Draft Media Ownership (Radio and
Cross-Media) Order 2011

The Committee consisted of the following Members:

Chair: Mr David Crausby 

† Barclay, Stephen (North East Cambridgeshire) (Con) 

† Birtwistle, Gordon (Burnley) (LD) 

Campbell, Mr Gregory (East Londonderry) (DUP) 

† Carswell, Mr Douglas (Clacton) (Con) 

† De Piero, Gloria (Ashfield) (Lab) 

† Gapes, Mike (Ilford South) (Lab/Co-op) 

† McClymont, Gregg (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab) 

† McGovern, Alison (Wirral South) (Lab) 

† McGovern, Jim (Dundee West) (Lab) 

† Metcalfe, Stephen (South Basildon and East Thurrock) (Con) 

† Mowat, David (Warrington South) (Con) 

† Newmark, Mr Brooks (Lord Commissioner of Her Majesty's Treasury)  

† Roy, Lindsay (Glenrothes) (Lab) 

† Russell, Bob (Colchester) (LD) 

† Shepherd, Mr Richard (Aldridge-Brownhills) (Con) 

† Vaizey, Mr Edward (Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport)  

† Whitehead, Dr Alan (Southampton, Test) (Lab) 

† Wilson, Mr Rob (Reading East) (Con) 

Mark Oxborough, Judith Boyce, Committee Clerks

† attended the Committee

Third Delegated Legislation Committee 

Tuesday 22 March 2011  

[Mr David Crausby in the Chair] 

Draft Media Ownership (Radio and Cross-media) Order 2011 

4.30 pm 

The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey):  I beg to move, 

That the Committee has considered the draft Media Ownership (Radio and Cross-media) Order 2011. 

I am grateful, Mr Crausby, for the opportunity to debate this important order. I am sure that all hon. Members can agree that a vibrant media sector is an essential part of a healthy society. Central to that is a media industry that reflects the diversity of opinion and plurality of voice of its listeners, readers and viewers. Those principles of plurality and diversity have long underpinned the legislative and regulatory regimes that govern our media industry, and they remain relevant today. However, the principles need to be balanced with the realities of the markets in which media companies compete. That is particularly true in the context of local media. 

During the past decade, there has been a notable decline in the revenues of the local newspaper and local radio industries. For example, local and regional newspaper advertising revenues fell by almost 6% in the second quarter of 2010, and the Advertising Association forecasts that revenues will continue to fall throughout 2010-11. Alongside falling revenues, local media companies face greater competition for their listeners and readers from the growth of digital technologies. Consumers now have a greater-than-ever choice of excellent content, across a multitude of platforms on any number of devices. 

The Government are keen to help the local media market to face the fundamental structural and cyclical changes, while at the same time preserving the characteristics that make it relevant and important to local people and communities. In the coalition’s programme for government, we stated our intention to address the question through a commitment to 

“enable partnerships between local newspapers, radio and television stations to promote a strong and diverse local media industry.” 

The relaxation of the media ownership rules through the order represents the beginning of the process by removing barriers to businesses, so that they can evolve and adapt to the changing environment in which they now operate. The relaxation of ownership rules to promote investment and innovation is a well established principle, which underpinned the ownership changes in the Communications Act 2003, passed by the previous Government. The rationale for protecting plurality through ownership rules was always going to be challenged, as plurality and diversity are increasingly delivered through digital platforms and new technology. 

Bob Russell (Colchester) (LD):  My apologies for arriving late, but I waited until what I thought was an appropriate moment to intervene. I come from a local newspaper background as the former editor of a weekly newspaper once owned by a local family firm in north Essex. That group is now owned in America. In addition, Heart Radio has shut down many local radio stations across the country. Will the Minister explain where the localism and diversity are when newspapers are now owned by Americans and Heart Radio shuts down its local radio stations? 

Mr Vaizey:  To a certain extent, my hon. Friend, if I may call him that—I would be honoured to do so—gets straight to the heart of the matter. It is important that we liberalise media regulation to allow opportunities for investment in local content, wherever that may come from. Clearly, investment in local content, even if it comes from abroad, can be welcome if it safeguards jobs and plurality. My local newspaper, the excellent Wantage & Grove Herald, is owned by an American company, Newsquest, and apart from a little bump in the road during the expenses scandal in 2009, it has, on the whole, provided excellent local coverage of the activities of the Member of Parliament and other local politicians. 

