In my opinion: David Cairns: Deregulation could save STV and local news bulletins

WHETHER or not STV’s legendary founder, Lord Thompson, actually coined the phrase, “a licence to print money”, he might as well have.

In those pre-Lottery days, there was no quicker way to get rich than to hold a commercial TV licence when the only competition, the BBC, did not show adverts.

‘Taking sweeties from a baby’ was Herculean by comparison. In return for engorging themselves on advertisers’ cash, the licence holder had to comply with a few regulatory obligations. Show a bit of politics. Some religion. A few educational programmes. And, most important of all, local news.

The programmes didn’t even need to be all that good. Legend has it that when the chair of the then TV regulator visited STV he summarily axed one long-running programme with the cry, “How long have you been getting away with this?”

Those days are no more. ITV is facing a huge challenge to keep local news on the air and the new Tory-Liberal government has just blown its first chance to take practical action to help.

STV, which once went on a Fred Goodwin-esque dash for global dominance (by milking its television cash-cow to near death), is a fraction of its former self. Where previoulsy they enjoyed an advertising monopoly, they now face voracious competition from hungry digital TV channels and ravenous internet behemoths like Google. As if that were not enough, the advertising industry has just gone through one of the worst recessions in living memory.

But still they must comply with regulatory obligations, now a larger drain on fewer resources. STV employs around 350 people, almost half of them in its newsrooms. Important though news bulletins are, they do not attract big advertising money and they cannot be sponsored like almost everything else is nowadays.

Facing similar challenges in England, ITV, under former executive chair, Michael Grade, slashed regional news spending and threatened to hand back the licences if the regulator forced him to carry on producing loss-making local news.

Yet surveys show that most viewers strongly value choice in local news and absolutely do not want the BBC to be the only channel that tells them what is happening in their area.

In response to this deteriorating state of affairs, the Labour government came up with the proposal to subsidise local news on ITV. The plan was to use money set aside – but not spent – on digital switchover, to fund pilot projects to help sustain local news. In Scotland, STV entered the competition for the cash against a consortium comprised of the Herald & Times Group, DC Thomson and Johnston Presss, and a TV production company. Most insiders expected STV to win comfortably and were dumbfounded when the newspaper guys triumphed.

The Tories opposed this plan on the principled grounds that money not used for digital switchover should be given back to the licence fee payer, so it was no surprise that, in his very first speech, Culture Secretary, Jeremy Hunt, pronounced the death of subsidised local news.

But two things did surprise. Instead of giving the money back to the public, the cash will now be used to fund expansion of superfast broadband. So much for principle. More alarming was the complete lack of any practical action that could be taken now to prevent companies like STV from immediately cutting back on their local news output and sacking journalists.

Instead, Mr Hunt promised another review. He repeated his favourite cliché about Birmingham, Alabama having eight TV stations while Birmingham, England has none. American TV is magnificent in many regards – from dramas like ’24’, to sophisticated comedies like ‘Frasier’, would that we had a tenth of its creativity. But TV news in the US is terrible. Whether local, national or international, it is vapid, soft-focus, parochial and endlessly repetitive.

The American model of city-wide TV stations acting as franchises for national networks is well established, though the Secretary of State conveniently ignores the massive differences with our own system.

He believes that scores of local TV stations can achieve what the current regional stations cannot: produce high-quality, mass audience, local news without losing millions of pounds in the process. How, exactly? Mr Hunt did not tell us. That task will fall to an investment banker – I kid you not – who has been asked to head up the review. He did claim in his speech that it was possible to set up a news studio for £250,000. Whilst digital cameras are certainly more affordable than their clunky predecessors, people are still required to operate them. How many good and experienced journalists, editors, studio technicians and producers can you get for £250,000?

If the coalition doesn’t like Labour’s plan, then there is an alternative, and it is based on a principle that Mr Hunt should have no problem with – deregulation.

The government should scrap the outdated restrictions that cap what ITV can charge its advertisers. The market is established, the restrictions can go. They should relax the rules for allocating advertising minutes and speed up the introduction of limited product placement. These reforms would bring in significant new revenues to ITV who should then be obliged to spend it on keeping regional and local news on the air.

By prevaricating, Mr Hunt may well have signed the death knell for news on STV as we know it.

David Cairns is MP for Inverclyde and a former Minister of State at the Scotland Office. This article originally appeared in Scotland on Sunday newspaper, June 13 2010.