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The Trust reached its decision after conducting a public value test of Â鶹Éç management's proposals to introduce a web-based local video service across the UK.

Sir Michael Lyons, Chairman of the Â鶹Éç Trust, said:

"It is clear from the evidence that, although licence fee payers want better regional and local services from the Â鶹Éç, this proposal is unlikely to achieve what they want. 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.

"We believe the Â鶹Éç's priority should be improving the quality of existing services. The public wants better quality regional television news programmes and more programmes of all kinds produced in and reflecting their areas. We would expect Â鶹Éç management to consider carefully the conclusions of this public value test before returning to us with new proposals.

"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 Â鶹Éç does not intend to make this new intervention in the market."

Â鶹Éç management's proposals

Within the bounds of existing service licences, the Â鶹Éç offers regional news on television, local radio and local websites. Programming from the Â鶹Éç's television services can be shown on the internet.

In May 2008 Â鶹Éç management submitted proposals to the Trust to introduce an additional local video service, covering news, sport and weather, on enhanced Â鶹Éç Local websites in 60 areas across the UK with an additional five Welsh language services. The proposed service was to have around 400 staff and a total budget of £68 million covering a four-year period from launch.

The Trust decided that the proposals were a significant change and should be subject to a public value test, including a public value assessment by the Trust and a market impact assessment by Ofcom. Both are summarised below.

Public value assessment (PVA)

The PVA, conducted by the Trust, concluded that a broadband-only local video proposal would not extend the Â鶹Éç's reach to those audiences it is not serving very well.

Some people in low income groups or living in remote areas may not have access to broadband. Younger audiences want a local online service which includes a wider range of commercial content, such as cinema listings, which the Â鶹Éç does not provide. Those aged between 34 and 45 – a target audience for local video – are more likely to be settled in an area and interested in news about local schools and hospitals. But typically they have less time to search for content on the web and, facing competing demands for internet access from children, they turn to TV, radio and newspapers instead. Older people already consume Â鶹Éç local news and their preference is an improvement in quality of Â鶹Éç regional news programmes.

Against the background of increased financial pressures on the Â鶹Éç, the PVA concluded that the service would not create significant new reach or impact in return for the investment of licence fee funds.

Market impact assessment (MIA)

The MIA, conducted by Ofcom, found that the overall market impact likely to arise from the local video proposals, is expected to be negative, with newspaper publishers among those most affected.

Next steps

The Trust has instructed that funds totalling £68 million that would have covered the four-year period from launch be removed from the Nations and Regions' budget and returned to central funds. Expenditure of this money will be subject to Trust agreement.

The Trust's decision not to approve local video is open to public consultation until 5 January at: (now closed).

The Trust will publish its final decision by 25 February.

The Trust has asked the Executive to consider their own response carefully and in particular whether existing regional and local television and radio services can better address the performance gap originally identified by the Trust.

Ends

Notes to editors:

1. The Trust's provisional conclusions are available on the Â鶹Éç Trust website, alongside the public value assessment, audience research and responses to the first period of public consultation.
2. General information about the public value test process is available: Tools we use
3. As part of the PVA, the Trust received 24 responses from industry and 131 responses from members of the public. It also actively consulted stakeholders.