BBC Trust says no to local video plans in provisional conclusions

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The BBC's plans to expand local video online have been refused, the BBC Trust has said, as part of its provisional conclusions on the scheme released today .

The plans, which would see £68 million invested over five years in on-demand video across a network of BBC Local websites , would not sufficiently improve services to the public to balance the investment of licence fee money required and the negative impact on commercial media, the body said.

"It is clear from the evidence that, although licence fee payers want better regional and local services from the BBC, this proposal is unlikely to achieve what they want," said Sir Michael Lyons, chairman of the Trust.

"We also recognise the negative impact that the local video proposition could have on commercial media services which are valued by the public and are already under pressure.

"Our decision today to refuse permission for local video means that local newspapers and other commercial media can invest in their online services in the knowledge that the BBC does not intend to make this new intervention in the market."

The BBC should prioritise improving its existing services, including regional news programming, which is demanded by the public, Lyons added.

The Trust's provisional conclusions were backed by an independent Market Impact Assessment (MIA) conducted by industry regulator Ofcom , which said the overall market impact on local media would be negative.

Newspaper publishers in particular would be affected by the plans and local commercial media could expect a 4 per cent drop in annual revenues if the plans went ahead, the MIA found.

"[T]he launch of BBC Local Video services would have significant negative impact on future innovation in online local news, sports, and weather services by the commercial sector, particularly newspapers," said the regulator in a statement.

"Commercial providers have strong ambitions to develop these parts of their businesses, despite commercial uncertainties. There is already a prevalence of local news sites across the country."

The plans have previously met with staunch opposition from regional newspaper publishers , who have accused the BBC of threatening their online development.

At the annual Society of Editors conference, Trinity Mirror chief executive Sly Bailey also criticised the corporation's plans to work with local news organisations , describing them as 'nonsense'.

Potential alterations to the plans proposed by the BBC were also considered by Ofcom, but the group said these would not outweigh the negative impact of the new video services on other providers.

In its Public Value Assessment (PVA) of the plans, which included 24 responses from industry and 131 from members of the public, the Trust also found that a broadband-only local video proposal would not help the corporation expand its reach to currently under-served audiences.

The £68 million budget proposed for the developments will be reallocated and removed from the BBC's regions and nations division for return to central control, Lyons said at a press conference following publication of the Trust's conclusions.

A final decision on the proposals will be made by the Trust on February 25 next year.

The group's initial conclusions will be open to public consultation until January 5 2009.