House of Lords - Communications

Select Committee on Communications Written Evidence

Memorandum by Jacob Rowbottom

SECOND CALL FOR EVIDENCE

MEDIA OWNERSHIP AND DEMOCRATIC GOALS

1. In this evidence I would like to outline some of the main goals and strategies for regulating media ownership, and in particular emphasise the fundamental importance of media ownership in a democracy. Below I will outline two democracy-based arguments that support controls on media ownership. The first being the concern that media owners have too much political power,[11] and the second that a concentrated media is less likely to provide citizens with the diverse views and information.[12]

POLITICAL POWER AND THE CHANCE TO INFLUENCE

2. Claims that media ownership confers too much political power tend to invoke images of the old newspaper barons or current figures like Rupert Murdoch and Silvio Berlusconi. However, this concern may apply where a company without a dominant figurehead owns a media entity, as that company is still in a position to influence political debate. This argument is highlighted by contrasting the position of the media to other persons or bodies in relation to election spending. Under the laws regulating election campaigns, the amount that a third party can spend in support of a party or candidate during the regulated election period is limited.[13] However, newspapers, periodicals and licensed broadcasters are provided with an exemption from these controls, recognizing the important role played by the media in informing the public.[14] As a result, an individual or interest group is restricted in the amount it can spend to advocate a candidate or party, while the media owner is free to use his or her property to advocate and campaign during an election.

3. Some commentators suggest that the use of such political power has declined since the days of the newspaper baron. One argument is that media owners now tend to leave content choices to editorial staff. While this practice may vary among different media entities, such a limit will generally be self-imposed and a result of the owner's choice. Furthermore, it is questionable whether the influence of the owner can truly be eradicated, as the mere knowledge of their preferences or interests among editorial staff has the potential to influence content decisions. Another argument is that the media is now less likely to be used as an instrument of a dominant owner, but is more strongly influenced by the market and profits. This reasoning can be seen in some of the regulators' decisions. For example, the Competition Commission thought a takeover of the Mirror Group was unlikely to change the political slant of the newspaper for "very strong commercial reasons".[15] The market constraints on content can, however, also lead to problems from the democratic perspective, as the media content may reflect the preferences of the most profitable audience or advertisers, rather than providing a fair distribution of political power and influence. Assuming that the market does provide some constraints, within those constraints lies considerable discretion to choose the political slant on many issues thereby allowing some scope for proprietorial influence to remain.[16]

4. Controls on media ownership provide a means of limiting the level of political influence. By ensuring the media is in the hands of a range of different individuals or companies, it will prevent any single individual or entity having a dominant voice in political debate. However, media ownership laws will provide only a partial constraint. Even if the media is diversely owned, given the costs associated with setting up and running a mass media entity, it will remain a channel of influence that is open only to a few. Even with the development of new forms of media, the position is unlikely to change in relation to the traditional mass media, which so far have continued to be the main provider of political coverage.[17] Media ownership controls prevent the concentration of political power and the chance to influence in the hands of too few. Such controls do not ensure that the distribution of political power is fair or representative of the public as a whole. To address this, other additional strategies may be necessary, such as impartiality requirements (as with the broadcast media), access to the mass media or subsidies to support certain media outlets, each of which raise difficulties of their own.

DIVERSE CONTENT AND VIEWPOINTS

5. A second concern with media ownership is not that it grants too much political power to those owning the media, but rather that the audience will not be provided with a sufficient range of views. Media ownership laws aim to promote this goal in the hope that diverse ownership will encourage differences in style, tone and coverage throughout the media. Diverse ownership also increases the chance that where one media outlet suppresses a particular story or excludes a voice, another media outlet will carry it. The degree of competition may also work to encourage media entities to pursue different stories in order to gain a competitive edge. In short, the more speakers there are, it is assumed the greater chance that different things will be said.

6. Equating different media owners with different speakers raises some difficulties. Even if a diverse range of individuals or companies owns the mass media, diversity of content does not automatically follow. Different media owners may get their content from the same source, or may produce similar content due to common preferences, interests or market constraints. Conversely, a relatively concentrated media can provide a range of different viewpoints across its overall content. A relatively concentrated media may have the resources necessary to produce diverse coverage and carry some non-mainstream content. A very large dominant media entity may also provide a common forum; a place for all sections of society to go and receive news including views other than their own.

7. While the regulators frequently cite the democratic function of the media in providing audiences with diverse views,[18] the relationship between media ownership and diverse content is not clear-cut. It raises some of the difficult context specific questions about the effects of media ownership on content and the ideal level of diverse content necessary for a democracy.

