House of Lords - Communications - Minutes of Evidence

Select Committee on Communications Minutes of Evidence

Memorandum by the Department for Culture, Media and Sport

SUMMARY OF EVIDENCE

The following memorandum provides written evidence from the Department for Culture, Media and Sport (DCMS) on news provision in the UK, both broadcast and non-broadcast, and, in particular, the future of news provision in the digital age.

It provides an overview of broadcast and non-broadcast provision in the UK and sets out the regulatory framework for broadcast news provision and the current system of newspaper industry self-regulation. It also explains the Government's role and its relationship with Ofcom, with regard to broadcast news provision.

NEWS PROVISION IN THE UK

Broadcast News—Overview

1. All five terrestrial Public Service Broadcasters (PSBs) are currently obliged to carry news as part of their services. There are also two dedicated UK news channels (Sky News and BBC News 24); specialist news channels (such as those covering business news); and a range of overseas channels, either dedicated to news or carrying news as part of a more general service.

Suppliers

2. The UK television news industry is dominated by three big "players", the BBC, ITN and Sky News.

3. All three operate in a market where considerations other than the merely commercial play a big part. The BBC is funded through the licence fee, and transmitted under the public service ethos set out in its Charter and Agreement.

4. ITN supplies news to two other PSB channels—ITV1 and Channel 4. Although it sells its services on a commercial basis, these main customers are obliged to carry news under their PSB licence terms. ITV also has public service obligations to produce news for the UK nations and regions. This is provided by ITN in London and by the individual ITV licensees elsewhere. ITV is the majority shareholder in ITN, owning around 40%.

5. The final player is Sky News which also sells its services commercially to a PSB licensee, having captured the contract to supply news to Five from the beginning of 2005.

6. The only other UK company transmitting significant amounts of mass audience general television news is the breakfast channel, GMTV. Although partly owned by ITV plc, it maintains its own news-gathering operation. However, it does use ITN facilities.

7. Whilst radio companies generally have their own news gathering facilities, and indeed analogue licensees are required to produce a certain amount of locally produced news, a number of commercial stations receive national and international news from IRN (Independent Radio News), although Sky News also offer a radio specific service.

HISTORY AND DEVELOPMENT OF BROADCAST NEWS PROVISION

BBC News

8. BBC News is the largest broadcast news-gathering operation in the world. Its scale extends across all platforms by providing services to BBC domestic radio as well as its television networks such as BBC News 24, BBC Parliament and BBC World, and also BBCi, Ceefax and BBC News Online.

9. The BBC broadcast its first radio bulletin on 14 November 1922. Televised bulletins came later on 5 July 1954. However cinema newsreels, adapted for television, had been run on the BBC since 1948.

10. In the 1950s, television news, although separate from its radio counterpart, remained firmly under radio's control—with correspondents providing reports for both outlets.

11. However, the knowledge that commercial TV was on its way (it arrived on 22 September 1955 in the form of Independent Television News) was central to BBC news policy that year and a separate TV news department was established, as part of a re-organised News Division that now reported directly to the director general. In 1958, after a BBC study group was critical of what the television news operation had become, it was decided formally to separate television and radio and provide the television service with its own proper newsroom, with an editor-of-the-day.

12. BBC 2 started transmission on 20 April 1964, and with it came a new news programme—Newsroom. Newsroom launched in 1964 and in 1968 it became the UK's first colour television news programme.

13. The Nine O'clock News launched on 14 September 1970; it was moved from the earlier time of 8:50 pm as a response to the ratings achieved by News at Ten, which had been introduced three years earlier. The early evening news on BBC 1 remained at its regular time of 5:50pm (it would be fourteen years before it would become the Six O'clock News). BBC News 24 was launched in 1997.

BBC News Online

14. BBC News Online was launched in November 1997 and it remains one of the most popular news websites in the UK. It contains international news coverage as well as entertainment, sport, science, business and political news. Television and radio bulletins are also available to view on the site, together with current affairs programmes including Newsnight and Question Time, which are available to view after they have been broadcast.

