Internal safeguards
211. If safeguards can be put in place within
a news organisation to prevent an owner influencing content then
it could be argued that there is no need for limits on media ownership.
In broadcast news, the content regulatory structures outlined
in chapter two, have lessened the influence an owner can have
on news. This was recognised by the Competition Commission in
its recent report on BSkyB's acquisition of a 17.9% stake in BSkyB.
It stated that "We note that there are a number of internal
and regulatory constraints in the production of television news
which are likely to limit any possible single minority shareholder
influence on editorial decisions"[89].
212. However, in newspaper and online news different
examples can be found of internal structures put in place to protect
editorial independence. A widely respected example is the ownership
structure of the Guardian Media Group. As explained in para 155,
the Guardian Media Group is owned by the Scott Trust, which was
created in 1936 to safeguard the journalistic independence and
liberal values of The Guardian. The core purpose of the Scott
Trust is to secure the financial and editorial independence of
The Guardian in perpetuity: as a quality national newspaper without
party affiliation while remaining faithful to its liberal tradition.
The Guardian Media Group is bound by the Scott Trust to uphold
a set of values laid down by the former Guardian editor, CP Scott,
and now enshrined as the Scott Trust values. The Scott Trust model
is unique and probably does provide a degree of protection for
journalistic independence. We believe it is unlikely that another
newspaper will ever choose to recreate the Scott Trust model.
213. Editorial independence is not only achieved
through models like the Scott Trust. Traditions of editorial independence
can develop in public companies too. Lord Rothermere, the Chairman
of the Daily Mail and General Trust, made it clear that the "convention"
at DMGT "is to allow editors to edit" (Q 2585).
However, this is a convention and is dependent on the nature of
the Chairman and Board, there is no internal structure safeguarding
the culture at DMGT.
214. Another internal structure designed to protect
editorial independence is the Independent National Directors at
The Times and The Sunday Times. In 1966 the Monopolies Commission
reported on the transfer of The Times and The Sunday Times from
Lord Astor to Lord Thomson. At the time of the merger there was
concern that the transfer would damage the character of The Times;
that the purchase would result in less competition and diversity
of opinion in the newspaper market; and that the outside influence
of the Thomson organisation might be allowed to interfere with
the accurate presentation of news. The Times Publishing Company
was similarly concerned and negotiated provisions that it considered
provided adequate safeguards. One such provision was that the
Board of The Times and The Sunday Times would include four
"national figures" who it was hoped would represent
the national interest. However, the Monopolies and Mergers Commission
doubted that "any reliance can be placed on such safeguards"
and asserted that "the inclusion of national figures on the
board could only be window-dressing"[90].
Despite this scepticism the national figures were appointed to
the board but in practice it was Lord Thomson's own hands-off
approach as proprietor that provided the real defence of editorial
independence during his years in charge of The Times and The Sunday
Times.
215. When Rupert Murdoch sought to purchase The
Times and The Sunday Times in 1981 he agreed to strengthen
the role of the national figures (now called the Independent National
Directors). He made this agreement in order to avoid his purchase
being referred to the Monopolies and Mergers Commission. Rupert
Murdoch was also responding to concerns from the then editors
of The Times and The Sunday Times who both wished to ensure their
editorial independence within the new company.
216. The new Articles of Association of Times
Newspaper Holdings Limited were passed in February 1981. Paragraphs
78 and 79 of the Articles state that there shall be no more than
20 directors of Times Newspaper Holdings and that at least six
of these shall be "the Independent National Directors".
All the directors are paid by Times Newspaper Holdings Ltd. The
Independent National Directors serve three-year terms and although
they have the power to appoint their successors, the Company has
the right of veto. The agreement of a majority of the Independent
National Directors is required to:
- Dispose of the company, i.e. transfer the titles
or authorise a sale
- Appoint and dismiss the Editor-in-Chief; the
Editor of The Times, and the Editor of The Sunday Times and
- Resolve disputes between the Editors and the
Company, their decision being final and binding.
217. It is questionable how effective the Independent
National Directors have been, even with the increased powers that
Rupert Murdoch agreed to give them. The system was strongly criticised
by Harold Evans who was Editor of The Sunday Times when Rupert
Murdoch bought it, and who was then appointed as Editor of The
Times. Mr Evans had fought for the increased powers of the
Independent National Directors but in practice, he found they
provided him with no effective protection. In his autobiography
he wrote that none of the guarantees that Rupert Murdoch gave
to safeguard editorial independence "are worth the paper
they are written on—unless the proprietor shares the spirit
of them. If he does, they are merely ornamental; if he does not,
they are unworkable … Internal freedom cannot be acquired
by external rules"[91].
Andrew Neil, Editor of The Sunday Times from 1983 to 1994, agreed
"It was a conceit invented ... to allow Mr Murdoch to
take over these papers in the first place, and it was put in place
for that reason. It was not really put in place to protect the
independence of the editors" (Q 1689).
218. A further example of internal structures
to protect editorial independence can be seen in the regional
press. In June 1993, the Daily Mail and General Trust applied
for the Secretary of State's consent to its acquisition of T. Bailey
Forman Ltd, the publisher of the Nottingham Evening Post and other
local newspaper titles in the East Midlands. The case was referred
to the Monopolies and Mergers Commission, which concluded that
"diversity of opinion can only be adequately protected if
the Nottingham Evening Post is not in the same ownership as the
daily evening newspapers in Derby and Leicester, any condition
would have to involve divestment of one or both of these titles"[92].
It advised the Secretary of State to reject the transfer[93].
However, in December 1994, the Government rejected the Monopolies
and Mergers Commission's advice and consented to the transfer
subject to conditions. These included the establishment of an
editorial board responsible for maintaining editorial independence
at the Nottingham Evening Post. They also included some competition
specific safeguards[94].