COMPETITION LAWS AND MEDIA SPECIFIC PUBLIC INTEREST CONTROLS

8. While the ordinary competition laws may incidentally further the democratic goals, this is not the primary concern of such laws. Competition laws are concerned with companies abusing a dominant position or preventing competitors entering the market. In the case of merger controls, the competition laws look at whether there will be a substantial lessening of competition rather than the impact on diverse content or political power. The ordinary merger laws have a high turnover threshold before the controls take effect, which could exclude some important media mergers from its jurisdiction.[19] As a result of the difference in focus, the definition of the market under the competition laws may be inappropriate for assessing the democratic effects of media ownership. Given these differences in goal and definition, UK law recognizes the importance of having additional controls to safeguard the democratic needs.

9. Beyond competition laws, different strategies can be pursued to address the democratic concerns about media concentration. One strategy is to impose fixed rules that limit the amount of media any person, group or company can own. This strategy was dominant in the 1990 Broadcasting Act, which restricted the accumulation of broadcast licences and placed limits on cross media ownership. While the fixed rules strategy provides an objective standard for evaluation and provides a degree of certainty for those in the media, its effectiveness will depend on what levels of concentration are set as permissible and how up to date those rules are. A danger may arise a strategy based on fixed rules will encourage parties to search for loopholes and for such regulations to become outdated in a rapidly changing media environment. For example, excluding non-domestic satellite broadcasters from the cross-media ownership rules paved the way for News Corporation to dominate the market for subscription TV in the 1990s with BSkyB. Since 1990, the fixed rules have been gradually liberalised, permitting the consolidation of ITV and the lifting of the cross media ownership restrictions on Channel 5. At the national level, this strategy of regulation can still be seen in the cross media restriction which prevents persons controlling a national newspaper with an aggregate market share of 20% or more gaining more than a 20% interest in a channel 3 licence. This also strategy continues to regulate the ownership of local radio licences.

10. At the national level at least, the trend has been to move away from the fixed rules to limit the concentration of broadcast licences. Now greater emphasis is placed on the competition laws but with an additional safeguard of ministerial discretion to refer media mergers to the regulators where media public interest issues are raised.[20] This approach brings the process for regulating broadcast mergers into line with that for newspapers, where mergers had previously been subject to discretionary control.[21] In contrast to the fixed rules approach, the discretionary safeguard provides greater flexibility and takes account of the context of a particular merger. However, such a strategy will have limits. Intervening at the merger stage may be too late, as the entity subject to a takeover may already be in financial difficulties and otherwise face closure.[22] Permitting a merger in those circumstances may be seen to be the least bad option. Furthermore, the regulators will also have to consider the needs of certainty for media companies planning a takeover. While these need not be overriding considerations, it may constrain the Secretary of State's willingness to intervene.

11. The role of ministerial discretion to trigger the public interest intervention may give rise to a suspicion of political motivations. Such suspicions were aroused when, under an earlier regulatory regime, the Conservative government did not refer Rupert Murdoch's purchase of the Times and Sunday Times to the Monopolies and Mergers Commission, and more recently when the Labour government did not refer Richard Desmond's takeover of the Daily Express. Whether or not there is anything to justify such suspicions, the exercise of this discretion was seen by some to be based on political considerations and a desire to win favour with that media entity.

12. The effectiveness of ministerial discretion to control media mergers will also depend on the policy for intervention adopted by the minister. While the intervention will trigger only a further investigation by the regulators rather than any conclusive action, the policy so far has been to intervene in a very limited range of circumstances. In mergers involving the broadcast media, guidance published by the Department of Trade and Industry provides that an intervention will be made only where the merger would previously have been restricted by media ownership rules that have since been removed by the 2003 Communications Act or in "exceptional circumstances".[23] In relation to mergers involving a newspaper, the DTI guidance similarly provides that such interventions will be rare.[24] While this policy may have advantages in providing greater certainty for media companies, such a limited approach means that the competition laws and remaining ownership rules will be the primary safeguards, despite the limits of such strategies mentioned above. Consequently, while the public interest provision has the potential to control the biggest concentrations of the media, the policy adopted on interventions suggests it will be used so sparingly as to provide at best a minimal safeguard.

13. Unlike the fixed rules approach, the public interest intervention gives the regulators scope to look at the context of each merger and the impact on the democratic functions of the media. However, the questions set out in s 58(2A)-(2C) of the Enterprise Act 2002 tend to lack an objective standard for assessment and raise difficult questions of fact. It is hard to draw any firm conclusions about the test from the one media public interest intervention made so far under the 2002 Act, especially as the Competition Commissions' conclusions were dependent on context of that case.[25] However, looking at the approach taken to such factors in relation to the earlier newspaper mergers, it appears that the regulators will often be cautious in reaching conclusions about an adverse impact on pluralism and diversity, which potentially reduces the strength of this control. The point can be made through two examples.