BBC Nations/Regions/Local news

15. The BBC provides news programming for 15 English Regions and sub-regions, and for the three other UK nations.

16. The BBC also regards itself as the national broadcaster for each of Scotland, Wales and Northern Ireland.

17. BBC One Scotland broadcasts the nightly Scottish news programme, Reporting Scotland, and other bulletins throughout the day. BBC Two Scotland operates as an opt-out from the UK national BBC Two, and includes some news bulletins; some Gaelic progammes; and coverage of the Scottish Parliament. There is a Scottish "opt out" from the network BBC Two Newsnight programme.

18. In Northern Ireland, the BBC output centres on the daily Newsline programme broadcast at 18.30 on weekdays. There are additional programmes at lunchtimes and bulletins throughout the day.

19. The flagship BBC news for Wales is Wales Today. As with the other nations, there are other bulletins throughout the day.

20. The BBC also provides a news service for S4C, the Welsh language television broadcaster. It is provided through BBC Wales as part of the Corporation's statutory supply of S4C programmes, funded by the licence fee. Schedule 12(9) of the 2003 Communications Act requires the Welsh Authority (the statutory body responsible for the S4C analogue and digital services) to ensure that the news service is of high quality and deals with national and international matters.

21. In England, the BBC has recently increased the number of its regions, creating new services for the South East and East Yorkshire/Lincolnshire. It has also created a new sub-region for Oxfordshire.

22. The total cost of BBC News in all its forms—according to 2005/2006 figures—is £112.6 million, of which £89.5 million is designated as Newsgathering and £23.1 million is assigned to BBC News 24.

ITV News

23. ITN first broadcast at the start of ITV in 1955. ITN was a consortium of the initial franchise holders. ITV news programming remained branded under the ITN name until 1999, when it became ITV News on programme titles. In 2001, the ITN name was removed from the voiceovers at the start of bulletins and reporter name-checks. The name is now seen only on the end production slide.

24. ITV News has one of the largest television audiences for news in the UK; BBC News is the only other news provider that has similar audience figures. ITV abandoned its 24-hour news channel towards the end of 2005, saying it was not commercially viable.

25. ITN remains the BBC's chief rival in UK television news—but its position has come under more and more pressure as the television market has evolved. The original BBC/ITV duopoly—based on fierce competition—is credited with setting historically high standards in UK television news. The ITV News at Ten was once a nightly "appointment to view" for viewers to the channel who did not watch or listen to news anywhere else.

26. A key turning point for ITV was the 1990 Broadcasting Act, when ITN was established as an independent entity. The value of ITN's core contract to supply ITV has declined ever since then. In order to maintain its independent voice, no owner could hold more than 20% of the business.

27. The Communications Act 2003 subsequently removed the restrictions which had previously prevented ITV from owning its nominated news provider and today ITV owns around 40% of ITN.

ITV Regional/Local

28. The Communications Act 2003 requires the Channel 3 licence holder (ITV) to provide regional news services in each of its 15 regions, and further licence commitments extend the total of regional/sub-regional programmes to 27. ITN has no direct role in regional ITV news coverage, except in London. Instead, the individual ITV regions maintain their own news operations and produce self-contained bulletins that are transmitted within the ITV national news.

29. The majority of the Channel 3 licence areas are required to provide an average of 5.5 hours of regional news per week (4,116 hours per year), of which 2.5 hours per week are required to be broadcast at peak viewing times. ITV Border and Channel Television are required to provide 4.5 hours per week (2.5 hours in peak) and 3 hours 9 minutes (1 hour 8 minutes in peak) respectively, reflecting their smaller size.

30. ITV fulfils its licence conditions to schedule regional news in peak by broadcasting half hour main bulletins at 6pm, five days a week. There are also regional news bulletins on GMTV and national bulletins at lunchtime and on the main evening news programmes.

Channel Four News

31. Channel 4 News is the news division of Channel 4. It is produced by ITN, under contract, and has been in operation since the broadcaster's launch in 1982.

32. Currently, Channel 4 News has three programmes:

News at Noon

Channel 4 News

More4 News

33. One of the reasons why ITN's reputation in the market has remained consistently high is its continuing contract to supply Channel 4 News. A new contract was signed in 2006 running to the end of 2010. The agreement, worth around £20 million a year, provides for a full news service for the corporation, including the main Channel 4 News, News at Noon and More4 News.

