BBC and Ofcom asked to help Norwich TV station cut the Mustard

http://www.theguardian.com/media/2015/oct/12/bbc-ofcom-help-norwich-tv-station-mustard

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The owner of Norwich’s Mustard TV has said the commercial viability of local TV hangs in the balance unless the BBC offers more financial support and Ofcom relaxes programming regulations.

Jeff Henry, the chief executive of regional newspaper group Archant, which owns Mustard, was speaking after financial filings revealed the local TV venture ran up a £657,000 loss last year.

Henry warned that while Mustard TV’s losses have been dramatically cut – the figure includes one-off setup costs and the business had to be built from a zero audience base – the overall local TV model needs to be reviewed or 2016 could see mass closures.

“I think the route to profitability at the moment is very challenged,” said Henry, the ex-ITV senior executive who joined Archant last August. “Fundamentally something has to change … the model of local TV has to be re-examined in a way that allows fledgling operations the chance to actually grow. Can I get it to profitability? At the moment that is questionable.”

Henry believes that to make local TV a success, changes need to be made in three areas.

Firstly, the BBC’s three-year £15m agreement to buy content from local TV owners needs to be extended beyond its termination point of March 2017 as part of the charter renewal process to give the businesses time to become established.

“I think [BBC] support for local channels has to go on for a longer period,” he said. “It needs to be extended and placed at a material level. The BBC competes head-to-head, [I’m] just looking for a level playing field.”

Henry also believes that Ofcom needs to adopt a more flexible approach to allowing local TV operators to vary their programming commitments from their initial licence agreements as the fledgling operations adjust to be commercially viable.

“Ofcom needs to be much more flexible in regards the terms we operate,” he said. “They tend to enforce the letter of everything in the bidding process, but that is not the nature of fledgling operations. It is about meeting the requirements of local viewers”.

Ofcom would challenge Henry’s assertion on this point having already allowed the capital’s local TV channel, London Live, and last week six others in cities including Cardiff, Bristol and Belfast to cut back on local programming, news and current affairs.

The third issue relates to the distribution of Mustard TV, which is available on Freeview and Virgin Media but not Sky’s satellite platform.

Henry says that the cost of a satellite uplink runs to hundreds of thousands of pounds and is the same no matter the scale of the TV player.

For Mustard, that makes it prohibitively expensive because the TV service would not add enough viewing households to make the payments commercially viable.

“We are one of the better financed operators in this arena,” said Henry. “Unless there are some fundamental changes, 2016 could be a very difficult year for a number of franchise holders.”

Henry said that following its launch period – Mustard TV went on air on the 24 March last year on Freeview – the cost base has been trimmed but growth is still “slower than expected”.

“The current local television model requires fundamental review,” he said. “The [financial] results demonstrate the underlying economic difficulty of providing a quality service in a limited broadcast area.”