Select Committee on Communications First Report

CHAPTER 3: WHY DOES OWNERSHIP MATTER?

117.  Understanding the link between ownership and news output is of fundamental importance given that the law currently regulates ownership as a means of promoting diversity in output. This chapter will examine the impact that an owner can have on a news organisation.

118.  In the UK there is a critical difference in the impact an owner can have on the content of a newspaper or internet site compared to the impact they can have on broadcast news. This is because there are statutory impartiality requirements that limit to some extent the influence which owners of a television or radio news operation can exercise. There is still scope for influence (for example differing approaches to journalism and profit maximisation can impact on the editorial direction and the quality of broadcast news) but not to the extent that exists in newspapers and on the internet. For this reason this chapter focuses on how owners can influence news output in the absence of content regulation. Where influence can be exercised regardless of content regulation we have said so.

119.  There is a range of ways that ownership can impact on news output. These include:

• Direct intervention by an owner
• Indirect influence of an owner through the appointment of an editor who shares his views
• The influence of the business approaches that an owner can take
• Different approaches to journalism

This chapter will consider each of these in turn.

Direct intervention

120.  The traditional image of the newspaper proprietor was that of a hands-on owner who expected his publication to mirror his political views and interests. This kind of proprietor was personified by figures such as Lord Northcliffe, Lord Beaverbrook and the first Lord Rothermere. These men were as much interested in the opportunity to convey their own political philosophies direct to the electorate and the Government as they were in the money-making potential of their newspapers. In his book "Newspaper Power" Professor Jeremy Tunstall argues that "These old press lords did not even want to buy more newspapers; the logical way for a press lord to spend his time was in persecuting editors and politicians"[32].

121.  There is nothing necessarily wrong with an owner having some say over content, except where regulators have imposed conditions to stop it happening. Andrew Neil, a media commentator and editor of The Sunday Times from 1983 to 1994, said:

"… in Britain [there is] … a rather bizarre assumption that the person who owns the newspaper, puts up the capital to buy it, takes all the risks, pays the bills and deals with any fallout that an editor gets up to, including massive libel bills, should be the one person that should have no say over the content of the newspaper, and that just seems to me to be bizarre … After all, frankly that person surely has more right to a say than anybody else in the land other than the editor ..." (Q 1649)

122.  During the course of this inquiry we took evidence from owners of newspapers and serving newspaper editors and we asked all of them for instances when owners became involved in a particular story or in laying down a particular editorial line—on issues such as political endorsements, the war in Iraq or the Euro. In all that evidence only one person was willing to admit openly to acting as a "traditional proprietor", and that was Rupert Murdoch.

123.  When we met Mr Murdoch he was quite candid about the fact that, at least in relation to his UK tabloids, he has "editorial control on major issues" (see appendix four). Interestingly Rebekah Wade, whom Mr Murdoch appointed as the Editor of The Sun and previously as Editor of the News of the World, contradicted the evidence of her proprietor and insisted that he did not exercise editorial control on major issues (QQ 1461-1463). She claimed that even on decisions such as which political party The Sun would back at a General Election, she would consult Mr Murdoch, but the decision was ultimately hers (Q 1463).

124.  In general, we found ex-editors were much more forthcoming about instances in their careers when owners had interfered in their editorial line. Andrew Neil, who was one of Rupert Murdoch's longest serving editors at The Sunday Times, has written about Mr Murdoch's decision to switch the allegiance of The Sun and the News of the World to the Labour Party in the 1997 general election: "The decision to place his two Tory tabloids—the biggest-selling in Britain—behind Blair and the Labour party was entirely Rupert's. Their editors played almost no part in the decision and many of the staff, especially on The Sun, were very unhappy about it. But they had no say in the matter and were never consulted"[33].

125.  Although Rupert Murdoch was the only owner who admitted to becoming involved in the content of his papers, we heard several examples of other owners doing the same. We took evidence from Roy Greenslade, Editor of the Daily Mirror from 1990 to 1991, when the paper was owned by the late Robert Maxwell. Mr Greenslade told us that Mr Maxwell was "an overt interferer ... He liked to appear in the newspaper as often as he possibly could and he liked to have an involvement in virtually every story, not just in domestic politics but often in foreign politics" (Q 1718). Dominic Lawson, Editor of The Sunday Telegraph from 1995 to 2005, gave us two examples where owners he had worked for asked him to change something in a way that he was uncomfortable with. One example involved Conrad Black asking him to run a Leader as part of a commercial spat involving The Sunday Times and the other example involved the current Chairman of the Telegraph Media Group, Aidan Barclay, who asked him to pull a story about a paternity case involving David Blunkett because he did not want to find himself on the wrong side of a "powerful man" (Q 930). (Unfortunately, Mr Barclay declined our requests for him to give oral evidence, so we were unable to put this to him.)

