Select Committee on Communications Minutes of Evidence


Memorandum by Lord Puttnam

SECOND CALL FOR EVIDENCE

1.  Are the requirements in the Communications Act 2003 relating to the quality, quantity, scheduling and impartiality of national and regional broadcast news appropriate? Are they sufficient? Will they be appropriate and sufficient after digital switchover?

  The UK can rightly be proud of the range and quality of its news coverage. The British public enjoys excellence in broadcast news, a dynamic newspaper sector and a fast developing diverse online news market.

  Television news plays a particularly important part in the democratic life of Britain, through the diverse range of independent and high quality news programmes that are available to all licence fee payers in the UK. Television news is widely respected and valued by the public for providing trustworthy, honest and high quality coverage; it also remains—despite the arrival of a plethora of alternative news sources in recent years—by far the most popular single news medium, with some 94% of people saying they use television as a source of news, compared with 67% for newspapers and 27% for the internet.

  It is widely understood by the public that television news can be relied on to tell the truth. Well over 50% of viewers say they trust television as an accurate source of information. By contrast just 29% trust the internet.[32] Impartiality in broadcast news is felt to be important to 87% of people and over half say that all the main PSB channels should provide them with serious news coverage.[33]

  In this context, public policy has for many years deliberately sought to enshrine the principles of impartiality, accuracy and fairness in primary legislation, most especially in relation to broadcast news services. As the 2002 Communications Act made its way through the Parliamentary process it became clear that those long-standing policy objectives remained as relevant as ever and as a result the Act requires all forms of broadcast news services to be impartial, accurate and fair.

  These requirements apply equally to terrestrial, digital TV and radio services, enforced through Ofcom's Broadcasting Code and licence obligations.

  In addition, the universally available, free to air public service channels (ITV, Channel 4 and Five) are held to a number of additional requirements relating to quality, quantity and scheduling. Each is required to provide a high quality news service, with coverage throughout the day including at peak times. ITV—as the largest competitor to the BBC and an organisation more susceptible to commercial pressures and change of ownership—is required to provide a news service that is explicitly competitive in terms of quality, particularly to the BBC. It must appoint a single news provider across the network that meets resource and quality criteria.

  The Act also grants powers to the Secretary of State to extend the appointed news provider provisions to Five, if for example ITV was no longer able to fulfil the function of providing competition in terrestrial news. Through its licence Channel 4 is required to provide news that not only deals with national and international matters (as ITV and Five are required to do) but is "authoritative and comprehensive, in terms of both geography and subject matter". In line with Channel 4's wider remit this translates into a news service that focuses more heavily than others on international and in-depth political affairs. Taken together, this regime performs an important role on behalf of the citizen in ensuring that a choice of high quality news is made accessible to everyone at no additional cost.

  In terms of other media, there are no statutory requirements on the quality, amount or impartiality of news. Newspapers are committed to accurate reporting through the self-regulatory Code overseen by the Press Complaints Commission. But the Act did not seek at this time to regulate content delivered via the internet.

  The last few years have seen major change in the media landscape as new channels and new media services have been launched. But it is significant that the values attached to public service broadcasting and to broadcast news in particular do not appear to be diminishing, as evidenced by the Ofcom research cited above. The arrival of more choice and more platforms does not appear to have (as yet!) translated into a lessening of demand for impartial, trustworthy news sources.

  It therefore remains relevant and important to maintain the requirements for impartiality and quality on all forms of broadcast news. Indeed, in a more complex world, it is perhaps more important than ever that broadcast news stands out as a beacon of truth and integrity that the public can believe and rely upon.

