Memorandum submitted by News International
This letter represents News International's
written evidence to the Joint Committee on the Draft Communications
Our comments focus on the proposals relating
to media ownership as set out in the policy document that accompanied
the publication of the draft bill. We have not included a detailed
response to the clauses of the draft bill as the clauses most
relevant to us (those relating to media ownership) have only recently
become available and, given the tight deadline for written submissions
to the Joint Committee, we have not yet had the opportunity to
examine these clauses in detail.
News International will make a detailed response
to the full draft bill in its representation to the Government,
a copy of which will be forwarded to the Joint Committee.
1.1 News International welcomes the broadly
deregulatory approach of the Government's proposals. The proposals
set out in the policy document are a big step in the right direction.
The Government has stated its intention to remove many of the
most anachronistic, inflexible and inconsistent media ownership
1.2 We believe the Government is right to
recognise the significant and ongoing changes in the way that
the media are produced, distributed and consumed in this country,
but we believe that the Government can go further while still
achieving the objectives it has set forth in its policy statement.
1.3 We have argued consistently that foreign
and cross-media ownership rules should be removed and that the
industry should be regulated like any otherthrough the
rigorous application of competition rules. We believe that this
is the best way for the Government to achieve its policy objective
of creating the most dynamic competitive communication industry
in the world.
1.4 With respect to the ongoing review process,
we are pleased that OFCOM will be required to ensure that regulation
is kept to the minimum and to identify any areas where regulation
is no longer necessary. The Bill should make clear that regulation
cannot be increased without first returning to Parliament.
2. FOREIGN OWNERSHIP
2.1 The UK Government has been bold and
forward-thinking in proposing to remove the prohibition that prevents
non-European individuals and companies from holding broadcasting
2.2 It has recognised that there are no
good arguments for retaining this protectionist rule; it is unnecessary,
anachronistic and discriminatory. Its removal, on the other hand,
will open up the UK media industry to fresh ideas and investment
from around the world and UK consumers will be offered greater
choice from a more competitive market.
2.3 There has been some scare mongering
in the press since the publication of the draft bill that the
removal of foreign ownership restrictions will result in the UK's
media being bought up by foreigners who will foist their own agenda
on the British public. This kind of reaction is hysterical, if
not xenophobic. First, under existing law foreign European companies
such as Bertelsmann and Mediaset may already own broadcasting
assets like the ITV companies or Channel 5. Second, any foreign
owner has to meet the relevant licensing requirements and, as
international experience has shown, has to deliver content that
appeals to the local market in order to succeed. It is consumer
demand that drives content, not ownership. Foreign ownership of
newspapers is not prohibited and, as a result, Fleet Street has
a long history of foreigners bringing investment and innovation
to the UK industry and successfully delivering the content that
UK consumers want. What, after all, could be more British than
The Times or the News of the World? Furthermore, it is only because
the rule has never applied to new media that this company has
been able to invest in satellite TV and, through BskyB's successes,
Britain now leads the world in this area.
2.4 Despite recent headlines about the ambitions
of various companies, the fact is that we do not know what developments
will follow from the removal of these restrictionswhether
a non-EEA company will show interest in ITV or Channel 5, or whether
indeed they are even up for sale.
3.1 The proposed relaxation of cross-media
ownership rules is a step in the right direction. However, having
accepted the market principle the Government should go further.
It should have faith in the competitive system and its ability
to deliver the outcomes the Government desires. Competition rules
are a flexible and sophisticated tool that can be used to define
and analyse the relevant market on a case-by-case basis, assessing
the number of voices in a market before reaching a decision on
any proposed merger or acquisition. Ownership thresholds, by contrast,
are a blunt instrument that creates arbitrary barriers to investment
and growth, preventing skills and capital acquired in one sector
from being deployed in othersto the ultimate loss of the
consumer. Their inflexibility means that whatever threshold is
set, it will quickly be out-of-date in a dynamic and changing
marketprobably before the legislation is even passed.
3.2 The Government justifies the retention
of the rule limiting the joint-ownership of national newspapers
and Channel 3, and similar rules at the local level, on the basis
that these combinations would represent an unacceptable concentration
of influence. Measuring and pinpointing influence is difficult;
individuals form their views in different ways and from different
sources. Determining which source is more influential overall
is therefore impossible. The Government should not base public
policy on such a vague and subjective concept.
3.3 As the policy document acknowledges,
competition law can address issues of concentration, efficiency
and choice, and will assure dispersed ownership and new market
entry. The UK media sector is already very competitive, offering
consumers a wide choice of news and entertainment, delivered in
an increasing variety of ways. With the exception of the BBC,
control of the media in the UK is highly diffused. Competition
rules can ensure that the market remains competitive and that,
driven by consumer demand, it delivers diverse content and responds
to different tastes and points of view.
3.4 The Government wants the UK media sector
to be the most competitive and vibrant in the world. But it will
be prevented from achieving this goal if business decisions continue
to be distorted by a set of inflexible roadblocks.
4.1 News International welcomes the proposal
that newspaper transfers will be treated, as far as possible,
like any other merger. We are also pleased with the removal of
the requirement for the Secretary of State's prior consent to
newspaper transfers, and of the criminal sanctions against purporting
to transfer a title without consent. We are concerned, however,
by the proposals for referring newspaper transfers for wider investigation.
4.2 The document states that newspaper transfers
that potentially raise plurality concerns will require wider regulatory
scrutiny and that such investigations "will be directed at
those cases that involve the public interest in accurate presentation
of the news, free expression of opinion and plurality of views
in the Press" (9.7.4). Not only would this represent an additional
and, in our view, unnecessary hurdle to Competition Act clearance,
but we are also very concerned by the suggestion that OFCOM would
have a role in advising the Secretary of State on such issues.
OFCOM, as a television, radio and telecommunications regulator,
will have no relevant expertise in newspaper matters. Furthermore,
to give a Government agency power to decide what it considers
to be the "accurate presentation of the news" is surely
contrary to the Government's desire to preserve "free expression
of opinion and plurality of views". In a free and competitive
newspaper market such as the one we have in Britain there is no
role for a state regulator. In the newspaper markets we are not
dealing with spectrum scarcity or market failure, features that
Governments say justifies content regulation. We are dealing with
a media sector that is feisty, competitive, and represents a wide
range of viewsas it must in order to attract readers.
The Government has taken a bold first step in
the right direction. We applaud its courage and vision, and urge
it to pursue its vision of vibrant, competitive, innovative media
markets that serve viewers, listeners and readers by eliminating
those arbitrary ownership restrictions that it has thus far chosen
to leave in place.