126.  In both these cases, Mr Lawson managed to resist the pressure that was put on him, but as he told us, the owner can decide what is in his paper, it is just unwise for him to do so (Q 930). It is interesting that, even though Dominic Lawson insisted that he only once experienced interference from Conrad Black, one of his predecessors Sir Max Hastings has suggested a slightly different relationship with the same proprietor. He has written, for example, that "among the great enthusiasms of [Black's] life were the United States and the Reagan Presidency". For this reason, "I was always sensitive to the fact that, while I enjoyed considerable latitude in many areas, the paper must tread warily in its treatment of the United States"[34]. Earlier in his book, he states that the Rothermeres "are the only newspaper owners I have worked for who have shown themselves sincerely committed to the doctrine of editorial independence"[35]. In his evidence Lord Rothermere, the Chairman of the Daily Mail and General Trust (DMGT), confirmed that he never interferes in the editorial content of his newspapers (Q 2537).

127.  There have been many other published accounts of proprietorial interference. For example, David Hellier (a senior city and business correspondent at Express Newspapers from 1996 to 2003) wrote a piece for the British Journalism Review called 'Life with Richard Desmond'. This article contained many examples of Mr Desmond asking journalists to spike stories, particularly business stories that were negative about his friends' businesses or did not chime with his view of the world[36].

128.  It is not necessary for an owner to give a direct instruction in order to influence content. Andrew Neil told us that "There are many ways in which you can influence a newspaper without giving a downright instruction. Throughout the 11 years that I was Editor of The Sunday Times, I never got an instruction to take a particular line, I never got an instruction to put something on the front page and I do not think I even got an instruction not to do something, but I was never left in any doubt what he wanted" (Q 1650).

129.  In the recent past, the competition authorities have recognised that an owner can have a direct impact on editorial policy and newspaper content. For example in 1990, the Monopolies and Mergers Commission (MMC) blocked the transfer of a controlling interest in The Bristol Evening Post plc to Mr David Sullivan who at that point had a 50 per cent interest in Sport Newspapers Ltd, publisher of the Sunday Sport and the Daily Sport.

130.  The MMC blocked the transfer on the grounds that it might adversely affect the public interest. The MMC report stated that "if the acquisition of shares were allowed Mr Sullivan could be expected to influence editorial policy and the character and content of these papers and that this would harm both the accurate presentation of news and the free expression of opinion". To back this up the MMC said that Mr Sullivan was "an active proprietor of Sport Newspapers Ltd with clear views on the content and promotion of his own publications. These views are communicated to his editors regularly, usually several times a week. A weekly article appears under his name in the Sunday Sport. During his involvement with the Daily Star he was, we were told, in daily communication with the editor"[37].

131.  In summary, the evidence we received on direct intervention by an owner suggests it can and does happen, but that it is probably less overt now than it used to be. More common is the indirect influence that an owner can have.

Indirect influence of an owner

132.  Usually the appointment of a newspaper's editor is down to the owner of that paper. This gives the owner a clear mechanism of influence over his title's editorial agenda. If an owner of a newspaper appoints an editor that he trusts to act in his image then there is no real need for that owner to become involved in particular stories or editorial lines. If he chooses to he can take a step back, safe in the knowledge that his policies will be followed.

133.  Rebekah Wade told us that this was the mechanism through which Rupert Murdoch ensured The Sun reflects his general views. She explained "Mr Murdoch appoints the Editor of The Sun and of the News of the World and, in that sense, he is the traditional proprietor" (Q 1461). She went on to say "I think it would be fair to say that, before any appointment, he knew me pretty well … he would be aware of my views, both social views, cultural views and political views" (Q 1462). "Take Europe for example—that is quite a good one to bring up—Mr Murdoch was absolutely aware of my views on Europe, I think even before I became Editor of the News of the World, maybe even Deputy Editor … So the European campaign absolutely comes from me" (Q 1466).

134.  It is notable that when Rupert Murdoch purchased The Times and The Sunday Times he gave certain undertakings to avoid the purchase being referred to the Monopolies and Mergers Commission. One of these undertakings was that he would seek the approval of the Independent National Directors of The Times regarding the hiring and firing of editors (for further information see paras 214-220). The fact that Mr Murdoch offered this undertaking to avoid a referral suggests that he recognised the power and influence that a proprietor can have over a newspaper when he alone can choose the Editor.

