Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Desai: My Lords, in a previous debate the noble Lord, Lord Harris, referred to malcontents, and he again referred to me, for which I am very grateful. I do not want to speak about The Times, although my previous speech on this subject got me a mention in the editorial of The Times, which had always been my highest ambition. I have nothing against Mr. Murdoch. I have written for the Sun newspaper, and it pays very well. It has stopped hiring me since we came to power. I regret that, but there are some small compensations.

The new clause proposed by the noble Lord, Lord McNally, should not be argued solely in terms of The Times newspaper. That is important. The special pleading referred to by my noble friend Lord Haskel came more from the noble Lord, Lord Harris, who spoke of nothing but The Times, than from my noble friend Lord Borrie, who drew a much more general canvas. Whoever owns a newspaper--whether it is Mr. Murdoch, Mr. Black, Mr. Montgomery, or someone else--we would like him to follow such practice as not deliberately to reduce the diversity and pluralism of our newspapers.

Arguments have already been advanced that in other parts of the Bill special provision is made for particular industries. Therefore, it cannot be an objection that Clause 19 is not in the spirit of the Bill. If Clause 19 is

20 Oct 1998 : Column 1359

ineffective, there is no harm in including it. We do not really have legislation so tightly drawn that we could not add a clause. If it were the case that Clause 19 was so feebly drafted and would be so contentious that no one could be brought under its aegis and no one could be punished, lawyers would get lots of money, and good luck to them! No harm would be done.

What people are worried about is that Clause 19 has teeth, and because it has teeth people want to do it down. I think it is a good clause. I voted for it last time and unless my noble friend tells me something entirely stunning--that he accepts the clause--I shall be hard put to follow him in the Division Lobby and I shall probably follow the noble Lord, Lord McNally.

Lord Ackner: My Lords, I take it to be common ground that independent newspapers are an essential cornerstone of the democratic process. The Fair Trading Act 1973, which has been referred to more than once, made special merger provisions for the newspaper market. The rationale for these provisions, according to a previous Secretary of State, is that, by increasing the concentration of newspaper ownership,

    "you threaten freedom and variety of expression of opinion".
I should have thought that it equally follows that the elimination through predatory pricing of a competitor newspaper would lead again to the concentration of ownership and consequently, to re-quote,

    "threaten freedom and variety of expression of opinion".

As I understand the Government's attitude, the main objection to the clause is that it is unnecessary. It can only be unnecessary if the law is certain. It is perfectly clear that the law is not certain. There are cases--this is such a case--where assurance should be made doubly sure. If this clause does not turn out to be necessary, I do not understand, even having listened to the noble Lord, Lord Harris of High Cross, what harm it can do. But if it is necessary and it is left out, then great harm will follow.

I submit to your Lordships that the risk of abuse of power in this field must be eliminated. Accordingly, I will support the clause.

Lord Rees-Mogg: My Lords, I wish to take the opportunity again to declare an interest. I do not have the good fortune to be one of the independent directors of The Times but I do write for that newspaper. I have been struck by a couple of points. First, the pricing of newspapers seems to me more complicated than your Lordships' House has altogether realised or indeed altogether been told. Newspaper pricing is designed to maximise the profit which arises out of the cover price of the newspaper and the advertising revenue of the newspaper. There is a third variable, which is how much you have to spend on the newspaper, how many supplements you have, and so on. That variable is very important. The cover price of a broadsheet newspaper produces probably about 30 per cent. of total revenue. The advertising revenue is usually therefore about 70 per cent. of the total revenue.

I spent 20 years deciding on cover pricing when I was on the board of The Times in the old days. You had to decide what effect a particular cover price would have

20 Oct 1998 : Column 1360

on your circulation and, through the circulation, what effect it would have on your advertising revenue. Therefore, it is not predatory pricing if you keep your cover price low or actually reduce it with a view to increasing your advertising revenue. That is a commonsense thing to do in commercial terms.

Perhaps I may explain the matter in mathematical terms. Let us suppose that the cover price is reduced by 10 per cent. That reduces the revenue from that source, except in so far as the sales increase, from 30 per cent. to 27 per cent. Let us suppose that that produces a 10 per cent. increase in advertising revenue. That increases the advertising revenue from 70 to 77 per cent. Therefore, one would end up with a total sum of 104 rather than 100.

If the propositions which have been put are correct, obviously in this country there would be a supreme example of predatory pricing of a most unacceptable kind and we should all wish to find laws which would shut it down; that is, the free sheets. The free sheets charge nothing. What could be more unfair than that? A free evening paper is given away to anybody who chooses to have it. That draws in advertising and competes with the local evening paper which is trying to earn revenue from its cover price.

If it were true that you can just consider the cover price, as we have tended to do in this debate and in the previous debate, and say that it is unfair because the cover price is so low, then free sheets would clearly be a predatory practice.

There is one other point I should like to make. I believe strongly in the contribution which newspapers make to democracy. But in this country we have far and away the largest national press of any major country. In London we have five broadsheets and six tabloid newspapers, one of the tabloids being an evening newspaper. All those are published in London and all are fairly good newspapers, with perhaps one or two exceptions. In New York, which is comparable--a major city in a rather similar country--there are four newspapers. We have 11 newspapers in London while New York has only four.

Therefore, it is odd that we should be in a state of acute anxiety when it is, in my view--and I have lived in that world for the whole of my adult life-- the competition which has created that situation. The problem with New York is that it has become monopolistic. The position is far more monopolistic in the rest of the United States, where most major cities have only one newspaper.