34. Of particular value in terms of prestige is Channel 4's commitment to international news coverage. The new contract includes provision for a newly opened bureau in Beijing (with ITV News); and the recruitment of extra journalists for Africa, the Middle East and Asia. Another key aspect of Channel 4 News is the use of independent news producers, which distinguishes the output from that of its competitors. Independent producers used include Guardian Films, IFA Films and Out There News.

FIVE News

35. When it was launched on 30 March 1997 5 News, as it was then branded, was one of the new station's flagship programmes. Originally, like ITV and Channel Four, it was produced by ITN. However, on 9 March 2004 it was confirmed that Sky had won the new contract to provide Five with its news bulletins.

36. Currently, Five News has three weekday news editions:

— a morning edition broadcast at 11:30 am;

— an early evening edition broadcast at 5:30 pm; and

— a mid-evening edition broadcast at 7:00 pm.

Sky News

37. Sky News is a 24-hour domestic and international television news channel first broadcast on 16 February 1989. Sky News was the only UK 24 hour news channel (BBC World Service Television started in 1991 but has never been broadcast in the UK) until November 1997 when BBC News 24 launched.

38. In March 2000 Sky News Active was launched, a 24-hour interactive service providing headlines (and other services including weather bulletins, the top story of the day and showbiz) on demand.

Radio

39. The BBC has five national analogue channels (Radio 1, 2, 3, 4 and 5 Live) and all of them carry news bulletins. These services, as well as the BBC World Service are available digitally via DAB (Digital Audio Broadcasting), alongside a further five national digital-only channels (1Extra; Five Live Sports Extra; 6 Music; BBC 7; and Asian Net). They are also available via digital television and the internet. These digital-only services are genre specific and in general do not broadcast specific news bulletins.

40. There are also 40 local BBC radio stations in England, and six dedicated national stations for Ulster, Scotland and Wales/Cymru (Radio Scotland, Radio Nan Gaidheal, Radio Ulster, Radio Foyle, Radio Wales and Radio Cymru).

41. Generally, BBC local radio is far more news and speech-oriented during its main programming than its music-based commercial competitors. In addition BBC World Service radio transmits to most of the world and in 33 languages.

42. News bulletins are carried on all three national commercial radio stations: TalkSport, Classic FM and Virgin. In addition, there are approximately 300 local analogue radio stations across the UK, and in the main they have licence obligations to broadcast news.

OTHER NEWS PROVISION

Newspapers/The Press

43. The UK continues to have one of the highest levels of newspaper readership in Europe. However, daily consumption has decreased since 2002 from 43% to 36%. Unlike television and radio, newspapers operate in an entirely commercial environment.

44. Approximately 11 million national newspapers are sold each day but over the last 10 years there has been a steady decline in the sales as more people rely on television, free newspapers and the internet for their news consumption.

45. The top five national newspaper publishers control 90% of sales. The biggest, News International, makes up 32.1% of all national newspaper sales and owns The Sun, The Times, The News of the World and The Sunday Times.

Internet

46. The internet is the fastest-growing platform for news and other information—although the number of consumers who get their news via the internet is still small compared to those who get their news from television. The majority of the national and virtually all the regional newspapers now have an on-line presence.

47. The Daily Telegraph launched the first UK on-line national news operation—Electronic Telegraph—in 1994, followed three years later by the BBC's news website. The last major UK national newspaper to launch its website was The Daily Mail, in 2004.

48. The outlets for commercial news distribution on-line can be divided into three main areas: news organisation sites (newspapers, broadcasters), news agencies (wire services) and news aggregators. The entry points for original news are the news organisations and the wire services—the companies which maintain traditional newsgathering functions.

REGULATION—SPECIFIC REQUIREMENTS ON BROADCAST NEWS PROVISION

Impartiality, accuracy and undue prominence

49. It is one of the fundamentals of the regulation of broadcasting in the UK that due accuracy and impartiality in broadcast services are maintained. The Government has continued strongly to support the independence and impartiality of the broadcast media.

