BBC Management’s assessment of the public value of its Local Video proposals

BBC Management’s assessment of the public value of its Local Video proposals

Contents 1 EXECUTIVE SUMMARY...... 3 1.1 Description of Proposals...... 3 1.2 Fit with BBC public purposes and strategy...... 5 1.3 Reach...... 6 1.4 Quality and Distinctiveness...... 7 1.5 Consumer and Citizen Benefits (Impact)...... 8 1.6 Cost...... 9 1.7 Value for Money...... 10 1.8 BBC’s role in local markets...... 10 2 DESCRIPTION OF PROPOSALS...... 12 2.1 A note on definitions...... 12 2.2 Overview of proposals...... 12 2.3 Proposals in detail...... 14 3 FIT WITH BBC PURPOSES AND STRATEGY...... 18 3.1 BBC’s role in serving local communities...... 18 3.2 The importance of Local...... 19 3.3 The shift from linear to on-demand news...... 21 3.4 BBC’s Purpose performance...... 22 3.5 Reach of BBC Nations and regional TV news...... 25 3.6 Market context...... 27 4 REACH...... 29 4.1 Reach of Local Video...... 29 4.2 Maintaining overall reach to BBC regional/local news...... 34 4.3 Widening the age profile of BBC regional/local news...... 35 5 QUALITY AND DISTINCTIVENESS...... 36 5.1 Relevance...... 36 5.2 Quality...... 37 5.3 Distinctiveness...... 40 6 CONSUMER AND CITIZEN BENEFITS (IMPACT)...... 45 6.1 Measuring impact and value...... 45 6.2 Assessment of consumer and citizen benefits...... 45 6.3 Local Democracy...... 48 7 COST...... 51 7.1 Overview of Local Video costs...... 51 7.2 Cost breakdown...... 52 8 VALUE FOR MONEY...... 56 8.1 Comparison between costs and audience valuations...... 56 8.2 Alternatives to the BBC Local Video proposal...... 57 9 THE BBC’S ROLE IN LOCAL MARKETS...... 61 9.1 The Local BBC...... 61 9.2 Relationships with third parties...... 61 ANNEXES...... 64 Annex 1: Existing BBC local online provision...... 64 Annex 2: Proposed Local Video offer geographic areas...... 65 Annex 3: Research Annex...... 66

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BBC Management’s assessment of the public value of its Local Video proposals

1 Executive Summary

This document sets out BBC Management’s application to the BBC Trust for permission to enhance significantly its creation of local news and related video content delivered via internet protocol (hereafter referred to as ‘Local Video’). The evidence and analysis presented in this document is intended to assist the BBC Trust in its assessment of the public value of the proposals as part of the Public Value Test.

BBC Local Video will provide distinctive, high-quality and relevant news to licence fee payers across the UK, when they want, and how they want. The offer will safeguard two of the BBC's public purposes – ‘sustaining citizenship and civil society’ and ‘representing the UK, its Nations, regions and communities’ – throughout the current Charter on future-proofed platforms. In particular, Local Video is designed to help close the wide ‘gap’ between the importance that audiences attach to the BBC’s local role and their view of current performance. Unchecked, this gap risks becoming more pronounced due to underlying shifts in audience attitudes and behaviour. As the value attached to ‘localness’ increases and the demand for on-demand news grows, the ability of the BBC’s traditional Nations and regional news outlets to meet audience expectations is likely to diminish.

Local Video will reinvent the BBC’s regional/local news offer: compensating for the decline in the reach of the BBC’s regional TV audiences, attracting a younger demographic to local news and deepening users’ appreciation of the BBC Local websites. It will preserve the BBC’s valued provision of local news – a role the BBC has played ever since its foundation as a group of local radio stations in 1922 – in an on-demand age.

In developing these proposals, BBC Management has spoken to various stakeholders in order to help maximise the public value of the offer, while providing as much certainty as possible to the wider market. The proposal contains self-imposed limits on the geographic scope, editorial focus and quantity of content as well as the speed at which the offer is introduced. In addition to extending the BBC’s generous linking to other local news providers, the BBC will also purchase content from these providers and give them access to BBC content, helping ensure that Local Video can contribute to building the overall market in local online news provision.

1.1 Description of Proposals The focus of the Local Video proposal is news and sport video bespoke for broadband, and in particular, the BBC Local websites. It will be made in 60 areas across the UK: it is not ‘ultra-local’ and the BBC has no plans to invest in hubs of a more local nature. Within England and Northern Ireland, the proposal will add a new tier of local relevance to the BBC’s existing audiovisual news. Within Scotland and Wales where BBC local radio stations do not exist, it will deliver audiovisual news at a local level for the first time.

The proposal supersedes the BBC’s previous plans to improve its local news offer by creating a local television service available on all digital TV platforms as well as via bbc.co.uk1. This document draws on over five years of research on a Local TV news offer culminating in a nine-month trial in the West Midlands on digital satellite and broadband. However, BBC Management has updated and refreshed its research to further assess the Local Video broadband offer, scaled back in light of the Licence Fee settlement and further work on the BBC’s strategic priorities in 2007/8. In addition to drawing on new audience research by BMRB2 and Opinion Leader Research3, this application draws on extensive

1 First outlined in full in Building Public Value, BBC 2004 2 BMRB quantative research on BBC Local Video, 2008 [hereafter ‘BMRB (2008)’]. 3BBC Local Video – Findings from deliberative workshops, Opinion Leader Research, 2008, [hereafter ‘OLR (2008)’]. Page 3 of 67

BBC Management’s assessment of the public value of its Local Video proposals analysis from media strategy consultancy, Human Capital. Separately, BBC Management has commissioned advice on the potential market impact of its proposals, also carried out by Human Capital.4

In brief, the proposed Local Video offer is as follows: 1) On average, up to 10 new local video stories created a day in each local area, adding up to no more than an average of 20 minutes per day, with an additional offer of up to three short daily bulletins for each of news, weather and sport. While this self-imposed limit is judged to allow for sufficient breadth to offer local audiences the relevance they want from the BBC, for each local area the totality of the BBC’s multimedia online news offer will still encompass considerably fewer stories than are provided on average by local newspapers. In addition, Local Video will not be produced in content areas where BBC Management believes the public value will be outweighed by the impact on other providers’ commercial revenues, such as commercial listings, cars, dating, jobs, property, holidays and horoscopes.

The upper limit of 10 video stories will comprise: · A mixture of news and news-related stories (such as politics, social issues, crime and debate). · A greater breadth and depth of local sport coverage than the BBC currently provides. · Some short, well-crafted films made by individuals or groups within the community which the BBC will help produce. · A small amount of content linked to core BBC knowledge-building genres and linear output.

2) The content will be distributed in two main ways: · On-demand over internet protocol (IP) via bbc.co.uk, mainly over broadband but also on internet- enabled mobile devices and possibly in the future on television sets via the internet. The context of the offer on bbc.co.uk will primarily be the BBC Local websites. These sites already provide multimedia content such as regional news video, user-generated content (UGC)5, video linked to linear output, local audio and local text news. Before the launch of Local Video, there will be improvements to the sites including a new mapping user interface, introduced under the existing bbc.co.uk Service Licence (this application does not seek permission for these evolutionary changes). · ‘Embedded’ in third party websites if consumers or other providers of local news wish to show the BBC content themselves.

3) The geographic scope of the content will be: · Predominantly based around areas in England and Northern Ireland that the BBC has been serving with local radio and local online content, and in Scotland and Wales, online only. · Content will be published in 60 hubs across the UK, largely based on cities and counties. In Wales, there will be offers in both the Welsh and English languages, giving a total of 65 separate local offers across the UK. · While this represents a significant investment in local newsgathering, this does not represent the ‘ultra-local’ provision offered by most of the 1,300 local newspapers and 1,100 local newspaper websites.6 · The BBC has no plans to invest in hubs that are more localised (ie. that have a more ‘granular’ geographic focus) in the future.

4 This preliminary Market Impact Assessment has been submitted alongside this Management assessment of public value. See Human Capital, Preliminary Assessment of the Market Impact of the BBC’s Local Video proposals, April 2008 [Hereafter ‘Human Capital, pMIA (2008)’] 5 This content (eg. ‘citizen newsgathering’) fits with the editorial purposes of Local Video and the BBC’s Editorial Guidelines. 6 Source: Newspaper Society, Annual Report 2007/08 Page 4 of 67

BBC Management’s assessment of the public value of its Local Video proposals

1.2 Fit with BBC public purposes and strategy The Local Video proposal will contribute to the delivery of all of the BBC’s public purposes. However, the strategic rationale for Local Video results from an analysis of audience demand and behaviour around two purposes in particular: · representing the UK, its nations, regions and communities. Specifically, to provide news and information that meets the needs of local communities across the UK. · sustaining citizenship and civil society. Specifically, to build a greater understanding of how the UK is governed at a local level and facilitate engagement in the democratic process. The effective fulfilment of these key purposes is under pressure in a fast-changing media environment. Two fundamental changes are affecting audience attitudes towards traditional regional television news: · an increased interest in ‘local’. · the long-term shift from linear to on-demand news consumption, as broadband penetration rises and video becomes increasingly common online.

Most people live the majority of their lives within a 14 mile radius and their primary concerns are focused there. Across virtually all age groups, people’s interest in locality and the area that surrounds them has increased significantly over the last two decades, particularly so for those under the age of 45.7 Research shows that it is not just that audiences find ‘local’ and their ‘area’ of increasing interest, but that they also identify with their local area more than their region.

A second major shift in audience behaviour is also affecting the consumption of traditional linear news: an audience demand for ‘convenience’. In the analogue world, the audience had to make an appointment to view the news at the right time and place to consume it. In the digital world, ‘personalised’, on-demand news content with opportunities for user-generated content and interactivity is becoming part of audience expectations.

We have already begun to see the impact of these trends on the BBC’s ability to fulfil its public purposes. Research by the BBC Trust shows that the priority to provide a range of output that meets the needs of local communities is an area where the BBC must improve its performance. The ‘purpose gap’ between the importance attached to the BBC’s community role and audiences’ view of current performance is among the largest for any of the BBC’s public purposes. The perception of under-performance is common to all age and socio-economic groups. The purpose gaps exist across all four nations, with audiences in Scotland and Northern Ireland among those seeing the greatest room for improvement.8

While the BBC’s 18:30 news remains the UK’s most watched news bulletin, this comparative success masks a real decline in recent years. In the past six years, the programme’s reach has declined by over three million viewers (17%). ‘Lost’ viewers are disproportionately young resulting in the typical audience for Nations and regional news getting older. Viewers aged over 55 now make over half of the audience reached, up from 40% only six years ago.9 Current trends suggest that overall reach to Nations and regional news bulletins will continue to decline and a generation of younger viewers could be lost. By contrast, over the same period the reach to BBC’s local websites has grown broadly in line with the growth of broadband households and is likely continue to grow as broadband reaches two-thirds of homes by 2013/14.10

7 Redefining Regions. The Future Foundation commissioned by the Newspaper Society, DETR, BBC and others, 2004 [hereafter ‘Future Foundation (2004)’] 8 In particular, ‘the BBC caters for my area and my community’ and ‘the BBC helps me feel more involved in my local communities.’ 9 BARB figures 10 Broadband penetration rate prediction based on the conservative Enders forecasts (see section 4 for more detail). Page 5 of 67

BBC Management’s assessment of the public value of its Local Video proposals

The Local Video proposal is designed to respond to audiences’ desire for more locally relevant video content and to the long-term shift from linear to on-demand news consumption. The offer will help maintain the reach and impact of BBC regional/local news provision and uphold the delivery of the BBC’s citizenship and community purposes. Research suggests that while audiences believe Local Video serves all the BBC’s public purposes, above all, they perceive the proposals to support communities in a number of powerful ways and to contribute significantly to sustaining citizenship and civil society.11

In addition, there are several strategic imperatives served through the Local Video proposals: · Local Video is part of a wider BBC Journalism strategy to strengthen the BBC's on-demand provision and engage audiences with high-quality, distinctive content, when they want, how they want.12 Local Video complements BBC plans to enhance on-demand multimedia provision of UK and international news (MyNewsNow) and sport (MySportNow) in order to maintain long-term reach and relevance. · At the same time, linear Nations and regional TV bulletins will be the primary source of regional/local news for many years to come; this proposal will enhance and enrich existing linear news programmes by strengthening the BBC’s newsgathering pyramid. · Local Video will deliver a new tier of localness to the BBC’s current audiovisual output in Wales, Scotland and Northern Ireland. Here audience demand for local services is strong and the BBC has hitherto not responded effectively to this demand. · The proposal also reflects the BBC’s wider commitment to improve cultural representation of the whole UK through its service portfolio and increase economic investment in Nations and English regions. Local Video is aligned with other major BBC initiatives including the move to Salford and the planned growth in the supply of network television from the Nations.

Key Performance Indicators · Close the BBC’s performance ‘gap’ in relation to its community role among users of Local Video 13 · 20% of Local Video content to focus on local politics and public policy issues · Within 24 months of launch, the majority of users of Local Video will agree that it has raised their awareness of the key political and public policy issues in their local communities. 14

1.3 Reach The reach of the Local Video proposal has been forecast from launch in 2009/10 to 2013/14, the first whole year in which the offer is fully operational. These forecasts are grounded in empirical data, including the existing reach of BBC local online content, audience research, trials of BBC ‘embedded’ video and industry sources. In summary: · By 2013/14, Local Video is projected to achieve a weekly reach of around 11% of UK households (3.2m households or 4.9m individuals15). This represents reach of around 17% within broadband households. · By way of context, this projection for BBC Local Video is over 1 million UK households more than the current reach of the BBC Local multimedia offer in its entirety;16 it is also greater than the anticipated loss of reach to BBC Nations and regional TV news bulletins over the next five years.17 · Consumption of Local Video will be predominantly among households forecast to be already using BBC’s local online content adding considerable value for these users and ‘future-proofing’ these websites.

11 OLR (2008) 12 Outlined in the BBC’s Six Year Plan, Delivering Creative Future (Oct 2007). 13 Performance gaps are currently -14% & -21% (see section 3) 14 This will be evaluated through BBC-commissioned audience research. 15 Individuals figure is an approximation based on an assumption of 1.5 individuals per household. 16 Reach to BBC local online content for year end Mar 2007 was estimated to be 2.1m households compared to projected reach of BBC Local Video to 3.2m by 2013/14. 17 On current BARB data trends, this is estimated to be a loss of 2 – 3 million in 3 minute weekly reach. Page 6 of 67

BBC Management’s assessment of the public value of its Local Video proposals

· New users will be brought to the BBC’s local online content by Local Video, with the offer forecast to add an incremental reach of over 1 million UK households by 2013/4. · Local Video will help maintain the overall reach of the BBC’s regional/local news by compensating for the predicted decline in Nations and regional TV news and winning back some of the ‘lost’ audiences. Research found that around a quarter of those who said they would definitely use Local Video are not viewers of BBC regional TV. Local Video is also likely to ‘deepen’ the BBC’s relationship with many existing users of regional TV news. · Local Video will ‘widen’ the age profile of BBC regional/local news by attracting a younger audience than those currently watching the BBC Nations and regional TV services; in the West Midlands trial over 60% of the audience was under 4518, while over 60% of those who said they would definitely use the offer in quantitative research were aged under 45.19 · Overall, Local Video will play a significant role in achieving BBC Journalism’s overall target to maintain reach to 85% of the adult population weekly.

Key Performance Indicators · Weekly reach to Local Video of around 11% of UK households by 2013/4. · Two-thirds of Local Video reach under the age of 45.

1.4 Quality and Distinctiveness Local Video will only be able to help close the ‘localness’ purpose gaps if it is of sufficient relevance, quality and distinctiveness to attract today’s ever more discriminating and demanding viewers.20 This offer proposes to bring the BBC’s reputation for high-quality, trusted and innovative video content to a new level of local relevance.

Audiences found Local Video offered a high degree of relevance, believing the range, depth and number of stories offered by the Local Video offer to be “ideal”.21 This is supported by BBC Management’s own assessment of the quantity of content needed to offer relevance, based on audience appreciation of BBC local text and radio coverage.

Research on the quality of the Local Video offer has confirmed that: · Content was perceived overall as high-quality in Deliberative Juries and content analysis found it to be visually attractive with strong production values22. · Content was judged to be high-quality among broadband users of the West Midlands trial. Around 60% gave it a score of seven (out of ten) for ‘excellence’ and for ‘innovative and original’.23 · Local Video offered beneficial knock-on effects on the quality of other BBC news and current affairs offers, by enriching their content with its local newsgathering; in the West Midlands trial, 10 video stories made by the local video-journalists featured on Midlands Today each week. · The BBC’s strong recent track-record of streaming content on its website and the highly-rated 24 new navigation around Local Video will build a high quality of service.

18 Essential (2006) 19 BMRB (2008) 20 The importance of quality is confirmed by audience research, see, eg. Digital Dividend Review, Ofcom, 2007 and OLR (2008) 21 OLR (2008) 22 Based on Human Capital analysis on level of ‘visual appeal’ and ‘complexity of production values’. See BBC Local Video: distinctiveness analysis, Human Capital (2008) [hereafter ‘Human Capital (2008)’]. 23 Essential (2006) 24 OLR (2008) Page 7 of 67

BBC Management’s assessment of the public value of its Local Video proposals

While local newspapers and broadcasters, such as ITV, are increasingly providing online localised video news, there is considerable uncertainty about how the market will develop and about the nature of commercial business models on digital television and broadband. In this context, the main points of ongoing distinctiveness of Local Video are likely to be: · The offers will demonstrate clear and consistent editorial standards underpinned by a commitment to deliver the BBC’s public purposes; it will uphold the strict regulatory requirements for fairness, independence, impartiality and accuracy that apply to the BBC on all platforms. · It will be provided universally across the whole UK, free at the point of use and free from the pressures of advertising and sponsorship, adding to the plurality of local news provision across the UK - particularly in those areas with a limited number of suppliers. · The offer will promote media literacy through the assistance provided in making Viewer Videos. · Commitments to working in partnership with other local news providers and to not create video in many content areas that directly raise revenue for commercial operators. · The West Midlands trial offer was found distinctive in an independent report by Professor Laughton and the majority of broadband users (56% gave a score of seven or more out of 10 as ‘distinctive and different’)25.

Key Performance Indicators · Maintain the BBC’s position as the ‘best’ rated for regional/local news overall.26 · BBC to be rated as the ‘best’ provider of local online news in the UK27 · Appreciation of BBC Local sites (measured by Net Promoter28 and approval scores) to exceed the bbc.co.uk average.

