The most surprising thing for many in the UK about the sale of London Live, the local TV channel launched by Evening Standard owner Evgeny Lebedev a decade ago, will have been that it was still operating at all. While the total viewer reach for London Live in December seems respectable at 1.2mn, the fact that the average time watched was a mere 4 seconds a day suggests the number of people who did anything except flick past was tiny.
London Live was one of a set of local TV stations launched as a project in the early years of then new UK Conservative government in 2011. At the time, then Culture Secretary Jeremy Hunt decried the fact that Birmingham, Alabama had eight local TV stations while Birmingham, England had none. A first set of 20 stations was announced in December of that year, with a further 24 set to follow. The stations would, according to Hunt, “provide local communities with programming which is relevant to their daily lives”.
As many pointed out at the time, however, the economic underpinning for ads-funded local TV simply wasn’t there. The advantage of local stations was, of course, meant to be that they would attract local advertisers. But the new stations were launched at a time when the internet was already providing far more effective ways to target local messages. Google, in particular, was simply doing a better job of directing people to local businesses, not only through search, but also Google Maps. Broadcasters with far bigger audiences such as the oan-European Sky TV have since also developed location-based advertising that can segment audiences watching far more popular programming.
Some of the new local channels – there are currently 34 after a later set of launches were cancelled – did hit profitability at various times, but the below graph of the sector’s income and expenditure during 2015-18 from regulator Ofcom shows that this was down primarily to cost-cutting because there was simply too little revenue.
The economic incentives for the channels also undermined their ability to meet their public service remit. In 2018, reports revealed that one of the biggest networks of local stations, That’s TV, was geared up almost entirely to bring in subsidies for the BBC, paid for each story produced whether the national public broadcaster got any use out of them at all. And, as the economic realities began to bite, channels repeatedly petitioned Ofcom to reduce requirements to provide original local programmes. In March last year, the regulator had to remind stations of their commitments, threatening to revoke licenses if they didn’t meet already heavily watered-down requirements to air programming about the areas they were meant to cover. The government’s promise of content relevant to local audiences has never really materialised in any significant way.
Can the new owner of London Live’s licence, Local TV, which currently runs eight stations including ones in Birmingham, Leeds and Cardiff, make it work? Aggregating the channels obviously provides slightly greater advertising opportunities, but total audiences will still pale in comparison even with smaller national channels. Tie-ups with the National World local newspaper titles controlled (until its sale is completed) by Local TV’s chairman, industry veteran David Montgomery, now seems unlikely. It’s also difficult to see even a successful bid by Montgomery for the Telegraph leading to synergies for a channel that is required to focus on just one smaller geography.
The fact is that the former UK goveernment’s comparison with the US always did more to underline why a local TV project in the UK was unlikely to succeed than it did to highlight an un-met need.
One simple reason is that the UK is a very different place to the US, where individual states have stronger identities and, importantly for news output, their own devolved politics. The local TV business in the US is also integrated into the broader broadcast market in a very different way. Birmingham, Alabama still has five stations with licenses in the city, and the state as a whole has around 40 stations. But those five stations in Birmingham are actually each managed by the national networks, Fox, NBC, CBS and PBS, as are the bulk of those across the rest of the state.
In Germany (another more federal country that has a relatively strong local sector),the picture is different but also more amendable to local TV. Public service broadcasting in the country is decentralised, with each state being ultimately responsible for broadcasting, though networks generally work in co-ordination and also deliver nationwide programming together. It is funded mainly via the German equivalent of the licence fee in the UK and also by advertising, with far bigger audiences making the latter a more significant revenue stream. The three regional networks operated by the joint organisation ARD had a total share of viewing at 13.6% last year. By contrast, London Live’s was 0.04% in December.
In the cases of both Germany and the US, local TV simply makes more sense because of the nature of the countries. However, their local TV ecosystems also simply benefit from having been set up in the pre-internet era – and they are still facing their own challenges from digital.
In the US, for example, viewing habits continue to shift. Pew Research found last year that the proportion of US adults who said local TV was their preferred source of news had fallen from 41% to 32% since 2018, with most of the shift going to digital sources including social media. While local news continues to be profitable in many places, it is becoming less so, and networks such as Sinclair continue to close down poor performing stations.
Those changing patterns of viewing aren’t going away and, coupled with broader shifts in advertising towards digital, many local broadcasters will rely increasingly on state support, where it’s available. Across Europe, states offer varying degrees of direct subsidies and support such as tax breaks to local TV news outlets. But, in most cases, these efforts are aimed at propping up existing ecosystems in the face of economic headwinds.
Eventually, you would expect local TV almost everywhere to continue declining, decreasing in audience and relevance, and often propped up by state subsidies. Ultimately, they will likely fail due to the basic economics of the internet, which tends to reward either mass scale or niche focus. Local TV offers neither.
All of this should have been obvious to the unwise architects of the UK’s local TV experiment a mere decade ago. It was a 20th Century idea launched just as 21st Century viewing habits were accelerating away from broadcast and localisation. That it failed should come as no surprise, and as a lesson in how not to build media for the modern age.
That is at least one reason why we shoiuld watch the strategy of London Live under its new owners. We’re not saying it’s not an interesting idea, just one that you might not want to bet real money on.
