Channel Zero eyes U.K. local broadcasting licences

Canadian independent broadcaster Channel Zero Inc. has applied for licences to operate a chain of over-the-air television stations in England and Scotland as U.K. lawmakers attempt to kick-start a local-TV industry. In May, U.K. regulator Ofcom responded to a government order to encourage the development of a local TV industry by releasing a call for applications for 21 local TV licences that would operate in cities and towns across the U.K.. Unlike in Canada, the U.S., and other leading European countries, the U.K. is not currently home to a series of local TV stations that allow TV viewers outside of major urban centres to gain specific news and insight about their communities. “hile the UK has an established regional television service provision, there is hardly any news or other content on television that is routinely specific to particular localities rather than regions,” the U.K. Department for Culture, Media and Sport, wrote in a July 2011 report on how it will encourage a local TV industry. “Local TV presents a valuable opportunity to put people in touch with what is happening in their local area and to demonstrate the difference that people’s activities can make on the ground.” Under the government’s plan, broadcasters will receive licences to operate local TV stations on the digital, over-the-air channel 8 in each of the 21 municipalities. Broadcasters who win those licences will be required to air one hour of local news during each broadcast day to fulfill their local broadcasting requirements, the report said. Channel Zero—which operates local, over-the-air station CHCH in Hamilton, Ont., as well as specialty channels Movieola and Silver Screen Classics—has applied for eight of the U.K. licences to operate a chain of local stations under the "Metro8” banner, the U.K. regulator’s website says. Cal Miller, Channel Zero’s president and CEO, said in an interview that, if granted any of the licences, the company’s U.K. stations would offer a local TV programming platform that is similar to what CHCH offers in Hamilton. CHCH currently offers a mix of local news and local personal interest programs, as well as popular national and international dramas, game shows, movies, and other programming. “We would use very much the same model that we’ve used here, which has worked very well for us,” he said. “This is a proven business model. This isn’t somebody saying that ‘This is my idea and boy I’m sure it’s going to work.’” The Canadian local TV industry has encountered recurring financial hurdles in recent years as advertisers have shifted away from local markets and towards increased spending on national advertising opportunities. Earlier this summer, Millar told The Wire Report that his company would have to “reevaluate” its Canadian business plan after the CRTC decided to phase out $70 million in annual subsidies that local broadcasters received through the Local Programming Improvement Fund (LPIF). Simon Oliver, a spokesperson for the Department of Culture, Media and Sport, said in an interview that the U.K. government does not intend to provide any direct subsidies to local TV broadcasters. Instead, he said, the government has reserved an 8 MHz swath of spectrum for local broadcasters to use, and will use 25 million British pounds ($39.2 million) of licence fees from the national broadcaster, the British Broadcasting Corporation (BBC), to subsidize the costs of building the necessary multiplexing infrastructure. Ofcom will hold a separate competitive process to select a company to run the multiplexing operations, and the selected local broadcasters will be required to pay the multiplex operator “a contribution towards operation carriage costs,” the government said in the July 2011 report. The BBC has also agreed to spend up to 5 million pounds ($7.9 million) to purchase content from the local broadcasters to run on the BBC’s own services in each of the first three years the broadcasters are on the air. Local broadcasters will also be expected to support their operations through advertising sales. “We anticipate the costs are pretty low,” Oliver said. “Yes there is a subsidy, but it’s a subsidy to carry the networks, rather than a subsidy for individual stations to operate. They will ultimately have to be self-financing.” Millar said Channel Zero would also benefit from “natural efficiencies” that could ease operating costs if it is awarded more than one of the eight operating licences it has applied for in Edinburgh and Glasgow, Scotland, and in Leeds, Liverpool, Manchester, Newcastle, Preston and Sheffield, England. He said all of the company “clustered” all of its applications in Northern England and Scotland, and ignored other licence opportunities further south, to reduce the scope of their coverage and to capitalize on programming material that could be shared across stations operating in communities with similar interests and issues. He also said his company urged Ofcom to consider these and other efficiencies when awarding licences to help ensure the success of the future stations. “For instance, if you’re going to award Preston, which is the smaller centre, it would sure make a lot of sense to award that to somebody that got one of the larger centres, just in terms of sustainability,” he told The Wire Report. In all, Ofcom received 59 applications by the Aug. 13 deadline for licences in 19 of the 21 total licence areas, Giles Mason, an Ofcom spokesman, told The Wire Report last week. Mason said the regulator would begin awarding the local broadcasting licences this fall, and would aim to have them all handed out by the end of the year. Millar said Channel Zero would be “thrilled” to receive all of the licences it has applied for, but added that the company was being “realistic” and was not hinging its business plans on receiving all eight. He said the company may also find itself without any licences if Ofcom gives special preferences to companies based in the U.K. “If that’s what the regulator wants, then we may be out of luck,” he said. Either way, Millar said, the company’s U.K. plans are just the beginning of a larger effort to expand internationally. “On a strategic level, we have a broader strategy to expand global-wide, wherever there’s a market that looks like it’s under-served,” he said. nkyonka@thewirereport.ca --- CORRECTION: An earlier version of this story incorrectly stated the value of the BBC licence fees that will go towards supporting the local TV multiplexing and broadcasters.

Channel Zero eyes U.K. local broadcasting licences

Broadcast | September 12, 2012

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