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Newspaper Industry (Scotland)

1 pm

Mr. Mark Lazarowicz (Edinburgh, North and Leith): I am pleased to have the opportunity to highlight an issue that is important to the newspaper industry in Scotland and has wider implications for newspapers elsewhere in the UK.

My choice of debate has been prompted by the recent speculation about the likely future ownership of The Herald, the Sunday Herald and the Evening Times, following the announcement by the Scottish Media Group that it was disposing of those interests, and in particular about whether those papers will be purchased by the current owners of the Scotsman group. A great deal of debate has taken place in Scotland, the Scottish media and the Scottish Parliament about the possible sale of the Herald newspapers to The Scotsman. It is right that Westminster should also focus on the issue, given that policy on competition, including competition in the media industry, is the responsibility of the UK Parliament.

I am aware that press reports at the weekend suggested that the owners of the Scotsman group—more precisely, Ellerman Investments, which was the vehicle for the bid—had been excluded from the final shortlist of two possible purchasers for the Herald newspapers. However, that does not render today's debate unnecessary—in fact, it is even more appropriate.

First, from the way in which corporate mergers often unveil, a takeover involving The Scotsman and The Herald may come back on the scene again. Secondly, and more importantly, the possible sale prompts much wider questions about the way in which media ownership is regulated in Scotland. Given that later today the House is beginning its detailed consideration of the Communications Bill, it is appropriate to highlight my concerns, which are shared by other hon. Members.

I am not making any particular criticism of The Scotsman's owners for seeking to buy the Herald newspapers; nor am I motivated by any particular dislike of The Scotsman's editorial line, or any individuals associated with the papers. I do not always agree with the editorial line of The Scotsman or the other papers in its stable, but I am as likely to choke over my breakfast at something I read in the Daily Record or The Herald as at something in The Scotsman.

I recognise also that The Scotsman has recently adopted a role as something of an outsider from what it sees as a dominant Scottish political and media consensus. I am not sure that all my colleagues would agree, but I believe that by doing that The Scotsman plays a valuable role. In a small country such as Scotland, a danger is that differing views and challenges to a political consensus become excluded from public debate.

In so far as The Scotsman has chosen to challenge received wisdom, I welcome it. It highlights the very reason why I believe that the Scotsman group of newspapers should continue to be distinct and separate from the Herald group.

In Scotland, the Scotsman and Herald groups are two distinct and competing newspaper groups, both opening their pages to a wide range of views and contributors,

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and both very much competitors in the market. That competition is even more apparent in their respective Sunday publications, which have both established themselves as papers with a Scotlandwide readership and appeal. My fear, and that of many others, is that if the ownership of the two groups were to become identical, such diversity and competitiveness would diminish and run the risk of disappearing.

Senior figures from the Scotsman group have said that if there was a takeover, The Scotsman and The Herald, and presumably the Evening News and the Evening Times, would remain separate titles. Despite the sincerity of those who made the pronouncements, there must be a risk of a diminution in diversity and competition because of the normal pressures from shareholders and the market. What has been said about The Scotsman and The Herald, has not been said, as far as I am aware from the reports, about the future independence of the Sunday Herald and Scotland on Sunday.

No matter what good intentions there may be, there is a risk of the papers' separate existence being eroded because the media world is competitive. New channels and methods of communication are being developed all the time. Shareholders need a return on their capital. If the two groups of papers were to merge, there would be an inevitable tendency for an owner of the combined group to consider ways of cost saving sooner or later. It would be amazing if they did not, and it would probably be an abdication of their responsibility to their shareholders.

One can easily foresee the pressures that there would be to merge various aspects of operations of the two newspaper groups. Why would there need to be a multiplicity of foreign teams? Why would there need to be two parliamentary teams, either at Westminster or at Holyrood? Why not just have one team in both Parliaments? Obviously, that one team would report events in the same way for both papers. Why have two sets of offices in cities and towns throughout the length and breadth of Scotland? What is true of news operations, which are perhaps more visible to politicians, would undoubtedly be true of the many less visible aspects of the businesses. The merger would affect everything from the advertising sales department to farming reports and distribution networks. That would be a clear threat to jobs in Edinburgh and Glasgow, in particular.