  The public would have appeared to have come to understand the differences between newspapers and broadcasting, and their expectations of each medium now differ accordingly. But it is unclear whether this distinction in the public's mind extends to online, particularly as the boundaries between video and print media becomes increasingly blurred with integration of video news into online services provided by "print" organisations. Might this alter the public's expectations of online news? Does it risk diluting the association with impartiality and quality traditionally associated with broadcast news? Or, does the public recognise the brand and editorial values associated with different providers, creating different expectations between, for example, BBC or Channel 4 news, and The Sun or Yahoo news online? As online news providers increasingly integrate video into their news services, there is a potential blurring in the public's mind between what is "broadcast" and what is not. These questions need to be kept under review as, over time, news consumption patterns continue to shift. There has even been some debate as to whether impartiality rules might be entirely removed for non-public service broadcast news. However, it seems unclear what public benefit would be derived from diluting these rules. It risks threatening the perception of TV news as a whole, making it unclear to the public whether certain services are indeed genuinely impartial.

  Most of the arguments in favour of relaxation also appear to misunderstand what is meant by "due" impartiality. The rules do not prevent news services making their own editorial decisions about which type of stories to prioritise, as long as the overall service is balanced. On any given day one news service might focus on a specialist story relating to news from Iraq; another might focus on the UK economy depending on the likely interest of the audience: both different, yet both impartial. In addition, the public has a plentiful and growing supply of news services that are not bound by impartiality rules.

  In terms of the requirements relating to quantity of news, one potential area of vulnerability is emerging in the provision of news for the nations and regions. ITV—the only source of competition in TV regional news to the BBC—has, in the light of increasing commercial pressures, outlined proposals to scale back on the number of regional news services in England. Beyond digital switchover, when the regulatory lever of access to spectrum has all but fallen away, it's possible that ITV might seek to withdraw from regional news provision completely. While there may be regional and local news services online, these are unlikely to fulfil the quality criteria applied to television news and would leave the BBC as the sole player in this field. Furthermore, a major withdrawal would also have implications on the newsgathering capability and consequent quality and range of output not only on ITV's national and international news service but also on Channel 4 News, because of the newsgathering base shared between ITV and Channel 4 through ITN.

2.  Are the public interest considerations for media mergers set down in section 58 of the Enterprise Act 2002 strong and clear enough to protect a diverse and high quality news media? Are the conditions under which the Secretary of State can order a public interest investigation appropriate?

  The public interest test in the Communications Act and at Section 58 of the Enterprise Act was one of the most important aspects of the new legislation and one of the policy areas that Parliament spent longest debating. In an age of increasing convergence and the associated likelihood of consolidation between and within media, it was important to ensure that the public interest was protected in terms of both the consumer and citizen. As I said during the Committee stages of the Bill:

    "There are two ways of accomplishing what we propose, and we need both of them. One looks from the viewpoint of the consumer; the other from the viewpoint of the citizen. For the consumer we have competition policy... for the citizen we have the public interest plurality test. Together they represent a formidable duo, and they are both flexible and future proof".[34]

  While the Enterprise Act and general competition policy provided an overarching framework to prevent undue concentration on pure competition grounds, it became apparent that the Enterprise Act would not be strong enough on its own to respond to the particular plurality and public interest concerns that might arise in relation to media mergers. The unique and important role of the media—and particularly broadcast news—in democratic life needed further protection which was achieved through the quality provisions and the specific references to broadcast plurality in the public interest test.

  The public interest test has recently been put to its first serious test, following BSkyB's acquisition of shares in ITV Plc. The Competition Commission's findings and recommended sell-down are a strong validation of the approach taken in the Communications Act. The Commission found that the original stake restricted competition. It did not identify any specific plurality concerns. It concluded that "the regulatory mechanisms, combined with a strong culture of editorial independence within television news production, are likely to be effective in preventing any prejudice to the independence of ITV news".[35] This demonstrates that the public interest regime worked precisely as it was designed to, with the dual limbs of regulation, relating on the one hand to ownership and on the other quality and independence, working in parallel to protect the public interest.