50. Under the Communications Act, the requirements of "due impartiality" and "due accuracy" in news are imposed on all television channels licensed in the UK whether terrestrial, satellite, cable or otherwise. Furthermore, the same requirement applies to national radio. Similar requirements have been placed on the BBC, through its Charter and Agreement.

51. The requirement of "due impartiality" means that broadcasters must always strive to achieve a balanced presentation of a range of points of view on matters of political or industrial controversy and relating to current public policy.

52. These obligations have played an important part in ensuring wide public access to impartial and accurate information about our society and the opportunity to encounter a diverse array of voices and perspectives.

53. It is impartiality that distinguishes broadcasters from other media. In particular, ensuring that the broadcast media provide a counter-weight to other, less impartial, sources of news, notably the print media. Research for Ofcom's report New News, Future News indicated that the people both recognises and values this characteristic of the broadcast media.

History of impartiality

54. Historically, the requirement for impartiality derives from the earliest days of nationally broadcast radio in Britain under the BBC, which began in November 1922.

55. The need to provide impartial services has been central to the BBC's development since this time and remains at the heart of the BBC's activity.

56. The tradition and reputation of British broadcasting for objectivity and impartiality was also clearly recognised in drawing up the 1954 Television Act, to ensure that commercial television provided programme services that were balanced and impartial, with obligations placed on the new Independent Television Authority to achieve this.

Fairness and Privacy in the broadcast media

57. Under the Communications Act 2003, Ofcom also has a statutory duty to include the application, in the case of all television and radio services, of standards which provide adequate protection to members of the public and all other persons from unfair treatment and unwarranted infringements of privacy in programmes included in such services.

58. In addition, the rules on fairness in the Communications Act reflect the requirements set out in Article 23 of the Television Without Frontiers Directive regarding the need to establish a right of reply or equivalent remedy.

NEWSPAPER REGULATION

Overview

59. The current system of newspaper industry self-regulation came into being on 1 January 1991. Its establishment followed a period in the 1980s when its predecessor, the Press Council, lost the confidence of some sections of the press, and there was growing concern over reporting standards, with corresponding calls for statutory regulation and a privacy law. The Government responded by appointing David Calcutt QC to head a Departmental Committee to look at the issue of privacy and press intrusion. The Committee published its Report in June 1990, which concluded that the former Press Council was "ineffective as an adjudicating body", and gave the newspaper industry 18 months to demonstrate that non-statutory self-regulation could be made to work effectively, before the then Government considered statutory controls for newspaper reporting.

60. Following publication of the Calcutt Report, a committee of national and regional newspaper editors, led by Patsy Chapman, the then editor of The News of the World, drew up a Code of Practice to be upheld by a Press Complaints Commission. The Commission was established along the lines suggested in the Calcutt Report, consisting of national, regional and periodical editors alongside a group of lay members. After an 18 month "probationary period" the then Government asked Sir David Calcutt to undertake a review of the effectiveness of press self regulation. In January 1993, Sir David Calcutt produced his report, recommending that a statutory Press Complaints Tribunal be set up in place of the PCC, with extensive powers.

61. Later that year, Clive Soley MP introduced a Private Members Bill seeking to establish a statutory Press Complaints Authority. In response, the newspaper industry sought to head off the threat of statutory regulation by strengthening the system of self-regulation, establishing a new position of Privacy Commissioner with special responsibility for handling complaints about alleged intrusions into privacy. A sanction of disciplinary action by publishers against editors involved in breaches of the Code was also introduced.

62. In July 1995, the then Government formally responded to the second Calcutt Report, by signalling that it was not minded to implement the Report's recommendations, and that it preferred an effective system of self-regulation.

63. Also in 1995, the PCC set up a new Appointments Commission with a lay majority, to ensure that lay members of the Commission were themselves appointed by a body independent of the press. By the end of 1996, a commitment to observe the Code of Practice had been written into the contracts of most senior editors.