1.5 Consumer and Citizen Benefits (Impact) Audience research demonstrates that Local Video creates a strong impact and high value for licence fee payers both as consumers and citizens. In the West Midlands trial, broadband users had a significantly higher approval rating of the BBC (7.2 out of 10) than the mean approval for the BBC in the region prior to the trial (6.4). There was also very strong agreement with the BBC launching the offer: 72% gave a score of seven or above (out of ten) and 94% gave a score of five or above.29

Audience research on Local Video30 confirmed this audience support: · Deliberative Jury research found “overwhelming support” for launching Local Video - 96% of participants voted for its launch on a citizen basis and 89% on a consumer basis. · When Deliberative Jury participants were asked to place a monthly monetary value on the offer, among other existing BBC services, the median value of Local Video was found to be £4.00 per month on a citizen basis and £2.25 per month on a consumer basis. · Responses as both citizens and consumers valued Local Video more highly than BBC News Channel (formerly News 24), BBC local radio and BBC national radio but less highly than BBC One, BBC Two and BBC Digital-only TV Channels.

25The BBC’s local television pilot in the West Midlands, An Independent Assessment, Roger Laughton, 2006 [hereafter ‘Laughton (2006)’] 26 PBTS Q407: BBC 45%; ITV1: 40% 27 This will be evaluated through BBC-commissioned audience research. 28 Net promoter scores are the key overall measure of quality used for bbc.co.uk sites measuring 'how likely are you to recommend site x to a friend or colleague' and netting out the percentage of ‘promoters’ against the percentage of ‘detractors’. Q4 07 Pulse figures show that the average NP score for BBC Local sites is +12; the bbc.co.uk average is +27. 29 MORI and Essential (2006) 30 OLR (2008) Page 8 of 67

BBC Management’s assessment of the public value of its Local Video proposals

· The West Midlands trial confirms these valuations; a comparison of mean monthly valuations of Local Video and of broadband users of the West Midlands trial gives near identical values (per month £4.57 and £4.59 respectively on citizen value and £3.85 and £3.89 respectively on consumer value).31 · Participants without broadband often found consumer value in the proposal – either as they planned to get broadband soon or perhaps due to planned use outside the home - and the majority had a strong perception of the citizen value of the offer.

Citizen value is also demonstrated above all by Local Video’s ability to fulfil the BBC’s public purposes, but of particular citizen value is the BBC’s commitment to local democracy. In each area across the UK, the BBC will present a range of local opinion on community issues; analysis and explanation of key issues; interviews with political representatives and other public figures; and coverage of UK and local election campaigns and local political institutions. Relevant video stories will link, where appropriate, to the websites of local government institutions, including to the live streaming of key proceedings. Overall, the enhanced online coverage of local politics will support the BBC's wider 'digital democracy' plans, designed to build greater understanding of the political process from Westminster and national Parliaments and Assemblies to local government. This aspect of the proposals appeals to audiences: Local Video is perceived to have a powerful effect in creating digital democracy by enabling audiences to hold MPs, councillors and other local decision-makers to account.32

Key Performance Indicator · 40% of weekly users of BBC Local Video will rate BBC local news highly for relevance. 33

1.6 Cost The BBC has assessed the cost of delivering Local Video over the five-year period 2008/09 to 20012/13. The BBC’s investment in Local Video would be phased to increase by small increments each year in each of the 60 areas, starting in 2009/10 (no spend in 2008/09) and reaching maturity at around £23m a year in 2012/13. This equates to an average cost of around £350,000 for each of the 65 offers across the UK. ||||||||||||||||||||||||| |||||||||||||||||||||||||| |||||||| of this will be direct content creation costs with the remainder comprising hosting, streaming and other technology costs.

The cost effectiveness of the offer is largely based on the considerable advances in multiskilling and cross-platform operations that the BBC has made among its existing Nations & Regions workforce over the past five years. BBC Local Video will be entirely funded by reinvesting efficiencies and savings achieved by 2012/13 within BBC Nations & Regions’ existing budget. Over the five year period, overall the BBC’s spend across its portfolio of regional and local offers will marginally decline. This will ensure that the BBC’s size and scale in the marketplace is likely to remain reasonably consistent.

Combining the projected reach of the offer with the costs provides unit costs which demonstrate that the offer delivers high quality for low cost when compared to the BBC’s current linear services. The weekly cost per user reach of just under 9p is significantly lower than the BBC’s Nations/local radio and the cost per hour of content of £2.1k is significantly lower than the BBC’s Nations/regional TV news.

Key Performance Indicator · Deliver Local Video proposal by 2012/3 to a total budget of £68m.34

31 Median figures have been used in Local Video value for money calculations as these are more conservative than mean figures. 32 OLR (2008) 33 PBTS Q407, 30% of regional/local users rated highly (8-10) 34 This KPI, and all other figures in this section, are expressed in 2007/8 prices. Page 9 of 67

BBC Management’s assessment of the public value of its Local Video proposals

1.7 Value for Money The BBC has used established survey techniques to estimate audiences’ perception of the value, in monetary terms, of the proposals. By comparing the perceived value with the cost of provision, it is possible to calculate a ‘value yield’. The ‘value yield’ is defined as the total perceived value divided by the total cost and is therefore an approximation of the overall value licence fee payers might be expected to gain from the proposals. The average across the current BBC is approximately 2 and any yield over 1 suggests that the investment would create value for licence fee payers.

By 2013/14, Local Video is forecast to generate an overall value yield of around 7. Value yields for individual areas range between 15 and just below 1, demonstrating that the vast majority of individual Local Video offers will add value and increase the BBC average. A number of offers had value yields of below two and only one offer was below one (these were mainly Welsh-language offers and in the Channel Islands and Isle of Man). The low value yields are due to the small populations involved in these areas. Given the crucial democratic, cultural and community roles current BBC local services play in these smaller communities, it is likely these figures underestimate the value created.

BBC Management will continue to monitor cost-effectiveness and overall value for money of Local Video if launched. BBC Management proposes to conduct a progress review of the offer after 24 months from launch. Although the offer will not be fully operational until 2012/13, BBC Management believes that it is prudent to evaluate the performance of the proposal at this stage. Key criteria will include reach, quality, impact and value for money as well as the specific ‘key performance indicators’ in this Assessment.

Key Performance Indicator · Cost per weekly user reached of 9p by 2012/13 · Overall ‘value yield’ around 735

1.8 BBC’s role in local markets The BBC is keen to develop new ways of working with third party providers of local news to build on the strong partnerships created during the West Midlands trial. The Local Video proposal includes a number of elements that are designed to ensure that the BBC's participation in local online news provision will help to build the market as a whole. The elements, available on a non-exclusive basis to local organisations in each of the 60 areas covered by the offer, include: · Content syndication: the BBC would make freely available its branded Local Video content to other local news websites, and local TV channels. The BBC would ensure that the majority of its Local Video content can be ‘embedded’ into other websites, whether not-for-profit or commercial.36 Individuals or organisations (such as local newspapers) would be able to supplement coverage on their own websites with BBC content. · Purchasing local video news: the BBC would make available an annual fund of up to 5% of local content creation costs with which to purchase local video news from other providers on a proper commercial basis. This would help maintain plurality of supply in local video news and give the platform of the BBC’s local websites to the best content from the wider market. · Increase volume of click-throughs: the BBC would link generously to other providers of local news, for example by improving its links on BBC Local sites to local newspapers. Existing links are already generating over one million click-throughs a month to external sites, equivalent to one click-through for every six unique users.37 Plans to make links to sites more meaningful and stronger - for instance,

35 Calculation based on median of citizen value figures. 36 A small minority of content (eg. some sports’ coverage) may be subject to restrictions which prevent embedding; any ‘embedding’ of video to third parties must be in line with the BBC’s Syndication Policy and Guidelines (available at bbc.co.uk). These ensure, for example, that content is properly attributed to the BBC and its display is consistent with the BBC’s editorial standards.. 37 Sage/BBC figures (Dec 2007). Page 10 of 67

BBC Management’s assessment of the public value of its Local Video proposals

by providing a ‘ticker’ of the latest local headlines that links back to the full stories on other sites (where editorially justified) – should also help drive traffic to other local news sites. · Training: the BBC would share its expertise and experience providing advice in training and mentoring in shoot and edit skills, where possible, with local news providers who wish to take up the offer. As relationships develop, so would other opportunities such as work placements. · Editorial: in a number of locations, the BBC has a good track-record of taking part in shared editorial initiatives, such as the shared photographic competition run with the Shropshire Star during the West Midlands trial. The BBC would seek to develop other similar editorial initiatives on the ground. · Community Media: the BBC proposes to build on formal partnership agreements with The Community Channel and the Community Media Association to help improve digital media literacy.

The proposals suggested here would mark a significant advance in the effectiveness and scale of the BBC’s collaboration with third party providers of local news. Combined with the proposed self-imposed limits on the scope of the offer, they would ensure that Local Video plays its part in the development of a vibrant and diverse local news ecology.

Key Performance Indicator · Help double the number of ‘click-throughs’ to third party sites by 2012/3.38

38 Based on SageAnalyst data provided to the BBC. Approx 1m were achieved in England in Dec 07. Page 11 of 67

BBC Management’s assessment of the public value of its Local Video proposals

2 Description of proposals

2.1 A note on definitions

The BBC’s current portfolio of Nations, regional and local content is a complex, integrated set of multimedia services spread throughout the UK. The different components operate at different levels of geographical aggregation. For consistency, the definitions used throughout this document are: · Nations: Scotland, Wales and Northern Ireland. ‘Network’ identifies UK-wide provision · Regions – usually the regions of England and defined (unless otherwise indicated) by the coverage maps of the BBC’s television regions, these tend to cover around 4million people each. · Local – typically covering a county or conurbation of more than 250,000 people (and on average around 1million), equivalent to the BBC’s network of local radio services and BBC Local websites.

2.2 Overview of proposals

Under the BBC Charter and Agreement, all BBC proposals for significant change to existing services or for new services are subject to a Public Value Test (PVT). A PVT is applied by the BBC Trust and involves weighing up the net public value of the proposal against its potential net impact on the market.

This document sets out BBC Management’s application to the BBC Trust for permission to significantly enhance its creation of local news and related video content delivered via internet protocol (IP) (hereafter referred to as ‘Local Video’). The evidence and analysis presented in this document is intended to assist the BBC Trust in its assessment of the public value of the proposals as part of the PVT.

The development of the proposals for Local Video go back several years and have been at the heart of the BBC’s strategic thinking about its local and regional services over that period. This process of development has involved a number of early experiments and trials. These included the BBC’s trial in Hull which delivered local news and information to approximately 7,000 homes, as well as subsequent small- scale trials in Worcester, Wrexham and Liverpool. All demonstrated a strong appetite for more localised content delivered in an on-demand environment, and Hull in particular demonstrated demand for ‘Viewer Videos’.

In order to hone the proposition and to test the content in a live environment, the BBC mounted a nine- month open trial. The West Midlands was selected as a good test-bed, capable of being split into six different areas for six distinct offers – two of these areas were largely rural (Hereford and Worcester, Shropshire), two of them shire counties (Coventry and Warwickshire, Staffordshire), two of them urban (Birmingham, the Black Country). In line with proposals for Local Video, the trial was built around existing local radio broadcast areas and BBC Local sites. Following the West Midlands pilot and the subsequent licence fee settlement, the proposal was scaled back into a broadband only offer.

This Local Video proposal therefore supersedes the BBC’s previous plans for Local TV, first outlined in Building Public Value.39 While the offer will no longer be provided on all the platforms originally intended, many of the learnings on the editorial proposition and the broadband platform are still relevant.

39 Building Public Value, BBC, 2004 Page 12 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Nonetheless, BBC Management has updated and refreshed its research with further audience research on the revised proposal from two different research agencies, BMRB (quantitative) and Opinion Leader Research (deliberative juries).

The editorial focus of the offer is news and sport video made in 60 areas across the UK for delivery via broadband platforms. The Local Video offer would be defined and limited around three areas: content creation, distribution and geography. In brief, the proposals are as follows:

1) On average, up to 10 new local video stories created a day in each local area (adding up to no more than an average of 20 minutes per day) with an additional offer of up to three short daily bulletins for each of news, weather and sport.

The upper limit of 10 video stories will comprise: · A mixture of news and news-related stories (including, for example, politics, social issues, crime and debate). · A greater breadth and depth of local sport coverage than the BBC currently provides · Some ‘viewer videos’: short, well-crafted films made by individuals or groups within the community which the BBC will help produce.40 · A small amount of local content linked to core knowledge-building genres and linear output.

2) The content will be made bespoke for broadband and distributed in two main ways: · On-demand via bbc.co.uk, mainly over broadband but also on internet-enabled mobile devices and possibly in the future on television sets via the internet (IPTV). · ‘Embedded’ in third party websites if consumers or other providers of local news wish to show the BBC content themselves.

3) The geographic scope of the content will be: · Content will be published in 60 hubs across the UK, largely based on cities and counties. In Wales, there will be offers in both the Welsh and English languages, giving a total of 65 separate local offers across the UK.

40 It is estimated that, at present, 100 producer-assisted viewer videos are published on BBC Local sites per week across the UK. It is anticipated that, as a result of this proposal, this number will increase to 300 producer-assisted viewer videos per week across the UK. In addition to this, the bbc.co.uk Service Licence already allows for the BBC to use user-generated content (such as ‘citizen newsgathering’) that fits with the BBC’s overall editorial aims. Page 13 of 67

BBC Management’s assessment of the public value of its Local Video proposals

2.3 Proposals in detail

2.3.1 Content The core of the Local Video proposal is the creation of bespoke local video news, sport and weather content to complement the BBC’s existing local online provision. BBC Management proposal is for, on average, up to 10 new video stories created a day in each local area. This upper limit of 10 stories will be made up from: · a mixture of news and related stories (for example, politics, social issues, crime and debate); · a greater breadth and depth of local sport in video. Minority sports such as ice hockey and speedway have passionate fan bases, currently served by local radio, but receive limited coverage on regional television. Increased coverage of such sports will link with BBC Sport’s online offer. There is also an opportunity to add a greater local texture and perspective to BBC Sport’s offer of major sports like football, rugby and cricket, as well as a specific aim of contributing from a grassroots level to the build-up to the 2012 Olympics and Paralympics across the UK; · some short, well-crafted films made by individuals or groups within the community which the BBC will help produce. The BBC proposes to deploy a ‘community producer’ in each local area to ensure that films are drawn from the widest range of communities and voices and to enable people who are not automatically comfortable with new technology to contribute.

In addition to these news, sport and producer-assisted ‘viewer videos’, the above upper limits will include a small amount of video content linked to core knowledge-building genres and linear output. These include nature & outdoors, heritage & history, arts & culture and faith.

Combined, the stories comprising the above maximum limit would not exceed 20 minutes per day on average. Limits on story numbers and minutage would be average across the year. Such an annual average allows the editorial flexibility required for the BBC to produce more than 20 minutes of content on days when exceptional circumstances apply (eg. at times of national crisis, flooding or national/local elections).

These self-imposed limits are judged to offer sufficient breadth and depth to local audiences in order to ensure the relevance they want from the BBC (see section 5). However, this is considerably fewer stories than are provided on average by local newspapers. In addition, Local Video will not be produced in content areas where BBC Management recognises the public value will be outweighed by the impact on other provider’s commercial revenues, such as commercial listings, cars, dating, jobs, property, holidays and horoscopes.

The news, sport and weather videos described above represent the editorial focus of the proposition. They will be published for viewing on demand throughout the day as soon as each individual story is ready. Up to three news bulletins a day will be made in each local area based on these stories. There will also be the same bulletin offer provided for both sport and weather. At present, high quality weather forecasts and information are a central part of the local BBC online offer. Local video forecasts will add an extra dimension to this service and as technology develops a mix of webcams, graphics and maps will be offered.

This proposal is primarily an on-demand proposal: however, BBC Management is also seeking permission to expand its occasional live streams of key local events to each of the 60 local areas. 41

41 Live streaming would not be included in the 20 minute average daily limit on output in each area. Page 14 of 67

BBC Management’s assessment of the public value of its Local Video proposals

2.3.2 Distribution It is proposed that the main mode of distribution for the content will be over internet-protocol, including broadband through bbc.co.uk and over internet-enabled mobile devices.

Distribution via bbc.co.uk is the basis of the Local Video modelling work (see section 4). The video will be available within the BBC Local websites as well as via numerous other routes, such as BBC News and BBC Sport online. The BBC Local sites already provide multimedia content such as regional news video, UGC42, video linked to linear output, local audio and local text news. Before the launch of Local Video, there will be improvements to the sites including a new map-based user interface, introduced under the existing bbc.co.uk Service Licence (this application does not seek permission for these changes). This improved navigational functionality would pinpoint, on a local map, the location of text, audio and video content.

Video stories would be browsable and selectable and could be adapted, aggregated, tagged, rated and shared in the multiplicity of different ways that the web makes possible. As well as offering video ‘embedded’ in text stories, the video would be offered full-screen on bbc.co.uk.

The majority43 of local video content on bbc.co.uk would be made available to be ‘embedded’ in other websites, whether not-for-profit or commercial. Individuals or organisations (such as local newspapers) would be able to select BBC Local Video made available and put it on their own websites to supplement their own coverage. Embedding would take place on fair, reasonable and non-discriminatory terms and be subject to the BBC’s Syndication Policy and BBC terms & conditions. These would ensure BBC content does not appear in an inappropriate context, such as alongside adult material (see section 9).

We propose to make Local Video accessible via internet-enabled mobile devices on the BBC's dedicated mobile browser service in a form that is optimised for mobile usage. This would include easy access to short daily video bulletins for news, sport and weather on mobile devices and access to local video content where relevant within our ongoing coverage of local stories described above. Where possible we will use location based technology such as GPS to deliver the local video content to mobile devices in a relevant and contextual way to users, based on their current location or previously saved location preferences.

In addition, the BBC has pioneered the use of digital ‘big screens’ to deliver high quality national and local content to urban audiences. Plans to expand the BBC’s big screen activity by the summer of 2008 offers a future platform for Local Video content, as part of a broad-based editorial proposition linked to major national events, sport (e.g. the Olympics), the arts, music (e.g. Proms) and entertainment.

2.3.3 Geography The BBC’s Local Video offer is predominantly based around the areas in England and Northern Ireland that the BBC has been serving with local radio for up to forty years, and in Scotland and Wales, with the BBC Local websites. These geographic areas are where the newsgathering and editorial focus of each operation will lie. They are also the areas which will be offered as the ‘front door’ to users of Local Video content on bbc.co.uk.

BBC Management proposes to employ video journalists to work out of 60 hubs (where Local Video content will be published) across the UK based on this existing infrastructure, as well as providing video journalism training to some staff already working in radio and television services.

