Andrew Jones: Absence of an in-house news service is more than symbolic for STV

THIS is a serious blow to STV. The company has been lobbying furiously, confident that its alliance with Bauer Radio and ITN would guarantee success. Few people imagined that a newspaper-led consortium with limited broadcasting experience would win.

It comes as a welcome boost to beleaguered print journalists burdened by endless talk of their impending demise.

The need for a sustainable model that can compete with BBC Scotland has troubled policy-makers for some years. The Scottish Broadcasting Commission proposed a completely new channel. But with a price tag of up to 100 million, it was never likely to win public funding.

The government has targeted the BBC licence fee and hoped that, by top slicing money allocated to the digital switchover project, alternative news providers would emerge. It is no coincidence that cash-starved newspaper groups feature heavily in each of the three winning bids.

Print journalists still outnumber their broadcasting colleagues by a considerable margin. It opens up the prospect of an "ultra" local service. The BBC Trust has assisted by restricting the development of regional content. Although Scottish newspapers have been slow to offer compelling online content, this contract offers the financial incentive they need.

Television is still important in Scotland. Digital and mobile content is a critical component, but the 6pm slot matters. Most people regard the medium as their primary source of news. STV staff can fill many gaps, but the Scottish News Consortium will not employ them all.

STV might continue for some years. The company has been building up its Scottish credentials. But the absence of an in-house news service is more than symbolic. This will reopen debate on the company's future and many will wonder how long it will take ITV's new management team to launch a hostile bid.

But time is running out. The Conservatives support an alternative model and hope to remove the IFNCs (independently funded news consortia) from the Digital Economy Bill. It is difficult to believe that binding contracts will be signed in advance of the general election. Funding beyond the initial pilot phase is also very uncertain.

The success of the Scottish News Consortium signals radical strategic change. The media sector knows it must work far more closely together to survive. How long will it be before there is a serious attempt to merge at least two of our famous newspapers into a single title?

• Andrew Jones is a media expert at Robert Gordon University in Aberdeen.