135.  Once an editor is in place it is usually the owner who has the power to fire him[38] so even when the editor and owner have different views there is considerable incentive for the editor to avoid upsetting his owner. Dominic Lawson alluded to this when he referred to the fact that the Telegraph papers have had a very high turnover of editors since the Barclay family took over in 2004—three different editors of The Daily Telegraph and four different editors of The Sunday Telegraph. Mr Lawson stated that "… one of the problems, if you have a situation where there was a very high turnover of editors … is that that makes the editors frightened. They feel that their tenure is a weak one and that makes them more likely to defer to ... pressure" (Q 932).

136.  Although selecting an editor does give a proprietor a clear mechanism for influencing content we did also hear of proprietors who happily appointed editors who they knew held different views to their own. Andrew Marr edited The Independent from 1996-1998, he told us that Tony O'Reilly, the Chief Executive of Independent News and Media, has "very different political opinions from those expressed by The Independent" but never interferes in its content (Q 931).

137.  The position of editor-in-chief should also be noted. Lord Rothermere told us about the Editor-in-Chief of Associated Newspapers, a position that is currently held by Paul Dacre who is also Editor of the Daily Mail. As Editor-in-Chief, Mr Dacre oversees the Daily Mail, The Mail on Sunday, the London Evening Standard and Metro, as well as the London Lite. He is responsible for appointing editors to these titles in conjunction with the nominations committee of the DMGT Board. He is also a member of that Board himself (Q 2567). Lord Rothermere and the DMGT Board believe in giving their editors "a lot of discretion, particularly in the editorial area" (Q 2581) but nevertheless a considerable amount of power still rests with one man whom the Chairman of DMGT appoints.

The business approach of an owner

138.  Some owners take a long view of the need for investment while others take a short-term view of profits. This impacts on the type and quality of journalism that a paper can invest in.

139.  Roy Greenslade suggested that there are "four reasons for owning a newspaper … profit, propaganda, prestige and public service" (Q 1727). He went onto explain that "generally a public limited company will own it for profit … Tony O'Reilly owns The Independent newspapers which have always made a loss ever since he bought them; he calls them a calling card, he clearly owns them for prestige. We know that Rupert Murdoch … owns them partly for propaganda and partly for profit. We know that the Scott Trust will say that The Guardian they own is for public service, and we will, by the way, always hear every proprietor pay lip service to the idea that they are in fact in it for public service, despite the other reasons" (Q 1727). Obviously these different emphases will impact on the content of the paper.

140.  We received evidence about some owners taking a long term view of profits and understanding the importance of investing in news to attract new customers. Peter Wright, the Editor of The Mail on Sunday, told us that "It is true that Lord Rothermere and his son, who is now Chairman of the company, take a long view and they are prepared to invest over long periods of time in something in which they believe, and it is the case that some PLC companies are looking for short-term return, and you do not necessarily get that in the newspaper industry" (Q 505). Robert Thomson, the Editor of The Times, told us that Rupert Murdoch recognises the importance of The Times and therefore "has supported The Times with investment over many, many years" during a period of great losses (Q 270).

141.  On the other side of the coin are owners who buy news organisations and milk them for profit. During our visit to the US, Leonard Downie Jr., the Executive Editor of The Washington Post, discussed the impact of relentless profit maximisation on journalism. He explained that the large conglomerates that have bought out many regional papers in the US insist on maintaining a very large profit margin. To do this they cut news room staff as soon as their purchase has gone through and this was the beginning of a vicious circle as they then lose readers (thus showing that such an approach to profit making is short sighted).

142.  The public interest groups whom we visited in the US were also concerned about the loss of journalists and much less sanguine than the US television networks about sustaining television news. Bill Buzenberg, at the Center for Public Integrity, told us that around 3,500 journalists had been lost to the industry in the last five years and that television was making no investment in reporters or editors. Professor Tom Rosenstiel, at the Project for Excellence in Journalism, suggested that corporations were concerned about diminishing profits rather than going into loss and that television stations routinely expected to make around 40% profit. Chris Murray at the Consumers Union agreed that the problem was high profit expectations (see appendix four).

143.  An owner's approach to profit making and investment in news gathering can affect news content in broadcasting as well. Broadcast news output may be affected by cost-cutting measures, targeted investment, retrenchment—although the impact is less severe for the BBC which is funded by the licence fee and ITV which is required by Ofcom to resource its news appropriately. If a new owner bought Sky News and attempted to run it for profit alone, this could have a significant impact on content.