My hon. Friend’s point about Heart Radio is also very interesting, because my understanding of how the owner of Heart Radio, which I think is Global Radio, is going about its business is that it is using technology to reduce costs so that it can continue to invest in local content. I have visited its headquarters in Leicester square and seen some of the technology that it is using. The opportunity for it, by investing in different local radio stations, to provide a national technology platform to deliver both national content, to an extent, and local content will be of great benefit to the residents of Colchester, but of course my hon. Friend’s point is perfectly valid. Knowing his interests, I think that the key test for him is whether local radio and, indeed, local newspapers continue to report the excellent form of Colchester United as they progress through various leagues. 

In 2009, under the previous Government, Ofcom did indeed carry out such a review, and recommended to that Government that significant liberalisation of the local rules was the way forward. It argued that such liberalisation could give the industry more 

“flexibility to respond to pressures” 

and remove potential barriers to the longer-term sustainability of the sector. 

Ofcom consulted as part of that review, and the majority of the responses—eight of the 14 received—supported the removal of cross-media ownership rules to the extent recommended by Ofcom. The Newspaper Society and the Guardian Media Group wanted to go further, and advocated a complete removal of the local ownership rules. GMG said that liberalisation, rather than full removal, would 

“present only limited opportunities for synergies and therefore limited commercial benefits to media owners” 

and while being 

“a helpful and positive step”, 

it would 

“not transform the position of local media organisations.” 

Ofcom’s recommendations were also fully endorsed by the Culture, Media and Sport Committee. In fact, its report, “Future for local and regional media”, published last year, urged the Government go further, because 

“more far reaching reform is needed”. 

We agreed with the Committee’s findings, and last year asked Ofcom to consider the case for full liberalisation of the local media ownership rules. 

Jim McGovern (Dundee West) (Lab):  The Minister has used the word “liberalisation” a couple of times. Should he not substitute “commercialisation”? Is that not what this is about—making money? 

Mr Vaizey:  With the greatest respect to the hon. Gentleman, most local media organisations are in the business of making money, whether they be a local newspaper or a local radio station, but thanks to his Government’s initiative we now have a thriving community not-for-profit radio sector as well, and in terms of local competition, we also have the BBC local radio stations supported by the licence fee. I am not quite sure that I grasp the idea that it is somehow wrong for local news organisations to make money. If that is his point, I am afraid I do not agree with it. 

Jim McGovern:  Perhaps I can clarify the point. I am referring to monopolies that would wish to control local radio and press for commercial purposes. 

Mr Vaizey:  As the last Government recognised, with respect to Ofcom’s review of the local media rules, it is important to deregulate to allow investment in local content. As the hon. Gentleman knows, the competition rules and the public interest test remain in place in case any consolidation somehow impinges on media plurality. 

As I was saying before the hon. Gentleman intervened, Ofcom responded on 29 July 2010 in a detailed letter and in a report that is available on its website. It noted the continued deterioration in revenues for local media, as well as the initiative in local television, and concurred that there was a case for the full liberalisation of the local media ownership rules. The order will therefore remove all the local cross-media ownership rules, which prevent the consolidation necessary to secure local media business. 

Subject to competition law, local newspapers, radio companies and the owners of ITV licences could consolidate, reduce costs and build sustainable business models. Such mergers can drive innovation and improve content as businesses use multiple platforms to distribute local content, such as news. Importantly, consolidation gives greater opportunity for local media companies to build trusted local brands and relationships with local communities. 

That rationale equally applies to the decision to remove the overly complex and unnecessary local radio media ownership rules, which is also contained in the order. The so-called 2+1 rules, which were designed to ensure at least two commercial radio operators and the BBC in most markets, give no regard to the emerging digital radio markets or the new tier of community radio. There are more than 300 commercial stations in the UK and 200 community radio stations, and the BBC alone provides more than 50 radio services, available

online and on digital television and radio. I welcome the note, which hon. Members may have seen, from RadioCentre, which represents the commercial radio market. It notes that the reform that we are debating today will be a vital step in helping to safeguard the industry’s future. 

We believe that continuing to restrict ownership in small local discrete radio markets fails to recognise the way listeners access radio and how those businesses operate. The need to remove unnecessary regulations governing the radio sector is therefore reflected in the final change in the order: rather than protecting plurality, the existing rule preventing ownership of more than one national multiplex is a potential barrier to a second multiplex being launched. 

Taken together, we believe that the order will provide a framework to promote a sustainable model for local media and encourage greater investment and innovation. I assure the Committee that I am satisfied that the order is compatible with convention rights. 

4.41 pm 

Gloria De Piero (Ashfield) (Lab):  It is a pleasure to serve under your chairmanship, Mr Crausby. We all know what huge challenges local media of all kinds face in this new internet age. Every member of the Committee—indeed, every Member of the House—knows just how much local people value their local media and what an important part they play in the democratic process. It is vital that all that can be done is done to strengthen the commercial viability, and with it the long-term future, of local media outlets. Therefore, the Opposition support the order in principle, on the basis that the opportunity for consolidation will offer real benefits to the regional media in the face of the considerable pressures on their revenues from the weakness of the economy and the move online of advertising spend. 