14. The first example arises where regulators consider the impact of a newspaper merger on the free expression of opinion, which includes editorial autonomy.[26] To assess this, the regulator will look at the evidence to support allegations of interference with editorial freedom.[27] However, proprietorial influence arises not only through direct intervention, but can be felt through more subtle pressures. Consequently, it is often difficult to find concrete evidence of owners influencing editorial choices, as the Committee will have found from its own investigations. Even where there is evidence, it is unlikely that such an issue will be a ground for blocking the merger. Instead, the likely response will be to approve the merger subject to undertakings that editorial independence will be protected. Such an approach was taken with Lonrho's acquisition of the Observer,[28] and but later evidence of interference in editorial decisions casts doubt on the effectiveness of such measures.[29]

15. Another example involving newspaper mergers arises where regulators consider whether there will be sufficient plurality of views in each newspaper market. This can arise if the change of ownership is likely to change the political perspective of the paper. Plurality is thereby assessed with the status quo as the base line rather than any reference to an ideal level of plurality in a democracy. As stated earlier, regulators have been willing to rely on market pressures to ensure sufficient diversity of viewpoints.[30] Even where the merger will limit plurality of views, there will be limits on what the regulator can do. The regulator will, for obvious reasons, be unwilling to demand that the paper maintain a particular slant as a condition of the merger and vet a possible proprietor's political views.[31] While there has been greater willingness to prevent mergers on such grounds in the context of the Northern Ireland press, such an intervention is exceptional given the political sensitivities in Northern Ireland which make such diversity of political opinion "of greater importance than it is elsewhere".[32]

OWNERSHIP AND CONTENT REGULATIONS

16. It is sometimes suggested that content regulations imposed on the broadcast media, in particular those concerning due impartiality, lessen the concerns associated with media ownership. As such regulations impose content requirements, the owner has less control over the media output. While broadcast regulations do impose a constraint on the potential for the political coverage on television or radio to be skewed, there is still considerable discretion left open to the broadcaster given that due impartiality does not prescribe exactly what stories are to be covered and which views are to be included. Even with the requirements of due impartiality, differences in ownership still have the potential to affect the political coverage in the media. Furthermore, given that some relaxation in the content regulation of the broadcast media is currently being debated,[33] the presence of such safeguards in the future cannot be taken for granted. The presence of the broadcast regulations should not be taken as an argument for liberalising media ownership rules.

CONCLUSION

17. Media ownership can have a fundamental impact on the workings of a democracy, both as a result of the political power that comes with media ownership and the need for citizens to be well informed and hear diverse viewpoints. The issue is complicated by other factors, in particular economic concerns about having a strong media that can compete in the global market. Despite the importance of such economic goals in the arguments for deregulation, it is important not to lose sight of the democratic concerns. There are different methods of pursuing these goals, which come with their own drawbacks and advantages. Although the current limits on media ownership continue to play an important role, the controls on the national media have been weakened, in particular due to the liberalisation of broadcast ownership and cross media ownership rules, and by the limited use and application of the media public interest test. While references are made to the changes in the media environment and the new voices that now have a platform, the traditional mass media continues to play a dominant role in political life. For this reason, I would argue that it is necessary to have strong controls on media ownership, over and above the competition laws, to promote the democratic functions and the Committee should look for ways to strengthen and secure such safeguards for the future.

8 February 2008

11 See Lord MacIntosh of Haringey, HL Deb, 2 July 2003, col 912-913: "The underlying principle is that it would be dangerous for any one person to control too much of the media because of his or her ability to influence opinions and set the political agenda". Back

12 For example, Ofcom has stated that the rationale for media ownership rules is to "to ensure that citizens have access to diverse viewpoints, enabling them to participate fully in the democratic process". Ofcom Review of Media Ownership (November 2006) at [2.8]. Back

13 See Political Parties Referendums and Elections Act 2000, Part VI and Representation of the People Act 1983, s 75. Back

14 Political Parties Referendums and Elections Act 2000, s 87(2) and Representation of the People Act 1983, s 75. Back

15 Trinity plc/Mirror Group plc and Regional Independent Media Holdings Limited/Mirror Group plc (1999) Cm 4393 at [2.25]. Back

16 For a recent discussion of this argument, see C E Baker, Media Concentration and Democracy (CUP, 2007), pp 88-96. Back

17 For the author's views on the impact of the digital technologies, see J Rowbottom, "Media Freedom and Political Debate in the Digital Era" (2006) 69 Modern Law Review 489. Back

18 See Ofcom, n 3 above. Back

19 s 23 of the Enterprise Act 2002 provides that a "relevant merger situation" applies where the annual turnover of the enterprise being taken over exceeds £70 million, and/or the merger would result in the creation or enhancement of at least a 25% share of supply of goods or services of any description in the UK or in a substantial part of the UK. Back

20 See the Enterprise Act 2002, s 42. Back

21 Fair Trading Act 1973. Back