Different approaches to journalism

144.  A more subtle but potentially more powerful influence can be exercised over the whole journalistic ethos of a news organisation or broadcaster, which in turn can determine the news output. This influence can emanate from the particular vision of an owner or an editor-in-chief, from a family ownership tradition, or from structural or organisational principles which dictate a particular editorial direction. These influences can be manifested through what kind of journalism is invested in, and what kinds of stories are followed or not followed. Such influence may be reflected as much in what does not appear in a newspaper or news bulletin as what does.

145.  An example of this type of influence is given in William Shawcross's biography of Rupert Murdoch. Shawcross suggested that "The ethos of News [Corporation] discouraged independent investigation or troublesome journalism … Murdoch was generally disinclined to upset the established order"[39] and "He believed that Watergate-type investigations were not the purpose of journalism"[40]. The late Hugo Young, who had been a political columnist on The Sunday Times and subsequently became chairman of the Scott Trust, wrote in 1984 of the impact of Murdoch's takeover of The Sunday Times that "The investigative tradition, which depends on detachment and irreverence as well as professional competence, has been all but abandoned"[41].

146.  Another example of such influence was given in the evidence of Dominic Lawson. For his first eight years as Editor of The Sunday Telegraph Mr Lawson worked for Conrad Black but in 2004 the paper was bought out by the Barclay family. Mr Lawson told the Committee that "Conrad Black was a great international figure, a global figure, so you had very good foreign pages. The Barclays are more parochial figures and you now find that The Telegraph has no full-time staff correspondent in Paris, no full-time staff correspondent in Brussels, and you see then that it is picking up agency copy which appears under the title of "By Telegraph correspondent" which it clearly is not" (Q 938). He also suggested that "Conrad Black understood that a lot of what newspapers did was about causing trouble, making mischief, throwing bricks through windows—what newspapers do from time immemorial. I think the Barclay brothers want a quiet life, do not want any aggro, want it all to be nice and smooth" (Q 933).

147.  However, in his evidence to us William Lewis, the current Editor-in-Chief of The Daily Telegraph and The Sunday Telegraph, defended the Barclays, saying that he did not recognize Mr Lawson's description of them and their approach to foreign reporting (Q 1433). We cannot know the exact details of how the change in ownership has affected The Sunday Telegraph but what is important about Mr Lawson's evidence is that is an illustration of an editor who felt that he was being asked to approach journalism differently after an ownership change.

148.  When Andrew Marr was appointed as Editor of The Independent the newspaper had two large shareholders with the same percentage of shares: the Mirror Group and Tony O'Reilly's Independent News and Media. Mr Marr told us that "There was an intense pressure about what sort of paper it was going to be in terms of what it covered and its news agenda and all those sorts of things from the Mirror Group side" (Q 911).

149.  Alan Rusbridger, the Editor of The Guardian, told us that the journalistic ethos of his paper is protected by the Scott Trust and its principles. He explained that the paper is still run according to the dictum of "Comment is free, fact is sacred" and that the paper took a decision not to follow the fashion of blurring the lines between fact and comment (Q 205). He also told us that it was a deliberately "specialist-led" newspaper, with 37 specialists including four science correspondents, seven political correspondents and between four and five covering education (Q 233), although we note that he also said that The Guardian now employs fewer specialist correspondents than it once did (Q 222).

150.  We heard evidence from broadcasters that, despite being subject to stricter regulatory codes on accuracy and impartiality, there are still clear organisational and cultural values which influence their news output and ensure the necessary diversity in broadcast news. Independent Television News told us that, while they retain complete editorial control over their bulletins, they provide a service to their customers (the broadcasters) according to their requirements (Q 12).

151.  Each of the three commercial public service broadcasters made it clear that they frame their editorial requirements differently. For Channel 4, Jim Gray told us that Channel 4 consciously looks for depth, range and perspectives "not pursued elsewhere" (Q 78). Dorothy Byrne talked of "seeing the world from perspectives of other people" and taking a multiculturalist approach. She told us that each news programme had a detailed editorial specification to achieve those aims for Channel 4 news programmes, although the day-to-day realisation of those aims was up to ITN. There was daily contact about the content of particular bulletins and a weekly meeting to discuss forward strategy (Q 86). It is therefore clear that, while ITN is free to implement Channel 4's news brief according to its own standards of journalistic professionalism and integrity, the overall news agenda and news framework is laid down by Channel 4. The channel, in turn, derives its approach to news from its statutory obligations laid down by the Communications Act 2003.

