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May 30, 2008

Local video news on the web: It’s the independents that count, not Archant or the BBC

By Peter Kirwan MM blog

So which side are you on? Do you like the BBC’s proposal to create up to 300 new jobs in journalism by adding video news to its local websites?

Or are you with Sly Bailey of Trinity Mirror and Ian Davies of Archant, who fear that the BBC’s investment will crush local newspapers’ “embryonic” sites?

It’s an ugly choice. Face-to-face with the nasty structural reality, the in-fighting has started in earnest. Naturally, both sides have big credibility problems.

This week, it emerged that the Corporation’s online operations have over-run their annual budget of £74m by 48%.

That’s impossible without the connivance of very senior managers. The inevitable result should be high-level sackings.

Instead, we got weasel words from BBC trustee Patricia Hodgson. After investigating, she has decided that the overspend isn’t attributable to human beings. Instead, the “management structure for online activities in the BBC” is to blame.

To cap it all, the BBC’s online operations have been promised £150m+ to spend next year — if they stick to unspecified tighter financial controls.

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With this simpering response, the BBC Trust is steering the Corporation’s mighty hull toward a big rock marked The End Of The Licence Fee. Politically, this is about as inept as it gets.

You can’t blame Mark Wood, the chief executive of ITN, for seeing all of this as sinister — rather than merely tragic.

“Commercial competitors thought the BBC website was already over-funded at a declared budget of £74.2m. Thanks to the work of the trust we now discover the real figure is £110m rising to £114m next year.

“On top of that, the BBC plans to add £39m of funding which the trust has limited powers to prevent. That means that instead of a £74m website we are dealing with a £153m website.”

The regional press has a different credibility problem. In fact, it has several of them.

Ian Davies’s reflexive attack on a BBC that is bending over backwards to minimize the perceived threat feels a bit overdone. For example, there seems to be potential for collaboration with local newspapers in the BBC’s proposals, plenty of scope for linking and driving traffic. But these ideas have been lost in the storm of invective.

Another problem: Most regional newspaper chains enjoy de facto local monopolies. In the absence of competition, monopolies will spend peanuts on developing their businesses.

Only a few weeks ago, for example, Tim Bowdler, chief executive of Johnston Press, told analysts that the company had already made its big investments in what he calls “digitization”. Henceforth, he said, developing digital operations “needn’t cost an arm and a leg”.

Really? That’s a claim that would meet with skepticism at the Telegraph, the Guardian — and lots of other places where web projects demand constant funding and development.

Meanwhile, on his blog Out With A Bang, journalist-entrepreneur Rick Waghorn says that the big regional chains could afford to compete with the BBC — if they wanted to:

“Look at the money that is still — even now with all the challenges and new competitors that they face — still being channelled shareholders’ way. Can we find £68 million over five-years in there, somewhere? Probably…

[But what are the] chances of any one of those boys getting up at an AGM and saying: ‘Look people, we need to invest in our medium and long-term future… so we’re not doing a dividend this year…’?

The reality is that dividends are still flooding out of these companies like there is no tomorrow; or maybe, that’s because they know, newsprint-wise there may be no tomorrow. . . So, in part it’s a question of priorities. Who we looking after here?

The answer is that regional newspapers are looking after their shareholders. In doing so, they put print media first — because that’s where the cashflow is. But by doing that, they jeopardize their ability to invest in the future.

So there we have it. You can throw in your lot with a spendthrift with the managerial-financial equivalent of Tourette’s. Or a miserly incumbent who has mortgaged the future to pay for the present.

Some choice. I’d don’t envy Ofcom.

That said, there is a third voice that should be heard amid all of the shouting.

Rick Waghorn, you see, is just the kind of journalist-entrepreneur who could, and should, represent a major part of the future of local news provision.

A former sports reporter on the Norwich Evening News, he has poured his redundancy money into setting up three vibrant web sites for fans of Norwich City, Ipswich Town and Colchester United.

Waghorn and entrepreneurs like him remortgage their homes and work 80-hour weeks. They don’t get audiences with Lord Fowler’s committee in the House of Lords. Nor do their views become page leads in the Guardian or Press Gazette.

But they’re the real innovators.

It would be positive to see Ofcom acknowledge businesses like Waghorn’s as the “embryonic” operations that actually matter.

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