A report in the Buzzfeed website, here,  written by Mark Di Stefano, claims that  

"The BBC has been paying hundreds of thousands of pounds of licence fee payers’ money a year to a TV company that produces often unusable local news content and that insiders say was established solely to obtain subsidies from the public broadcaster.......

At the time, critics warned the policy was ill-thought-through and little more than an attempt to dilute the BBC’s economic power by rerouting its public funding.

The company that has benefited most from Hunt’s initiative is That’s TV. Founded by a businessman called Daniel Cass, it has become by far the biggest player in the field, scooping up 14 of the local broadcast licences with potential total earnings, via the BBC, of over £3 million of public money....

The company successfully applied to Ofcom 14 times in the last few years to relax the amount of local content its stations were required to show. In one instance this involved cutting the 35.5 hours of local programming a week to just 7.5.