152.  For ITV, Michael Grade told us that ITN provided a "different product" to the BBC and believed that it "has always felt more accessible without being frivolous" (Q 998). While the day-to-day news agenda is again delegated to ITN, the commissioning editor of ITV has conversations with ITN about what is being planned. For example, Mark Wood, the Chief Executive of ITN, told us that "we provide a service to our customers around their requirements and we agree with them in quite intense coordination, what kind of news service they want … However, there is then a very clear dividing line, on the other side of which is editorial control. Editorial control is with the editorial management with ITN and is, if you like, sacrosanct" (Q 12).

153.  For Five, Sue Robertson told us that the face and type of news broadcast reflects the personality or brand of your channel (Q 150). Chris Shaw said that the channel lays down the overall strategy for its news bulletins and will discuss programmes post-transmission but the day-to-day decision making is left to Sky. He also said that they seek to make it to bring a "distinctive approach" to their news, which they want to be "fresher, clearer, more straightforward than others", with the emphasis on clarity and accessibility (QQ 131, 132). Five does not seek to do long-form investigative reports, and does not see investigative journalism as its hallmark. In all three cases, it is clear that the news requirements are designed to fit in with the culture, branding and general approach of the respective channels.

Different ownership structures

154.  It is clear from the evidence above that the approach an owner takes to a news organisation can affect content in several different ways. We believe that different ownership structures could have different impacts on journalism and content. The experience of Leonard Downie Jr that we outlined in para 141 suggests that in the United States the content of regional newspapers was changed when the large conglomerates which were accountable to shareholders started to buy the titles from private family-run companies which were under less pressure to make profits.

155.  In the UK most national newspapers are owned by public companies such as DMGT, or by private companies such as the Telegraph Group. However, The Guardian and The Observer are owned by the Scott Trust, which was created in 1936 to safeguard the journalistic independence and liberal values of The Guardian. Alan Rusbridger told us that he believed that because there is no board or proprietor or publisher, there is a "different kind of editorial process … your relationship is purely on a horizontal level with your colleagues and your readers and I think that makes you more conscious and possibly more accountable to your readers" (Q 208). Paul Myners, the Chairman of the Guardian Media Group, suggested that the Trust model "gives the editors a degree of independence and freedom which I think is admirable and something which is a source of distinct advantage to us" (Q 2473).

Conclusion

156.  It is clear that the ownership of a news organisation can impact on its content.

157.  In broadcast news, the presence of content regulation and impartiality rules limits the kind of influence an owner can have. However, owners of broadcast news can have an impact on content through setting an editorial agenda and through the levels of investment in journalism that they are willing to make. For the commercial PSBs, issues of quantity, scheduling and (in ITV's case) resources are regulated by Ofcom, but beyond that news output is at the discretion of the broadcaster. For the BBC, news output is monitored by the Trust and editorial decisions will to some extent depend on the service licences to be agreed for each individual BBC TV channel and radio station.

158.  However, for newspapers and internet news providers, there are more varied and more frequent opportunities for owners to influence content. Examples in this chapter show that owners have several potential mechanisms of influence—whether that be direct interference in a story, communication to the editor of what is expected of him, appointment of an editor and team that reflect a particular world view, investment in journalism or investment in specific types of journalism[42].

159.  As Professor Baker, from the University of Pennsylvania Law School, told us during our US visit: proprietors have always influenced the agendas of their newspapers. Historically this was not a threat as no single proprietor controlled too much of the media. As the next chapter shows, this may no longer be the case.

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32   Jeremy Tunstall, Newspaper Power, Clarendon Press, 1996, pg. 79. Back

33   Andrew Neil, Full Disclosure, Pan Books, 1996. Back

34   Max Hastings, Editor, Macmillan, 2002, p67. Back

35   Ibid. Back

36   David Hellier, Life with Richard Desmond, British Journalism Review 2003; 14; 35. Back

37   Mr David Sullivan and The Bristol Evening Post PLC: A report on the proposed transfer of a controlling interest as defined in section 57(4) of the Fair Trading Act 1973. The Monopolies and Mergers Commission 1990. http://www.competition-commission.org.uk/rep_pub/reports/1990/274david.htm  Back

38   Although we note that in some companies the dismissal of an Editor is a decision taken by the whole Board. In her evidence, Sly Bailey the Chief Executive of Trinity Mirror, told us that when she wished to dismiss Piers Morgan as Editor of the Daily Mirror she made a recommendation to the Board (Q 2653). Back

39   William Shawcross, Murdoch, 1994, Pocket Books, pg. 298. Back

40   Ibid, pg. 266. Back

41   Article in Political Quarterly, quoted in: Nick Davies Flat Earth News, Chatto and Windus, 2008, pg. 303. Back

42   Although in the case of broadcasting, some of these mechanisms of influence cannot operate due to content and standards regulation. Back