  However, the case also indirectly raised questions in relation to Channel 4 news provision. The rules limiting ownership of an ITV licence by a major newspaper owner to 20% also extend to ITV's news provider. This means that a major newspaper owner cannot own more than 20% of ITN or form more than a 20% share of an alternative ITV news provider. In the event that ITV were to switch its news contract to an alternative supplier, given the expertise required to produce news it is likely that this consortium would involve Sky, as happened in 2001 when Sky formed a consortium to bid for the ITV contract. In this event, ITN would be unlikely to be in a position to solely provide news to Channel 4 in keeping with the current arrangement. Channel 4's options for alternative news supply would therefore be limited. It might therefore be appropriate to consider ways in which the editorial independence of Channel 4 might be safeguarded in future in order to safeguard plurality of supply.

3.  Do current national and cross-media ownership and single sector media ownership rules set out in the UK legislation do enough to ensure a high quality and diverse news media? Or now that most news organisations are moving towards multi-platform operations, have these rules outlived their usefulness and relevance? In this context are there effective actions that can be adopted by news organisations to protect the public interest?

  The cross-media and single sector ownership rules that were put in place in the Communications Act were designed to ensure that there continued to be a plurality of news suppliers. The system sought to balance ownership liberalisation with prevention of undue consolidation within newspaper ownership, between local broadcast and newspaper services and between a major newspaper owner and ITV. As a whole the system aims to create an environment in which a plurality of news suppliers would continue to exist, whilst providing a more flexible ownership regime.

  In the years since the Act came into force, there have been numerous takeovers and mergers, in television, radio and online. More deals are sure to follow. Earlier this month, for example, Microsoft made an unsolicited bid for Yahoo, a move that is being fiercely resisted, prompting speculation that other parties such as News Corporation may enter the fray.

  In a changing landscape, it is very important that the overarching policy objectives regarding quality and plurality in the Act are kept in place. Research shows that even in this fast changing world the public continues to demand a range of high quality news services. It is equally important to take into account both institutional plurality—defined by the sheer number of separate organisations—and editorial plurality; that's to say the range of "voices" serving the public's matching range of interests and concerns.

  I didn't make myself particularly popular with newspaper interests when outlining these different types of plurality during the later stages of the Parliamentary debate on the Bill:

    "...the maintenance of a range of media owners and voice sufficient to satisfy a variety of tastes and interests—that is, many speaking to many; the promotion and maintenance of a plurality of broadcast media owners, each of whom demonstrates a commitment to the impartial presentation of news and factual programming—that is, many broadcasters all abiding by the important impartiality requirements that this Bill and its predecessors set out; and the promotion and maintenance in all media, including newspapers, of a balanced and accurate presentation of the news, the free expression of opinion, and a clear differentiation between the two".[36]

  While a number of additional news providers have entered the market, particularly with online services, I believe there remains a clear need to retain the ownership rules. As outlined above, there's still a demand from the public for a variety of trustworthy news sources. The rules surrounding separate, structural ownership are an important means of safeguarding this plurality. Interestingly the increased choice provided by online services does not necessarily deliver a greater diversity of news "voice".

  As Ofcom noted in its New News, Future News publication this may in fact lead to an even greater homogenisation of news:

    "[internet news sources] far from aiding plurality—can actually give an impression of news uniformity|virtually all of these apparently diverse `sources' from all around the globe were, in reality, posting the same news stories, using the same words, lifted directly from one or other of four key international sources—Reuters, AP, AFP or the BBC. It is the future potential of the internet that makes it so central to any understanding of the post DSO news environment. So far, this enormous potential remains relatively un-tapped by the majority of consumers. Even journalists at the forefront of `new media' believe it is too early to predict whether the internet will eventually replace traditional news outlets; operate alongside them; or merely supplement and enhance them".