42 This content (eg. ‘citizen newsgathering’) fits with the editorial purposes of Local Video and the BBC’s Editorial Guidelines. 43 A small minority of content (eg. some sports’ coverage) may be subject to restrictions which prevent embedding. Page 15 of 67

BBC Management’s assessment of the public value of its Local Video proposals

The map of Local Video offers is largely structured around counties and cities and has an average population of around one million people per area. This level of ‘local’ granularity is smaller than the BBC’s Nations or regions TV services, which have an average population of around four million and larger than the ‘ultra-local’ providers that serve towns and smaller communities. While the Local Video proposal represents a significant investment in local newsgathering, it does not represent the ‘ultra-local’ provision commonly offered by the 1,300 local newspapers and 1,100 local newspaper websites. The BBC has no plans to invest in hubs that are more localised than under the Local Video proposal.

The map of the BBC’s Local Video offer will be as below (see annex 2 for full list of areas).

Figure 1: BBC Local map

Notable exceptions to the broad geographic principles outlined above are in London, in Wales and in three areas which are under-served by the BBC’s local radio and online provision (Cheshire, Buckinghamshire and Surrey). As a result of Local Video, these three counties will get for the first time a bespoke local offer from the BBC.

In Wales, BBC Management proposes to reflect the BBC’s commitment to enhance its support for indigenous languages by providing separate offers in English and in Welsh. In order to serve audience needs and different demographics, it is intended that the proposed limits on the number of stories and their duration described above be applied separately to the English and Welsh offers. This will allow the creation of separate video in English and Welsh using teams that work alongside each other. The Welsh and English language services will not simply be translations of each other. Even when the same stories are covered, they will often receive different treatment. This is likely to be particularly marked in rural affairs, culture, faith, education, business, the arts and language.

The proposed Local Video offer for London is a special case, given London’s large and diverse population. Currently a potential audience of over 10.5 million people representing 22.2% of the Page 16 of 67

BBC Management’s assessment of the public value of its Local Video proposals population of England is served by one BBC regional television service, BBC London News.44 It is also of note that audience approval for the BBC Local site for London is low. BBC Management proposes to improve this provision by investing twice the amount in London than that planned for each other offer – still a comparatively low investment per capita. This will result in a higher volume of stories for London than elsewhere, capable of reflecting the rich and diverse social and cultural nature of the UK’s largest city. BBC Management therefore seeks permission for the limit on the average number of new video stories created each day in the London area to be doubled to 20, adding up to no more than 40 minutes per day on average.

44 BARB/TRP, February 2008 Page 17 of 67

BBC Management’s assessment of the public value of its Local Video proposals

3 Fit with BBC Purposes and Strategy

This section considers the extent to which Local Video will strengthen the BBC’s ability to deliver its public purposes and how it is aligned with the BBC’s strategy.

3.1 BBC’s role in serving local communities

The BBC aims not only to enrich the lives of those who pay the licence fee by entertaining, informing and educating, but also to deliver value to society as a whole. The six public purposes, enshrined in the BBC’s current Charter and Agreement (in force since January 2007), are shown below.

Figure 2: BBC public purposes

The Local Video proposal will contribute to the delivery of all of the BBC’s public purposes. However, the genesis of Local Video results from an analysis of audience demand and behaviour around two purposes in particular: · representing the UK, its nations, regions and communities. Specifically, to provide news and information that meets the needs of local communities across the UK. · sustaining citizenship and civil society. Specifically, to build a greater understanding of how the UK is governed at a local level and facilitate engagement in the democratic process.

The BBC’s Nations and regional television news services, local radio stations and BBC Local online sites (formerly Where I Live) provide audiences across the UK with a news service that is comprehensive and valued. Ofcom research into public attitudes demonstrated that audiences continue to attach a high value to news for the nations and regions 45 and around 50% of consumers say they are personally interested in events in ‘my region/nation’ or ‘events where I live’.46 In particular, licence fee payers see the provision of Nations and regions output as an important part of the BBC’s remit.47

45 78% of respondents ranked its importance as 7-10 out of 10, Ofcom PSB Tracker, 2007. Regional news was ranked the 6th (out of 17) most important programme types for society, Ofcom PSB Review survey, Oct-Dec 2007. 46 Ofcom, New News, Future News, July 2007, p24 47 Survey of 4,500 licence fee payers. BBC Trust Purpose Remit Survey (BMRB, Feb 07), base: all adults 15+

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BBC Management’s assessment of the public value of its Local Video proposals

However, the effective fulfilment of the BBC’s purposes is under pressure in a fast-changing media environment. Two fundamental changes are affecting audience attitudes towards traditional television news. These are: · an increased interest in ‘local’ · the long-term shift from linear to on-demand news consumption

As a result, the BBC must modernise its portfolio of Nations and regional news services. This will involve a shift in resources towards editorial propositions and platforms that will supplement the BBC’s traditional news outlets and enhance overall public value. While television is still the main source of national and regional news for most people, especially older viewers,48 there is real potential to develop local online offers which meet the needs of citizens in new ways. Ofcom’s latest research found that 40% of participants with broadband agreed (28% disagreed) that websites are a better way of finding out local information than the main TV channels49. The strategic rationale of Local Video is to help sustain the reach and impact of the BBC’s local news provision and safeguard the delivery of the citizenship and communities purposes throughout the current Charter period. The idea formed part of the BBC’s high level Six Year Plan, approved by the BBC Trust in October 2007.

The strength of the Local Video proposal is based on combination of three elements: · it involves the development of a new tier of video newsgathering across the UK. Local Video represents an appropriate response to audiences’ desire for a greater depth and breadth of local news coverage. Strengthening the base of the BBC’s newsgathering pyramid also has the potential to enrich the provision of UK-wide news as well as nations and regions linear outlets. · the content will be made available on ‘future-proofed’ platforms that meet the growing audience expectation for on-demand access, convenience and participation. New platforms present an opportunity to connect with all audiences, but particularly those who are harder to reach such as younger viewers. · the addition of audiovisual reporting to other media (e.g. text and graphics) to achieve a richer, innovative news environment. Multimedia platforms allow great flexibility of format; news items can be designed in as much depth as desired with links to other BBC news and sport content and to third party websites.

Local Video is part of a wider BBC Journalism strategy to strengthen on-demand journalism and engage audiences with high quality and distinctive content, when they want it, how they want it. Local Video will complement the BBC's related plans to enhance the multi-media provision of UK-wide and international news as well as sport, in order to maintain reach and audience impact in the long-term.

It also reflects the BBC’s commitment to improve cultural representation of the whole UK through its service portfolio and increase economic investment in Nations and English regions. Local Video is aligned with other major BBC initiatives including the move to Salford and the planned growth in the supply of network television from the Nations.

3.2 The importance of Local

A variety of research projects over the last few years have been carried out into the relationship between audiences and local / regional identity. These all confirm that there is an increased interest in local news and information in all sections of society and across all parts of the UK. People are increasingly interested in their own area, and they perceive that area increasingly to be local rather than

48 Ofcom PSB Review survey, base: UK adults aged 16+, Oct-Dec 2007, 49 PSB review survey, Oct-Dec 2007. The figure was 27% for all participants (25% disagreed; 25% don’t know); the corresponding figure in 2003 was only 4%. Page 19 of 67

BBC Management’s assessment of the public value of its Local Video proposals regional. The most significant of these research projects was Redefining Regions, a report produced by the Future Foundation in 2004 for the BBC, the Newspaper Society and others.

The report concluded that ‘local’ is important to many people in today’s increasingly complex world. Most people live the majority of their lives within a 14 mile radius and their primary concerns are focused there50. Across virtually all age groups interest in locality and the area that surrounds them has increased significantly over the last two decades, although this change has been most marked among those under the age of 45.

Figure 3: % who agree that what interests them above all are things that happen in the city or town where they live

1983 2000

70% 60% 50% 40% 30% 20% 10% 0% TotalMenWomen16-2425-3435-4445-5455-6465+

Source: Redefining Regions. The Future Foundation (September 2004)

Government research has found that people feel strongly about the places they live and work in and increasingly so, with 75% now feeling that they belong strongly to their neighbourhood, up from 71% in 2003.51 In fact, local needs remain one of the driving forces for new technologies, and broadband use in particular: according to one study, 63% of US Internet users performed a local search online in July 2006, a 43% increase on the previous year. 52

There is no simple, single reason to explain these trends, and indeed it may be perceived to be counter to similarly strong trends towards globalisation. However, it has been claimed that increased interest in the ‘local’ is in fact a direct result of increased globalisation. Commentators have argued that the uncertainty engendered by globalisation drives people to value their local networks of family, friends and colleagues even more highly.

There has also been a strong political shift toward ‘localism’. ‘New Localism’ – as it has been termed – can be characterised as a strategy aimed at devolving power and resources away from central control and towards front-line managers, local democratic structures and local consumers and communities. The embracing of this philosophy by all mainstream UK parties in recent years indicates this agenda is likely to be embedded in policy-making over the next decade. Media coverage of and engagement with local democracy, as well as the scrutiny of the devolved institutions, is therefore likely to become increasingly important.

Research also shows that it is not just that audiences attach an increased value to ‘local’, but that they also tend to identify with their local area rather than their region. The primary issue is that most people

50 Future Foundation (2004) 51 Citizenship Survey statistical release, Department for Communities and Local Government, 2008 52 Local Search Continues to Gain Momentum, Comscore, 2006 Page 20 of 67

BBC Management’s assessment of the public value of its Local Video proposals

find it hard to define what their region actually is. In focus group discussion53, most people express some difficulty in describing their region and its boundaries (this is not helped by confusing regional TV reception in many areas).54 Sometimes they think in terms of administrative boundaries. At times, people’s sense of region might equate roughly to a particular city or to a particular county, or they might think in terms of a broader area such as ‘the South West’ or ‘the North’. Regional attachments, while present, tend to be relatively weak (strongest in the south west and the north east of England), and people tend to identify most strongly with their neighbourhood, town and city, particularly in England.

Both the BBC’s and ITV’s regional TV structures are, to some extent, historical accidents, rooted in what was possible at the start of analogue television transmission. Ofcom research into Nations, regions and local broadcasting - as part of during the first Public Service Television Review (PSTR) – found evidence that viewers think regional news is not sufficiently local, particularly those who live on the fringes of the TV regions55. Ofcom concludes: ‘whatever the specific distances involved, it is clear that the English TV regions as currently defined are far too large to map onto the geographical units that people feel most attached to and interested in. Meridian, for example, stretches from Weymouth to Essex and covers a population twice that of the whole of Denmark’.56

BBC research around the 18:30 Nations and regional news programmes is consistent with these findings. Audiences are clear what international news, national news, and local news are and what they cover. However, the definition is hazier for regional news: it can be a media construct (regional TV or regional papers), a historic connection (i.e. West Country) or a county / region. ‘Regional’ is really only salient when it deals with ‘my’ local area57.

3.3 The shift from linear to on-demand news

A second major shift - in audience behaviour and technology - is also affecting the consumption of traditional linear news. The digital age has seen an enormous proliferation in the volume and range of news suppliers. The internet is the fastest growing platform for news and other information. There is a trend towards 'news promiscuity', with many consumers increasingly using online as well traditional sources of news.

‘Convenience’ is becoming a key driver for news usage. In the analogue world, the audience had to make an appointment to view the news at the right time and place. In the digital world, audiences increasingly want to shape their own news consumption in line with their lifestyle. The consumption of BBC online local news tends to remain, on average, fairly constant from 9am to 7pm, with a peak during lunchtime. In addition, many news consumers want content they can ‘personalise’ with opportunities for interaction. There is now a much greater desire from audiences to join in a dialogue with news providers and provide user-generated content to enrich broadcasters’ output around stories that interest them. A closer dialogue helps to deepen relationships with audiences: it gives them a place in the news, and in doing so, injects a new relevance to output and broadens the range of views and experiences available.

BBC research has identified three core groups of news consumers58: · Traditionalists: they consume linear news programmes and bulletins on TV and on their favourite radio station. They don’t access 24/7 services, such as BBC News Channel or the BBC news website.

53 Future Foundation (2004) 54 See, for example, OLR (2008) 55 Reshaping television for the UK’s Nations, regions and localities, Ofcom, 2004 56 The BBC’s East region, for instance, is similarly extensive, stretching from Norwich to Luton and covering a population of 5.5 million people. 57 Exploring audience perceptions of BBC regional news, TRBI, 2004 58 Creative Future , BBC (2006) Page 21 of 67

BBC Management’s assessment of the public value of its Local Video proposals

· Mix & Matchers: they too watch and listen to the main news programmes but they also access the continuous news channels and the BBC’s internet offer. · Clickers & Flickers: Generally these people are younger but they can be ‘silver surfers’ too. They use the web, TV news channels and mobile devices for their news.

Today, the biggest groups are the ‘traditionalists’ and ‘mix & matchers’. However, the increasing penetration of new technologies and changing audience behaviour, particularly on the big news stories, means that the balance is shifting. Over the next five years or so, it will be the ‘mix & matchers’ and the ‘clickers & flickers’ who are likely to become the dominant groups. While linear news bulletins will continue to play an important role in the BBC’s delivery of news, new technologies will meet the desire of many news consumers for greater convenience, personalisation and participation.

Internet news is currently used mainly for text and pictures far more than for moving images. However, there is strong evidence to suggest that consumption patterns are changing rapidly as video becomes increasingly common online and delivery mechanisms improve. A recent study of video streaming in the UK showed that 80% of the online population initiated a video stream in April 2007 and the average user initiated 80 streams in the month. In the UK, streamers allocated 10% of their total time online to viewing video.59

Research from the US has shown that 37% of adult internet users have watched online video news; 10% in the last day. 60 Overall, news was found to be the most popular category of online video.61 Nearly a quarter of Americans surveyed report they have seen some type of video online (e.g. interview, speech or commercial) as part of the US presidential campaign. Among younger respondents, the numbers are even higher: 41% of those under aged under 30 have viewed at least one such type of video.62

Initial data suggests that the introduction of ‘embedded’ video on the BBC’s news and sport websites has significantly increased the ‘conversion rate’ from text stories. Local Video audience research revealed strong interest in new platforms such as the internet and mobile for delivering news and information about local communities63.

These changing audience dynamics pose challenges for the BBC’s Nations and regional TV news and for the BBC (and ITV) flagship early evening news programmes in particular. According to research64, early evening is increasingly a hectic time in most households with few opportunities to sit down and concentrate on TV (or any media). Many are still commuting or working at this time – for instance, the distance of the average commute has risen by 16 per cent over the past 10 years65. As a result, watching the BBC’s Nations/ regional news flagship programme at 18:30 is becoming less convenient.

3.4 BBC’s Purpose performance

The trends outlined above are already impacting on the BBC’s ability to fulfil its BBC’s public purposes. Recent research by the BBC Trust shows that the priority to provide a range of output that meets the needs of local communities is an area where the BBC must improve its performance 66. The ‘gap’ between the importance attached to the BBC’s community role and audiences’ view of current performance is

59 Base: age 15 or older who have accessed the internet from either a home or work computer, ComScore, June 2007 60 Pew Internet & American Life Project, Feb-Mar 2007 61 Pew; Online Publishers Association study, 2007 62 Pew Centre Research, Jan 2008 63 OLR (2008) 64 Early Evening Audiences, SPA, 2004; Look East Research Findings, thinkvivid, 2005 65 Centre for Transport and Society, University of the West of England, Bristol, 2006 66 Purpose Remit Survey, BBC Trust (2007) Page 22 of 67

BBC Management’s assessment of the public value of its Local Video proposals among the largest for any of the BBC’s public purposes. The perception of under-performance is common to all age and socio-economic groups. In relative terms, older audiences tend to regard the BBC’s performance as most effective. This is the audience that is best served by the BBC’s nations and regional/local radio and TV news. The purpose gaps exist across all four nations, with audiences in Scotland and Northern Ireland among those seeing greatest room for improvement. 67

Figure 4: Performance ‘gaps’ in relation to BBC’s community role Importance Performance Gap Priority Statement 53% 32% -21 the BBC helps you feel more involved in your local community 64% 50% -14 the BBC caters for your area and your community Source: BBC Trust

It is also of note that Ofcom’s latest research identifies a significant ‘satisfaction gap’ among audiences with respect to the delivery of regional news programmes by public service broadcasters (-25%).68

Left unchecked, there is every reason to believe that the BBC’s ability to meet audience expectations is likely to diminish further. The primary aim of the BBC Local Video proposal is to help address these performance ‘gaps’. Its ability to do so was confirmed by deliberative juries. Participants believed that, above all, the proposal most strongly supported the local communities’ purpose. Local Video was found to support communities in a number of powerful ways, such as through its more ‘local’ style and the involvement of more story-telling from the people in the community.69

In addition, the proposal will ‘future-proof’ the delivery of the BBC’s citizenship purpose at the local level. The comprehensive and in-depth coverage of local politics will feature prominently in the new tier of video newsgathering. In each area across the UK, the BBC will present a range of local opinion on community issues; analysis and explanation of key issues; interviews with political representatives and other public figures; and coverage of all UK and local election campaigns and local political institutions. Relevant video stories will link, where appropriate, to the websites of local government institutions, including to the live streaming of key proceedings. Overall, the enhanced online coverage of local politics will support the BBC's wider 'digital democracy' plans, that are designed to build greater understanding of the political process from Westminster and national Parliaments and Assemblies to local government institutions.

Deliberative Jury participants believed the proposal would contribute to sustaining citizenship and civil society. In particular, the ‘digital democracy’ function of BBC Local Video was seen to help ensure that local politicians and decision makers could be held to account. It was also believed that the proposal would encourage people to take a more active part in local politics (see Section 6.3 for more details on Local Video proposals for local democracy).

Local Video will be of key strategic importance in the three Nations, as it will deliver a new level of granularity to the BBC’s current TV and radio offer in Wales, Scotland and Northern Ireland. Audience demand for local services is strong and the BBC has hitherto not responded effectively to this demand.

67 Survey of 4,500 licence fee payers. BBC Trust Purpose Remit Survey (BRMB, Febr ’07), base: all adults 15+ 68 Ofcom PSB Tracker, 2007 69 OLR (2008) Page 23 of 67

BBC Management’s assessment of the public value of its Local Video proposals

In Wales, the proposal to offer 10 services, five in Welsh and five in English, will be a major contribution to the strength and variety of media provision across the country. Unlike England, Wales has no BBC local radio network. Radio provision is based on the all-Wales Radio Wales and Radio Cymru services (with the exception of a South-West Wales opt-out on Radio Cymru). The growth of the BBC Local sites in Wales shows the strong demand for local content in both Welsh and English. There is a public service need to meet the information requirements of people not currently served by print or other media. Only 14% of the Welsh population take a local daily morning paper; 21% take local evening papers and 7% paid-for local weeklies. The comparative weakness of the press in Wales was described as an ‘information deficit’ in the Electoral Commission’s 2006 report on Assembly election participation.70

The provision of Local Video in the Welsh language will be an important contributor to the future health of the language and will spread the benefits of the BBC’s investment in Welsh across the whole nation. Investment in Welsh language BBC Local Video will meet the record surge in Welsh speakers. The 2001 census figures show that 39% of children between 10-15 years of age in Wales could read, write or speak Welsh – a much higher proportion than among adults (20%).

