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Sunday, October 12, 2008

Regional news needs ITV but, currently, ITV doesn't need it

He described himself as a man on a diving board, with the water draining from the pool, eager to go in but told to wait. Michael Grade's message was clear - if you don't absolve ITV from virtually all its historic PSB regulatory obligations - and soon - the water will have drained from the pool and the diver will meet a tragic and grisly end. Leave us alone, he said, and we will continue to invest in high-quality UK content. Let regional news - characterised as a complete commercial basket case by ITV - be provided by third parties (and paid for by someone else) and give ITV everything else it wants, and it might consider allocating such programming slots in ITV's schedule. Fail to cough up and ITV will simply hand back its licences and sail off into a fully digital world where it can do exactly as it pleases with no guarantees to provide anything of public value.

Grade is nothing if not a showman and his presentation last week to an audience of politicians, regulators and opinion-formers was pretty well received. And, importantly, there was some truth and even logic in nearly everything he said. But the operative word is "some". His assertion that reduced regulatory obligations would enable ITV to invest more in high-end UK content just doesn't bear scrutiny. The regulatory burdens may well exceed the benefits - and if they are not brought back into balance ITV's shareholders might decide to hand back their PSB licences - but decisions on investment in high-end content are an entirely separate matter. Expensive drama either makes money or it doesn't and that has nothing to do with whether or not regional news obligations are relaxed or removed.

Then there's the costs of regional news and other programming that ITV says are far in excess of the value to ITV of being a PSB. These costs never take account of how much revenue is (or could be) raised around regional news and information programming. ITV would doubtless point out that they don't raise revenue round these programmes. But that's because they've chosen to take the advertising minuteage - ie the ad breaks that could have been around regional content - and use it elsewhere. This might make financial sense but it makes the commercial potential of regional programming impossible to assess sensibly. Grade and ITV portray regional news as a pit into which they pour tens of millions of pounds, but it could represent a real commercial opportunity. By offering up the programme slots, as he suggested last week, but without the right to sell advertising around them (which ITV itself doesn't currently do), Grade really is having his cake and trying to eat it.

The unfortunate reality is that in all these discussions, ITV has the whip hand. Why? Because no one can deny the legacy of audience reach and the impact of 50 years of virtual monopoly. It is this position with audiences in the nations and many English regions that Ofcom, rightly, sees as crucial to maintaining really effective plurality and competition to the BBC. If ITV decides to hand back its licences and take its ball away, all that legacy goes with it.

So now where are we with ITV? In the nations of the UK, access to the ITV network schedule is essential if plurality in news is to be maintained. In the English regions, access to slots on ITV network with the right to sell advertising around them could underpin the development of a whole generation of new regional and local multimedia news and information services. ITV might also sign up to renewed commitments to national news and UK programme investment. But if the "regulatory assets" possessed by ITV will be worth only £45-50m by 2012, as Ofcom estimates, the starkly simple question will be: what, if anything, might ITV be persuaded to do for the money?

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