APPENDIX 59
Memorandum submitted by The Daily Mail
and General Trust
INTRODUCTION
The Daily Mail and General Trust (DMGT) welcomes
the inquiry announced by the Culture, Media and Sport Select Committee
ahead of the government's draft bill on communications. We are
grateful for this opportunity to provide you with DMGT's views
on media ownership and related issues.
Our main conclusions are as follows:
BROADCASTING
— Plurality should be preserved by
ownership regulation within each media sector. Longer term a share
of voice measure may be more appropriate as media distinctions
blur.
— With appropriate ownership limits
delivering plurality within each media sector (we suggest three
owners including the BBC), cross media ownership restrictions
between newspapers and radio are unnecessary.
— Diversity of content will be delivered
through a combination of ownership deregulation and a licensing
regime. It should not be dealt with by ownership regulation.
NEWSPAPERS
— Newspapers transactions should be
subject to discretionary review ex post facto by the Competition
Commission.
— The same review criteria should be
applied whether or not the acquirer is an existing newspaper owner.
— The review should be conducted by
the Competition Commission and its findings should be binding
on Government.
— Local newspapers and newspapers assets
should be removed from the remit of the regime.
— There should be no criminal sanctions
for non-compliance.
ABOUT DMGT
The Daily Mail and General Trust (DMGT) is a
broad based media group growing rapidly on an internationally.
Our businesses include:
| Associated Newspapers |
Daily Mail, The Mail on Sunday, Evening Standard, Metro, Loot and Ireland on Sunday
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| Northcliffe Newpapers | regional newspapers, 20 daily & 21 weekly titles
|
| Teletext | on ITV & Channel 4 (analogue) on digital terrestrial, satellite & cable television and on mobile telephones
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| DMG Radio | 60 radio stations in Australia
|
| DMG World Media | consumer & trade exhibitions worldwide
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| Euromoney Institutional Investor | international financial publishing conferences and training
|
| Hobsons Study Group | education and recruitment publishing and training for students worldwide
|
| DMG Information | information and software publishing for risk managers primarily in insurance and property
|
We are also investors in UK Radio and have been since its
very beginning in 1973. We have a 27 per cent interest in GWR
Group, one of the leading UK radio groups, and the pioneer of
digital commercial radio.
THE CURRENT
BROADCASTING REGIME
Our concerns are:
Current rules have discouraged investment
Although DMGT is a major investor in UK radio we have been
prevented from controlling a significant radio business in the
UK by current regulations. This has led us, to date, to concentrate
our radio operations overseas. Media laws should enable media
companies like ours to invest in UK radio for the longer term,
not discourage them.
Current rules discriminate against terrestrial broadcasting
Under the existing Broadcasting Act, there are no restrictions
on newspapers controlling UK licensed satellite news services,
yet newspaper ownership of terrestrial radio stations is severely
fettered. Rules like this are discriminatory and inhibit investment
in radio. Communications regulation should as far as possible
be technology-neutral.
Current rules are less liberal than other countries.
The UK's current rules on newspaper/radio cross-ownership
are less liberal than many other countries, including those with
highly-regulated regimes like Canada, France, The Netherlands,
Belgium, Germany, Italy, Spain and Poland. We should not slip
further behind them.
Current rules give an unfair advantage to foreign media players
EU media groups which do not own UK newspapers but which
are major press owners in Europe currently have an unfair advantage
over UK press groups in the ownership of UK broadcast assets.
But their markets are for a variety of reasons not as open to
us as our market is to them. The Government recognises this in
the context of newspapers and should take the opportunity to correct
this imbalance in broadcasting.
PROMOTING INVESTMENT
AND DIVERSITY
WITHIN UK RADIO
The radio industry needs investment, in particular to develop
digital radio. DMGT believes that newspapers and radio are natural
partners and together can provide better services to consumers
through:—
1. cross-fertilisation of creative ideas;
2. co-operative development of new services (eg local
internet portals);
3. radio stations having access to greater news gathering
resources;
4. pooling resources for the development of digital radio,
including cross-promotion.
Newspapers do not generally impair broadcast impartiality.
Teletext, which is used by 22 million people a week, is subject
to strict impartiality controls. There has never been any suggestion
that the editorial independence of the service has been affected
or influenced by its common ownership with the Daily Mail.
Diversity is more a licensing issue, than an ownership issue
Concerns about diversity of services and content are best
addressed through the licensing requirements rather than ownership
regulation.
A NEW REGULATORY
ENVIRONMENT
Regulation needs to be simple and clear
Concerns about ownership both within and between media sectors
should be dealt with by clearly defined and understandable parameters.
Present arrangements — such as the Radio Authority's operation
of public interest tests — are opaque, arbitrary and unpredictable.
RADIO/NEWSPAPER
OWNERSHIP—DMGT'S PROPOSALS
DMGT believes the Radio Authority's proposals for ensuring
that there are a minimum number of commercial radio stations in
any market is an acceptable way to achieve plurality, although
given the Government's willingness to consider abolishing local
newspaper ownership control, we believe local radio should be
viewed in the same way.
We support the suggestion in the Media Ownership consultation
paper that the government "could deregulate further"
than the current Radio Authority proposals, and we would support
a system requiring a minimum of three separately owned radio stations
in a market including the BBC. This principle should apply to
both local and national radio.