64. The Code was significantly strengthened following the death of Diana, Princess of Wales, specifically in the areas of privacy and harassment. In 1998, following pressure from the newspaper lobby, the Human Rights and Data Protection Bills were amended to include a clause designed to protect freedom of expression. In February of that year Lord Wakeham stood down as PCC Chairman, to be replaced by Professor Pinker, previously Privacy Commissioner, as Acting Chairman.

65. The Commission's current Chairman is Sir Christopher Meyer, and there have been other changes to its organisational structure, such as an increase in the number of lay members not previously involved with the press. Amendments have also been made to the Code to reflect concerns of the day.

Self regulatory structure

66. In essence, the industry's system of self-regulation consists of a voluntary Code of Practice drawn up by the industry, overseen by an independent Press Complaints Commission, which is financed by the Press Standards Board of Finance (Pressbof). More details on the self-regulatory structure are given below.

Press Complaints Commission

67. The PCC's purpose is to oversee the working of the industry's Code of Practice and deal with complaints from members of the public about editorial content. As well as adjudicating on complaints made under the Code, the Commission occasionally issues guidelines on specific reporting issues (eg: the privacy of prominent people, media packs reporting on major stories). The Press Complaints Commission (PCC) has also recently extended its activities to cover all the material on newspapers' websites as well as their printed versions, thus showing the ability of self-regulation to meet the challenges of new technology.

68. There are 17 members of the Commission—10 lay members and seven editors. Appointments to the Commission are made by an Appointments Committee. The Appointments Committee comprises of five people, including the Chairman of the PCC, the Chairman of Pressbof and three independent others. These arrangements ensure that the independent majority of the PCC is then appointed by an independent body unconnected with the press.

69. The lay members are appointed through open competition, and vacancies and conditions are advertised in the press. These posts are paid. None of the lay members may be engaged in or, other than by their membership of the Commission, connected with or interested in the business of publishing newspapers, periodicals or magazines. Current members represent a wide range of backgrounds and experience, including business, politics, religion, academia and law. Press Members are also appointed by the Commission although these positions are not openly advertised as they are only for those already in the press. Each of the Press Members must be a person experienced at senior editorial level in the press. Press members are not paid by the Commission.

Pressbof

70. Pressbof is the industry body charged with raising a levy from within the industry to finance the PCC. It plays a key role in the appointment of the PCC Chairman. Its Chairman is also a member of the PCC's Appointments Commission. Other members represent trade bodies and press businesses.

Code of Practice

71. The Code of Practice is central to the industry's system of self-regulation, setting standards for gathering and reporting stories.

72. The Code is reviewed periodically by a committee of editors (the Code of Practice Committee), which includes editors from across the newspaper and magazine industries. Committee meetings are also attended by the PCC's Chairman and Director, in an ex officio capacity. Members of the Committee are appointed by the PCC's Appointments Commission on the basis of nominations from the industry's trade associations. Any changes to the Code proposed by the Committee must be ratified by the PCC before they can take effect.

MEDIA OWNERSHIP

Media ownership—overview

73. The current rules governing media ownership are set out in the Communications Act 2003 and the Media Ownership (Local Radio and Appointed News Provider) Order 2003. These rules operate through a series of disqualifications on the holding of licences based on levels of market share, measured by audience size, as well as disqualifications based on the number of interests held in discrete media markets.

74. Prior to the Communications Act 2003 the rules were set out in the Broadcasting Acts 1990 and 1996, while the Fair Trading Act 1973 imposed a special regime on newspaper mergers.

75. The purpose of the media ownership rules has been, as far as possible, to create a competitive market whilst ensuring plurality of voice and diversity of content. The principles behind the ownership rules set out in the Communications Act 2003 were to remove unnecessary restrictions with the intention of promoting greater investment, competition, ideas and skills; while at the same time ensuring a diversity of content from a plurality of sources. A summary of the changes made by the Communications Act and the associated Order are as follows.

TV—Historic rules on media ownership

76. The Broadcasting Acts 1990 and 1996 prevented anyone from holding more than two licences to provide TV services which attracted 15% or more of the total TV audience share. The Acts also prohibited owning more than one ITV regional service in the same area, this restriction prevented any one person or company from owning both the London licences. The Broadcasting Acts also prohibited holding both a Channel 3 and the Channel 5 licences.