Furthermore, as the very nature of the media continually evolves at enormous speed, it is important that the rules on ownership allow greater flexibility. Indeed, the growing diversity of alternative sources of local news and entertainment—from video blogs to advertising-supported community websites—will help to ensure that a range of voices continues to be heard locally. However, we remain mindful of the question of the concentration of media ownership and the possible dangers of the narrowing of the range in ownership of local media, and the Department and Ofcom will both need to monitor the effect of the order carefully. 

This liberalisation makes it more important than ever that the rest of Government policy and Ofcom action take into account the public interest and competition considerations of the range and quality of local news and information. First, and perhaps most important, is the regional presence of the BBC. The deal that the Minister’s Department forced on the BBC last October, in a great hurry and with a shocking lack of transparency, potentially provides a real threat to the corporation’s regional presence. The worrying noises emerging about the future of local radio could be just the beginning. If the withdrawal of the restrictions on cross-media ownership locally is to work, it is vital that the BBC continue to provide a serious local service within the plurality of voices. 

In addition, the new rules will work only if Government policy, such as the roll-out of superfast broadband, works to support the ability of new and innovative players to provide services of local information. The Secretary of State will also need to ensure that he is prepared to intervene fully where it is clear that cross-media mergers raise public interest considerations—not least if they threaten sufficient plurality in a particular region. That is my party’s bottom line. Plurality of local news providers remains vital and we strongly believe that an over-concentration of news and opinion in a local area would unduly restrict local debate and accountability. 

Stephen Barclay (North East Cambridgeshire) (Con):  I agree with the hon. Lady about the importance of regional BBC radio coverage. Is it the Opposition’s view that the National Audit Office should have full and unfettered access to the BBC in terms of its spending on regional radio to ensure that best value is secured? 

Gloria De Piero:  The Labour party supports any measure that ensures that public money is guaranteed in the public interest. 

It would be tragic at a time when more power is to be devolved locally—if we are to take the Government’s word for that—were the ability of the local media to hold decision makers to account to be diminished in any way. We support the Government’s proposals in the spirit of helping the local media industry to find a sufficient commercial basis to continue strong local journalism. 

I know that the regional newspapers in particular have long campaigned for the proposed changes as the commercial pressures on their members’ publications have increased. I am glad that they believe that liberalising the ownership rules will make a material difference to the ability of local papers and their associated websites to survive. 

We will also be looking at the detail of the Government’s concept of local TV to ensure that its roll-out adds to the plurality of voices that local people can hear. 

The withdrawal of restrictions on local cross-media ownership only stresses the imperative for the Government to get local TV right. Its successful introduction would be a strong bulwark to maintain the plurality of voices that we all want. I am therefore happy to offer my party’s support for the order, but in doing so, I underline the responsibilities of the Department and the industry to make it work. If they do not, the consequence will be a dangerous diminution in what local people are able to see, hear and read in the media, and none of us wants that. 

What reassurances can the Minister give the Committee that the settlement imposed on the BBC in such a hurry does not run the risk of causing a significant reduction in the BBC’s local services, particularly in the English regions? In the light of recent events, the Committee might be forgiven for a certain scepticism, so what assurances can he give that the Secretary of State will be prepared to intervene when there is a threat to the plurality of local media voices? 

4.46 pm 

Bob Russell:  My apologies, Mr. Crausby, but if the Committee is still sitting at 10 past 5, I am booked to do a local radio interview—on the BBC. I appreciate the irony. 

Just under 50 years ago, the Essex County Standard moved to new premises in Culver street in Colchester. It had a room on the second floor at the back, where the local radio station was based, because, as older Members will recall, Hughie Green was running a national campaign for commercial radio stations. Legislation prevented commercial radio at that time, and even if it had been allowed, legislation would have prevented cross-media ownership. In a way, we are debating something that was very much a live issue almost half a century ago, but then local newspapers had virtually 100% penetration in their communities, because they were part of the community. That was localism. 

Newsquest, an American company, owns newspapers in this country, not because of its love for the community, but rather to screw as much as it can out of that community. Whereas newspapers once employed quite a number of reporters and photographers, they now employ a bare minimum to satisfy the American bosses. It is important to stress that because local newspapers now have very low penetration—perhaps 30% to 40%, if they are lucky. 

