Fifty firms thrown their hat into the ring

LONDON — Birmingham, Ala., has a population of 229,000 and eight TV stations.

The British city of Birmingham, second-largest in the U.K. after London, boasts a population of more than a million, but lacks a single local TV station.

That may be about to change.

Media minister Jeremy Hunt revealed an idea this past fall that has morphed into plans to offer licenses that would allow their holders to program all or some of a new national channel available only on digital terrestrial TV platform Freeview.

“My vision is of a landscape of local TV services broadcasting for as little as one hour a day: Free to affiliate with one another — formally or informally — in a way that brings down costs; free to offer nationwide deals to national advertisers,” Hunt said at the time.

Back then the idea of local TV in Blighty was dismissed by commentators and bankers alike as a license to lose money in a nation as compact as the U.K., where the commercial webs were already struggling for advertising and auds have hundreds of channels to choose from.

To reduce risks for the startup, in October, Hunt forced the BBC to subsidize the plan to the tune of £25 million ($40.2 million) a year, plus provide coin to help build infrastructure.

In January, he sweetened the pot still further, announcing the new network would have a prime slot on the nation’s electronic program guide behind the most popular terrestrial TV channels BBC1, BBC2, ITV1, Channel 4 and Channel 5 — a valuable piece of TV real estate — giving rise to the unofficial Channel 6 moniker.

On March 14, the government’s Dept. of Culture, Media and Sport (DCMS) announced it had received more than 50 “expressions of interest” from companies who want to run local TV services in cities like London, Birmingham, Manchester, Leeds, Liverpool, Newcastle and Glasgow.

The “expressions of interest” are the first part of a long process that will lead to formal bids being invited next summer.

By then the DCMS will have published more detailed proposals of what shape the new Channel 6 will take.

At this stage, many groups that have expressed an interest have done so in order to put down a marker and, in some cases, to alert rivals that they mean business. In most cases, their plans have not been made public.

Some, like former tabloid newspaper exec Richard Horwood, appear determined to run a national station, albeit one that leaves room for around two hours a day of local fare in large U.K. cities.

Other interested parties, however, such as Manchester-based City Broadcasting, are likely to have suggested a more modest service comprised entirely of local shows.

Serious players are among those lining up to bid for licenses. They include former BBC director-general and ITV topper Greg Dyke, chairman of the Local Television Network; and ex-Channel 4 chairman and restaurant entrepreneur Luke Johnson, whose Local6 group, which includes veteran TV entertainment maven Paul Jackson, wants to run a service aimed at Londoners.

Horwood’s previous TV experience includes working alongside ex-Sun editor Kelvin MacKenzie at Live TV!, a station remembered for pioneering such fare as topless darts.

Philip Reevell, managing director of City Broadcasting, who along with Ape Media, Gizza Job and Channel Zero, has submitted plans to run local services, says, “The expressions of interest are much more substantial and extensive than people expected last autumn when the idea was proposed.”

Hunt, a self-made millionaire who made his fortune in publishing, is determined to push his idea for local TV through. But he may have left the door open to create a new channel which, at the end of the day, may not be all that local.

According to information on the DCMS website, “The government envisages that these services will likely be supported by a new network channel that will carry local services at specified times of the day, as well as a schedule of networked programming.”

In other words, the original plan for a mold-breaking network of local TV stations based on the U.S. model has changed into a network with a national schedule that revolves around a mix of entertainment shows, with two-hour programming blocks that reflect life in 10 to 12 big cities, like London.

Adding the BBC subsidy to the plan, optimists calculate that Channel 6 could become financially solvent. Ultimately, though, this depends on the new challenger generating enough advertising money.

“There is around £3 billion ($4.8 billion) of TV advertising in the market, and it’s estimated that Channel 6 could generate about £25 million ($40.2 million) a year in advertising revenue with a 2% viewing share,” media commentator Steve Hewlett reckons.

Crucially, it would be up to those interested in running the service to figure out how to make it work, rather than pols or regulators.

Two years ago, all private free-to-air webs had to make big cuts as ad coin dried up due to the poor economy. While the advertising recovery has put a new spring in the step of both ITV and Channel 4, in the case of ITV, ad revenue has bounced back to only 2006 levels, according to CEO Adam Crozier.

The jury is very much out on whether the economy can sustain another free-to-air web. Channel 5 has struggled to survive and become profitable, with RTL selling the loss-making station to newspaper and magazine magnate Richard Desmond last year.

Nevertheless, Hunt hopes to have the local TV services operational by 2015.

It is anyone’s guess who will emerge as the operator running the main channel or precisely what criteria will be used to award licenses. Expect some of the big guns of U.K. broadcasting to take a close interest, not least because they likely will regard the emergence of a new channel as a potential threat.

International media firms such as Viacom (which recently paid an undisclosed sum, reckoned to be in the millions of pounds, to gain higher program-guide positions on BSkyB for MTV and Comedy Central) may well be weighing the possibilities.

Media commentator Raymond Snoddy is among those skeptical of the direction Hunt is taking to deliver local programming.

“Someone will get this license and launch a channel,” Snoddy says. “(But) once it’s got the subsidy from the BBC and the prime slot on the (program guide), it could sink like a stone (and be unable) to pay for programs that are worth watching.

“Meanwhile, the BBC is being forced to cut its local radio services, because Hunt has cut the license fee in real terms. Where’s the sense in that?”

Something else that also hasn’t escaped the attention of observers with long memories is that the blueprint for Channel 6 sounds remarkably like the one policy makers had in mind for ITV when it bowed more than 50 years ago — a national network with firm commitments to provide local coverage for regional auds from regional TV stations at certain times of the day.

That idea gradually imploded, principally due to competitive pressures — and that was long before auds could zap through hundreds of channels, never mind use their TVs to go online.

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