Ofcom says BBC local expansion part of 'headwinds' facing local news publishers
Two years after saying it didn't see a problem with the BBC's local news push, the regulator is facing questions about why it's changed tack - and whether it's up to the job of safeguarding local news
Hello,
On Friday morning, with no fanfare, Ofcom published its final report in the local news market. The broadcasting regulator was commissioned to do the research after noisy protests from publishers ahead of the Beeb’s mid-term charter review that its expansion into local news online was putting existing organisations at risk.
Given the fact that Ofcom rubber-stamped the BBC’s plans, using BBC data which insisted there was no risk to publishers (more on that a bit later on), it’s shifting position is worth delving into.
The BBC has long insisted that the Corporation isn’t to blame for the challenges facing the local news sector. And Ofcom concurs. So too, do publishers - no-one has ever put all the challenges facing the sector at the door of the BBC. But publishers have been steadfast in saying that the BBC was always going to make matters worse.
And now, in describing the BBC as ‘part of the headwinds’ facing publishers, it would appear Ofcom is coming to the same conclusion.
But what next? That’s what we look at in this week’s newsletter.
Thanks for reading,
Behind Local News
BBC now part of the headwinds facing local news - and risks ‘displacing’ commercial page views in some markets
The BBC has become part of the headwinds facing news publishers working to find a sustainable future for independent local news, Ofcom has said.
In a significant shift from its position two years ago, when the broadcasting regulator backed the BBC’s plans to invest heavily in creating online local news in direct competition to existing publishers, Ofcom has now said “it is possible that in some local areas, additional BBC page views may be displacing commercial page views to some degree.”
And it added: “We recognise that increased BBC online local news forms part of the headwinds facing local publishers.”
Ofcom said the BBC wasn’t to blame for an overall decline in page views at commercial publishers, instead pointing to longer-term trends such as news avoidance, and changes into referrers such as Google and Facebook.
It said evidence to to date showed ‘weak’ links between BBC expansion and local news challenges, saying this was because it was hard to disentangle BBC activity from other factors, such as “changing attitudes to news, social media and search engine algorithms and policies towards local news.”
It said: “It appears the decline in commercial page views is part of a longer-term trend predating the BBC’s changes, although we recognise that these changes may be contributing to some degree.”
The admission that a plan approved by Ofcom was now leading to the BBC being part of the headwinds facing commercial publishers is a significant change in position. It will raise further questions in Westminster about Ofcom’s role in monitoring the BBC’s approach to local journalism — having previously come under fire for supporting the dismantling of local radio services around the country.
Ofcom’s position also directly contradicts assurances from the man behind the BBC’s plans, Rhodri Talfan Davies, who said in December last year that the expansion wouldn’t harm existing publishers.
Ofcom has also indicated the BBC would struggled to get support for further local expansion, adding: “Our qualitative research noted that if the BBC provided more localised online content, people might choose it over alternative online sources, suggesting greater potential for substitution. Therefore, some future BBC changes may require further consideration by the BBC and Ofcom.”
What has Ofcom found?
BBC England local news page views have risen 40% since March 2023, while page views to other Nations the BBC serves, and which have not had additional resource, have fallen by 30%
In that time, commercial local news page views in England have fallen 20%, but only 10% in other UK Nations.
Overall, BBC local news page views have risen from 200m in March 2023 to just under 300m in June 2024, while commercial local publications have fallen from around 750m in March 2023, to 600m in June 2024. BBC local news market share has risen from 23% to 31% in that time.
In some areas, including Shropshire, the Isle of Man and Jersey, the BBC had 90% market share of page views, and less than 20% market share in Tyne and Wear, Birmingham, Black Country and Merseyside.
The number of local news stories being created by the BBC England team has more than doubled — which aligned with its 40% increase in page views would suggest demand for its local news is not keeping up with supply.
The launch of a new online section for Bradford had led to the creation of 100 extra articles a month, and added up to 8m page views a month to the BBC in West Yorkshire.
In Wolverhampton, which also has a new BBC service, up to 150 additional stories are being written a month, with up to 7m extra page views a month to the BBC in the West Midlands region.
In Peterborough, story count is up by around 150 a month, and page views for the area have risen by around 4m a month.
Only in Wearside, the fourth new launch area, has total page views in the area actually fallen, despite an addition 100 stories a month.
Referrals from Google to BBC England have risen from 14m to almost 45m. Google is known to favour pages which load quickly, something made all the more possible when not having to load ads on pages.
Ofcom-commissioned research showed the majority of BBC News readers hadn’t noticed a change in coverage. “People liked that the BBC provided content free from paywalls and advertising, and felt the lack of advertising and pop-ups made for a more pleasant user experience,” they concluded.
In the research, people reported not wanting to pay for local news and information. Some felt that if the BBC was able to provide sufficiently localised content, with a better user experience (for example, advert free), they might choose it over alternative online sources.
What’s at the heart of this?
Ofcom was tasked by Government at the start of the year to produce a local media review, with a particular focus on the impact the BBC is having on local news across TV, radio and online.