  As changes in the market and viewing habits continue apace, the impact on news delivery and consumption need to be kept under review. This should include the ownership of those providing news. While the internet at present remains a less significant source of news than television, it has itself experienced a sharp growth in usage (Ofcom research found it had doubled to 27% between 2002 and 2006) and therefore must be included in any future analysis of news. While we should embrace the opportunities that new media companies bring to the media, it is important to keep a close watch on the impact on plurality of ownership and plurality of news supply. When the Communications Act was passed internet players were tiny in scale relative to today; user-generated content sites and social networking were still some years from becoming mass consumer propositions. Today, the use of the internet as a news source is increasing exponentially, to a point at which the major internet players are probably the most likely future buyers of UK media assets.

  I have long argued that a comprehensive, evidence based, impact study should be conducted to examine the full ramifications of cross-media ownership, taking into account the influence of large internet players as well as ownership of newspaper and broadcast organisations. Such a study might look at areas such as whether large internet companies are a bigger threat to consolidation; the globalisation of media via the internet and the impact on UK news supply; what impact the growth of the internet has on the importance of cross media ownership between newspapers and broadcasters and the need for single sector restrictions on consolidation, including within the television, radio and online sector. This study would, I hope, provide much needed clarity in an immensely complex and shifting environment, and help inform future policy debates with the type of evidence that would strike the right balance between enjoying the benefits of the digital world and protecting the broad public interest.

4.  Do any problems arise from having four bodies involved in the regulation of media markets (the OFT, Ofcom, the Competition Commission and the Secretary of State)? Are there any desirable reforms that would improve the effectiveness of the regulatory regime?

  The public interest test deliberately sought to involve the expertise of all the relevant competition and regulatory authorities. The BSkyB/ITV case showed the process working as it was intended to do, with input from the OFT, Ofcom, Competition and Secretary of State.

  In the first instance, after a media merger or takeover, Ofcom and the OFT carry out an intensive analysis of the likely impact. This evidence based approach, relies upon the sector knowledge of each body to establish the likely issues that might arise, rather than a "black and white" assessment of whether or not there are issues of genuine concern. Then, if relevant, the Competition Commission conducts a full inquiry, leading to an interim finding and final recommendations being published before the Secretary of State makes a final decision.

  The BSkyB/ITV experience demonstrated that, while the whole process took some time to complete, it allowed for extensive consultation and consideration of the issues. The scope for a full range of views to be taken properly into account should be welcomed. The involvement of these various bodies achieves a number of things: it allows for extensive consultation and market analysis; it provides transparency throughout the process, with interim findings and responses to arguments published along the way; it enables a variety of expertise to be involved in the process; and it ensures that the process as a whole is evidence based, in line with good regulation principles.

5.  Has the lifting of all restrictions on foreign ownership of UK media affected the quality and independence of the UK news media, or will it affect it in the future? Has the UK industry benefited, or does it stand to benefit in the future?

  The Communications Act introduced a relaxation of long-standing foreign ownership rules, including on the largest commercial public service broadcaster, ITV. While Parliament was willing to liberalise in this area in light of the globalising nature of the media market and to encourage inward investment, a careful balancing act was achieved through the quality and independence provisions relating to broadcast news. On top of that, the public interest test exists to test the impact of any significant merger or take over, regardless of the nationality of the acquiring company.

  While the impact of a non-EU acquisition of a major British media company has yet to be tested, the balance between liberalisation and the quality and public interest regulations seems appropriate. Ultimately, the quality, credibility and editorial independence of news is more significant than the identity or nationality of the owner. However, this should be kept under close scrutiny in the coming years, particularly in light of the massive growth of a new generation of large overseas media players who, as I mentioned earlier, are now among those companies most likely to seek to buy up British media organisations.

February 2008



32   Ofcom New News Future News, Figure 5.6. Back

33   Ofcom New News, Future News research annex. Back

34   Committee stage, Communications Bill 5 June 2003 (Hansard Col 1432). Back

35   Paragraph 5.75, http://www.competition-commission.org.uk/rep_pub/reports/2007/fulltext/535.pdf Back

36   Ibid (Hansard Col 1434). Back


 
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