77. There were disqualifications on the BBC, S4C and Channel 4, or their companies, from holding Channel 3 or 5 licences or for local delivery (cable) systems.

TV—Communications Act changes

78. The Communications Act repealed all the rules which had prevented the single ownership of Channel 3, as detailed below. This paved the way for the merging of Carlton and Granada in 2004.

79. The Act also removed all specific ownership restrictions on Channel 5.

Radio—Historic rules

80. The Broadcasting Acts controlled the ownership of radio services through a points system. Each licence is awarded points according to the size of the population covered by the service. Nobody was permitted to control licences which accounted for more than 15% of the total number of points in any one area.

81. There were also disqualifications from owning more than one national analogue radio service, more than one national radio multiplex service, or more than one national digital sound programme service, and there were restrictions on local concentration.

Radio—Communications Act changes

82. The Media Ownership (Local Radio and Appointed News Provider) Order 2003 introduced a new limit of 55% ownership of any one radio market, again based on a points system; the new limit ensured a minimum "2+1" result in all but the smallest local radio markets. "2+1" referring to the requirement for at least two separate owners of local commercial radio in addition to the one local BBC service. The 55% limit in theory allows for a reduction in the number of local commercial radio owners from 70 to 2, subject to competition law.

83. A 55% rule was also imposed on digital radio licences, although points are calculated by the total market rather than on a multiplex-by-multiplex basis; this means that points are calculated by the total number of services available in the market, rather than on a single multiplex. The purpose of this is to avoid multiplex owners having to put their services on others' multiplexes.

84. In addition, the Order introduced a new rule which prevents a person from owning two or more overlapping multiplexes.

Cross Media—Historic rules

85. The Broadcasting Acts set out cross-media ownership rules which sought to prevent any one company acquiring excessive influence across the media at a national or local level. These rules included preventing owners of newspapers with a 20% or greater market share from controlling, or holding more than 20% of, a licence to provide a national or regional ITV service, Channel 5, or a national or local radio service. Rules also limited the control that a local newspaper owner could have of TV and radio services in the same area.

Cross Media—Communications Act changes

86. The Communications Act extended the application of the 20% rule setting an ultimate limit on the percentage ownership of a Channel 3 licence by owners, or partial owners, of other influential media. These rules are:

— no one controlling more than 20% of a national newspaper may hold an Channel 3 licence;

— no one controlling more than 20% of a national newspaper may hold more than a 20% stake in a Channel 3 service;

— a company may not own more than a 20% share in such a service if more than 20% of its stock is in turn owned by a national newspaper proprietor with more than 20% of the market.

87. There are also restrictions on the holding of a local commercial radio licence if an organisation or person also:

— runs a local newspaper, or newspapers, which has a 50% or greater market share in the coverage area of the licence in question; and

— holds the licence to provide any regional Channel 3 service where at least 50% of the potential audience reside within the local radio licence in question.

88. These rules apply only if the local commercial radio licence overlaps with two other local radio licences which in themselves overlap.

FOREIGN OWNERSHIP

89. The Communications Act removed the rules prohibiting the ownership of a Broadcasting Act licence by a non-EEA (European Economic Area) individual or company.

PUBLIC INTEREST TEST

90. In addition to the specific media ownership rules, the Communications Act extended the public interest mergers provisions, detailed in the Enterprise Act 2002, to include newspapers and other media mergers. These powers allow the Secretary of State for Business, Enterprise and Regulatory Reform to launch an investigation into a merger which raises public interest concerns. Any merger would need to meet the Enterprise Act thresholds, which are that the company/companies being acquired or merged has a £70 million or above turnover and/or the merger would create or enhance a 25% or greater share of supply in the UK or a substantial part of the UK.

91. Where the SoS deems that a merger may act against the public interest he may instruct Ofcom to advise him on the public interest considerations. In addition, the Office of Fair Trading (OFT) will be asked to consider the competition effects. The OFT's findings are binding and the Secretary of State must accept their recommendations. On receipt of the advice from Ofcom, he must decide whether there are sufficient grounds for referring the case to the Competition Commission (CC) for further investigation. If a referral is made, the CC will then advise on whether the merger should be cleared, blocked or cleared subject to conditions, although again all recommendations on competition issues are binding.