In Scotland, research suggests people identify most closely with their local area – more closely than with Scotland, more closely than with the UK. Scotland itself has been defined as a ’nation of regions’. This offer will build on the Scotland BBC Local sites and on the current local radio provision which delivers regular news bulletins in Dumfries, the Borders, Highlands & Islands and the North East as well as two community services in Orkney and Shetland. Despite these services the BBC in Scotland scores poorly on measures of local connection. The audience in Scotland have confirmed repeatedly that they are interested in more Local News from the BBC. They seek the BBC values of quality and impartiality, applied to local stories and issues: 81% of the Scottish audience would be interested in 5-10 minutes of local information about their area within the News.71

In Northern Ireland, where BBC Local websites are in development, there is less of a difference in scale between the current pan-Nation service and the proposed two local services. However, Northern Ireland has the highest proportion of rural population in the UK and the proposed split would allow better coverage of rural and urban communities and enable more audience value to be released from existing content gathering resources in BBC Radio Foyle and BBC Northern Ireland's network of district journalists. The Belfast and East service would give the opportunity to reflect the diversity of life within the city, treating it as a number of distinct ‘local’ districts, each with their own unique sense of place, history and individual news priorities.

The BBC’s other public purposes will also be supported, though to a lesser extent, by the new Local Video offer. Audience identified the potential of the proposal in the following areas:72 · The producer-assisted ‘viewer videos’ component is seen as delivering cultural and creativity value by supporting those wanting to make their own films about the community and ensuring a breadth of content to allow the celebration of diversity within local communities. · BBC Local Video was judged to contribute to education and learning in the narrow sense of improving people's understanding and awareness of their local area. While the proposal was not perceived to contribute to this purpose in the broader sense as an educational resource, some participants saw educational value in encouraging children and young people to make their own videos. · Help audiences experiment creatively with digital media tools and gain a better understanding of how media content is made; the proposal will contribute to the BBC’s media literacy remit and help deliver the benefits of new communications technologies.

70 Beaufort Research (November 2007) 71 BBC Scotland Journalism Review (2003) 72 OLR (2008) Page 24 of 67

BBC Management’s assessment of the public value of its Local Video proposals

A further assessment of how the proposed offer might contribute to the BBC’s public purposes came from Roger Laughton’s independent review of the West Midlands trial73. Commissioned by BBC Management, Professor Laughton’s report concluded that ‘‘on the evidence of the pilot, there is no reason to doubt that local television can be mapped onto all six [purposes] – particularly the first, fourth and sixth [citizenship, communities and digital Britain]…’’.

3.5 Reach of BBC Nations and regional TV news

Audience figures for the BBC’s Nations/regional news programmes at 18.30 show it to be the most watched news slot on UK television. However, this relative success masks a real decline in recent years. The overall reach of the BBC’s regional news is falling at the same time as the audience is getting older.

Average audiences to the 18:30 bulletin are down from over 6 million in 2001 to 5.2 million in 2007. In quarter 4 2001, average three-minute weekly reach to the 18:30 news programme was 19.6 million viewers. In quarter 4 2007, this figure had fallen to 16.2 million – a decline of 17%. In six years, the programme has lost over 3 million viewers.74

Figure 5: Three-minute reach of 18:30 bulletin, 2001 – 2007 (millions of viewers)

25.0 19.6 20.0 16.2

15.0

10.0

5.0

0.0

1 2 3 6 7 0 0 03 0 04 0 06 0 07 0 0 0 0 0 0 0 0 2 2 2 2 2004 2 2 2 2 3 Q12001 Q320 Q12002 Q3 Q1 Q3 Q1 Q Q12005 Q32005 Q1 Q3 Q1 Q3

Source: BARB

The decline in reach to the 18:30 news bulletins has been more severe than for BBC1 as a whole.

Figure 6: Year-on-year reach change, BBC One and 18:30 News

0% 2004200520062007 -2% -1% -2%-2% -2% 0%-1% -4% All BBC1 -4% -6% 18:30 News -8% -8% -10%

73 Laughton (2006) 74 BBC analysis of BARB figures. Page 25 of 67

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Source: BARB The decline in the 18:30 bulletin audiences is particularly stark for younger viewers. The average number of 16-34 viewers to these bulletins has decreased by 43% between 2001 and 2007 (-319,000). In contrast, the average number of viewers aged 55+ has remained constant over the same period. The decline demonstrated by average audiences is also noticeable in reach figures: over 1.5 million fewer viewers in the under-35 age group in quarter 4 2007 compared with quarter 4 2001.75

Figure 7: Change in 18:30 News reach to those under the age of 35

4.5 3.8 4.0 3.5 3.0 2.5 2.2 2.0 1.5 1.0 0.5 0.0

1 2 2 3 4 5 6 0 01 0 0 0 0 0 06 0 07 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 1 3 120 3 3 3 3 1 1 Q Q Q Q Q12003 Q Q12004 Q Q12005 Q Q Q320 Q Q32007 16-34s

Source: BARB

As a result, the audience to Nations and regional news is disproportionately elderly and getting older. Around 65% of the average audience to the 18:30 news bulletin is aged over 55, while 51.4% of weekly reach is over 55. The older profile for average audiences indicates that the over 55s are tuning in for longer than younger audiences. The audience for the 18:30 bulletin is now older than BBC Local Radio, which deliberately targets an older demographic. The average age of the audience is now 56, from 53 a few years ago.76

75 BARB. 76 BBC analysis of BARB figures. Page 26 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Figure 8: Age profile of the 18:30 Nations / Regional News

100%

28 32 80% Adults 65+ Adults 55-64 60% 16 20 Adults 45-54

15 Adults 35-44 40% 16 Adults 25-34 13 Adults 16-24 20% 13 12 8 7 5 0% 2001Q4 2007

Source: BARB If the current trends continue, it is anticipated that reach to the BBC’s 18:30 news could fall by a further two or three million by the end of 2012, and that a generation of younger viewers could be lost.

Figure 9: Forecast audience reach to 2012 (millions)

24 22 20 18 Forecast 16 14 12 10 8 6 4 2 0

02 03 04 05 06 001 009 010 011 012 2 20 20 20 20 20 2007 2008 2 2 2 2

Source: BBC analysis of BARB figures

3.6 Market context

In terms of the wider market context, ITV plc has put forward plans to provide most regions with peak- time sub-regional or local ‘opt-outs’ – news summaries targeted at specific areas which are included within regional news programmes. It sees this re-structure as necessary to make regional news sustainable in the short and medium-term, given the difficult economic pressures. There is also increasing online activity at the local level: from the nations and regions press; the ITV Local online service (and equivalent activity from non-ITV plc licensees in Scotland, Northern Ireland and the Channel Islands); and

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BBC Management’s assessment of the public value of its Local Video proposals sites funded by local authorities or community groups, such as Kent TV. The independent preliminary assessment of the market impact of BBC Local Video proposals (Human Capital, 2008) identified the following key market developments in the absence of the BBC’s proposals: · Local print newspapers will continue to decline in circulation, with consequent impact on revenues, and further market consolidation will occur; new entrants will continue to attack their lucrative classified advertising business (e.g. specialist online classifieds firms) · Local radio will similarly face increasing competitive pressure, and the challenge of responding to changing consumer demands · Local TV faces uncertain prospects, especially as spectrum availability is in question, and stations may only succeed commercially in the main metropolitan markets · New local cross-media services (taking advantage of print, broadband and possibly broadcast), may emerge, backed by the main newspaper publishers or other media and internet groups – they will offer an increasing amount of local audiovisual content and news, financed by advertising and other commercial income (e.g. transactions). Other possible models for new entrants might include online aggregators of local journalism · Alongside the above, we may see innovative and creative start up ventures, using lower cost broadband distribution platforms to provide new community-based local services, with significant use of UGC and social networking · Overall, market prospects and viability of business models are currently uncertain, and we may see the emergence of a patchwork of local services – with some (mainly urban) markets well served, but others with less provision.

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BBC Management’s assessment of the public value of its Local Video proposals

4 Reach

4.1 Reach of Local Video

Methodology Modelling for the BBC has forecast reach for the Local Video proposal from launch in 2009/10 to 2013/14. This five year period encompasses the first year (2013/14) in which spending will be unchanged from the year before and is likely to be more predictable than the longer term. The reach model is based on the broadband penetration of the BBC’s local online content and forecasting reach of Local Video content within this universe. In addition, Local Video is expected to increase the frequency of use of occasional users and attract new users to BBC local online content.

The model has used third party forecasts for UK broadband adoption. In particular, it uses for the base case Enders forecasts77, which are more conservative than those from Screen Digest. These UK-wide forecasts are broken down into forecasts for the 60 local news areas. Figures for broadband penetration are not available at this level of geographic granularity, so the model includes bespoke forecasts based on national and regional forecasts for population and households, and Ofcom reports78 for broadband penetration by region.

To project reach of Local Video, as a first step, the model forecasts the number of users of existing BBC local online content over time and then estimated the portion of these that will ‘convert’ to video usage. The results of this methodology (outlined in more detail below) were then cross checked against alternate methodologies and other proxies. In recent years, BBC local online content has had an average weekly reach of 16% of broadband households79 in England80 (based on analysis of server logs)81 with relatively little variance around this mean. To project forward as a baseline, the model assumes that reach of these sites will continue to be 16% of forecast broadband households, in England and the Nations.

77 Enders Analysis, UK Residential Broadband Market, October 2007 78 Ofcom, Communications Market Report – Nations and Regions, May 2007 79 Note that we have assumed all usage is in broadband households. This will be a slight overstatement. However, 81% of internet households had broadband in mid-2007 (Enders), and broadband households have five times the usage of narrowband households, so 95% of residential internet hours are from broadband homes (and this will rise). Thus the overstatement is not material. 80 Data was not available for a UK-wide analysis. However, given greater regional affinity amongst those living in the Nations, using England as a proxy is a conservative assumption 81 Server logs provide data on unique users, and the link between this metric and using households is complex. Firstly, a UU is not the same as a single PC, for a variety of technical reasons related primarily to the clearing of cookies. Based on Comscore figures (Impact Of Cookie Deletion: An Empirical Comscore Study, June 07) we estimated 1.64 weekly UUs per using PC. Secondly, there is an indirect link between PCs and using households – if multiple PCs in the home access a site or if an individual accesses from both home and work, PCs will be higher than using households. We have adjusted for these factors primarily based on NNR figures. Page 29 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Figure 10: % weekly reach of BBC local online content in England broadband households

25%

20%

15%

10%

5%

0%

Jul 2007 Jul Jul 2006 Jul

Jan 2007 Jan Mar 2007 Mar Mar 2006 Mar Sep 2007 Sep 2007 Nov Sep 2006 Sep 2006 Nov May 2007 May May 2006 May Source: Human Capital analysis of BBC data

Historically BBC local site users have looked at 17.5 pages with local content per household per week. The new Local Video will be embedded in such pages. Based on a recent trial of embedded video on bbc.co.uk, 14% of visitors to a page of this type viewed the video content.

At maturity for the new proposition, it is estimated that the proportion of BBC local online content with video embedded will be 50% of all pages82. Thus by 2013/14, of the 17.5 pages viewed, 8.8 will have video, and the probability of the visitor viewing at least one such clip is 72%.

In addition to these existing users, the new Local Video offer is expected to increase the frequency of usage of current occasional users and appeal to broadband internet households who do not use BBC local online content. The model does not seek to disaggregate this uplift between occasional local online users increasing their frequency and the acquisition of completely new users. However, a simple analysis83 suggests that if the impact of video was to double the frequency of visits of occasional users, then this could provide 30 percentage points of the assumed 50% uplift in weekly reach.

In terms of attracting new users, Human Capital analysis of BMRB 2008 research suggests that Local Video will deliver incremental reach to BBC local online content. 69% of those who said they would definitely use Local Video (9% of total sample84) do not currently use BBC local online content. In contrast, only 31% (4% of total sample) of those who said they would definitely use Local Video are existing users of BBC local stories. That is to say that the data implies it is more than twice as likely that a user of Local Video will be new to BBC local online content.

Certainly the nature of the new offering is such that it will benefit appreciably from cross-promotion by the BBC broadcast services, which should drive usage beyond those who stumble across the video on the BBC local online content. Nonetheless this research is likely to overestimate (unavoidably) the proportion of video users who would be incremental to users of BBC local online content. Firstly, the research makes all respondents aware of Local Video, but in practice awareness is likely to be lower. Many potential users of Local Video would be unaware of it unless they had visited the BBC local online

82 Weighted by page views 83 Based on a ratio of 1.9:1, monthly to weekly reach for BBC local online content. Against a crude assumption that users divide into those visiting every week, and those visiting every month, this implies a 37%/63% mix of these two user types. Converting the monthly visitors into fortnightly visitors essentially doubles their contribution to weekly reach, for an overall increase of 30% 84 Raw respondent answers have been adjusted to remove those who said they would use Local Video but did not have access to broadband Page 30 of 67

BBC Management’s assessment of the public value of its Local Video proposals content. Secondly, users of BBC local online content are likely to under-estimate their propensity to use Local Video as the video content will be easy to use and incorporated into pages they are already visiting.

Thus in estimating the amount of additional usage of the video service beyond those who were already within the weekly reach of BBC local online content, the model conservatively assumes a 50% uplift. Since 72% of existing local online content users are assumed to become local video users, this implies a 50% x 72% = 36% increase in local online content usage as a result of the introduction of Local Video.

The model has basic mechanisms to assess the positive impacts of mobile usage and increased acclimatisation with online video, and the negative impact on BBC reach due to increased competition. There is evidence that the availability of Local Video via mobile devices is likely to materially increase reach over time. Reach to BBC news content (primarily text-based) on mobile increased by around 50% to 1.8 million unique users per month in 2007. Over 50% of the audience is under 35 85. A proportion of mobile usage is also likely to be incremental: around 30% of BBC's current mobile users do not also use bbc.co.uk. However, the lack of strong empirical data (e.g. on news video use via mobiles) makes it difficult to estimate these effects quantitatively. Therefore in the base case all these impacts are set to zero, effectively assuming that in aggregate their net effect is nil.

Results By 2013/14, the BBC Local Video proposition is projected to reach 11.4% of all UK households (3.2m households or 4.9m individuals86). This forecast is, of course, dependent on the assumptions described above. For instance, if the 50% uplift assumption for new (or more frequent) local site users were increased to 70%, the reach of the local video offer would rise to 13.0%. See the sensitivities section below for a more detailed discussion of results of changes to assumptions.

Figure 11: Illustration of Modelling Methodology

50% uplift for new users brought to online content by video

4 17.5 page views per 100 67 11 7 week per HH 50% of pages Households This proportion having based on embedded video 14% of page views with video converting Using BBC Local AllUsing Using video broadband online content [11% HH (has averaged reach (Enders 16% of BB HH) 17% BB HH forecast) reach] Source: Human Capital The Local Video reach of 11.4% is approximately 80% of all households who are projected to be reached by BBC local online content. It represents reach of 17.2% within broadband homes. This projection for BBC Local Video alone is greater than the current reach of the BBC Local multimedia offer in its entirety by over 1 million households.87

85 Source: M:Metrics 86 Individuals figure is an approximation based on assumption of 1.5 individuals per household. 87 Reach for BBC local online content for year end Mar 2007 was estimated to be 2.06m households compared to projected reach of BBC Local Video of 3.2m by 2013. Page 31 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Figure 12: Base Case Weekly Reach of overall BBC local online content and of BBC Local Video

16%

14%

12% New users brought to local online content by Local Video 10% Reach of BBC Local Video Offer 8% Existing local online content users converted to using video

%of UK HH 6%

4%

2% Existing local online content users not using video 0% 20072008200920102011201220132014

Source: Human Capital

The Ofcom forecast for local television88 provides a cross-check. Ofcom assumed a 10% reach in broadband households for local online video services from independent providers. This is obviously lower than the 17% broadband household reach for the BBC offer, but the providers being modelled by Ofcom did not have the existing traffic base or the brand strength of the BBC.

The forecast can also be cross-check against the BMRB 2008 research, in which 13% of individuals said they would use Local Video. Since in general household reach for a service is higher than individual reach, this suggests that the forecast household reach of around 11% looks conservative relative to the 13% figure.

To estimate reach for the 60 local areas, the UK average reach figures were then adjusted based on the propensity of individual areas to consume local video. For instance, the proposition is likely to be more attractive in rural areas89 and areas outside England (where people tend to have a higher attachment to their locality) and in smaller areas (where, effectively, the proposition will be more targeted). In such areas the base reach was increased – in areas at the opposite end of these scales, base reach was decreased. However, these upshifts and downshifts were calibrated to keep UK average reach unchanged. The percentage reach at maturity for each local area ranges between 3% and 21%.

88 Ofcom, Digital Local 2006 89 See Human Capital, pMIA (2008) for a discussion of how areas have been classified. Page 32 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Figure 13: Base Case Percentage Weekly Reach by Local Video area

25%

20%

15%

10%

5%

0% Kent Tees Wear Derby Leeds Essex Bristol Devon Surrey Jersey Dorset Suffolk Norfolk London Sussex Cumbria Bradford Cornwall Wiltshire Cheshire Berkshire Somerset Guernsey Hampshire Shropshire Lancashire Isle of Man of Isle Manchester Oxfordshire Birmingham Lincolnshire Humberside Staffordshire Northampton Herts + Beds + Herts Warwickshire Black Country Black Leicestershire North Yorkshire North Foyle and West and Foyle Gloucestershire Cambridgeshire South Yorkshire South Nottinghamshire Belfast and East and Belfast Newcastle / Tyne / Newcastle Buckinghamshire South of Scotland of South Glasgow and West and Glasgow Mid-Wales - Welsh - Mid-Wales Edinburgh and East and Edinburgh Tayside and Central and Tayside Mid-Wales - English - Mid-Wales Liverpool / Merseyside / Liverpool Highlands and Islands and Highlands Hereford and Worcester and Hereford North East Wales - Welsh - Wales East North North West Wales - Welsh - Wales West North North East Wales - English - Wales East North South West Wales - Welsh - Wales West South North West Wales - English - Wales West North South West Wales - English - Wales West South North East and Northern Isles Northern and East North Cardiff and South East - Welsh - East South and Cardiff Cardiff and South East - English - East South and Cardiff

Source: Human Capital

In spite of the relatively strong reach for the proposal, volumes of viewing are likely to be low, given the nature of the offer which is focused on bite-sized, high-impact content. At a point of maturity, weekly viewing of online local video is projected to be around 200,000 household hours, representing 0.05% of total BBC viewing hours and 0.012% of total weekly viewing hours.

