Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of witnesses (Questions 55 - 79)



  Chairman: We are delighted to see you here this morning, as it still is. We are going to go straight into questions with Mr Faber.

Mr Faber

  55. You kindly have provided us with a succinct, brief document about your views on the White Paper. I would like to start you really on point four, the future of online regulation and your views on online regulation. How important to you is the online content that you put out as well as your newspapers? How important is that to you in your overall publishing at the moment? How do you see it growing and what role and what level of profit do you see it reaching in the future?
  (Ms Clark) It is quite a small part of our business at the moment. We think it will carry on expanding. We do not think it will kill off newspapers, there is no sign of that at the moment. We think it is an important place for us to be and we are looking at different areas, and how we are going to use it. As I say, it will not kill off newspapers, I do not see any sign of that.

  56. Are you saying at the moment it is effectively a loss leader, you are investing in it but not drawing any profit out of it?
  (Ms Clark) Not across the board, no, some parts of it are making a profit.

  57. Some are?
  (Ms Clark) Yes.

  58. How do you intend to expand on it? How do you intend to build on it? I quite understand it will never take over from newspapers per se. One or two round this table might hope that.
  (Ms Clark) We will be driven by what people demand and how they use it. There are different ways where it can provide additional information to supplement what is in the paper. Some people prefer to access news in that way but we will be driven by the consumer.

  59. How do you, as an organisation, anticipate that it will be regulated in the future as laid out in the White Paper, the content?
  (Ms Clark) We are slightly confused by what the White Paper is saying. On the one hand the Government seem to be advocating self-regulation. We have some concerns about the statutory back-up to this regulation, whether you can have self-regulation with a statutory back-up. There is also the term co-regulation which we feel should be better defined.

  60. The truth about the Internet at the moment is that self-regulation is almost impossible. It would only be a moral self-regulation effectively on organisations such as your own which have a name to protect and obviously would want to maintain their standing in the public and with government?
  (Ms Clark) Our print publications are regulated by the Press Complaints Commission and our online publications are also regulated by the Press Complaints Commission. They are editions of our offline newspapers.

  61. You are happy for that to continue?
  (Ms Clark) Yes, we are very happy for that to continue.

  62. You say "... online distribution is in its infancy and requires large investment by the private sector". You hinted a moment ago that investment varies across the board within your own organisation. You then go on to say that because of the BBC being allowed to use its licence fee to produce its own very good web site, which indeed gets considerable praise in the White Paper, you clearly feel that is unfair and that is restrictive against your own publications.
  (Ms Clark) We have concerns about the BBC when they move into the commercial side of the Internet.

  (Ms Clark) Yes. If you look at it in a different way, if someone invented printing today and the BBC was allowed to migrate all its services on to print, if that situation had occurred would we have the hundreds of local newspapers, thousands of magazines and 22 vibrant national newspapers that we have? I do not think we would. There can be crowding out and we are concerned with those elements of it that are using taxpayers' money funding powerful brands.

  64. How would you like to see it? Would you basically like to see a higher level of regulation for the broadcast web sites to bring them down to your level?
  (Ms Clark) Sorry?

  65. You are seeking a higher level of regulation for them.
  (Ms Clark) I think we are seeking scrutiny. We are seeking a higher level of scrutiny about what they do with taxpayers' money.


  66. In your memorandum you deal very understandably at some length with the issue of cross-media ownership. Now the Government has left over pretty well completely the issue of cross-media ownership in its White Paper. You are, of course, an extremely powerful organisation and there would be those who would argue because you are so powerful with considerable interests in the electronic media as well as the print media that you are a very good example of the need for stringent cross-media ownership. On the other hand, there will be those who argue, and I think perhaps I will be one of them, that in an age of proliferation of media, particularly electronic media, the stringent regulation of cross-media ownership, particularly on the basis of what seem to me to be highly suspect figures that were in the last Broadcasting Act, means that certainly cross-media ownership is over-regulated and maybe we are approaching the time when it need not be regulated at all because there are so very, very many voices. It may well be that your inclination is to agree with the latter point of view. I would be interested to hear the reasoning behind it to add to what you say in your memorandum.
  (Dr Stelzer) I have been invited to respond to that by Alison. First of all, I think that there would in any event be residual regulation of cross-media ownership if the specific rules disappear because the normal Competition rules would apply, so the danger of excessive concentration of economic power in the media would be coped with by standard competition policy, and no-one is proposing to eliminate that. The question of just how powerful a media organisation is is difficult to come to grips with. There is no question in my mind that media are somehow different from other industries in terms of their effect on public opinion and so on. But, in the end, there are no franchises in the media business, as we have seen some newspapers not do well. I think the power lies at least in part with the consumers who have to be lured into buying these newspapers every day or turning on the television programmes. My feeling is that the trouble with the cross-media ownership rules is what you pointed out, Chairman, that they pulled the number 20 per cent out of somewhere and it does not really have any meaning. But I think the main thing is that there are the Competition rules in place and it seems to me that they would prevent any excessive concentration. Your point about proliferation adds to that. We are seeing more and more and more ways that people can communicate to consumers. I know in America right now they are reviewing the cross-media ownership rules. It is 90 per cent likely that they will be gone before the year is out. They are just obsolete.

