By Torin Douglas
BBC media correspondent
Channel M's owner GMG said the station was no longer sustainable
Drastic cuts at a respected community TV channel in Manchester have raised questions about the future of local news and the reshaping of local media in the UK.
Channel M, under the ownership of Guardian Media Group (GMG), pioneered the convergence of local TV, newspapers and online news services.
Many see this as the only way forward for the local media, as more and more of their advertising moves on to the internet.
The station was singled out in the Conservatives' blueprint last year for restructuring local media as "the most successful local television in the UK". Now it's ceasing most production.
Channel M began life as a student TV station, and opened officially in 2003, winning a Restricted Service Licence to broadcast in and around Manchester.
Later it became available on cable and satellite and the internet. To keep costs low, it used content and staff from the Manchester Evening News, owned by GMG.
At its peak, the channel was producing live news broadcasts five days a week at 5pm and 9pm, as well as a live three-hour breakfast show, incorporating music, sport and entertainment.
Now, most of its original production is to be stopped, after GMG failed to find a buyer for it when it sold the Manchester Evening News and its other regional newspapers to Trinity Mirror.
The station will remain broadcasting, showing mainly archive material, network news and traffic, but 29 of the 33 staff are likely to lose their jobs.
Many saw the Manchester station as a model for the government's new breed of Independently Funded News Consortia (IFNCs), designed to make regional news bulletins for ITV1.
The door was opened after Michael Grade, ITV's executive chairman, said it could no longer afford to provide them.
But the Department for Culture Media and Sport chose three other areas for its pilot IFNC projects - the north-east of England, Scotland and Wales.
While the Digital Economy Bill, giving legal backing to the IFNCs, goes through Parliament, industry experts are sifting bids involving ITN, the Press Association, several regional newspaper groups and other production companies.
An announcement of the winning bids is expected later this month.
But the Conservatives have warned the bidders they will scrap the IFNCs if they come to power.
Jeremy Hunt, the shadow culture secretary, said: "Propping up regional news simply casts a failed regional TV model in aspic and would actively prevent the emergence of new, local media models."
Instead, Mr Hunt wants to create about 80 local multi-media companies, each producing TV, radio, print and online services.
The Tories said Channel M lacked 'significant advertising revenue'
He takes his inspiration from city TV in the United States and Canada and points out that Birmingham, Alabama, has eight local TV stations, while Birmingham in the UK has none.
He said recently: "We want to see the emergence of a radically different, improved and forward-looking local media sector.
"Not just local TV, where we are about the only major developed country not to have proper city-based TV franchises, but profitable, hungry and ambitious local radio, local newspapers and local websites."
To achieve this, the Conservatives would scrap the cross-media ownership rules that prevent local media companies merging.
The plan was set out in a paper last summer by Roger Parry, former chairman of Johnston Press.
He proposed that Ofcom should advertise a single bundle of about 80 local TV licences, to be run by a "spectrum band manager", which would then allocate them to independent local consortia.
But the industry remains sceptical about city TV, more than two years after Mr Hunt first put forward his vision.
At a recent event, several experienced TV executives and financiers reminded him that Channel One, the London cable TV service run by Associated Newspapers, lost £25m before being closed - and that Channel M in Manchester was also loss-making.
This fact was acknowledged in the Conservative blueprint, which has a three-page annexe devoted to Channel M.
It said the channel had "a good audience share and has won many awards but, lacking significant classified advertising revenue and without shared network programmes, it is loss-making."
That could be changed, the paper suggested, if Channel M were part of a national network of local stations, which would allow syndication of content and access to national advertising budgets.
So why is Channel M cutting back just as the two biggest political parties see its model as a way forward for local media?
In a statement, GMG said the station was no longer sustainable in its current form.
It cited "the absence of a committed buyer, the loss of access to news from MEN Media, and the costs associated with the requirement to leave its current building".
Trinity Mirror declined to buy Channel M when it acquired MEN Media, despite its involvement in the government's IFNC bids. GMG's chief executive Carolyn McCall said she was "surprised Trinity Mirror didn't see it as a strategic fit".
Would it have made any difference if the north-west of England - rather than the north-east - had been chosen as one of the IFNC pilots? Or would that simply have delayed a reality-check that has implications for the whole industry?