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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