  67. If one is looking at a multiplicity of voices or single voices, there is a view extended that your organisation, which as I say is very powerful, is liable to concentrate and dominate in public opinion. Yet if one looks at your newspapers, at the last General Election one of your newspapers supported the Labour Party, the other newspaper did not support any party though I have to say it did support the candidate who was standing against me.
  (Dr Stelzer) It was not a policy I made, I hope you understand that.

  Mr Maxton: You still have not been forgiven.


  68. I do not think it singled me out. BSkyB, in which you have a substantial interest of course, has not got any political voice at all and has never attempted to have one. Do you think that there is some lurking fear of the principal figure in your organisation that arouses certain emotions that make people feel that cross-media ownership regulation has got to prevail in order to prevent the potentiality of something happening which is not, in fact, happening?
  (Ms Clark) We would not want to be accused of being paranoid or anything but what do you think the reason is?

  Chairman: Everybody in this place is paranoid, if we were not then there would be something wrong with us.

Derek Wyatt

  69. It is the Peter Principle.
  (Dr Stelzer) I do not think there is any question that that is a factor that is in people's minds, that there is an aura around Mr Murdoch that seems to me every time I come here—I spend more than half my time here now—quite amazing. I think about it a lot as to why it is. I think it is the price a revolutionary pays when you revolutionise broadcasting by competing with the established monopoly, when you revolutionise work practices in the print industry. We have the same thing in America, when you take on the oligopolies in television broadcasting it engenders resentment and fear. I think those factors do overlay people's approaches. They do not say it, they dress it up in economic concentration ratios and so on, but I think that is a factor that is present. I do not think there is any way out of it.


  70. Mr Faber was asking you about regulation and regulation on the Internet. There is a strong basis for believing that such regulation in the longer term is just not possible. Clearly under the kind of regulation that exists in the Broadcasting Act 1996 cross-media ownership can exist and can continue to exist. Does News International believe that there should be any kind of regulation of cross-media ownership and, if so, what? Is there a belief that the time has come when what some people might regard as a very old-fashioned approach to the media that is out of date should be abandoned entirely in any Broadcasting Bill brought forward in the next Parliament?
  (Ms Clark) The latter is true but obviously we do understand that competition law will still be in place.

Mr Maxton

  71. Could I just take up a question coming back to Mr Faber's questions on regulation of the Internet. Are you saying that this is impossible? Do you think that it is impossible to regulate the Internet?
  (Ms Clark) I think there are various ways in which the Internet can be regulated. Obviously normal laws which apply offline will apply online and I think the way forward is for self-regulatory codes to be developed by the industry.

  72. Self-regulation is not the same as regulation, strictly speaking, is it? Self-regulation by an industry is not necessarily the same as a Government saying "this is what you will do"?
  (Ms Clark) No, it is not.

  73. It has to be self-regulation, does it?
  (Ms Clark) I think the only reason to have content regulation in any electronic media is when there is spectrum scarcity. I think the market will provide enough choices and that self-regulation is okay when you have not got this scarcity of spectrum.

  74. But the Internet is international and even self-regulation is going to be difficult to work, is it not?
  (Ms Clark) I think it is going to be easier than state regulation.

  75. Certainly it will be easier than state regulation, but is it possible to regulate at all? If somebody is putting out some material on the Internet that is highly undesirable and within a particular country they say "you are not going to put that out", all they have to do is move to some other country that says "yes, we will allow you to put it out". What do you do about that?
  (Dr Stelzer) It is easier in a totalitarian society to do that. The Chinese have been relatively effective and some of the Middle Eastern countries have been relatively effective, but those are societies where you really control what people get access to and there are very severe penalties if you violate them. It is still difficult there, there are a whole lot of freedoms you would have to be willing to give up, among other things deciding what is highly desirable.

  76. So looking at some of the content on the worldwide web, on the Internet, which is, as you have admitted, basically not able to be regulated, why on earth do you want to stop the BBC from producing such a superb web site? What is your problem with that? Why can anybody put out whatever pornography they like around the world but the BBC is not going to be allowed to put out superb services to people around the world?
  (Ms Clark) To be fair, we did not say we wanted to stop the BBC having web sites. What I said was I am concerned about where they go into commercial areas.

  77. What do you mean by a "commercial area" exactly?
  (Dr  Stelzer) In the White Paper there is an interesting page on market failure in which they discuss with as much precision as is possible from a Gavyn Davies' report as to what possible boundaries might be set. On the one hand you can say that there ought to be no limit, the BBC can do anything it wants, and no-one is saying that, and on the other you can say they should not be allowed on the web, and no-one is saying that. So you have got this difficult middle area and what you try to do, I think, as a matter of public policy at least from an economic point of view—I do not presume to comment on the social policy in Britain—is to say "What will commercial broadcasters provide? What is not being provided because of various kinds of market failure and the peculiarities that are set forth in the White Paper?" That would be a proper role for a public broadcaster to try to fill. You can then lay over that social policies, if you want to, but at least I think you can start with an economic dividing line that is hazy of the sort that Alison described.

  78. Let me ask you a specific example. Virgin Radio stream live on the web and so do Radio One, which is a very similar type of pop broadcasting, although they may play different music I accept. Are you saying in those circumstances Radio 1 should not be on the BBC web site?
  (Ms Clark) I do not think I have ever given that any particular consideration.

  79. It seems to me that that is commercial competition between two people providing a similar service.
  (Ms Clark) I think the problems we have seen are if the BBC has a particular programme which is based, for example, on a motoring programme and they then launch a commercial site linked to that programme, how is the market ever going to compete with that?

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