What is even more significant to the political process is that at a time when it is especially vital that there are a range of voices in the Scottish media to ensure that there is a vibrant political debate and a hard-hitting scrutiny of the Scottish political scene, there is a risk of two very different and powerful voices being replaced by one voice alone. That would be bad for Scottish democracy—a democracy that is still finding its feet in a new world following the establishment of a devolved Parliament and Administration.

Those in the metropolitan media world may not fully appreciate the significance of such a merger in relation to public debate, news coverage and media policy in Scotland. They should ask themselves what the reaction would be if there was a prospect of The Guardian and The Times merging, without any other broadsheet papers in the market as major contenders. If that were to happen in London, there would be an immediate

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outcry and a chorus of voices from all parts of the media and political spectrum demanding that the regulators intervene. That is what a merger of the Scotsman and Herald groups would mean for Scotland, and that is why the issue is so important.

I call on the Government to refer any such merger to the Competition Commission. Even though the takeover of the Herald newspapers by the Scotsman newspapers may no longer be an immediately likely prospect, the issues it raises have a much wider significance. The issue emphasises that although a newspaper or media outlet may be relatively small in terms of the United Kingdom, its significance for a region or nation of the UK may be much greater. There is a need for such special interests to be taken into account when newspaper mergers and takeovers are on the agenda. The Communications Bill emphasises the need to ensure plurality of views in the newspaper industry. It is important that the role that a newspaper plays in a regional or national arena—particularly one with its own political arena, such as Scotland—is taken into account.

I well understand that the Minister has to be careful in what he says about the competition authorities. He may be especially reluctant to comment on a potential takeover rather than a specific proposal, especially when the takeover might not even proceed. I should not be surprised if he were uncharacteristically restrained in his statement today, but I would be delighted if he could expand on any of the issues.

My hon. Friend should, however, give assurances to the House that, whenever a takeover of the Herald titles takes place—as eventually it will—if it occurs under the present rules for regulating competition in the newspaper market, he will, in deciding whether to refer to the Competition Commission, take into account the role of both the Herald and the Scotsman group in the Scottish market. They should both be treated as national newspaper groups, not merely as regional groups within the UK. Will he, together with his ministerial colleagues, ensure that the new competition regime for newspapers that will be established under the Communications Bill takes account of the need for plurality and diversity in the newspaper market at the local and regional, as well as the UK level? The needs of Scotland, in particular, should be acknowledged.

1.11 pm

Mr. Tom Clarke (Coatbridge and Chryston): I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) on introducing a debate on an important issue that is highly topical in Scotland and has major implications not just for the future of the Scottish media but for democracy itself. I warmly welcome his decision to apply for this debate and I am delighted that he was successful in securing it.

I look forward to the Minister's reply. If I smiled a few moments ago when my hon. Friend was speaking, it was because he referred to the Minister's reluctance to become involved in controversy. I had never viewed the Minister in those terms before, particularly in his journalistic role. If anyone understands the Scottish media, it is he, and we have many reasons in Scotland—not least his contribution to the West Highland Free Press—to be grateful to him.

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I want to underline the crucial importance of having a variety of opinions on, and interpretations of, the work of this place as well as the Scottish Parliament. I would greatly regret the takeover of The Herald and other newspapers by another news group, which would then have a virtual monopoly on reporting and the expression of opinion. The chattering classes in Scotland—I have never seen the like elsewhere—are renowned for expressing strong and diverse opinions. Ownership is power—used and often abused—so we must take the correct decisions on these matters.