The BBC used the money saved from cutting local radio services to create new digital journalism posts, increasing the number of local news stories produced on its local ‘index’ pages.
130 roles were created across a range of local news services, including additional journalists reporting across its local news services online.
Publishers said this text-and-images approach put the Corporation in direct competition with them as they also contend with multiple other challenges, including news avoidance, advertising revenue shifts and less support from referrers such as Facebook.
Ofcom, in reviewing the proposal at the time, rejected concerns from publishers, instead relying on BBC market impact data and analysis and claiming it would lead to only a minimal reduction in digital advertising revenue at established publishers.
Publishers continued to reject this assertion, and last December united to brand the BBC ‘neighbours from hell’ in the weeks before Government told Ofcom to investigate the local news market.
What has the reaction been so far?
The News Media Association has called on the BBC to work with the industry to develop a sustainable future forlocal news.
CEO Owen Meredith said: “In the Local Media Review, Ofcom has acknowledged that ‘increased BBC online local news forms part of the headwinds facing local publishers and that there may be some local areas where BBC viewing is displacing commercial viewing’ and that there is potential for the problem to get worse in the future.
“It is now time for the BBC to acknowledge this and work with us to develop a sustainable future that promotes local news instead of obstructing it — and for Ofcom to decisively lead the way in achieving these goals, rather than continuing with the overly cautious approach it is currently adopting.
“The Review calls on the government to take action that supports local journalism, rightly highlighting the innovation within the local news sector and the huge audiences it commands. We look forward to engaging on this important work as it develops.”
Local publishers have been vocal in their concern that the BBC would do damage to the local news sector, regularly pointing to the fact much of what the BBC is now producing online is a replication of what is already being covered.
What does this mean for Ofcom?
Question marks have also been raised about Ofcom’s understanding of the local news market, and its willingness to challenge the BBC.
Henry Faure Walker, CEO of Newsquest, wrote at the weekend: “Should we be concerned that the BBC has used its licence fee muscle to almost double its market share of the local online news market in less than two years.?
“They’ve done this by diverting resources away from radio and making a big push into local online news. Do we really want a local news future that is only dominated by the Beeb?
“It’s about time, Ofcom, the regulator that is supposed to supervise the BBC, stepped in. Based on past form, I am not optimistic.”
Ofcom has previously been under fire for allowing the dismantling of BBC local radio, which has left most BBC local radio stations away from big cities with just a few hours of truly local programming a day, and in some cases, being unable to cover breaking news events ‘out of hours.’
It’s likely MPs will renew their focus on whether Ofcom was right to allow the BBC to divert funding from local radio, and to invest in a direct competitor to existing publishers in the way it has. In 2023, the regulator was criticised by MPs from all parties for allowing local radio to be changed.
Ofcom v the BBC — a blame game
In the face of strong criticism from publishers over its expansion plans online, BBC bosses have regularly cited Ofcom’s decision to support the plans in their defence.
Ofcom, in its report this week, described its role differently.
It said: “We reviewed the BBC’s materiality assessment and, based on the information available at that time, we agreed with the BBC that the change was not one that may have a significant adverse impact on fair and effective competition, and was therefore not a material change.
“We said we would monitor progress and gather information from the BBC and commercial operators to consider the actual impact of the BBC’s changes on audiences.”
The man leading the plan, Rhodri Talfan Davies, told Press Gazette last December: “ the media regulator Ofcom has reviewed the BBC’s local online plans and determined that they are unlikely to have a significant impact on other local providers.”
In March, he told the Lords review of news: “When we decided to put additional investment into local online to fund these additional journalists, we submitted those plans in full to Ofcom.
“Ofcom provided independent scrutiny of those plans. It came to the conclusion that they would not materially affect commercial providers. In fact, it estimated that the impact on commercial revenues would probably be in the order of 0.5%. We are not unilaterally making these decisions. We are making analysis and recommendations, but our regulator, Ofcom, then runs the rule over those plans.”
Much of this centres around the BBC’s materiality assessment produced in 2022, a redacted version of which is published on the Ofcom website.
While it is correct to say the original analysis was carried out by the BBC, Ofcom does say in the report it ‘modified’ the BBC’s work to ‘understand the potential impact of the changes.’
This resulted in Ofcom concluding that the impact on local news revenue would be between 0.49% and 2.75%, and between 2.4% and 13% for total digital advertising revenue. Ofcom ultimately predicted a maximum impact of 1% on revenues.
However, as digital revenue is directly related to the number of page views local publishers get, it makes sense that the data reported by Ofcom has resulted in a decision to declare the BBC now one of the ‘headwinds’ facing local news.
What next?
Ofcom says it will continue to review the local media landscape annually, and also intends to launch a Public Service Media Review next year which will include local news.
But it has stopped short of saying the BBC should reverse its local news expansion, but has indicated it would be less likely to support further local news expansion by the BBC.
The BBC says it remains committed to deep relationships with the local media sector, and is continuing to fund the Local News Partnership, which runs the 165-strong Local Democracy Reporter scheme, re-tendering for which has just begun.