Warning over local TV stations plan
Advertising revenue alone will not be enough to ensure the success of a Government-backed plan to launch dozens of local television stations, according to a new report.
Nicholas Shott, of investment bankers Lazard, who was charged by Culture Secretary Jeremy Hunt to investigate the proposals said a multi-million pound corporate sponsorship deal could be one way to make it work.
In a letter to Mr Hunt, he said the stations were more likely to succeed in "urban areas", but even there "the economics of a TV business funded mainly by advertising will still be challenging" and "additional revenue sources" would have to be explored.
Mr Shott, who heads a five-member steering group, has published an interim report into their findings.
He wrote: "We believe there may be scope for the local TV sector collectively to be sponsored (at least in the early years) by a large corporate wishing to be seen to support local/community life - a reasonable parallel for this is Barclays' sponsorship of the London bicycle scheme, worth £25 million over five years".
He added that stations could be hosted by existing channels and that discussions had started with "senior management" at the BBC which were showing "early promise".
Mr Hunt will argue the case for more local television in a speech to the Royal Television Society at the Barbican Centre in London.
He is expected to say: "My vision is of a landscape of local TV services broadcasting for as little as one hour a day. Free to affiliate to one another - formally or informally - in a way that brings down costs. Free to offer nationwide deals to national advertisers.
"Able to piggyback existing national networks - attracting new audiences and benefiting from inherited ones at the same time. And able to exploit the potential of new platform technologies such as YouView and mobile TV to grow their service and improve their cost-effectiveness."
He will say that an expansion of superfast broadband and the removal of cross-media rules preventing companies controlling newspapers, television and radio stations will all help make the plan more likely to succeed.