We have no way of knowing whether this internal structure proved
effective because the competition authorities do not monitor the
post-merger situation.
219. Some of our witnesses suggested that no
media mergers should be allowed if there was enough doubt about
the effect on the diversity of voices available that pre-merger
commitments were needed. This was the view of Andrew Neil
"If you have to ensure commitments before you allow a merger
to go ahead, you probably should not let that merger go ahead"
(Q 1797).
220. We do not believe that an internal company
structure can be an adequate substitute for competition law and
statutory regulation in ensuring that no single voice becomes
too powerful. We are clear that regulation to ensure a plurality
of media ownership is still relevant and necessary.
Self-regulation of the newspaper
industry
221. The newspaper industry is subject to common
law, including the law of defamation. In addition it is subject
to self-regulation by the Press Complaints Commission (PCC). The
PCC is a non-statutory body which deals with complaints from members
of the public about the editorial content of newspapers and magazines.
The Board of the PCC is made up of 17 members, seven of whom are
senior editors of national and regional newspapers and magazines.
The remaining ten members form a lay majority who are appointed
by the PCC's Appointments Commission, which includes the Chairman,
one industry representative[95]
and three independent members[96].
The PCC's role is to investigate breaches of the industry Code
of Practice, which is drawn up and maintained by the Code of Practice
Committee (composed of editors of national and regional newspapers
and magazines). It does this by investigating complaints from
members of the public about the content of newspapers and magazines.
It does not pro-actively investigate compliance with the Code,
it only investigates if there has been a specific complaint by
someone specifically and directly affected by the story in question.
222. The worth of the PCC as an industry watchdog
was called into question by a number of our witnesses. Alastair
Campbell, Director of Communications and Strategy for the former
Prime Minister Tony Blair 2001-03 and Chief Press Secretary 1997-2001,
said "it is a pretty useless organisation" (Q 1869).
He went on to explain that "I do not think actually that
it offers a real system of redress for people who are traduced
by newspapers. I think it is part of a cosy media club" (Q 1870).
Lord Puttnam agreed with this assessment when he said, "I
have very limited respect for the Press Complaints Commission
and the organisations that surround it because I think essentially
it is a cartel. It is a self-regulatory organisation that will
very seldom do anything that will discomfit [the press] or make
its life difficult" (Q 2113).
223. Dr Moore, Director of the Media Standards
Trust, agreed, "I think that it is astonishing how anachronistic
the governing structures of the PCC are … You have someone
who is the Executive Editor at News International sitting on both
the funding committee and the editorial committee. You have an
editor of the Daily Mail sitting both on the editorial code committee
and on the PCC. In other words, they are both setting the rules
and policing the rules themselves and then monitoring themselves.
The whole thing is slightly absurd in a way which I think is why
there is an urgent need to review it and to undertake an independent
review of the self-regulation particularly as it expands"
(Q 769).
224. The system of self-regulation, as currently
constituted, has particular implications for ensuring ethical
and journalistic standards are upheld. This is because as Sir Simon
Jenkins, former Editor of the Times from 1990-1992, told us, one
of the defences against "buccaneering newspaper ownership
is the way in which the profession regulates itself … I think
that one of the defences that journalists and journalism have
against proprietorial interference or unethical practices is a
far more rigorous structure of self regulation … and I don't
think you are getting it at the moment at all" (Q 1798).
225. Sir Christopher Meyer, the Chairman
of the PCC, strongly defended the Commission but also admitted
that the remit of the organisation is limited. When asked whether
the PCC would ever investigate a complaint about cross-promotion
within a newspaper, he was clear that "I do not do commercial"
(Q 1860). Given its current remit the PCC is not currently
equipped to carry out a role in protecting editorial independence
and there is no sign that the newspaper industry would agree to
a wider role for it.
226. The Press Complaints Commission is an internal
complaints body, which lacks independence from the industry. Its
own terms of reference are to deal with complaints about the editorial
content of newspapers and magazines. It was never designed or
established to proactively promote journalistic standards or ethics.
It does not have the powers necessary to prevent the voice of
any one owner becoming too powerful and there is no prospect of
the industry giving it such powers.
227. In summary we are clear that none of these
developments in the media industry mean that regulation of media
ownership is now out of date or unnecessary. In light of this,
the next chapter will examine whether any changes are needed to
the current system of media ownership regulation.
87 Consultation on media ownership rules, Department
for Culture, Media and Sport, 26 November 2001, para 1.7. Back
88
Media Ownership: The government's proposals, Department
of National Heritage, 1995, para 1.4. Back
89
Acquisition by British Sky Broadcasting Group plc of 17.9 per
cent of the shares of ITV plc, Competition Commission report,
para 5.69. Back
90
The Times newspaper and The Sunday Times newspaper: A Report on
the proposed transfer to a newspaper proprietor, Monopolies and
Mergers Commission, December 1966, para 176. Back
91
Harold Evans, Good Times, Bad Times, Weidenfeld and Nicolson,
1983, pgs. 461-462. Back
92
A report on the proposed transfer of seven local newspapers published
in Nottingham, Monopolies and Mergers Commission, para 1.11. Back
93
Ibid, paras 1.4, 1.7, and 1.10. Back
94
These include a requirement not to re-enter the market for weekly
paid-for newspapers in the East Midlands area; a requirement not
to behave in a way that distorts or restricts competition in the
newspaper market in the area; and a requirement not to initiate
a regional edition of the Daily Mail in the area. Back
95
Tim Bowdler, Chief Executive of Johnston Press. Back
96
Lord Phillips of Sudbury, Sir David Clementi and Baroness Smith
of Gilmorehill. Back