92. These powers were used for the first time this year when the then Secretary of State for Trade and Industry launched a public interest inquiry into the purchase of 17.9% of ITV's share by BSkyB. The Competition Commission are expected to conclude their investigation by the end of this year.

RADIO

93. Local Commercial Radio licences which use terrestrial spectrum do not have specific public service obligations, but are chosen by "beauty parade", which has led to public service content, such as general and travel news and weather forecasts, being offered; local analogue stations also have a "localness" obligation. The three national analogue licensees have format obligations, but the highest bidders are chosen.

94. All public service broadcasters, excluding the public corporations, have, as well as their responsibilities to invest in public service content, obligations to pay licence fees to the Consolidated Fund in recognition of the income they can earn from the use of the public resource of wireless telegraphy spectrum.

THE FUTURE

95. The Government believes that the UK has benefited from an independent and impartial broadcast media. However, we recognise there are challenges to be faced as we move into a new environment and on to digital switchover and beyond.

MEDIA OWNERSHIP

96. As the Committee Chairman has stated, there has been little investigation into the impact of ownership on editorial priorities, such as fairness, accuracy and impartiality. DCMS has run two consultations on ownership rules, in 1994 and 2001, the second of which led to the Media Ownership (Local Radio and Appointed News Provider) Order 2003.

IS THERE A PLURALITY OF DEBATING VOICES IN THE UK MEDIA?

97. There is a varied amount of news available to UK consumers, in addition to the five main PSB channels. There are two home-based 24 hour news channels (Sky News and BBC News 24) and a range of international and niche channels which carry news bulletins.

98. The major south Asian organisations (STAR, Zee TV, ARY, PTV, ATN Bangla and Asianet) all have a presence in the UK, along with channels such as Al Jazeera, France 24 and CNN.

99. All of these overseas channels licensed in the UK have to conform to the rules on due impartiality, as set out in the Communications Act 2003.

HOW HAS THE WAY PEOPLE ACCESS NEWS CHANGED?

100. Whilst television remains the first choice for most consumers of news, there has been a gradual decline in audience figures for bulletins on the main channels over the last ten years.

101. Clearly, people are moving away from the main PSB news providers. Newly available TV channels, such as Fox News and Al Jazeera, are providing people with greater diversity and choice. In addition, there has also been a decline in newspaper circulations, especially for tabloids, over the last five years.

102. The development of the internet, cheaper newsgathering, and the expansion of video news agencies also provides potential for new news providers to offer services at lower cost than current major broadcasters.

103. The internet is the fastest-growing platform for accessing and distributing news. Consumers are employing more and varied internet resources in order to obtain information they require. The internet is also allowing people to access news from other news sources, and this is allowing people to gain different views and insights into news stories and also to get a greater view of news, as seen from other countries.

104. In addition, people are often presented with news headlines for example via "tickertape" on the internet, whether or not they are actually seeking them out. This is particularly the case with young people aged between 16 and 24, who are currently the biggest users of the internet. This can actually be seen as a positive step in news access, as this is the group that is least likely to access news via the traditional methods, such as television news bulletins and newspapers.

HOW HAS THE PROCESS OF NEWS GATHERING CHANGED?

105. The expansion of the internet has gone hand-in-hand with the development of new forms of news gathering, including the aggregating functions built into sites like Google and Yahoo; and the self-standing news aggregation sites of others.

106. The sophistication of online news delivery tools has developed rapidly, enabled by the growing penetration of broadband internet access. Audio and video is now increasingly common on the broadcasters' and larger newspapers' sites, although text is by far the most used form of internet news.

107. Podcasts dedicated to news (audio downloads that can be heard on a PC or portable device) are increasingly popular and there is also distribution of news to mobile devices through wifi and text alerts. There has also been an explosion in blogs, which has harnessed the internet's ability to distribute news and comment from users themselves.