Sensitivity analysis In developing the above forecasts the model includes a number of judgements and assumptions. In order to quantify the effect of changes to these input assumptions on the model’s outputs, a sensitivity analysis was run. The results are below. The size of the bars provide the magnitude of the change in forecast reach as a consequence of making the high- and low-case assumptions shown on the left.

Figure 14: Sensitivity analysis of base case weekly reach forecast

Change to reached households Low Base High -20%-10%0%10%20%

14% Conversion rate for video 10% 20% -16.5%19.1% Uplift from non-users of Low BBC local online content 30% 50% 70% -13.3%13.3% High BBC local online content 14% 16% 18% -12.3%12.8% reach in BB HH Portion of pages with video 40% 50% 60% -11.3%8.7%

2013/14 broadband 60% 67% 75% penetration -10.2%13.1%

Local newspaper effect -10% 0% - -10.0%

Uplift from mobile usage - 0% 10% 10.0%

5.46.88.2 Value yield Source: Human Capital

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BBC Management’s assessment of the public value of its Local Video proposals

A key point to note is that none of these assumptions are on a ‘hair trigger’, in the sense that changing these inputs does not result in a dramatic change to the outputs. Flexing them each as above in no case reduces the value yield below 5.5, suggesting that the case for the offer is relatively robust (see section 8).

Within this context the model is relatively more sensitive to changes in the ‘conversion rate’ to video, that is, the portion of users arriving at a page with video who choose to watch it. This is set at 14% in the model, a figure directly based on empirical data. As broadband speeds and user familiarity with video increase, this figure might be expected to rise, but conservatively this increase has not been built into the base case of the model.

BBC local online content usage as a portion of broadband users is also a sensitive assumption, but again this is anchored in empirical data. As shown above, this figure has been relatively steady around 16% of broadband households.

4.2 Maintaining overall reach to BBC regional/local news

As outlined above, reach to Nations and regional news is in long-term decline due to a combination of factors, including the shift to on-demand news consumption and increased focus on local relevance. Local Video will help to compensate for this predicted decline and win back at least some of the ‘lost’ audiences. The quantitative research suggests that Local Video will deliver some incremental reach to BBC regional TV news: around a quarter of those who said they will definitely use Local Video are not viewers of BBC regional TV (3% of the total sample).90 Over time, as regional TV audiences continue to decline, we would expect the number of unique Local Video users to increase91.

In addition to maintaining overall reach, Local Video is likely to ‘deepen’ the BBC’s relationship with existing users of regional TV news. Many viewers of existing linear news bulletins may also come to the new Local Video offer as a valuable additional provision from the BBC. Research suggests that the addition of Local Video to bbc.co.uk will increase the reach of BBC local content among existing viewers of BBC regional TV, thereby adding additional value to these audiences.

The offer may also, to a small extent, attract a certain number of viewers away from Nations and regional news through the more local and more convenient offering; however, this could be offset by the quality improvements Local Video is expected to deliver to the linear bulletins. Indeed, the evidence from the West Midlands trials suggests that these quality improvements resulting from the extra local picture- gathering of the local team lead to an increase in the performance of the BBC’s other relevant offers. Midlands Today’s reach grew year-on-year by 8%, against a UK trend of no change for the slot. There was also a sharp increase in the then Where I Live website usage in the West Midlands, with all six sites in the trial region showing growth ahead of the then Where I Live average92.

90 BMRB (2008) 91 It is not possible to quantify these effects, given the range of assumptions involved and lack of data on the overlap between BBC regional TV news and local online content. 92 The then Where I Live website average growth 12.3%; Hereford & Worcester: +46%, Shropshire: +20.6%, Black Country: + 18.6%, Birmingham: +18.5%, Stoke: +17.7%, Coventry & Warks: + 12.8% Page 34 of 67

BBC Management’s assessment of the public value of its Local Video proposals

4.3 Widening the age profile of BBC regional/local news

As outlined above, Local Video is expected to attract audiences who are moving away from traditional linear news (see Section 3). The centre of gravity of audiences for Local Video is likely to be the 25-44 age group.

Local Video is designed to attract a younger audience profile than BBC regional TV. As a result, it will widen the age profile of users of BBC regional/local news services. The reason for this is twofold: · Local Video will be available on those platforms that are used disproportionately by younger audiences. The audience for BBC local online content skews significantly younger than the audience for both nations and regional TV news or local radio services. · the editorial offer will be different in tone and style to traditional linear news broadcasts and involve short, impactful stories designed for convenience and always-available consumption

The appeal to a demographic underserved by the BBC’s traditional linear regional news is supported by evidence from the West Midlands trial, which was successful at targeting a younger demographic. During the trial over 60% of the audience was under 45. This is broadly consistent with the age profile of the current audience for local content on bbc.co.uk. Similarly, 2008 quantitative research suggests that Local Video will appeal to a younger demographic than regional TV bulletins. Amongst these respondents, over 60% who said that they would definitely use the proposition were aged under 45, with 35% under 35.

By comparing the demographics for several different England regional/local offers, it is possible to see the strikingly different age profiles for regional/local when provided on television, radio, online and on mobile. Figure 15: Age demographics of different England regional/local platforms

70%

60%

50%

16-24 40% 25-44 45-54 30% 55+

20%

10%

0% English English bbc.co.uk Where I BBC W. Local regions local radio News Live mobile Midlands Video 1830 TV England London browser BB users (Quant)

Sources: Q4/07 BARB/TPS, Q4/07 RAJAR/RSL, Q4/07 The Pulse, Q4/07 TNS New Media Tracker, Essential Research 2006, Human Capital analysis of BMRB quantative survey 2008.

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BBC Management’s assessment of the public value of its Local Video proposals

5 Quality and Distinctiveness

Local Video will only be able to help close the BBC’s ‘localness’ purpose gap if it is of sufficient relevance, quality and distinctiveness to attract audiences. This section assesses the extent to which the Local Video proposals meet an acceptable standard of quality and distinctiveness.

5.1 Relevance

A variety of research projects, including substantial audience research and off-air trials, 93 have shown that relevance is one of the most important components that audiences use to assess the quality of local news. As outlined in section 3, across virtually all age groups, people’s interest in locality and the area that surrounds them has increased significantly over the last two decades, particularly so for those under the age of 45.94 The development of a new tier of video newsgathering, as part of the Local Video proposal, will result in stories focused on interests and concerns of local communities across the UK.

This was a message highlighted in deliberative jury research, in which one participant in Cheddar commented: “I can’t remember a time when there’s ever been anything about our local area… it’s always happening somewhere else”. Perhaps even more tellingly, one participant in Chelmsford said: “The quality isn’t actually in the pictures that are taken, the quality is in the actual information that you’re obtaining from around the county, so therefore your community. 95

The range and breadth of the coverage is also important to ensure relevance. The research noted that, while deliberative jury participants stressed the importance of providing more stories for younger audiences, “individuals of all demographic backgrounds were able to find at least some stories that interest them, even if for some younger males this is only the sport stories. This is seen to be the beauty of the proposition’s offering; personal choice at a local level.” Above all, the deliberative jury research found that “the range and depth of stories presented as possible with the new video offer, are felt to be ideal.” There was a particularly strong appreciation of the wide editorial range in areas which are currently under-served, such as Aberdeen and Llanelli. The Opinion Leader Research report concluded:

“When asked if the BBC should increase or decrease the amount of video content with a corresponding increase or decrease in the cost, many believe that the proposed amount of video content is ideal. A few participants express concern that there may not always be sufficient newsworthy stories in their local area to meet the daily quota of video stories and are keen to ensure that stories will only be covered if they are sufficiently newsworthy. There is little appetite for an increase in the amount of video content beyond the proposed number of local video stories.”96

This matches BBC Management’s own assessment of the range and breadth of coverage required to offer local relevance, based on the existing levels of provision that audiences appreciate on BBC Local sites in text and on BBC Local Radio.

93 See, for example, A qualitative research debrief exploring viewer reaction to local BBC television, Thinkvivid, February 2004 or Local TV News pre-pilot testing, Jane Barrett, April 2005 94 Future Foundation (2004) 95 OLR (2008) 96 OLR (2008) Page 36 of 67

BBC Management’s assessment of the public value of its Local Video proposals

5.2 Quality

Audience research confirmed that quality is important for audiences to be attracted by Local Video. 97 In order to meet high expectations of quality, the BBC will bring its reputation for high-quality, authoritative and trusted video news output to the new level of relevance offered by Local Video. Local Video can also draw on the understanding of providing local content afforded by its heritage in Local Radio. For forty years, the BBC has provided high quality, advertising-free local news on radio, reflecting the voices and celebrating the diverse cultures of individual communities up and down the country.

Local Video journalism will display the BBC's core values of independence and impartiality; truth and accuracy; and fairness and diversity of opinion. The quality of the offer will lie in its ambition to offer a broad, serious and relevant news agenda in each local area across the UK. The video content will have high visual appeal and be rooted in in-depth journalism: effective reportage, analysis, and interviews. The style and tone of the material will be accessible in order to maximise appeal across a broad range of audiences.

The quality of the existing BBC Local websites, where the new video content will be hosted, is very patchy. A key objective of the Local Video proposal is to modernise these largely text-based websites and significantly boost current audience appreciation.98

5.2.1 Research on Quality of Content Deliberative Jury research found that overall, BBC Local Video was perceived to be high quality in terms of its production and journalism. Participants in several locations spontaneously described the offer as “professional”. Others emphasised instead the rawer, “more real” community feel to the content which was seen to make it less stuffy.99

Content analysis confirmed that the content had high production values. In particular, it judged the BBC content to have ‘complex’ production values in 72% of pieces of video, based on criteria including cuts per minute, use of photos, animation, graphics, and overlaying of audio and text. The analysis also found the BBC content to have ‘high’ visual appeal in 84% of pieces of video, signifying bright and colourful video with the professional feel associated with a broadcast television programme. 100

Broadband users in the West Midlands trial also judged the content to be high-quality. The content on the service was rated around two questions: was the content ‘excellent’ and was it ‘innovative or original’. Of broadband users, 62% gave it a score of seven (out of ten) or above and 91% gave it a score of five or more for excellence.

97 Digital Dividend Review, Ofcom, 2007; OLR (2008) 98 Judged by Net Promoter scores: these are the key overall measure of quality used for bbc.co.uk sites measuring 'how likely are you to recommend site x to a friend or colleague' and netting out the percentage of ‘promoters’ against the percentage of ‘detractors’. 99 OLR (2008) 100 Human Capital (2008) Page 37 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Figure 16: Is the content on the service ‘excellent’?

Score 1-4 (low agreement)

Score 5-6 Broadband 9% 29% 62%

Score 7-10 (high agreement)

0%20%40%60%80%100%

Source: Essential Research, West Midlands trial

Similarly, 58% gave it a score of seven and above (out of ten) and 89% gave it a score of five or more for ‘innovative and original’ on broadband:

Figure 17: Is the content on the service ‘innovative or original’?

Score 1-4 (low agreement)

Score 5-6 Broadband 11% 31% 58%

Score 7-10 (high agreement)

0%20%40%60%80%100%

Source: Essential Research, West Midlands trial

5.2.2 Effect on the BBC’s other news services Assessment of the quality of Local Video content should not underestimate the impact on the quality of the BBC’s other services. As outlined in section 3, Local Video will play a crucial role in enriching programmes across the BBC by creating a far more extensive newsgathering capability around the UK. This is true not just of BBC news programming at a UK-wide, Nation and regional level, but also current affairs programming such as Newsnight, the One Show and the Politics Show.

The West Midlands trial demonstrated this effect powerfully, not least through the substantial new newsgathering resources that were out on the road in the region: on average, 15 more cameras were deployed across the West Midlands on a daily basis. This added greatly to the breadth of the region’s journalism with many more stories covered than before the pilot began. For instance, in Shropshire the regional TV operation rarely sends out a camera more than once a day – during the trial this picture- gathering capability was quadrupled. This also allowed multiple deployments of cameras – for example to cover changes to the licensing laws, local elections and hospital finance cuts.

The trial made the BBC quicker to deliver stories to viewers because there were more cameras on the ground. For example, flash floods in both Worcestershire and Shropshire were on BBC News Channel quickly, a weekend murder at a massage parlour in Shrewsbury was on BBC News Channel well ahead of other news channels, and an outbreak of World Cup-related violence in Birmingham’s main

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BBC Management’s assessment of the public value of its Local Video proposals entertainment district was on BBC News Channel within minutes. When a serious fire cut power to part of Birmingham in the middle of night, breaking Local TV News coverage from the trial was used on Breakfast News and BBC News Channel.

On average, 10 stories a week from the trial were broadcast on Midlands Today and its associated bulletins. Producers had a greater range of stories to choose from and were able to vary the agenda across the day more effectively. A number of films also explored aspects of life in the West Midlands that viewers would not otherwise have seen. Items regularly progressed even further up the news pyramid. For instance, video-journalism trial features on Rover and Peugeot workers affected by factory closures were used on Midlands Today and BBC News Channel. A piece of user-generated video was used on Newsround, BBC News Channel and Midlands Today. An interview with Moazzam Begg, former Guantanamo Bay inmate, was used on the 10 O’clock News.

The trial also allowed BBC local radio stations to develop stories across all media simultaneously, with an increasing number of radio staff using small cameras. A full multi-media ethic was in place right from the start, with ideas and material shared across all platforms. Radio producers had additional resource to support their stories and cross-promotion was also more effective, principally because material was available in an on-demand, non-linear format with a critical mass of content on the web. In the coverage of major stories, the trial led to increased depth and quality on all platforms.

BBC Management proposes to take the opportunity of the Local Video application to seek permission to give video-journalism training to BBC local radio staff who are yet to be multi-skilled. This investment will be used for training and job swaps to ensure key personnel are well versed in online text and online video skills, as well as investing in a training programme in video newsgathering for senior radio journalists.

5.2.3 Quality of Service It is important to separate the assessment of Local Video from its delivery. The main mode of distribution for the content will be over internet protocol, including broadband through bbc.co.uk and over internet- enabled mobile devices. The context of the offer on bbc.co.uk will primarily be the BBC Local websites, which provide multimedia content such as regional news video, UGC101, video linked to linear output, local audio and local text news. For some time, BBC Local websites have been evolving into a more interactive, relevant and distinctive offer, and BBC Management has plans for it to evolve further through improvements which it believes accord with the BBC’s existing regulatory permissions (the bbc.co.uk Service Licence102). These improvements include a new map-based user interface which would sit alongside more traditional navigational tools, such as scroll menus. The new tool will allow the BBC to pinpoint, on a local map, the location of text, audio and video content. At present, the map would be populated predominantly with audio and text based stories with very few items of video falling into the categories described above. However, the map provides a level of functionality well-suited to the addition of Local Video.

Participants at Deliberative Juries were shown an indicative demonstrator of BBC Management’s plans for the improved websites in order that they could make an assessment of this context to the proposal and the likely quality of service, separately from their overall assessment of the Local Video offer. Participants found value in the demonstrator as a high quality context for Local Video. Many felt the overall look was uncluttered and easy to use, with one participant in Aberdeen commenting: “It’s more clear, like easier to use, it’s not stuffy, it’s… it’s more like a modern website”. In particular, the map was found to be an effective tool.103

An assessment of the quality of service was also made during the West Midlands trial. As this is the area

101 This content (eg. ‘citizen newsgathering’) fits with the editorial purposes of Local Video and the BBC’s Editorial Guidelines. 102 See bbc.co.uk/bbctrust 103 OLR (2008) Page 39 of 67

BBC Management’s assessment of the public value of its Local Video proposals

of most significant change between the BBC’s original plans for Local TV News and the Local Video proposal, the findings should be treated with caution. However, at the time, users of the broadband service were asked their view of this form of delivery during the trial. 64% gave the offer a score of seven or more (out of ten) and over 90% five or more on ‘well-designed and well-made’:

Figure 18: Is the service well-designed and well-made?

Score 1-4 (low agreement)

Score 5-6 Broadband 9% 27% 64%

Score 7-10 (high agreement)

0%20%40%60%80%100%

Source: Essential, West Midlands trial

5.3 Distinctiveness

The extent to which Local Video is distinctive will help determine whether the BBC can deliver public value above and beyond what already exists, and is likely to exist, in the marketplace.

While there is considerable uncertainty about how local video in the wider market will develop and about the nature and sustainability of commercial business models on digital television and broadband, research commissioned by the BBC has identified several areas of expected ongoing distinctiveness. This research104 centred around a detailed analysis of typical output on the West Midlands trial as well as output on alternative local video news services currently available via broadcast or over broadband.

This in-depth assessment compared the BBC output to video material available from thirteen alternative sources: nine local newspaper websites with video news, and four broadcaster websites with local news online. These sites were selected to ensure that the BBC proposition was being compared to sites that contained the most advanced local video online and other selection criteria – such as area type, geographical factors and – in the case of newspaper sites – ownership. A further 120 local newspaper sites were also examined against seven high level metrics.

This research did not assess the regulatory dimensions in which the content is created. The BBC’s editorial guidelines, supervised by the BBC Trust, impose strict impartiality requirements on BBC news output on all platforms. The same rules do not apply to the print media or to other online news output. Local Video will demonstrate clear and consistent editorial standards underpinned by a commitment to deliver the BBC’s public purposes; it will also uphold the strict regulatory requirements for independence, impartiality and accuracy. In this respect, it will have a distinctive role in the mixed news economy at the local level.

In addition, commercial news providers at the local level are likely to be funded via advertising revenue. Local Video would be advertising-free and subscription-free, something which audiences value highly and see as distinctive: 60% of those responding to the Government’s Charter Review consultation process said that advertisements would interfere with their enjoyment of BBC programmes105. This is particularly

104 Human Capital (2008) 105 Review of the BBC’s Royal Charter: What You Said about the BBC, DCMS, July 2004 Page 40 of 67

BBC Management’s assessment of the public value of its Local Video proposals true of BBC news coverage. The provision of local news content, free at the point of use and free from advertising is therefore another crucial source of distinctiveness.

Human Capital’s analysis concluded that the Local Video content was likely to be most distinctive on the following criteria:

· The fact that the BBC service will be UK-wide.

· The geographical areas targeted by the BBC proposition, which are larger than those targeted by local newspapers (in the majority of cases) and smaller than those targeted by broadcasters’ sites (with the exception of Manchester). The BBC proposes to introduce a new level of local video newsgathering.

· The BBC’s plans to partner with other local media providers.

· Its plans to provide assistance with the production of UGC.

· That the proposition involves production of bespoke content with high production quality, high visual appeal that exhibits in-depth journalism.106

5.3.1 Commitment to universality It is highly likely that the BBC will be the only provider that can offer this service universally across the UK, thereby providing value to every licence fee payer. No other provider has its local radio and online infrastructure to build on, and the development of local services has so far been very patchy. Overall, market prospects and viability of business models are uncertain, and we may see the emergence of a patchwork of local services – with some (mainly urban) markets well served, but others with less provision. This view is supported by Ofcom’s previous study of digital local options.107 BBC Local Video would provide a distinctive offer which would add value and plurality to all parts of the UK.