Newsquest is not exactly a good employer when it comes to employees’ rights and salaries. I do not share the Minister’s enthusiasm for Global Radio either, because whereas the Government are moving towards localism, Global Radio is moving in the opposite direction. Until a few months ago, Heart Radio had many radio stations around the country that it has now shut. In the case of Heart Radio Colchester, the coverage now comes out of Chelmsford, but Colchester and Chelmsford are not exactly communities of joint interest, to put it kindly. Will the Minister assure the Committee that where Global Radio has physically vacated the community where it secured a radio licence—after all, that is how it got the licence—that licence will be available to others who will provide a radio station in that community? 

I will obviously support the order because Her Majesty’s official Opposition are going to support it and I will go along with it, but I put it on the record that I am not an enthusiastic supporter of American ownership of my local newspaper, nor of Global Radio, which has shut down my local commercial radio station. 

4.49 pm 

Mr Vaizey:  I am grateful for the opportunity to respond to the excellent contributions that we have heard. I acknowledge the points made by the hon. Member for Ashfield. I hear what she says about the BBC, but we will have to agree to differ about the merits of the BBC licence fee settlement. Our view is that we concluded negotiations quickly and effectively, that it is an excellent deal for the BBC, that we are strong supporters of the BBC and that the settlement will give the BBC a confident and energetic future. 

Mike Gapes (Ilford South) (Lab/Co-op):  How much consultation was there between DCMS Ministers, the BBC and the Foreign and Commonwealth Office about the decision to dump the costs of the World Service on to the BBC in three years’ time? 

Mr Vaizey:  As the hon. Gentleman knows, this is a joined-up Government, so the FCO, the DCMS and the BBC conducted detailed negotiations on all those issues. 

To return to the order, I echo the hon. Member for Ashfield in saying that it is vital that the BBC continue to provide local services. I have noted with some interest newspaper reports that the BBC is planning to divert some of its local coverage to Radio 5 Live. It is my instinct that that is an editorial decision based on analysis of BBC local radio station audiences, rather than one driven by economics, but as far as I am aware, it is something the BBC is merely consulting on and there has certainly not been any decision. 

I also hear the hon. Lady’s point about the need to deliver superfast broadband. We will debate broadband in Westminster Hall tomorrow. Although she may disagree, the Government now have well-worked-out plans to deliver the fastest superfast broadband in Europe by the end of 2015. I acknowledge her point about the importance of local television in delivering media plurality. As she knows, local television is a key policy of the Secretary of State and we are progressing that, with many expressions of interest lodged with the Department since the launch of our consultation document. 

I would like to give my hon. Friend the Member for Colchester an award for extraordinary political bravery, the like of which I have rarely seen. He used the few minutes available to him to insult his local newspaper and radio station. Knowing him as I do from my brief time in the House, I suspect that he knows full well that he is a highly regarded, perhaps even adored, local Member of Parliament who can afford to face down his local media in such a fashion. 

Bob Russell:  I am grateful to the Minister. My attacks were on the foreign owners of the newspaper and the absenteeism of the local radio owners. Obviously, I have nothing but respect for the editorial judgment and competence of those who run the local radio and newspaper institutions. I question the localism of a local newspaper that is American-owned. 

Mr Vaizey:  I acknowledge my hon. Friend’s point that investment, albeit from a foreign owner, does not impinge on editorial judgment or content. I am glad to put it on the record, with him, that Newsquest does not seek to influence the editorial content of its local newspapers. Global Radio is a UK company. It has not closed any of its local services, but it has taken advantage of a new power to co-locate radio stations. As I said in response to his earlier intervention, that is because it can use new technology to slot in local content, even though the presenter may not be based in Colchester. 

Bob Russell:  I must persist, because I think that the Minister has been duped by Global Radio. Three radio stations used to cover Essex, one of which was called Heart Radio. Heart Radio does not exist any more. Its frequency goes out of Chelmsford, but it does not have the Colchester staff, the Colchester programmes or the Colchester phone-in. It is now an Essex commercial radio station. There is nothing wrong with that, but that is not the licence that it applied for and was granted. 

The Chair:  Order. May I ask the Minister to confine his remarks to the order, despite the temptation offered by the hon. Member for Colchester? 

Mr Vaizey:  Thank you, Mr Crausby, for getting me back on track. I shall resist the temptation to respond to my hon. Friend the Member for Colchester. He is a Member whom I have long admired and I found it difficult to resist when given the chance to reply to his concerns. 

To the relief, perhaps, of other hon. Members, I shall conclude. I am grateful to the hon. Member for Ashfield for supporting the order and I thank hon. Members for their cogent and pertinent interventions. 

Question put and agreed to.  

4.56 pm 

Committee rose.