With the above protections in place, and plurality in radio
protected in this way, we believe it is unnecessary to place further
restrictions on newspaper/radio cross ownership.
Instead, we believe that the Radio Authority's three-to-a-market
proposals for maintaining local plurality can usefully be extended
to the cross-media arena so that:
— a national newspaper would be permitted to own
an INR licence provided that there were at least two other independent
owners of national radio licences in the market, including the
BBC. The number of other national radio licences to be counted
should also include any national digital licences (other than
simulcasts);
— as now, there should be no specific restriction
on the ownership of national digital radio stations by national
newspapers—to impose new restrictions would be a retrograde
step;
— as now, there should be no cross media ownership
restrictions between newspapers and national or local radio multiplexes—to
impose any would be a retrograde step;
— if there were more than three national radio services,
then the number of radio licences which could be owned by the
newspaper proprietor would increase proportionately provided there
were always two other owners of radio in that market including
the BBC;
— there would need to be grandfather provisions
to allow the continued holding of a licence by a newspaper organisation,
or vice versa, if circumstances beyond the control of either occurred
to reduce the number of other licences in the market, or if the
BBC withdrew from that market.
We believe this proposal also guarantees plurality across
radio and newspapers by ensuring that there are always at least
two services that are independent of any particular newspaper
group. We believe the system described would be appropriate for
both national and local radio markets.
WIDER CROSS
MEDIA OWNERSHIP
We do not disagree that some measure of media concentration
may be needed to address one owner's share across the media market
as a whole. We believe that our proposals above adequately guarantee
plurality as between newspapers and radio. However, should Government
consider that some further plurality measures across the entire
media market may be necessary, we would support a Share of Voice
scheme.
Share of Voice
Measurement by Share of Voice or Media Impressions is a far-reaching
proposal advanced for a number of years by DMGT and others by
which to assess market positions for regulatory purposes. This
is our preferred option for the future and is increasingly being
considered in other countries (eg the US). However, while we recognise
that the UK government may not think it would be appropriate now,
we consider it important that research and modelling work is carried
out under the auspices of OFCOM to ensure that in future all the
necessary information is available to give such a proposal full
and proper consideration.
We would also not object to proposals, such as a sliding-scale
approach as referred to in paragraph 6.5.11 of the government's
consultation paper, although the exact percentages and market
definitions among other things would need careful debate.
THE NEWSPAPER
REGIME
The current newspaper merger regime, which was introduced
in 1965, is no longer appropriate in today's media world, which
offers a much broader range of choices to both readers and advertisers.
Ex post facto control is now the appropriate way to govern
newspaper transactions. This means that the competition authorities
would have the power to review a newspaper transaction up to four
months after completion, using the same procedure as is currently
in place for other transactions in all other industries. Parties
to a newspaper transaction could therefore decide whether to submit
their proposals to the competition authorities for prior approval
(or for confidential guidance), or take the risk of the transaction
being called in for review.
The review of the transaction for any public interest concerns
must apply to newspaper owners (however many titles they own)
and non-newspaper owners alike. If there is any sensitivity attaching
to newspaper ownership (a fact which underlies both the current
regime and the government's proposals), it is critical that all
purchasers are subjected to the same public interest test. The
review should be carried out by the Competition Commission, which
has a wealth of experience in assessing both competition and freedom
of expression issues in newspaper transactions. It is difficult
to see what additional expertise OFCOM could bring to this process,
since there has never been any suggestion that the Competition
Commission is in any way ill-equipped to deal with freedom of
expression and public interest judgements.
The political element should be removed entirely from the
review process. It would not serve the public interest for an
independent investigative body (currently the Competition Commission)
to produce a detailed report (taking evidence from interested
third parties), and for the Secretary of State for Trade and Industry
to then be free to overrule its conclusions.
DMGT agrees with the Consultation Paper's proposals to remove
local newspapers and newspaper assets from the remit of the regime,
as well as the proposal to remove criminal sanctions for non-compliance.
It will be important to ensure that there is no regulatory
"double jeopardy" if there is some broadcast element
in a newspaper take-over or vice versa. It would be unacceptable
for two regulators both to be adjudicating public interest-style
tests where there was some element of discretion.
OTHER ISSUES
Plurality tests
In the Media Ownership consultation paper, the Government
discusses the possibility of revising the existing cross ownership
thresholds and applying a Plurality Test to any future business
developments that exceed the new limits to introduce a degree
of "permeability". So long as the Plurality Test were
not a substitute for clear rules with substantially raised thresholds,
but would operate in circumstances where thresholds would otherwise
be exceeded, DMGT are neutral on this proposal. If it were in
substitution for clear and simple rules with substantially raised
thresholds, DMGT would strongly oppose it.
DMGT would not support political influence in the conduct
of the Plurality Test. If the Government is to de-politicise newspaper
mergers, the same should take place in cross-media mergers.
Biennial Reviews
The Government's consultation also proposes an automatic
review mechanism every two years to respond to market developments.
DMGT support this proposal and would like to see an open process
of review conducted by OFCOM, making recommendations to the Secretary
of State.
11 January 2002
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