We have a couple of monopoly newspapers in this country. They are not the newspapers we have been talking about. They are the Financial Times, a great and good newspaper which has a monopoly in the financial and business field, and the Evening Standard, a somewhat less great and good newspaper, which has a monopoly in the London evening field. I should very much welcome it if people entered into competition with them. But it seems to me that the situation in relation to our newspapers does not justify the anxiety which has been expressed.

20 Oct 1998 : Column 1361

6.15 p.m.

Lord Razzall: My Lords, we have probably reached the stage in the debate when it is appropriate for me to sum up on behalf of the movers of the amendment. First, as a number of noble Lords have indicated, it is a pity that this has become potentially an anti-Murdoch debate. Despite the fact that a number of speakers in favour of the amendment have indicated that their support is based on general principles, we have been assisted by the fact that a number of defenders of the Murdoch position have jumped to their feet, in particular from the Cross-Benches. However, as the noble Lord, Lord Borrie, indicated, the reason that the Murdoch allegations about predatory pricing are relevant is that, as we speak today, those are the current allegations about monopolistic practices in the newspaper industry.

However, this amendment, as proposed by my noble friend Lord McNally, goes much wider than that. It seems to us on this side of the House that when noble Lords decide what to do with regard to the amendment, they must ask two questions: first, does the Bill, as returned to us from the Commons, provide satisfactory protection to the public against anti-competitive practices in the newspaper industry; and secondly, as a subsidiary question, does the newspaper industry require special treatment in the legislation because it has special characteristics that do not apply to other industries?

The answer that my noble friend Lord McNally gives to those questions is that, first, the Bill as returned does not give that satisfactory protection; and, secondly, that there are specific characteristics of the newspaper industry which require special protection to be built into the Bill.

I shall not go over the details of the technical arguments. The noble Lord, Lord Borrie, did that better than all noble Lords in this House put together could have done, being one of the world's experts on the subject. Perhaps I may briefly touch on the opinion to which he referred of Richard Fowler QC. Those of us who have been involved both with the law and the mergers and acquisitions industry know well that lawyers' opinions are lawyers' opinions and for every lawyer's opinion on one side there is usually a lawyer's opinion on the other side, in particular if large amounts of money are involved. But also those of us who have been involved with that industry are aware that one ignores an opinion of Richard Fowler QC at one's peril. As the noble Lord, Lord Borrie, indicated, his opinion is on the record. We do not know the legal basis on which the Government are relying but we have Richard Fowler's opinion that if one looks at the structure of the newspaper industry at the moment, it is unlikely, in his view, that any of the newspaper groups would pass the necessary test for dominance, thereby bringing them within the European law on which the Government are relying to control those practices.

On this side of the House, we disagree with the Government in their view that if this Bill is passed in its existing form, it will provide the protection which the Government believe it will.

Perhaps I may touch on the second and fundamental question to which a number of noble Lords have referred; namely, why the newspaper industry should

20 Oct 1998 : Column 1362

require special treatment. It is strange that that issue should still be being debated. After all, in 1973, in the legislation dealing with mergers, it was accepted that the newspaper industry required different treatment. That is now 25 years ago. Throughout that period it has been accepted generally that the newspaper industry requires special treatment in our competition legislation. The reason for that is as the noble Lord, Lord Judd, indicated. It is the industry which is the lifeblood of our democracy. For that reason and that reason alone, the newspaper industry requires special treatment in legislation.

There are a number of fundamental differences in the newspaper industry. Currently, in aggregate, it is worth about £700 million and, in aggregate, shows a net loss of £50 million. No other industry in this country would continue year after year to have that significant net loss were there not some other reason for people wanting to run newspapers. People want to own newspapers not only to make money out of them, if they can, but also for the express and specific purpose of exercising power and influence.

When the Sun ran its headline after the 1992 election,

    "It was the Sun what won it",
it did not run that headline because it thought it would increase its circulation but because it believed it had exercised political control over the democracy of this country. When Rupert Murdoch and Conrad Black, through their newspapers--and perhaps I may rephrase that before other noble Lords indicate that proprietors do not influence the policies of their newspapers--when The Times, the Sun and the Daily Telegraph run their campaign against the euro, it will not be because they wish to increase the circulation of their newspapers but because they wish to exercise power and influence over the deliberations of the democracy of this country.

For that reason and for that reason alone, as the noble Lord, Lord Judd, indicated, the newspaper industry requires separate legislation and separate protection. The purpose of my noble friend's amendment, which nobody has mentioned since he introduced it, is to lower the point at which the dominant position test kicks in in our legislation and in our jurisprudence. For that reason, we wish this amendment to be carried.

Finally, in winding up, perhaps I may deal with the point made by the noble Lord, Lord Judd. "All right", he said, effectively, "I agree with everything the noble Lord, Lord McNally, said. However, because of the constitutional position, we made that point; the Commons disagreed with us and have sent it back to us."

I ask noble Lords to bear in mind that on a similar amendment at least 23, if not 25, Labour Members of Parliament defied the three-line Whip in order to support the position that the noble Lord, Lord McNally, is producing today. Seven Select Committee chairmen signed an amendment in the other place similar to the amendment which the noble Lord has brought forward today.

I ask noble Lords finally to think carefully. To revert to our debates last week, perhaps I can paraphrase the noble Lord, Lord Richard. I urge Members of the House

20 Oct 1998 : Column 1363

to think independently, to peruse the clause independently, then vote for the amendment, voting against the exercise of power without responsibility which, as we all know, is the prerogative of the harlot throughout the ages.

Next Section Back to Table of Contents Lords Hansard Home Page