5.3.2 Geographic Scope Human Capital concluded that the geographic scope of BBC Local areas is likely to be a key point of distinctiveness. It will serve considerably bigger areas than the video offered by newspaper websites on an ‘ultra-local’ level in some areas of the UK but a smaller area than most broadcasters. The research does note that ITV Local looks to be moving to a comparable level of granularity (67 areas) though there is no evidence that the video itself is produced bespoke for those areas – rather it appears to be almost exclusively re-versioned content from their linear regional bulletins. It is also noteworthy that local newspapers (e.g. Trinity Mirror Group) are developing 'hyper local' online strategies based on websites covering single postcode areas. The strength of the BBC’s newsgathering capacity will enable a large volume of reporting to take place out of the studio on location.

106 BBC Local Video: Distinctiveness Analysis, Human Capital, 2008. 107 Digital Local - Options for the future of local video content and interactive services, Ofcom, January 2006 Page 41 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Figure 19: Total minutes spent in studio and on location

Mins 250

200

150 166 Out of studio 99 In studio 100 210

115 1 50 74 78 72 41 29 9 60 56 46 9 6 8 19 2 12 1013 19 2 0 V l s T M ing ald gu S el UTV raph ws n en v Ne e Post E ir s Ar BBC Tria Teleg he Her Chan BBC Trialt T ale ocal Meridian rksh as ewburyHull Today Dailyester Mail o L h Liverpool Echo h W N Y ut ITV Belf o S Manc Eastern Daily Press

Source: Human Capital

5.3.3 The BBC and other local providers Human Capital concluded that the stated aim of BBC Management to work in ‘partnership’ wherever appropriate with other local news providers, such as links around the video content, offering content for ‘embedding’ to other providers and buying in content, is a source of distinctiveness (see section 9 for BBC proposals). Also relevant in this respect is the commitment not to produce in content areas where BBC Management believes the public value will be outweighed by the impact on providers whose advertising revenues depend upon – these areas include commercial listings, cars, dating, jobs, property, holidays and horoscopes.

5.3.4 Producer-assisted ‘viewer videos’ Human Capital noted that there is a significant point of distinctiveness between the BBC’s approach to producer-assisted ‘viewer videos’ and the user-generated content elsewhere. The research noted that while many other sites provide a location for uploading UGC, none, broadcast or local newspaper, provide production assistance. In contrast, at the heart of the BBC’s proposals and contained within its staffing models is the role of the community producer in each local area. Their role is to stimulate user- generated content and develop skills among audiences with the aim of sourcing a broad range of user- generated content from a variety of people, not just those technologically-savvy users. All ‘viewer videos’ will fit with the overall editorial purpose of BBC Local Video content and serve the BBC’s aspiration to promote media literacy. Over a number of years, the BBC has invested substantial resources in supporting the creation of content from those to whom it is a new experience, from Digital Storytelling to Video Nation. Community producers will ensure this is strong track-record is built on and enhanced through Local Video.

5.3.5 High Quality Bespoke Content Human Capital concluded “when a series of factors are combined – high production values, high visual appeal and in-depth journalism along with the creation of bespoke content – the BBC appears to be distinctive from the sites analysed.”

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BBC Management’s assessment of the public value of its Local Video proposals

The BBC’s high production values were seen to be a source of distinctiveness when compared to the majority of local video content on newspaper sites, but, overall, was not found to be so when compared with other broadcaster-affiliated content. However, in certain areas, such as the number of cuts per minute and “complexity” of the post production, the BBC led the field.

Figure 20: “Complexity” of post production of news stories

11% 8% 18% 17% 14% 13% 17% 20% 33% 50% 65% 60%

53% 67% 67% 81% 100%100% 80% 87% 83% 80% 67% 50% 40% 35% 29% 22% 16% 6% 11% s o t M ail s l day ch idian e STV ws UTV rgu o ressComplex n graph l E P er Ne T Intermediate BBC Trial es A oo Chan al Tele ury p The Herald Manchester ll Daily M kshire Po Daily Simple wb er r n W Hu iv o vening th L Y er E u Ne o Belfast st ITV Local M S Ea

Source: Human Capital

In addition, the editorial approach is more in-depth with a wider range of stories than local newspaper video. It was not distinct from local services that are affiliated with broadcast channels.

Figure 21: “Depth” of coverage

8% 14% 12% 11% 14%

36% 31% 27% 33% 36%

86% High 44% 73% 100% 100%100%100%100%100% 36% 86% Medium Low 61% 56%56%

28% 25% 13% 14% V M n h y T s p a ost S UTV el ester ra ress h od P ann c eridia T y P BBC Trial an g New ry il Ch al M The Herald M c Da enin ast Telegewbu Hull Daily Mail n Lo f LiverpoolYorkshire Echo Ev V N Bel aster IT South Wales Argus E

Source: Human Capital

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BBC Management’s assessment of the public value of its Local Video proposals

5.3.6 West Midlands research on distinctiveness The majority of broadband users agreed that programmes on the service were distinctive and different. 56% gave it a score of seven or above (out of ten) and 89% give it a score of five or more: Figure 22: Is the content on the service ‘distinctive and different?

Score 1-4 (low agreement)

Score 5-6 Broadband 11% 33% 56%

Score 7-10 (high agreement)

0%20%40%60%80%100%

Source: Essential Research, West Midlands trial

Professor Laughton’s independent assessment of the trial also concluded that it would make a distinctive contribution to local news markets, and noted: · The BBC has correctly chosen to base a more locally-based service on local broadcasting areas where it is already a player in text and radio. · The BBC would need to make a clear commitment to reaching all parts of the United Kingdom. · A more localised BBC service would ensure that, throughout the UK, there is effective plurality of voice, particularly by adding provision of additional newsgathering capacity in areas where there is often a monopoly news gatekeeper · A more local BBC should seek to work with other news providers as well as maintaining enough resource to compete with them where necessary. The BBC would need to demonstrate a clear commitment to partnerships in which it is not always the lead partner. · The BBC has the ability to be the major national player in stimulating media literacy by providing extensive support and screen access for individuals and communities. · The BBC would need to identify no-go areas as well as the areas where it can create unique public value.108

108 Laughton (2006). Page 44 of 67

BBC Management’s assessment of the public value of its Local Video proposals

6 Consumer and Citizen Benefits (Impact)

This section assesses the extent to which the BBC’s proposals are likely to create value for licence fee payers as consumers and as citizens. Consistently, Nations, regional and local services are highly valued by consumers and are perceived to be some of the most valuable output that the BBC contributes to society (see section 3).

6.1 Measuring impact and value

The public service remit of the BBC means that Local Video is required to deliver citizen benefits to society as a whole, over and above the consumer benefits it could generate for individuals and their households. As portmanteau concepts, consumer and citizen benefits are best explored through a basket of measures which focus on the different components of impact and value.

Figure 23: Measuring Consumer and Citizen Benefits:

Consumer Citizen Impact Perception of proposal as Perception of societal benefits of personally useful and beneficial proposal109 Value Willingness to pay/perceived Perceived worth to society as a worth of offering to them as whole110 consumers Research Deliberative and quantitative Deliberative and quantitative

It is important to note that this type of audience research can never provide an entirely accurate measurement of the proposals’ benefits. Firstly, the research only arrives at respondents’ perceptions of the BBC’s public value, not its real value. Secondly, respondents often under-appreciate the real ‘externality’ benefits flowing to others as a result of BBC offerings. The very nature of ‘merit goods’, for example, means that their true value can only ever really be known in the future. However, this research does provide an indication of the likely public value that the proposed service might deliver.

6.2 Assessment of consumer and citizen benefits

6.2.1 Consumer and Citizen Impact Audience research found “overwhelming support” for launching Local Video with 89% of participants agreeing on a consumer basis and 96% on a citizen basis.

109 It is beyond the scope of this assessment to assess outcomes/impact beyond broadcast (e.g. impact on educational levels). 110 Differentiating consumer value and citizen value will never be completely accurate, but is a helpful filter through which to analyse the proposals. Page 45 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Figure 24: Support for BBC Local Video on a Personal and Citizen Basis

100%

90%

80%

70%

60%

50%

40%

30%

% of deliberative jury participants 20%

10%

0% Personal Citizen

In favour Not sure/against Source: BBC analysis of OLR (2008)

Net support for the offer was confirmed by quantative research, which found that 44% of participants believed the launch of the offer would be of high personal value (scoring seven or more out of ten) and 59% gave a high citizen value to the offer.

Figure 25: Importance attributed to BBC Local Video on a Personal and Citizen Basis

60

50

40

30

% of whole sample 20

10

0 ImportantNeither important nor unimportantUnimportant

Personal Citizen Source: BBC analysis of BMRB (2008)

This is corroborated by evidence from the West Midlands trial. Demonstrating the proposal’s overall impact, it was noticeable that trial broadband users had a significantly higher approval rating of the BBC than the mean approval for the BBC in the region prior to the trial. Mean approval pre-trial was 6.4 but

Page 46 of 67

BBC Management’s assessment of the public value of its Local Video proposals after the trial, broadband trialists mean approval was 7.2. There was also considerable support for the BBC launching the offer.111 When asked whether they agreed that the BBC should launch the offer, broadband trialists showed a high level of support. Over 72% gave a score of seven or above (out of ten) and 94% gave a score of five or above.

Figure 26: Should the BBC launch Local TV News?

Score 5-6 Broadband 22% 72% Score 7-10 (high agreement)

0%20%40%60%80%100%

Source: Essential Research, West Midlands trial

Demonstrating the proposal’s consumer impact, broadband users of the West Midlands trial rated the service highly for ‘useful and beneficial’: 69% gave it a score of seven or more (out of ten) and 93% of broadband users gave it a score of five or more.

Users were also asked how often they would use the offer if provided in the future (ie. is the offer one which users will find of continued personal benefit). Around 80% of users would use it at least weekly. 112 Quantative research confirmed that once acquainted with the proposal, over two-thirds of people say they are likely to use it (68%).113

6.2.2 Consumer and Citizen Value Audience research confirms that this perceived consumer and citizen impact translates into perceived consumer and citizen value. Deliberative Jury participants were asked to place a monthly monetary value on the offer among other existing BBC services. Answers resulted in a median value which BBC Management has used as the key metric (both here and in ‘value yield’ calculations in section 8) – the median is a more conservative figure than the mean.

Figure 27: Median value of Local Video: Trial users consumer value Trial users citizen value (£ / household / month) (£ / household / month) Overall 2.25 4.00

Participants without broadband (as well as those with broadband) often found consumer value – either as they planned to get broadband soon or perhaps due to planned use outside the home - and the majority had a strong perception of the citizen value of the offer. Local Video compared strongly with values ascribed to other BBC offers. On both consumer and citizen value, Local Video was valued more highly than BBC News Channel, BBC local and national radio but less highly than BBC One, BBC Two and the BBC’s Digital only TV Channels.

Research from the West Midlands trial confirms these audience valuations; a comparison of mean monthly valuations of both Local Video and broadband users of the West Midlands trial gives near

111 MORI & Essential Research (2006), West Midlands trial 112 Essential Research (2006) 113 BMRB (2008) Page 47 of 67

BBC Management’s assessment of the public value of its Local Video proposals

identical values (per month £4.57 and £4.59 respectively on citizen value and £3.85 and £3.89 respectively on consumer value).

Similarly, quantative research is supportive: eight out of ten participants did not disagree with the licence fee being used to fund the proposal; those who did disagree represented a similar number to those who did not ascribe a personal value to the offer.114

Citizen impact and value are also supported strongly by audience research on Local Video’s ability to fulfil the BBC’s public purposes, all of which offer value to the UK’s citizens. These are explored in Section 3. However, the citizen value of one particular aspect of the Local Video (and its fulfilment of its citizenship purpose) – the commitment to Local Democracy – merits further scrutiny.

6.3 Local Democracy

Local Video is designed to ‘future-proof’ the delivery of the BBC’s citizenship purpose at the local level. In particular, the proposals include a strong commitment to local democracy, building on the BBC’s strong heritage of creating democratic citizen value.

Material focusing on local politics and public policy issues was at the heart of the West Midlands trial, and citizenship activity became a popular part of the proposition. This included: · A partnership in Hereford and Worcester with the area’s local newspapers and NHS Trust to run a public debate on local hospital finances and prospects. BBC coverage included several features. · Cross-media weeks where the trial local offer was the stimulus for video, radio, and online activity on a number of issues, including the debate about whether Birmingham should have a city mayor, the building of a new bridge across the River Severn in Worcester and the possible extension to the M6 in Staffordshire. · Providing a gateway to council broadband services. In Birmingham, special features were run on a council attempt to deal with the issues around graffiti. Viewers were directed to the council’s own broadband service for more information. · The debate about community hospital closures in Shropshire and health trust redundancies in Staffordshire led to senior NHS executives being interviewed at length within trial’s news bulletins, with viewers encouraged to feed in extra questions. · In Birmingham four local authority social care workers were trained to help disadvantaged people make their own films. A teenager in care and a disabled youngster both made films about their circumstances as part of the wider debate about council facilities. · A series of MPs took part in features in which video clips of their constituents were played to them posing questions. This allowed local people a new and different kind of access to their elected representatives – the issues raised varied from facilities for young people to questions about the attitude of MPs to a number of national issues.

114 BMRB (2008) Page 48 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Figure 28: MPs answered ‘On the spot’ questions from constituents

The trial was set a suitable challenge to test its distinctive citizenship agenda in the May 2006 local elections. All the services ran constituency profiles and other material in the run up to the elections. Because of the trial and its associated enhancement of the BBC’s newsgathering ability, for the first time the BBC was able to field a camera at every count in the region. A full hour of material was running by the following breakfast time, and a number of stories were captured that would have gone unnoticed otherwise. There was a sharp spike in usage for the on-demand local results coverage on the morning after, making it one of the most popular events in the whole trial:

Figure 29: Page impressions per day, May 2006 16000 14000 Day after local elections 12000 10000 8000 6000 4000 2000 0 01/05/2006 02/05/2006 03/05/2006 04/05/2006 05/05/2006 06/05/2006 07/05/2006 08/05/2006 09/05/2006 10/05/2006 11/05/2006 12/05/2006 13/05/2006 14/05/2006 15/05/2006 16/05/2006 17/05/2006 18/05/2006 19/05/2006 20/05/2006 21/05/2006 22/05/2006 23/05/2006 24/05/2006 25/05/2006 26/05/2006 27/05/2006 28/05/2006 29/05/2006 30/05/2006 31/05/2006

Source: BBC server logs

Drawing on the lessons of the West Midlands trial, BBC Management proposes a strong commitment to the comprehensive and in-depth coverage of local democracy in the Local Video offer.

This includes ensuring 20% of content will focus on local democracy and public policy issues. In each area across the UK, the BBC will present a range of local opinion on community issues; analysis and explanation of key issues; interviews with political representatives and other public figures; and coverage of all UK and local election campaigns and local political institutions. Relevant video stories will link, where appropriate, to the websites of local government institutions, including to the live streaming of key proceedings. Overall, the enhanced online coverage of local politics will support the BBC's wider 'digital democracy' plans, that are designed to build greater understanding of the political process from Westminster and national Parliaments and Assemblies to local government institutions.

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BBC Management’s assessment of the public value of its Local Video proposals

Deliberative jury research has confirmed the strong audience appeal of this aspect of the offer: · The video journalism is perceived to have a powerful effect in creating digital democracy by enabling audiences to hold MPs, councillors and other local decision-makers to account. · Some participants stated they currently felt distant from local politics but that they may become more interested in and involved in politics if they are enabled to understand it better. · There was a more general perception that by allowing the public a greater insight into the decision-making process that people could be encouraged to take a more active part in local politics, such as by voting in local elections.115

To maximise the potential of this output, creating Local Video content across the UK could support and strengthen existing BBC local political initiatives. By linking up with current programmes and strands such as Junior Question Time and BBC News School Report, the offer could connect grass-roots citizen journalism and local campaigns with broader themes and activities across the BBC’s local, regional, Nations and network output. Local democracy is about much more than just local elections – the constant scrutiny of councils, quangos and authorities would be a strong theme on the offer and would be a major contributor to public value in local areas.

However, building this democratic value needs universality. If the service is not available across the country, citizen value will be sub-optimal. Deliberative jury research confirms that universality and accessibility are vital contributors to the offer’s citizen impacts.116

115 OLR (2008) 116 OLR (2008) Page 50 of 67

BBC Management’s assessment of the public value of its Local Video proposals

7 Cost

7.1 Overview of Local Video costs

The BBC has assessed the cost of delivering Local Video over the five year period 2008/09 to 20012/13, using a bottom-up approach. The BBC’s investment in Local Video would be phased to increase annually in each of the 60 areas, starting in 2009/10 (no spend in 2008/09) and reaching maturity at around £23m a year in 2012/13. This equates to an average cost of around £350,000 for each of the 65 offers across the UK.117 ||||||||||||||||||||||||| |||||||| of this will be direct content creation costs with the remainder comprising hosting, streaming and other technology costs.

BBC Local Video will be entirely funded by reinvesting efficiencies and savings achieved by 2012/13 within BBC Nations & Regions’ existing budget. Over the five year period, the BBC’s spend across its portfolio of regional and local services will marginally decline. This will ensure that the BBC’s size and scale in the marketplace remains reasonably consistent. It also will mitigate any supply-side employment effects by balancing as far as possible efficiencies in the BBC’s current local and regional services against the additional effort required to staff the new offer. The savings proposals inherent in the plans for each Nation and English Region assume significant levels of redeployment of existing staff resources to the new BBC Local Video offer. There will be implications for these savings plans and the costs associated with them if these opportunities are not available.

Each of the 65 proposed local offers across the UK would have some additional technical support provided at appropriate regional centres (12 English Regions and 3 Nations). BBC Local Video content will be routed from the 60 local areas to regional centres for delivery to bbc.co.uk and where appropriate for use in regional linear television services. These figures are included in the costs.

117 Expressed in 2007/8 prices. Page 51 of 67

BBC Management’s assessment of the public value of its Local Video proposals

7.2 Cost breakdown

7.2.1 Costs

Figure 30: Estimated breakdown of incremental costs of BBC Local Video through to 2012/13 ||

[Redaction note: Total gross costs in £000s are nil in 2008/09, 12,391 in 2009/10, 14,355 in 2010/11, 19,013 in 2011/12 and 22,536 in 2012/13. The total cost over the 5 years is 68,294. The sub-total for start up costs is nil in 2008/09, 3,540 in 2009/10, 1,531 in 2010/11, 1,644 in 2011/12 and 1,603 in 2012/13. The sub-total for operating costs is nil in 2008/09, 8,851 in 2009/10, 12,824 in 2010/11, 17,369 in 2011/12 and 20,933 in 2012/13. Acquired video & partnership costs are nil in 2008/09, 520 in 2009/10, 645 in 2010/11, 745 in 2011/12 and 795 in 2012/13. All values expressed in 2007/08 prices.]

