Culture secretary Jeremy Hunt today confirmed he is scrapping the three proposed regional TV news pilots due to have been run by consortia of local press groups.

In his first major speech on media policy, Mr Hunt said the £130m that had been earmarked for the Channel 3 news pilots would instead be used to fund the rollout of superfast broadband.

But there was a silver lining for the regional newspaper industry as Mr Hunt also revealed he has asked Ofcom to remove all cross-media ownership rules at a local level.

The government hopes the move will open the way to a new network of ultra-local TV and radio stations owned by local newspaper groups.

In his speech at London’s Hospital Club, Mr Hunt said he believed the previous government’s plans for independently-funded news consortia (IFNCs) were “misguided.”

“They had the positive benefit of stimulating new and imaginative thinking amongst local media companies for which I am grateful – and I want to carry on talking to those who submitted bids about your ideas,” he said.

“But, fundamentally, they were about subsidising the existing regional news system in a way that would have blocked the emergence of new and vibrant local media models fit for the digital age.

“They risked turning a whole generation of media companies into subsidy junkies, focusing all their efforts not on attracting viewers but on persuading ministers and regulators to give them more cash.”

Mr Hunt explained that his proposed review of ownership rules will allow local newspapers to own local commercial radio stations and set up local TV stations.

But he added: “In addition I have asked Ofcom to go further and look whether we should remove all cross-media ownership rules at a local level.

Mr Hunt has appointed Nicholas Shott, Head of UK Investment Banking at Lazard, to conduct an independent commercial assessment of local TV over the summer, ahead of a “local media action plan” to be published in the autumn.

The three independently-funded news consortia schemes in Scotland, Wales and the North-east and Border region were to have been funded using money from the BBC licence fee digital switchover surplus.

The previous government had awarded licences for the pilots to the following consortia: