With the referral of the BSkyB merger to the Competition Commission, thoughts turn to the question of how we got into this mess in the first place, and how, with reform of legislation and self regulation we might get out.
It is worth recalling that were it not for an intervention by a committee led by Lord Puttnam almost a decade ago, the Sky merger would have been waved through some time ago. The Draft Communications Bill of 2002 proposed a framework on media mergers without a public interest test. Were that framework in place today, News Corporation would already have bought BSkyB. It was only after an intervention by the Joint Scrutiny Committee – a committee of MPs and peers chaired by Puttnam– that the public interest and plurality test was inserted in the legislation, leaving Ofcom to work out how to measure ‘plurality’.
So the 2003 framework at least had a plurality test. As we have found out to our cost, this was, however, an inadequate fudge. As Ofcom pointed out in their report on the plurality test for News International’s purchase of BSkyB, the problem with the legislation is that it bites only when there is a merger. Plurality problems (one company having too much control over public opinion) can also arise when a company grows, as Sky has, steadily in the last decade, whilst their competitors do not.
Another key part of the UK media plurality framework are the limits on media ownership in the Communications Act Schedule 14. These so called ’20-20 rules’, are a complex system of thresholds which as a rule disqualify holders of more than 20% of newspaper markets from holding more than 20% of some television and radio licences. These bite when there is a change in a broadcasting licence.
These interventions are all very well, but as Ofcom has acknowledged loud and clear they do not actually offer the public any guarantee that plurality will be safeguarded, because they only come into play if a merger or a change in a broadcast license results in a lessening of plurality. If, as in the case of the News International BskyB merger there is a strong case that a lessening of plurality occurred before the merger situation arises, the merger test may return the answer that the merger itself does not result in a lessening of plurality.
As Peggy Valcke described in a recent LSE seminar, many other countries, and in particular Belgium and the Netherlands, have put in place systems of annual reviews of media concentration and plurality which enable monitoring also of endogenous growth of media companies, and procedures for undertakings to deal with plurality threats that arise.
The Government is fortunate that Jeremy Hunt announced recently – and before the furore of recent weeks – that he is conducting a full review of the policy framework on the media. This offers an excellent opportunity for a full debate of the framework for media pluralism, and he should show his resolve by leading the debate on these issues yet understanding that the executive should stand back from detailed prescription of the outcome.
Parliament should be given the opportunity to discuss an appropriate framework of market reviews, and other safeguards of plurality and standards, such as independent production quotas, self- and co-regulation of journalism ethics (more on this shortly) and the role of independent civil society boards on the German model, but this can only be made to work if there is a system of regular market reviews which deal with the root of the problem. It is clear that media power has not been subject to sufficient checks and balances in the UK. Stronger safeguards should be enforced when media organisations grow beyond a certain threshold in terms of their size and market power.
It’s a shame to have so many inaccuracies in such a short post. First, it was of course News Corporation, not News International, that proposed buying BSkyB. Secondly, the plurality test would in the end have been exercised by the Competition Commission – Ofcom’s test was simply to establish whether the transaction “might” have a negative impact on plurality. Thirdly, when Ofcom carried out its last statutory review of cross-media ownership (yes, these already exist), it reported no problems and made no significant recommendations. Since then, there have been no significant shifts in shares of news provision, other than the large growth in the BBC’s share of TV news consumption (up 10%, from 60% to 70%, entirely at the expense of ITN). The growth of BSkyB as a platform is entirely irrelevant to a plurality review. Sky News’ share of news consumption has been static for years. There has been a small increase in News International’s share of national newspaper circulation in the last decade, but only because its sales have fallen less precipitately than those of Trinity Mirror. NI’s share is currently about 31% (since the closure of the News Of The World), not the 40% asserted by Ed Miliband. Ofcom had every opportunity to launch a plurality review when Northern and Shell bought Channel 5 (a very obvious reduction in plurality), but declined the opportunity. And the 20-20-20 provisions apply at all times, not just during transactions – and, as BSkyB found to its cost, normal competition rules barred it buying more than 7.5% of ITV in the open market (ie, without a formal transaction).
Needless to say, ownership plurality is no guarantee of plurality of views: but then, there’s a limit to how government can micro-manage newspapers, short of a Hungarian-style media law.
David thank you for taking the time to comment on the post, and correcting me on News International vs News Corp. That was a slip and I will correct it.
I find your other points less persuasive. I am in the process of writing a longer paper setting out exactly what reforms could be undertaken so you can look forward to a more detailed clarification in September.
You point out some relevant aspects of the existing framework which in my short post I didnt really go over in much detail. My point is not that there are no rules in place, but that the current rules have not succeeded in fostering an appropriate level of plurality.
Like all three main party leaders, I think reform of media plurality regulation is an important part of the response to the recent revelations about News of the World journalists, and more importantly to the apparent cover-up and collusion between press, politicians and police. Like Ofcom, I am exploring the idea that new rules and a system of regular market reviews of media ownership should be part of the new framework.
You correctly point out that Ofcom’s role in the special media merger regime currently is to advise the Secretary of State on whether enough doubt exists about the plurality implications of the merger to justify referral to the Competition Commission. We can differ about whether this part of the whole procedure or only the bit the Competition Commission does should be called a plurality test. In blog posts it is sometimes necessary to use some shorthand terms. I wouldn’t call that an ‘innacuracy’.
By Ofcom’s review of media ownership, I presume you mean the triannual reviews of media ownership which Section 391 of the Coms Act obliges Ofcom to do. I am of course aware of these but my proposal is for market reviews that would be more frequent than these and which would apply new criteria which Parliament should debate in the light of the Leveson Inquiry.
My point about the 20-20 rules was that whilst they do take the form of a ban on holding a broadcasting licence, and could indeed be invoked at any time, they tend to come into play when there is a change in a licence or a transaction of some kind.
The current framework indeed presents Ofcom with a range of powers to report, intervene or recommend in relation to media plurality. The point is that Ofcom (like Parliament and the Police) has not been inclined to use these powers. The revelations of recent weeks will have implications for how we think about media plurality in this country, so it is likely that each of these constituencies in the future may interpret their role differently. They may have more courage.
Your comment does not really engage with the overarching argument. Are you saying that you think the current framework is the appropriate one? I would be interested to hear your views on recent events, and in particular what reforms if any of press and media regulation we should consider in the light of 1. phone hacking and 2. the cover up and apparent failure of regulation. I am against knee-jerk responses, but think we need to think hard about what has gone wrong.