Source: BBC Nations & Regions Finance

The key assumptions on cost relate to the number of service areas and staff per service. A total of 60 service areas are identified with an average of 6 staff per service. Wales has additional resource for dual language coverage in its five areas, making 65 offers in 60 geographical areas.

7.2.2 Staffing Resources The proposal provides for the gradual increase in staffing across all of the 65 offers over the 5 year period. Where possible staff are redeployed from existing services where savings initiatives would otherwise result in redundancies. In such cases growth in resource is assumed at the start of a year for that full year. Where recruitment of new staff resource is required this arises part way through each year to further phase the introduction.

Figure 31: Staff Resource Breakdown through to 2012/13 || Source: BBC Nations & Regions Finance

7.2.3 Start-up Costs Start-up costs include camera acquisition equipment and edit capability for all content staff for each of the offers. These costs are estimated at |||||||||| |||||| |||||||||||||

Also included are costs associated with delivery systems to broadband based on initial set up costs related to the volume of video predicted to be delivered and stored for the offers. Further costs are provided for training, marketing activities and project management. In particular, BBC management is proposing to include an additional ||||||||||| ||||||||||||||||| of training spend in the BBC Local Video budget. This is a one-off spend in 2009/10 to prepare key radio and television staff in video journalism and web techniques as part of the launch process (see sub-section 5.2.2).

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BBC Management’s assessment of the public value of its Local Video proposals

7.2.4 Operating Costs Staff costs form the majority of operating expenses accounting for |||||||||||| |||||||| of total costs by 2012/13. Expenses associated with these staff account for a further significant element of the cost case with each journalist expected to travel extensively around their coverage area.

Provision is made for the acquisition of video from external sources both from traditional news agencies, local newspapers and other community partnerships (see section 9).

Technology support and distribution costs account for ||||||||||| ||||||| |||| ||||||||||||||. This excludes the employment cost of engineering support staff in local service areas which is included within staff costs.

7.2.5 Unit costs Combining the projected reach of Local Video with the costs outlined above provides the following output- based unit costs: · The projected cost per hour of the new offer at maturity would be £2.1k / hour. · The projected weekly cost per user of the new offer at maturity would be 8.9p.118

These metrics can be benchmarked against comparable BBC services (where costs are assessed on a comparable basis as the cash costs to BBC Nations & Regions).

Figure 32: Unit Costs of BBC Local Video alongside Comparable BBC Services

Local Video Regional/Nations Nation/Local News119 Radio

Cost per hour (£k) 2.1 13.3 0.3

Weekly cost per user (p) 8.9 6.2 18.4

Source: BBC Nations & Regions Finance

Cost per user is the most meaningful unit cost metric for Local Video, as it is an online offer based on short, impactful video content for on-demand consumption. It is not designed to achieve the substantial overall volume of viewing hours that are delivered by the BBC’s linear news programmes. The weekly cost per user reach of 8.9p is significantly lower than the BBC’s nations/local radio, but higher than for nations and regions TV news. Critically, it is forecast that a significant proportion of the weekly users attracted by Local Video (over 1 million by 2012/13) will be incremental to the existing users of BBC local online content, and a smaller proportion are likely to unique to the BBC’s regional TV service.

There are limitations to this analysis as BBC Local Video is a new and innovative proposition with no directly comparable propositions currently available within the BBC’s portfolio, or outside it. Despite these limitations, BBC Management believes that the proposal will deliver high quality for relatively low cost.

118 The calculation is based on 26 minutes per day: 20 minutes of new video stories and 6 minutes of summary bulletins. 119 Estimated TV and radio figures for 2012/13. Page 53 of 67

BBC Management’s assessment of the public value of its Local Video proposals

7.2.6 Roll-out Model The rollout model for this broadband based proposal has altered since the West Midlands TV pilot. The pilot assumed that in order to rollout efficiently and to make best use of the distribution platforms for a linear model it would be necessary to rollout complete services in a phased manner. That rollout broadly matched the regional digital switchover timetable.

However, the broadband model is not constrained by these requirements. Consequently it is possible to gradually increase the resource to each of the 65 offers in a phased manner. This has the advantage of making the service universal from year one and so delivering public value to all audiences across the UK from early in the roll-out sequence. In addition, it provides the opportunity for much greater synergies with existing BBC services and the changes required as a result of the efficiency programme. The phased rollout model will maximise the opportunities to redeploy existing staff where roles end as a result of savings initiatives to BBC services as they are phased in. This should minimise redundancies and costs of relocation. The phased roll-out will also spread the training load and knowledge acquisition process to maximise synergies from existing skilled staff resource and trainers. Phased roll-out also has the added benefit of giving commercial operators the necessary certainty and lead-time with which to bring forward any planned local video offer of their own should they wish to.

7.2.7 Cost efficiency The cost effectiveness of this proposal is largely based on the considerable advances in multi-skilling and cross platform operations that the BBC’s Nations and Regions Division has made among its existing workforce over the past five years.

There has already been a considerable investment in training and equipping video journalism among the teams currently working on the BBC's existing nations and regional news services for BBC One, building on a new video journalist job category and reward structure. Small lightweight digital video cameras are now used by journalists on a daily basis for news output, whilst desktop editing by journalists is commonplace in BBC newsrooms across the UK.

This investment in multi-skilling has helped to deliver value-for-money efficiencies whilst simultaneously increasing the breadth and depth of video newsgathering by the BBC across the UK. At times of major incidents like the London terrorist bombings or the Boscastle floods, it has also enabled the BBC to carry out multiple deployment of larger numbers of cameras in order to cover the many and varied angles of major breaking news stories. Video journalism has also helped to deliver a more intimate and original news agenda making it more cost-effective to follow a particular contributor or story over a longer period of time. The BBC has also been advancing multi-skilling across its network of local radio stations where an increasing number of staff have gained online skills linked with the network of BBC Local sites. Increasing numbers of district television reporters based at these radio stations have also developed shoot-edit skills. In addition, the long-established Video Nation brand has been boosted by giving local radio producers the equipment and training to facilitate this type of user-generated video content.

The Local Video proposal represents the transformational change in respect of how these multi-skilling changes are embedded throughout the business for Nations & Regions. Training initiatives and skills enhancement that have helped deliver efficiencies and enhanced output for fixed points in a linear schedule will become fundamental to the delivery of a new service. Journalists will work in a largely independent manner on each story shooting and editing, writing text for online services and creating audio for radio output. These changes will over time flow back into traditional linear services to create a truly integrated multi-media operation.

The investment in Local Video represents an incremental investment on top of existing radio, television and online teams who will themselves support the new offer via news planning systems and 'top-up' capture of content as well as the provision of text based services on the BBC Local websites. This

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BBC Management’s assessment of the public value of its Local Video proposals approach therefore leverages maximum value for money on behalf of licence fee payers from new ways of working, new technology and an existing local multimedia news operation.

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BBC Management’s assessment of the public value of its Local Video proposals

8 Value for Money

Local Video is an integral part of the BBC’s Six Year Plan to deliver public value during the current licence fee settlement. The overarching rationale is that the BBC must make use of the best new digital technologies to make its public service content more convenient, more compelling and more relevant for all licence fee payers.

This section of the assessment combines the valuation work in section 6 with the reach forecasts in section 4 to calculate the likely value that would be generated by the Local Video proposal. This is then divided by the cost of delivering Local Video to derive a ‘value yield’ for the proposal. In effect, this measure highlights the return on expenditure, illustrating the amount of public value generated for every pound of investment in the Local Video proposal.

It is important to note, however, that an assessment of the public value of Local Video cannot be reduced to a mathematical calculation and must take into account the wide-ranging benefits of the offer, in terms of purpose alignment, strategic fit and reach, quality and impact measures.

The assessment in this final section forecasts value for money over time. However, in order to safeguard the investment of licence fee payers’ money, BBC Management will conduct a progress review of the local video proposal after 24 months from launch. Although the offer will not be fully operational in each area until 2012/13, Management believes that it is prudent to evaluate the performance of the proposal at this stage. In evaluating performance, we would give consideration to the overall reach, quality, impact and value for money achieved by the proposal and, in particular, to progress against the ‘key performance indicators’ outlined in the application (see section 1).

8.1 Comparison between costs and audience valuations

8.1.1 Overall Value Yield By comparing the perceived value of the new proposals with their cost of provision, we can calculate a ‘value yield’. The value yield is defined as the total perceived value of the proposal in reached households divided by the total cost. The average across the current BBC is approximately 2 and any yield over 1 suggests that the investment would create value for licence fee payers. By 2013/14, Local Video is forecast to generate an average value yield of around 7.

8.1.2 Value Yield by geographic service By separating out the value yields of each local offer, it is possible to assess value created in each area. However, this can only be a part of the judgement involved given the importance to citizen value of universality.

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BBC Management’s assessment of the public value of its Local Video proposals

Figure 33: value yield created for each Local Video area in 2013/4

18.00x

16.00x

14.00x

12.00x

10.00x

8.00x

6.00x

4.00x

2.00x

0.00x Kent Tees Wear Derby Leeds Essex Bristol Devon Surrey Jersey Dorset Suffolk Norfolk Sussex London Cumbria Bradford Wiltshire Cornwall Cheshire Berkshire Somerset Guernsey Shropshire Hampshire Lancashire Isle of Man Oxfordshire Manchester Lincolnshire Birmingham Humberside Staffordshire Herts + Beds Northampton Warwickshire Black Country Leicestershire Foyle and West North Yorkshire Gloucestershire Cambridgeshire South Yorkshire Nottinghamshire Belfast and East Newcastle / Tyne Buckinghamshire South of Scotland Glasgow andWest Mid-Wales - Welsh Edinburgh and East Taysideand Central Mid-Wales - English Highlands and Islands Liverpool / Merseyside Hereford and Worcester North East Wales - Welsh North West Wales - Welsh NorthEast Wales - English South West Wales- Welsh North West Wales - English South West Wales - English North East and Northern Isles Cardiff and South East - Welsh Cardiff and South East -English

Source: Human Capital

This chart shows that the vast majority of the Local Video offers not only build greater public value than they cost, but also increase the average BBC value yield of 2. Ten offers produce a value yield of between 1 and 2, and just one offer is below one (mainly Welsh-language, the Channel Islands and Isle of Man offers). This low value yield is primarily due to the small populations involved in these areas. Given the crucial democratic, cultural and community role of BBC services play in those areas, it is likely that these figures underestimate the value created in these communities.

In any case, the BBC’s commitment to geographic universality and its public purpose-driven commitment to indigenous language programming appear to BBC Management to provide justification for launching Local Video in the small number of areas where the value yield seems to be low (see Section 3).

8.2 Alternatives to the BBC Local Video proposal

The investment in Local Video is self-financed within BBC Nations and Regions. It involves a re-allocation of resources from linear to non-linear services, in line with the BBC’s overall strategy. As a result, total spend across the BBC’s portfolio of Nations and Regions services will marginally decline over the next five years (in 07/08 prices). Television and radio services will still receive three quarters of the available investment.

The development of a strong on-demand video offer is designed to supplement existing news outlets, not replace them. Local Video will deliver additional benefits to audiences. At the same time, the extension of the BBC’s newsgathering capacity across local communities will strengthen the BBC’s existing linear news service for the Nations and regions. The content produced by the new Local Video teams will be published for IP distribution but will also be re-used by the BBC’s linear outlets. As described in Section 5, the ability to achieve this was demonstrated in the West Midlands trial where up to 10 stories a week from

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BBC Management’s assessment of the public value of its Local Video proposals the Local TV teams were re-used on Midlands Today. The most successful stories from Local Video would also be available to enrich the BBC’s UK-wide news service and improve its ability to reflect the changing face of the UK.

In short, the value of the BBC’s news offer to audiences will be higher with the Local Video proposal than without it. This can be explained further by consideration of the alternative investment options available to BBC Nations and Regions.

8.2.1 Do nothing The evidence and analysis presented in this report suggests that the option of not investing in Local Video would be sub-optimal. Although this option would save the start up and operational costs identified in section 7, there would be significant consequences in terms of the public value foregone.

Significant performance ‘gaps’ already exist in relation to the BBC’s community purpose, and the reach to its flagship 18:30 news bulletin is under increasing pressure, particularly among younger audiences. In the absence of the Local Video proposal, the BBC’s ability to deliver its public purposes and meet changing audience expectations is likely to diminish further. Local Video will modernise the BBC’s service portfolio: compensating for the long-term decline in the reach of the BBC’s Nations and regional TV services, attracting a younger demographic to local news and deepening users’ appreciation of BBC Local websites. It will increase the local relevance of the BBC’s news provision and make it available in ways that fit with the long-term shift in news consumption patterns.

The impact of this scenario on the specific KPIs identified for the Local Video proposal would be as follows:

· Public Purposes: fail to address the wide performance ‘gap’ in relation to BBC’s community purpose · Reach: no incremental growth in weekly reach to BBC local online content. The overall age profile for BBC regional/local news will narrow as TV news audiences get older · Quality: fail to address the low net promoter scores for BBC Local sites · Value: value foregone as the public value attached to Local Video outweighs the delivery cost by a significant margin.

At the same time, the Local Video proposal is an ‘enabler’ to reduce the costs of existing BBC linear services. The BBC is committed to a programme of efficiency savings over the next 5 years and regional and Nations’ linear services are included in this programme. The range and quality of output is in part maintained by the synergies with BBC Local Video which will increase the total video news and sport stories available to these linear services. Without the material generated by BBC Local Video, the traditional linear services will struggle to maintain their current quality and impact, as the agreed efficiency programme reduces the resources available specifically for these services.

In addition, a number of the job losses and efficiencies in these services are assumed to be redeployed to the BBC Local Video proposal. Such a programme of redeployment increases the speed at which the service reaches maturity as the training programme is shortened where staff have current skills and BBC experience. It also significantly reduces the implementation costs of the restructuring programme associated with those efficiencies by avoiding redundancy payments and other termination costs that would otherwise be necessary. It is estimated that the redundancy and associated costs that would otherwise be payable should BBC Local Video not proceed would total approximately |||||||||| in nominal terms.

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BBC Management’s assessment of the public value of its Local Video proposals

8.2.2 Reduced Investment There are various alternative ways in which the Local Video proposal could be considered with a lower level of resource. One option would be to reduce the number of journalists - this has been tested by modelling a reduction of 1 EFT journalist in each of the 60 local areas. The saving in cost would total |||||||||| |||||||| per annum from 2012/13.

The impact of this option on the specific KPIs identified for the Local Video proposal would be as follows:

· Public Purposes: the reduction of the performance ‘gaps’ among users would be constrained by the impact on the reach and quality of Local Video · Reach: reduced levels of output would be likely to depress the reach and usage of the offer as fewer stories would carry video. It is estimated that Local Video would reach around 800,000 fewer users on a weekly basis. · Quality: reduce the depth and breadth of the local journalism. The proposed resource for the offer has been designed around a small team for each of the 60 areas with sufficient critical mass to provide the service on each day of the week and with cover across large parts of each day. The effect of rosters and leave means that on some days there are no more than 2 journalists available. A reduction in resource 1 EFT journalist per offer would mean that some specialisms (e.g. sport or politics) could not be covered and the Sunday operation may have to be dropped. Research found that audiences regarded the proposed volume and range of stories as “ideal” for an offer designed to provide relevant news and information about local communities.120 This matches BBC Management’s own assessment of the range of coverage required to offer local relevance, based on existing levels of provision on BBC Local sites in text and BBC local radio. · Value: the direct effect would be to increase the cost of output per hour, because the quantity of video produced would be impacted to a greater extent than the proportionate reduction in total resources. This is due to the fact that reduction would occur among the group of most productive journalists (as opposed to ‘fixed’ staff with management, supervisory and technical responsibilities). Given the likely fall in weekly reach, the weekly cost per user of the proposal would also increase.

This analysis suggests that a reduction in journalistic resources is likely to have a disproportionate impact on the value generated by the Local Video proposal and reduce its ability to deliver its strategic objectives.

A further option for reduced investment would involve restricting the rollout of Local Video to those areas where BBC news resources are currently most limited.

The BBC’s regional TV news cameras are currently spread out unevenly across the UK, reflecting the location of regional and national centres, as well as variations in newsgathering demands and geography. Locations distant from such centres are currently least well served by BBC cameras and reporters. The planned roll-out of Local Video has taken into account inconsistencies in the current spread of resources by allocating fewer video journalists to the areas already best served. On average, there will be one fewer video journalist taken on, as part of the Local Video proposal, in regional centres.

However, it would be possible to save a significant additional proportion of the proposed investment by not investing in new teams of video journalists in the areas that include the BBC’s 15 regional and national centres.121 The analysis presented in this report suggests that such an option would be sub-

120 OLR (2008) 121 Glasgow, Belfast, SE Wales (Cardiff), Newcastle, Leeds, Manchester, Humberside (Hull), Birmingham, Nottingham, Norfolk (Norwich), London, Kent (Tunbridge Wells), Hampshire (Southampton), Bristol and Devon (Plymouth). Page 59 of 67

BBC Management’s assessment of the public value of its Local Video proposals optimal. The affected areas include more than 25 million people, so such an option would exclude nearly half the UK's population from the benefits of Local Video, and so undermine the principle of universality.

The strategic challenges facing the BBC – namely the performance ‘gap’ in relation to its community purpose and the decline in reach to traditional TV news, particularly among younger audiences – are common to all parts of the UK. Equally, the public value of Local Video – in terms of providing high quality, distinctive and relevant news that is available on-demand – will benefit audiences across the UK.

Although percentage reach is expected to be lower in big cities and regional centres (see section 4), the volume of likely users means that the ‘value yields’ for these areas are among the highest (e.g. Kent is ranked first, Glasgow fourth, Manchester sixth and Cardiff ninth). The analysis suggests that Local Video will deliver value that is significantly in excess of cost in all these areas. While it could be argued that certain areas will benefit the most from the Local Video investment, the public value case for the proposal is strong across the UK. It should also be noted that a partial rollout – under either of the above options - would also increase redundancy costs disproportionately, with job cuts highest in the affected areas.

The impact on the specific KPIs identified for the Local Video proposal would be as follows: · Public Purposes: the wide performance ‘gap’ in relation to the BBC’s community purpose would not be addressed in certain areas of the UK

· Reach: significant reduction in the incremental reach benefits of Local Video. The age profile of BBC regional/local news would continue to narrow in those areas without the proposal

· Quality: the existing low net promoter scores for the BBC Local websites will not be addressed in those areas without Local Video

· Value: significant value foregone as the Public Value in virtually all of the 60 areas across the UK is significantly in excess of the delivery cost.

In summary, BBC Management believes that none of the alternative options would deliver an equivalent level of public value as the BBC’s proposed service of Local Video.