108. Mainstream providers are not standing still, however. "Uploaded" is an ITV News feature which launched on Tuesday 31 July 2007. The service, available on itv.com, features viewers' contributions to daily debates. Candid pieces of comment and opinion from "citizen correspondents" are then used across ITV News programmes in short clips edited to entice people to visit the website and to complement its TV reporting work.

109. There are also ITV News bulletins which can be sent to mobile phones twice a day, once in the morning and once in the afternoon (there are two bulletins at the weekend). For this service there is a charge of £2 a week.

110. FIVE also has the "Your News" segment on most of its bulletins. This is a segment given over to viewers' videos and has now been adopted by many other news programmes under the banner "user-generated content".

111. Camera phones are also being used as a way of getting news on location, on the spot and many broadcasters are now actively requesting consumer-generated material to prompt or to supplement news stories. A good example is the London 7/7 bombings.

IMPACT ON DUE IMPARTIALITY

112. At present, there is a legal requirement that all UK licensed television and radio news is duly impartial and there is little pressure for change.

113. However, Ofcom has questioned in its recent report "New News, Future News" whether this should continue to apply to non-PSB broadcasters in the longer term.

114. They note, in particular, that in the future regulated and unregulated news is likely to be accessed through the same device and it could be harder to apply traditional impartiality rules in such an environment.

HAS THERE BEEN CONSOLIDATION IN THE MEDIA SINCE THE COMMUNICATIONS ACT 2003?

115. The most obvious outcome of the changes to the media ownership rules in the Communications Act was the merger of Carlton and Granada in 2004 to form ITV plc, which owns 11 of the 15 regional ITV licences. Later the same year ITV became the majority share holder of GMTV and, taken, together they now have an 18% market share of viewing.

116. As noted above, in November of last year BSkyB bought a 17.9% share of ITV, this merger is currently under consideration by the Competition Commission. However, besides that, the overall picture in television ownership has remained largely static over recent years; all the main television owners have been present in the UK for the last five years.

117. The radio market has seen considerably more consolidation with a number of high profile mergers since 2003. These mergers have increased concentration in both station and multiplex ownership at the local and national level. The most significant of these was the merger of Capital and GWR to form GCap which is now the largest commercial radio company in the UK, although only representing a 12% share of total listening. In addition there were acquisitions of Scottish Radio Holdings by Emap, TWB by UTV and Radio investments by The Local Radio Company. However, the industry as a whole remains relatively fragmented. In 2003, 58% of the local commercial radio market was owned by small groups compared to 44% in 2006.

118. We are not aware of any further significant consolidation in the newspaper market.

119. The Communications Act 2003 sought to deregulate and encourage consolidation which in turn would promote competition and attract new investment, ideas and skills. Consolidation on the scale which has already occurred was, in principle, envisaged during the passage of the Communications Bill and we believe has contributed to a market which offers increasing choice to audiences.

CAN THE COMMUNICATIONS ACT ENSURE PLURALITY?

120. The Communications Act was designed to maintain a balance of different media viewpoints in society by putting in place a series of ownership rules that would effectively safeguard democratic debate at a national, regional and local level. These rules are in addition to the general competition law which should protect against the creation of uncompetitive markets. We believe that, when taken together, the competition and media ownership rules, including the public interest test, will ensure a plurality of ownership in all but the smallest of markets.

121. These rules apply to broadcasting and newspaper enterprises and, while these remain the principal suppliers of information, including in their on-line forms, the Communications Act provisions should remain not only effective in securing plurality, but necessary. However, the development of new media has brought an enormous proliferation in the volume and range of news suppliers, making new voices and perspectives available as never before both nationally and internationally. The increase in both the availability and influence of these new media suggests that placing restrictions on ownership for radio and television, based upon their power to influence democratic debate, may well become less relevant in the future.

122. Section 351 of the Communications Act 2003 requires Ofcom to review the media ownership rules at least every three years and where appropriate make recommendations to the Secretary of State if, in their view, the rules need changing. The first of these reviews was published in November 2006 and concluded that the current rules were broadly right and recommended no changes. We believe that the requirement to keep the current media ownership rules under review will help ensure that they remain relevant and proportionate in the future.

September 2007