 2011]
Based on the comparative research undertaken for this study, we identified certain key measures that could potentially be introduced into the French local TV market (and could generally also be applicable in other countries):
- Revenue maximisation: encouraging revenue frameworks that can broaden and harmonise subsidies for local TV, promoting harmonised scheduling at peak times to support advertising sales to national advertisers, and re-examining the measurement of audiences
- Content initiatives: encouraging co-operation between the PSB and local channels, producing content at a regional or ‘supra-local’ level, and promoting harmonisation of editorial quality across channels on the same network
- Cost reduction: supporting the grouping of channels to address larger potential audience footprints (4 million+), promoting the sharing of structural costs, and options to minimise the overheads of DTT broadcasting
- Regulatory measures: relaxing rules on the definition of first-run local programmes, on advertising on local stations (in terms of volume or products), and on ownership of local stations.
Overall, these or any other measures need to be carefully assessed in the context of each country’s own situation and public policy objectives. Moreover, a number of very different options are likely to co-exist in each country, and some technical analysis is likely to be valuable in helping to reconcile them. In this context, it is worth noting that asymmetries of TV regulation allow countries like Germany to cater for different economic and cultural realities at a regional and local level.
Analysys Mason has significant expertise in media, including experience of projects involving regional and local TV channels in several countries. We can assist with commercial and technical analysis and assessment of these channels, and associated transmission and spectrum options and issues. For more information on our services in this area, please contact Johann Adjovi at johann.adjovi@analysysmason.com or Lluís Borrell at lluis.borrell@analysysmason.com.