8.2.3 Other new BBC services The plan to enhance the BBC’s local online services was a strategic priority in the BBC’s Six Year Plan, approved by the BBC Trust. The Six Year Plan also outlined a series of other priority investments. Each of the new investments is designed to meet specific audience needs and will play a complementary role in the BBC’s portfolio. So far, two new BBC services have been subject to the PVT process (BBC iPlayer and a HDTV channel) and assessed against the drivers of public value: reach, quality, impact and value for money. While Local Video is part of the BBC’s strategy to make use of the best new technologies to deliver its public purposes, the proposal has different audience objectives to the other services. In addition, Local Video is the only one of the three proposals based on content creation rather than content delivery. Direct comparisons are, therefore, of limited value. However, for illustrative purposes, Local Video’s predicted value yield is higher than that for the BBC’s HDTV channel, but lower than that for the BBC’s On-Demand proposals (iPlayer PVT).

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BBC Management’s assessment of the public value of its Local Video proposals

9 The BBC’s role in local markets

9.1 The Local BBC

The BBC’s historic role in the local news market dates back to its establishment in 1922. Local radio was the original service on air in 1922, and the only service offered for the first nine months of the BBC’s existence. Regional television news was added in the 1950s and over the following decades this remained the core service, enriched by a mix of other genres. The most recent major phase of development in the BBC’s local and regional service provision was the rollout of the Where I Live internet sites (now BBC Local), started in 2000.

Overall, the BBC’s involvement in local broadcasting has been healthy for consumers as well as citizens. It is hard to argue that the BBC’s presence has hampered local and regional commercial developments in television, radio or online. The BBC’s services have added plurality to the market and enriched the service for consumers. Similarly, the BBC and ITV have co-existed for forty years in the provision of Nations and regional news. There is no evidence that audiences have been deprived of choice or quality through this competition.

9.2 Relationships with third parties

During the long gestation of the BBC’s new local news offer and in the development of the specific Local Video proposals, BBC Management has spoken to various stakeholders in order to help maximise the public value of the offer, while providing as much certainty as possible to the wider market. Accordingly, Local Video contains self-imposed limits on the scope of the editorial offer and the speed at which it is introduced.

If the BBC is to maintain its commitment to plurality in local markets, it must be ever more ready and willing to drive that commitment through the use of ‘partnerships’ where appropriate. The BBC has taken major strides in recent years in evolving the extent of its partnerships and relationships. For example, BBC Wales based a producer in the County Times local newspaper office in Newtown for a month and advertised a weekly ‘open day’ where local people were encouraged to bring in their stories; the resulting stories were shared between BBC Wales’s services and the newspaper. More, however, remains to be done in how the BBC develops partnerships and this section outlines the BBC’s proposals for how Local Video could help stimulate the overall market for local news.

9.2.1 West Midlands trial Throughout the West Midlands trial, the BBC made every effort to partner with local groups and spread the benefits of its trial as far as possible. The following are a few examples of partnerships created during the trial which demonstrated what a full service could achieve: · The trial involved a contractual arrangement with the Press Association in which the BBC paid for video news supplied from their new Birmingham bureau. The Press Association used the contract as a trigger to introduce video skills at the bureau. · A number of other useful relationships developed with local newspapers on the ground. This included exchanges of material, branded BBC video on newspaper websites, shared editorial initiatives, and a sharing of BBC expertise in video-journalism training. The BBC signed a Letter of Intent with one newspaper group, Trinity Mirror, and the two organisations began exploring the role the BBC could play as a training organisation.

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BBC Management’s assessment of the public value of its Local Video proposals

· A shared photographic competition was run with the Shropshire Star newspaper with the winning pictures in the newspaper and on local television. A “letter of the week” from the newspaper was also turned into a video item, with viewers encouraged to write to the newspaper. · The BBC worked with the Rural Media Company – a film and video charitable organisation – to create content for Hereford and Worcester TV. They provided workshops for anyone in Hereford interested in making a video about an issue which concerned them. They produced 62 films over the course of the pilot ranging from woodworking to a young farmers’ pantomime. · Independent and community film makers have been paid to run workshops in the BBC Stoke Open Centre teaching shoot and edit skills to around 50 people. Chris Bradley Animations worked with parents and children under 10; Junction 15 and Chris Stone Productions ran sessions for older people who wanted to tell their stories and dozens of films have been broadcast. · Birmingham City University (then UCE Birmingham), Wolverhampton University and Staffordshire University were all partners in the trial. As well as students creating content for the BBC’s trial services, the BBC the providing material and resources to help students complete their course work, for example in partnership with Wolverhampton’s Journalism department where a Local TV News element was included as part of degree and foundation courses. In addition, there was a partnership with the dance department of Wolverhampton University. Students produced dance films for the big screen, re-cut and re-choreographed for the small screen, with the BBC provided video training and mentoring. Their material also made ten days worth of films for BBC’s Black Country trial service.

To show transparency and its commitment to plurality in local markets, the BBC commissioned Roger Laughton to undertake an independent review of the trial in the West Midlands. Laughton’s brief included a commitment: · To assess the impact of the local television pilot on the West Midlands media market. · To determine whether the pilot can enable the BBC to develop and grow partnerships in the region. · To consider the extent to which the proposed BBC local broadcasting model might encourage or discourage the growth of other local services on all platforms, including broadband. · To consider the extent to which the new services enrich the offer from the BBC to licence payers in the West Midlands.

In the process of writing his report, Laughton spent time with the BBC’s critics in the press and radio, commissioning limited research on newspaper circulation trends, meetings the DCMS, DTI and Ofcom, talking to and visiting the BBC’s partners and seeking feedback from opinion formers and stakeholders. In line with its commitment to transparency, the BBC has made Laughton’s report public.122

9.2.2 Local Video proposals In order to facilitate this new approach to partnerships and to ensure that working with other local providers is built into the offer, the BBC is prepared to offer a set of proposals on a non-exclusive basis to all local organisations in each of the 60 local areas:

· Making content available to other providers: the BBC would make available its Local Video content to other local news websites, and local TV channels, for free. The BBC would ensure that the majority of its Local Video content can be ‘embedded’ into other websites, whether not-for-profit or commercial.123 Individuals or organisations (such as local newspapers) would be able to supplement coverage on their own websites with BBC content. Embedding would take place on fair, reasonable and non-discriminatory terms and be subject to the BBC’s Syndication Policy and BBC terms &

122 See http://www.bbc.co.uk/info/policies/pdf_text_archive/local_tv_news_laughton.pdf 123 A small minority of content (eg. some sports’ coverage) may be subject to restrictions which prevent embedding. Page 62 of 67

BBC Management’s assessment of the public value of its Local Video proposals

conditions.124 These would ensure BBC content does not appear in an inappropriate context, such as alongside adult material. · Purchasing local video news: the BBC would make available an annual fund of up to 5% of local content creation costs with which to purchase local video news from other providers on a proper commercial basis. This would help further maintain pluralism in the supply of local video news and give the platform of the BBC’s popular local websites to the best content produced in the wider market. · Click Throughs: the BBC would link generously to other providers of local news, improving its existing links to local newspapers and introducing links to commercial local radio stations and other local news websites. Existing links are already generating over one million click-throughs a month, equivalent to one click-through for every six unique users. 125 The BBC believes that in future this rate will increase as the range of links to other providers increases. Plans to make links between sites more meaningful and stronger - for instance, by providing a ‘ticker’ of the latest local headlines that links back to the full stories on other sites (where editorially justified) – should also help drive traffic to other local news sites. In addition to direct click-throughs from bbc.co.uk, the very presence of such links will boost the search engine ranking of these other local news sites, thereby driving further traffic. It is worth noting that approximately 40% of unique users of BBC Local arrive at the websites as a result of Google searches.126 · Training: the BBC would share its expertise and experience providing advice in training and mentoring in shoot and edit skills with local newspapers who wish to take up the offer. As relationships develop, so would other opportunities such as work placements or formal courses. · Editorial: in a number of locations, the BBC has a good track-record of taking part in shared editorial initiatives, such as the shared photographic competition run with the Shropshire Star during the West Midlands trial. In their summary news bulletins, the BBC local teams would also consider including a What the Papers Say-style sequence, with proper credits and, where appropriate, illustrations of the relevant local newspapers. The BBC hopes to ensure useful relationships continue to develop on the ground. · Community Media: the BBC has formal partnership agreements in place with The Community Channel and the Community Media Association. It is committed to working alongside community media companies to improve digital media literacy and to explore joint initiatives for assisting members of the public in making user generated content.

Through the variety of mechanisms described in this section, the BBC could maximise the public value benefits of its proposed offer and the potential benefits to other providers while minimising the risks of adverse market impact. The proposals suggested here would mark a step-change in the effectiveness and scale of the BBC’s collaborations with partners and would ensure that Local Video would play its part in the development of a vibrant and diverse local news ecology.

124 The BBC’s Syndication Policy and Guidelines is available at bbc.co.uk. 125 Sage/BBC figures (Dec 2007). 126 (BBC/Sage Analyst, Oct 2007). Page 63 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Annexes

Annex 1: Existing BBC local online provision BBC Local Video will operate in the context of the existing BBC local provision, which currently serves audiences under the terms of the bbc.co.uk Service Licence. There are various gateways to local online content, for example via BBC News online, BBC Sport or via the BBC Local sites. This content includes:

News · The main news stories in each local area in text. · Audio is added where appropriate from radio output. · Full nations and regional TV news bulletins available on-demand. · Video stories are added when the relevant story has been filmed for regional or national output. Often supported with graphics and maps. · Local information and updates in times of civil crisis like the floods of 2007. · News text, video clips and TV news programmes are available in perpetuity.

News-related material · Includes local events - for example music festivals, sporting events and local celebrations. · Stories and content to support BBC campaigns like Children in Need and Abolition. · In local radio areas brochure support of the station and cross-platform editorial projects across the local radio agenda.

Sport · The main stories in each local area in text. Audio from radio output is added where appropriate. Video coverage is added from BBC Sport where it has the appropriate online rights or if it has been filmed for national or regional TV output.

Travel · Updated information via live feed from a traffic information provider. · Links to traffic cameras operated by traffic agencies.

Weather · Feeds of information and graphics from BBC Weather Centre in partnership with Met Office.

User generated content · Interaction from users which fits in with the editorial purposes of BBC Local is encouraged; includes text comments, blogs, written features, photo galleries and citizen journalism in text and video. All such content will fit the sites’ editorial purposes and comply with BBC Editorial Guidelines. · The public are also assisted in the production of videos – eg. under the Digital Storytelling and Video Nation brands.

Linear derived content · Video as part of pan-BBC projects or deriving from BBC linear content around key BBC knowledge- building genres, such as nature & outdoors, heritage & history, arts & culture and faith.

Live streaming · Sites stream local radio live when they serve an area with local radio coverage. Separate streams of major local events are also offered on merit, in audio and video. Examples include sports where the BBC Sport has the rights (e.g. cricket coverage and a range of minority sports) and political debates as well as video streaming of events such as the Tall Ships Race and the Bristol Balloon festival.

Mobile · Text and re-versioned video material is made available to internet-enabled devices such as mobile phones. Examples include the Luton festival and the Bridgewater Carnival and the Luton festival.

Podcasts and audio on demand · Sites offer audio programmes and highlights on demand, as well as podcasts of radio highlights.

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BBC Management’s assessment of the public value of its Local Video proposals

Annex 2: Proposed Local Video offer geographic areas Existing local radio station and website Existing website but limited radio 127 Newcastle Dorset Cumbria Somerset Tees Lancashire Existing website but no existing local radio 128 Merseyside Manchester Bradford (served by Radio Leeds area) Leeds Black Country (WM radio area) Sheffield Wear (Newcastle radio area) York (North Yorkshire) Humberside (Hull) Highlands & Islands Lincolnshire North East Scotland Staffordshire (Stoke) Tayside & Central Scotland Hereford and Worcester Glasgow & West of Scotland Birmingham (West Midlands) Edinburgh &East of Scotland Coventry and Warwickshire South Scotland Shropshire Leicester North-West Wales Nottingham North-East Wales Derby Mid Wales Norfolk South-West Wales Suffolk South-East Wales. Essex Northampton Isle Of Man Cambridgeshire Beds/Herts (Three Counties) London Existing radio and website in development Kent Sussex (Southern Counties) Foyle and West Hampshire (Solent) Belfast and East Oxford Berkshire Under-served Gloucester Wiltshire Cheshire (parts served by Merseyside/Stoke) Bristol Buckinghamshire (served by Three Counties) Devon Surrey (served by Southern Counties). Cornwall Guernsey Jersey

127 Dorset receives an opt-out news service from BBC Radio Solent with separate news bulletins on weekdays. The BBC also invests in separate travel and sports coverage for the county. BBC Somerset broadcasts an opt-out from BBC Radio Bristol for 44hrs pw. 128 The BBC does not provide the same breadth and depth of local radio coverage in Scotland as it does in England, but some news bulletin services do exist, such as for Highlands & Islands, the NE, and community services for Orkney and Shetlands. Page 65 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Annex 3: Research Annex

Prior to initiation, the approach to the Local Video research was agreed with the BBC Trust and discussed with Ofcom.

The audience research for this application was generally conducted among representative samples of adults in the UK or among trialists of the BBC’s West Midlands trial. For one strand of research (OLR 2008) we specifically excluded people with “no interest in local news and events” because of the need to engage the respondents for a full day’s deliberations.

Deliberative Juries (OLR 2008)

BBC Management commissioned deliberative jury sessions in order to provide considered and informed feedback from the public on whether BBC Local Video is of value to them. Deliberative research is often used in the public sector to aid policy-making decisions since it combines the depth of qualitative groups with a statistically-valid quantitative research component.

The appointed agency, Opinion Leader Research (OLR) conducted six one-day workshops across the UK (Manchester, Sheffield, Cheddar, Chelmsford, Llanelli and Aberdeen) in January 2008, each comprising around 20 licence fee payers. At four locations the sample was split between broadband and non- broadband users in order to gauge the impact of access to broadband upon the reaction to the service. Out of the eventual final sample of 121 respondents, 82 had broadband and 39 didn’t, only a slight over- representation of broadband users. As previously mentioned, those who had “no interest” in local news and events weren’t asked to attend; only those that said that they were “very interested” or “quite interested” were invited.

The format of the day was a mix of group discussions and individual responses on paper, informed by a presentation on the proposition by BBC Management, a demonstration of how the content would be accessed, a few example items of local news that would have been produced by video journalists and a range of relevant factsheets.

The six-hour sessions culminated in each respondent casting two votes for or against the proposition, one from a personal and one from a citizen perspective. Respondents were also asked to attribute a weekly ‘willingness to pay’ value (from a personal and, separately, from a citizen perspective) for the BBC Local Video offer benchmarked against other existing BBC services in order to provide a quantitative basis for assessing the public value of the BBC’s proposals for Local Video.

Quantitative Research – Hall Tests (BMRB 2008)

To complement the public value focus of the deliberative jury research, BBC Management also commissioned a quantitative study to assess existing regional and local commercial media consumption and the possible impact on this consumption of the planned launch of BBC Local Video. This would primarily feed into the independent preliminary assessment of the likely market impact of its proposals, but also inform forecasts of the reach and usage of Local Video. In order to inform respondents of the BBC’s proposals, BBC Management produced a short film of five minutes duration which outlined the proposition, set out what the benefits would be and drew attention to existing commercial provision. The film was generic and wasn’t specifically versioned for any location.

We needed considered feedback from a sufficiently large sample of respondents where stimulus needed to be shown and the respondents could be left to complete a questionnaire themselves. We judged that hall tests were the most appropriate method of doing this. A hall test is where respondents are recruited in a public place such as a shopping area and then invited to a nearby venue (the “hall”) to answer a few questions. In this case they were engaged for around 15 minutes, a total of ten minutes of questions, with five minutes spent watching the explanatory film in between.

There were a total of 1,036 interviews conducted in 21 locations across the whole of the UK (at least two locations in each of Scotland, Northern Ireland, Wales, England North, England Mid, England South and London). All adults aged 16+ in the UK were eligible to take part in the survey and quotas were set to ensure a broad representation of views at each location. The final results were weighted by macro area to correct for any over and under sampling. Page 66 of 67

BBC Management’s assessment of the public value of its Local Video proposals

Distinctiveness Analysis (Human Capital 2008)

Human Capital was asked by BBC Management to conduct content-based research - BBC Local Video: distinctiveness analysis - to assess whether there were any areas of ongoing distinctiveness offered by the proposal. This research, conducted by Human Capital, centred around a detailed analysis of typical output on the West Midlands trial as well as output on alternative local audiovisual news services currently available via broadcast or over broadband.

It compared the BBC output to video material available from thirteen alternative sources: nine local newspaper websites with video news, and four broadcaster websites with local news online. These sites were selected to ensure that the BBC proposition was being compared to sites that contained the most advanced local video online and other selection criteria – such as area type, geographical factors and – in the case of newspaper sites – ownership. A further 120 local newspaper sites were also examined against seven high level metrics.

Research linked to the West Midlands trial

In 2005 the West Midlands was selected as a good test-bed for trialling the BBC’s local audiovisual news ambitions since it was capable of being split into six different areas for six distinct offers – two of these areas were largely rural (Hereford and Worcester, Shropshire), two of them shire counties (Coventry and Warwickshire, Staffordshire), two of them urban (Birmingham, the Black Country). As with the proposals for Local Video, the trial was built around existing local radio broadcast areas and BBC Local (formerly Where I Live) sites.

There were two separate audience reviews arising from the nine-month trial in the West Midlands (December 2005 to August 2006) that are directly relevant to the present BBC Local Video proposal.

Essential Research (2006) conducted an online survey of 2,300 users of the service via broadband. There was a representative cross-section of respondents from each of the six local areas covered by the trial and from all ages (16 years and upwards). The questions related mainly to consumption of the trial offer and their views on the service according to a range of criteria such as excellence, innovation, distinctiveness and design.

BBC Management also commissioned Professor Roger Laughton (2006) to provide an independent assessment of the public value and market impact issues likely to arise if the BBC were to introduce local television services in the UK. His report provides a balanced, disinterested and considered overview of the proposition’s likely impact on local marketplaces and the strengths and weaknesses of its public value ambitions. It was submitted in November 2006 and is available online.

Preliminary Market Impact Assessment (Human Capital 2008)

Human Capital was asked by BBC Management to undertake an independent preliminary market impact assessment of the BBC Local Video proposal. This is submitted separately alongside this document.

In summary, their approach addressed the markets in which the BBC’s Local Video proposals will operate and identified any economic activities that may be affected by the existence of the BBC’s proposals. The preliminary market impact assessment does not represent a full market impact assessment. As such, the report draws mainly on existing market analysis, competition cases and research and does not quantify in detail the possible impacts of the BBC’s proposals.

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