My hon. Friend spoke about the reporting of this place and the new Scottish Parliament. It is important to reflect on how opinions are presented to mould the perceptions of the readership of Scottish newspapers. The Scottish Parliament is at an early stage of its development. Frankly, it has not been helped by the way in which the chattering classes have reported it. We have also suffered here, because many of the important issues that are dealt with day after day at Westminster are simply disregarded by a media in Scotland that should show greater maturity and responsibility. The events that occurred over the weekend give us a little more encouragement, as my hon. Friend said, but I would very much regret it if the two major newspapers—The Scotsman and The Herald—and their sisters newspapers found that they had the same owners and therefore the same political influences.

I do not want to dwell on what I regard as my own unsatisfactory experience with the Scottish media for three or four years in the 1990s. I must say, I hope objectively, that they behaved disgracefully towards me, although that is a matter for memoirs or another debate. If our democracy is to flourish in this place and in Scotland, we must have the pluralism that we want and to which the people of Scotland are entitled. It would be very grave if the owners of The Herald and its sister newspapers also owned The Scotsman and its sister newspapers. Variety, democracy and pluralism are important, and my hon. Friend has done us a great service by introducing this debate. I am sure that the Minister will respond appropriately.

1.16 pm

The Minister for Energy and Construction (Mr. Brian Wilson) : I, too, congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) on securing this debate on the important questions of competition and plurality in the Scottish newspaper industry. I say that not only from the perspective of a Member representing a Scottish constituency, although in the light of the comments made by my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) and my own modest history of press proprietorship I should, perhaps, enter a disclaimer. I am not, however, thinking of entering a late bid.

It is widely recognised that a vibrant and diversified press is essential for healthy, democratic debate, especially in a nation such as Scotland that shares many interests with the rest of the United Kingdom but also has its own rich traditions, culture and concerns. Today's debate is so important that it is surprising that only one political party is represented in the Chamber.

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The Government have noted the considerable interest in the proposed sale of the Scottish Media Group's publishing division. We saw that in the House, the Scottish Parliament, the press and among the public of Scotland. In particular, there has been lengthy and lively debate about the effect that the sale might have on the plurality of views available from the press. As has been recognised, that chimes with the measures that we proposed to protect the public interest in newspaper mergers in the Communications Bill, which receives its Second Reading in the House this afternoon. I hope that my hon. Friend, and others who recognise the importance of protecting the plurality of the press in the United Kingdom and its nations, regions and localities, will support our proposals in the Bill.

As my hon. Friend properly recognised and other hon. Members will understand, I cannot comment today on the details of an individual case that the Secretary of State may have to consider under the merger provisions of the Fair Trading Acts. However, it would be useful briefly to set out the processes by which a sale of SMG's publishing business may fall to be considered under merger control provisions.

If the acquirer of SMG's newspapers is an existing UK newspaper provider, and if a circulation threshold is met, the transfers would fall to be considered under a special newspaper merger regime. The threshold is that the total paid-for circulation of the newspapers involved averages 500,000 or more each day of publication. Qualifying newspaper transfers are unlawful and void without the Secretary of State's prior written consent, and except in certain circumstances, the Secretary of State cannot give such consent without a Competition Commission inquiry.

Mr. Lazarowicz : My hon. Friend referred to the 500,000 threshold for sold copies of a publication. Given that a number of newspaper chains make great play of their total circulation, including copies that are given away, would it not be more appropriate if the figure included the circulation figures as they are claimed, rather than simply the paid-for circulation figures?

Mr. Wilson : My hon. Friend has alighted on an interesting point, which I shall be pleased to clarify in writing. Whether the 500,000 a day is in sales or distribution should be clarified.

The Competition Commission would be directed to report on whether the transfer might be expected to operate against the public interest, taking into account all matters that appeared to be relevant, particularly the need for accurate presentation of news and free expression of opinion. The Secretary of State would have regard to the report in deciding whether to consent to the proposed transfers, and could make consent subject to conditions.

