Select Committee on Communications First Report



Successive governments have recognised the impact that media ownership can have on the news. The previous Conservative administration stated that "A free and diverse media are an indispensable part of the democratic process … If one voice becomes too powerful, this process is placed in jeopardy and democracy is damaged". When drawing up the Communications Act 2003, the present Labour Government stated that a healthy democracy was dependent on a culture of dissent and argument and this culture would inevitably be diminished if there were only a limited number of providers of the news. One of the aims of the Communications Act was to ensure that a diversity of voices continued to exist in the news media at a time when the industry was experiencing a period of consolidation.

This report examines the impact that media ownership can have on the news and the effect of consolidation on the newspaper, television and radio industries. We have proposed changes to the regulation governing ownership, but do not believe that by themselves media ownership laws are sufficient to ensure our aim of a diversity of voices in the news. We believe that public service broadcasting has a continuing and vital role to play.

Our inquiry took place against the background of what Rupert Murdoch described as the "fairly chaotic" state of the news media. We found plentiful evidence to support this view. Both here and abroad the newspaper industry is facing severe problems as readership levels fall; young people turn to other sources of news; and advertising moves to the internet. The newspaper industry is responding to these challenges in a variety of ways including establishing a high profile web presence. However, even when newspapers run successful internet sites the value of the advertising they sell on these sites does not make up for the value lost. The result of these pressures is that newspaper companies are having to make savings and this is having a particular impact on investment in news gathering and investigative journalism. The number of foreign news bureaux is decreasing, and there is an increasing reliance on news agency feed and information derived from the public relations industry. Inside the United Kingdom the regional and local press is under particular pressure.

In television news the same trends are evident. Most news programmes have smaller audiences than they had ten years ago; younger people in particular are watching less television news; commercial television channels are losing advertising revenue to the internet.

New media, in particular the internet, are having a major impact on the way news is produced and consumed. The internet provides a multitude of sites through which news stories can be accessed. Internet news can be updated minute by minute and space is not limited so more information can be made available. The internet is now attracting large amounts of advertising—Google's overall headline advertising revenues have now surpassed ITV1's.

The popularity of the internet as a news source should not be overstated. In 2006 only 6% of United Kingdom adults surveyed stated that the internet was their main source of news. This contrasted to 65% of adults whose main source of news was the television, 14% from newspapers and 11% from the radio. The traditional forms of news are likely to continue to be the most popular sources of news for the foreseeable future.

It was put to us that because of the proliferation of ways to access the news, it is no longer necessary to be concerned about the regulation of media ownership. We do not accept that argument. Much of the news available on the internet and on the new television channels is not new. It is repackaged from elsewhere. The proliferation of news sources has not been matched by a corresponding expansion in professional and investigative journalism. It is still possible for one voice to become too powerful to be acceptable in a healthy democracy. Owners can and do influence the news in a variety of ways. They are in a position to have significant political impact.

The consolidation of media ownership adds to the risk of disproportionate influence. In the United Kingdom, the national newspaper industry is run by eight companies—one of which has over 35% of the national newspaper market. The regional and local press has seen a particularly marked concentration of ownership where four publishers now have almost 70% of the market share across the United Kingdom. Radio news is dominated by the BBC, which accounts for over 55% of radio listening and the commercial radio sector is dominated by four companies which have a 77% share of the commercial radio market. National television news in the United Kingdom is produced by three companies: the BBC, ITN and BSkyB. There may now be many new channels but only these three companies produce national content. At the same time there have been increasing levels of cross-media ownership.

The Communications Act 2003 introduced a new regime for considering the public interest implications of a media merger—the Public Interest Test. One of the most worrying trends in recent years has been the lack of investment in news gathering and investigative and specialist journalism, yet the Public Interest Test does not include any requirement to establish whether a merger will impact adversely on news gathering. The criteria to be considered during the Public Interest Test for newspaper mergers in particular are far from comprehensive and are in need of review. We also have concerns that government ministers are the only people with the power to issue a public interest intervention notice, we recommend that Ofcom should have a similar power. We believe that reforming cross-media ownership restrictions on regional and local newspaper and radio mergers is also necessary. We question why the Government have made no progress in attaining reciprocal rights for British companies to hold broadcast licences abroad, having liberalised the laws in this country.

However, we do not consider changes in ownership regulation and competition law to be enough if the aim is to ensure a range of voices and high quality news. The public service broadcasting system in the United Kingdom provides an invaluable news service for the citizen. The public service broadcasters and particularly the BBC have a worldwide reputation for news gathering and continue to provide a wide range of home and overseas news. This is in contrast to the position in the United States where the quality and range of television news has diminished as commercial pressures have increased. It is therefore crucial that the contribution of all the public service broadcasters is maintained. The BBC occupies a pivotal position in news and current affairs and it is vital that nothing be done to diminish that role.

By the time that analogue switch-off is completed in 2012 the commercial public service broadcasters will have lost a large proportion of the indirect subsidies they have received in return for the public service content that they produce. The system of supporting and regulating the public service broadcasters is currently under review by the industry regulator Ofcom and by the Government. There is a possibility that without new forms of support some of the commercial public service broadcasters will decide to hand back their licences and operate as purely commercial entities. We do not believe this would be in the public interest. Public service broadcasting cannot be left to the BBC alone. A continuing plurality of public service broadcasters is particularly important for news and current affairs. However, we are sceptical that "top-slicing" the licence fee would be a sensible way forward. The commercial public service broadcasters should not be supported at the expense of the ability of the BBC to do what it does best. We also believe that Ofcom needs new powers to ensure that the quality of the news provided by the commercial public service broadcasters is maintained.

Parliament has an important role in relation to the commercial public service broadcasters and the BBC and we want to see that role strengthened. In the case of newspapers however (and in the case of the internet) the role of Parliament is less clear. We strongly believe in the freedom of the press. But we also believe that there is a legitimate democratic expectation that newspaper owners and editors be open about how they approach their job. During the course of this inquiry we found that some witnesses from the newspaper industry were very reluctant to come and give oral evidence and in one case a potential witness refused to appear. Newspapers themselves call for maximum openness and condemn secrecy and attempts at "cover ups". We do not believe that newspaper owners or editors should be able to hide behind a shield of privacy that their newspapers would not accept when dealing with members of the public. In the light of this we have invited the House of Lords Procedure Committee to review the cumbersome way by which witnesses can be compelled to give evidence to a Select Committee.

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