Memorandum from the Department for Culture, Media and Sport

 

Summary

 

1. Government is aware of the intense challenges facing local news providers, including radio and television as well as local newspapers. We launched the Digital Britain report in October and published an interim report in January. That report acknowledged these challenges and sought views from the industry about what role local journalism would play in the digital age.

 

2. Further to that, Secretary of State for Culture, Media and Sport Andy Burnham hosted a summit on 28 April, at which key representatives from the industry, as well as other stakeholders, were present.

 

3. The purpose of the event was to give those with an interest the opportunity to look at the various ways to support local news providers, as part of the ongoing programme of work looking at the future of media as part of Digital Britain. The day's discussion will feed into the final Digital Britain report to be published in the summer.

 

4. Broader Government policy on the future of local and regional media will be informed by a range of sources, including relevant reports from the Office of Fair Trading and Ofcom, the Power of Information Task Force and the consultation on the Killian Pretty Review.

 

Importance of local and regional media

 

5. Government recognises the importance to our democracy of local news, as a source of independent local information produced to high journalistic standards, and news plurality. We believe that wide availability of news at all levels, national, regional and local, is at the core of public service content. Research carried out as part of Ofcom's public service broadcasting (PSB) review showed very clearly that people trust and value the provision and choice in news services in this country, and they trust and value local and regional news in particular.

 

Challenges

 

6. The local media sector is facing difficult times. In the UK today, there are some 1300 regional and local newspapers, read by 40 million adults, and 1100 websites, estimated to reach at least 20 million adults.

 

7. While online readership of local newspaper websites is rising, physical circulation is experiencing a year on year decline in the region of 5.2 per cent. Some local newspapers are closing with many more forced to make job cuts.

 

8. The situation has been exacerbated by current market conditions, with the decline in advertising revenue (currently at 30 per cent year on year) particularly pertinent. This fall in advertising is a result of structural and cyclical factors. Structurally, advertising has moved online. Cyclically, local press depends heavily on the classified advertising sector, where recent economic circumstances have seen advertising of jobs, houses and cars decrease.

 

9. Other challenges facing local newspapers include the costs associated with owners transforming their businesses from a single format product to a multiplatform one. This requires both capital expenditure and also new skills in both content creation and for selling advertising space. Finally, the price of paper has itself risen.

 

Digital Britain

 

10. The Digital Britain Report assesses the UK's readiness to exploit the dramatic shift to digital platforms as the basis for huge parts of our economy, as well as our private lives, and one part of this is how the news media are meeting the challenges of a changing world.

 

11. We are seeing a convergence of local content in print, broadcasting and the internet. It would be unrealistic to see newspapers in isolation, as a separate group from online publishers. Increasingly, there is a content business, and content is distributed in different ways. In an environment in which there is a transition to the versatility of the digital world from traditional methods of newsgathering and reporting, the Government is giving consideration to the future of news in light of the opportunities presented by Digital Britain.

 

12. In the interim Digital Britain report, Government called on the local newspaper industry collectively to contribute to the discussion on how to continue to provide high quality, impartial news in the digital age, and specifically on the role of local journalism. Following a series of meetings between Andy Burnham and various representatives of the industry, Government hosted a summit on 28 April where these views could be shared collectively to help inform the direction of travel.

 

13. Speakers at the summit included Stephen Carter (Minister for Communications, Technology and Broadcasting), Ed Richards (Chief Executive, Ofcom) and Alan Rusbridger (Editor, The Guardian). To make sure that a broad range of interests were represented, attendees included the National Union of Journalists, the Society of Editors, the Newspaper Society, Ofcom, the Press Association, as well as other Members of Parliament and key stakeholders from national and local television and radio.

 

14. In his speech, Ed Richards said that Ofcom had been looking at potential models of how to deliver news in the nations, regions and localities. One would involve the setting up of news consortia, based on nations and regions, which would deliver a quality regional TV news service providing plurality alongside the BBC, deliver a range of news in nations, with scope for a cross-media service integrated into and contributing to the wider local media ecology. The news consortia could comprise news broadcasters, regional newspaper groups, local TV and radio stations, picture agencies or independent producers.

 

15. Ofcom's proposal, and others discussed on the day, will inform and feed in to the final Digital Britain report to be published in the summer.

 

Models of ownership

 

16. Government believes that there is a viable business model to deliver local and regional news, and is encouraged by the efforts of businesses to adapt to the converged world. We believe that convergence in the media industry should not only raise challenges but should also create new business opportunities for high quality local content to be delivered to citizens across a wider range of platforms than previously.

 

17. While it is not for Government artificially to sustain a business model if it is failing, nor is it Government's place to intervene in the management of individual newspapers or the commercial management of individual businesses, Government's regulation of business does however impact on the newspaper industry in various ways, particularly in the regulation of monopolies and mergers, including the ownership of media.

 

18. That is why, in the Digital Britain interim report (action 14), the Government invited the Office of Fair Trading, together with Ofcom and other interested parties, to examine whether any change is needed in the merger regime for local and regional media, with a particular focus on print media.

 

19. OFT completed the first phase of its review, seeking views from interested stakeholders on the main scope of its review in to the local and regional media sector, and issued a discussion paper on 13 March, inviting responses by 31 March.

 

20. The discussion paper briefly set out how the media merger regime operates and focuses on areas where Government and stakeholders have identified potential issues of relevance to the review. OFT also held hearings with key stakeholders.

 

21. The OFT will submit key findings and any recommendations to Government in line with its timetable for publication of the Digital Britain final report in the summer.

 

22. In terms of the broader media ownership rules which govern the ownership of television, radio and newspapers in the UK, Ofcom is required to review these rules at least every three years. These rules are designed to strike a balance between ensuring a degree of plurality on the one hand, and providing freedom to companies to expand, innovate and invest on the other hand. Ofcom last reviewed these rules in 2006. Ofcom's next review is due this year.

 

Collaborative ways of working

 

23. Government is encouraged by recent examples of partnership working, for example the Memorandum of Understanding signed by the BBC and ITV on a partnership to provide regional news in England and Wales, and the BBC's recent announcement to offer a similar package of resources to local news providers.

 

Public Sector Publications

 

24. Government is aware of the concerns raised by local commercial newspapers that they are facing increasing competitive pressure from public sector bodies. Government policy on this issue will be informed by a range of sources, including the OFT review and the Power of Information Task Force, published on 2 March 2009.

 

25. In addition, and specifically on the issue of planning, the Government response to the Killian Pretty Review includes a commitment to consult on the recommendation in that Review to give greater flexibility to local planning authorities to determine the most cost effective way of informing the public about planning applications. Government would not want to make any changes to the planning process that could leave local people in the dark over proposals that affect them. Therefore, the decision on whether to remove the mandatory requirements to advertise certain planning applications in local newspapers will follow this consultation.

 

Intellectual Property

 

26. Government is aware of the concerns raised by the newspaper industry that some internet providers are aggregating news gathered by the newspaper industry and republishing it online.

 

27. Copyright law is determined by a combination of UK laws, EU directives and international treaties. Copyright is primarily a civil law matter and it is mainly for rights holders to sue if they feel their rights have been infringed. The Intellectual Property Office is responsible for the UK's copyright framework, but it does not function as a regulator.

 

28. The Government is encouraging the newspaper industry and internet providers to collaborate in the investigation and implementation of initiatives such as Automated Content Access Protocol, which marks web pages to identify the IP owner.

 

May 2009