If the acquirer is not an existing United Kingdom newspaper proprietor, or the circulation threshold is not met, the merger could fall to be considered not under the special newspaper regime but under the general merger regime of the Fair Trading Acts. In the first instance, it would be for the director general of fair trading to assess the merger's likely impact before advising Ministers on whether he believed that it should be referred to the Competition Commission.

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The Competition Commission would be directed to report on whether the merger would be expected to operate against the public interest. Again, the final decision would be for the Secretary of State, although under this regime, in deciding on a reference, she would generally expect to follow the director general's advice, and in the event of a reference, she could take no action if the commission found that the merger would not, or would not be likely to, operate against the public interest.

Under the Enterprise Act 2002, which reforms merger control and which we plan to commence next spring, the vast majority of mergers will be assessed only on the test of whether they would result in a substantial lessening of competition. However, we still believe that the plurality of views in the press is a vital public interest and we remain committed to its protection. To that end, the 2002 Act has preserved the special newspaper merger regime of the Fair Trading Acts until such time as the Communications Bill reforms those measures. The principle is important: the special newspaper regime should remain. Those reforms will continue to provide a system for protecting the particular public interest that newspaper transfers can involve. Decision making in cases that raise plurality concerns will rest with the Secretary of State, rather than the specialist competition authorities.

The newspaper public interest considerations in the Communications Bill are substantively directed at the same types of public interest issue that have arisen in the past in relation to newspaper transfers. We have drawn very much from the existing body of precedent. They will cover the concepts of free expression of opinion and accurate presentation of news that are already identified as matters to which the Competition Commission is to have particular regard in the public interest test under the special newspaper merger regime.

There will be a third limb of plurality of views. That is designed to pick up some of the issues that the Competition Commission has previously considered, or might want to consider, in relation to plurality, but that might not fall strictly within the concepts of accurate presentation of news and free expression of opinion. In particular, that is aimed at ensuring that, so far as is reasonable and practical, a range of different views is available in newspaper markets.

The Bill will remove the rather anomalous distinction in the Fair Trading Acts under which different regimes apply, depending on whether the acquirer is a

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newspaper proprietor and on whether the circulation threshold is met. In future, there will be a single newspaper plurality regime.

I assure my hon. Friend that we take this issue extremely seriously. Our concern is not limited to what might be called the national press in a UK sense, or the London press, as some might describe it. Newspapers in all parts of the UK play powerful roles as opinion formers for the communities that they serve. For those affected, local, regional and national issues in Scotland, Wales, Northern Ireland, and indeed England, as well as the wider UK issues of the day, can be of great significance.

The Communications Bill will rightly allow us to continue to consider issues of editorial freedom and the plurality of views in mergers affecting the local and regional, as much as the national press. In addition, when considering newspaper plurality, the Competition Commission will be specifically directed to test local opinion effectively, for example by means of citizens' juries.

The newspaper industry plays an essential role in political debate and the democratic process. My hon. Friend will appreciate that I cannot comment on individual merger cases, but I hope that he will rest assured that the Government are committed not only to their current approach but to continuing the protection and maintenance of freedom and variety of expression in the press, and the wide range of views that the UK press offers. We need greater rather than lesser diversity, which is why future legislation will maintain the existing principles.

I recognise that this subject is of widespread interest in Scotland, for all the reasons that have been discussed, and that whatever happens on this specific issue will continue to be of interest in Scotland and throughout the UK. My hon. Friend has done the issue a service by giving it an airing in the debate today, and if I have not dealt with any points that he raised, I will be pleased to respond to him in writing.

Scotland has a tradition of a geographically, culturally and politically diverse press, as has the UK as a whole. It is clear from the approach that we are taking through the Communications Bill, the Enterprise Act 2002, and the perpetuation of the special newspaper regime, that that is the sort of media that we wish to maintain in Scotland and in the UK.

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