Examination of witnesses (Questions 55
THURSDAY 25 JANUARY 2001
CLARK and DR
Chairman: We are delighted to see you
here this morning, as it still is. We are going to go straight
into questions with Mr Faber.
55. You kindly have provided us with a succinct,
brief document about your views on the White Paper. I would like
to start you really on point four, the future of online regulation
and your views on online regulation. How important to you is the
online content that you put out as well as your newspapers? How
important is that to you in your overall publishing at the moment?
How do you see it growing and what role and what level of profit
do you see it reaching in the future?
(Ms Clark) It is quite a small part of our business
at the moment. We think it will carry on expanding. We do not
think it will kill off newspapers, there is no sign of that at
the moment. We think it is an important place for us to be and
we are looking at different areas, and how we are going to use
it. As I say, it will not kill off newspapers, I do not see any
sign of that.
56. Are you saying at the moment it is effectively
a loss leader, you are investing in it but not drawing any profit
out of it?
(Ms Clark) Not across the board, no, some parts of
it are making a profit.
57. Some are?
(Ms Clark) Yes.
58. How do you intend to expand on it? How do
you intend to build on it? I quite understand it will never take
over from newspapers per se. One or two round this table
might hope that.
(Ms Clark) We will be driven by what people demand
and how they use it. There are different ways where it can provide
additional information to supplement what is in the paper. Some
people prefer to access news in that way but we will be driven
by the consumer.
59. How do you, as an organisation, anticipate
that it will be regulated in the future as laid out in the White
Paper, the content?
(Ms Clark) We are slightly confused by what the White
Paper is saying. On the one hand the Government seem to be advocating
self-regulation. We have some concerns about the statutory back-up
to this regulation, whether you can have self-regulation with
a statutory back-up. There is also the term co-regulation which
we feel should be better defined.
60. The truth about the Internet at the moment
is that self-regulation is almost impossible. It would only be
a moral self-regulation effectively on organisations such as your
own which have a name to protect and obviously would want to maintain
their standing in the public and with government?
(Ms Clark) Our print publications are regulated by
the Press Complaints Commission and our online publications are
also regulated by the Press Complaints Commission. They are editions
of our offline newspapers.
61. You are happy for that to continue?
(Ms Clark) Yes, we are very happy for that to continue.
62. You say "... online distribution is
in its infancy and requires large investment by the private sector".
You hinted a moment ago that investment varies across the board
within your own organisation. You then go on to say that because
of the BBC being allowed to use its licence fee to produce its
own very good web site, which indeed gets considerable praise
in the White Paper, you clearly feel that is unfair and that is
restrictive against your own publications.
(Ms Clark) We have concerns about the BBC when they
move into the commercial side of the Internet.
(Ms Clark) Yes. If you look at it in a different way,
if someone invented printing today and the BBC was allowed to
migrate all its services on to print, if that situation had occurred
would we have the hundreds of local newspapers, thousands of magazines
and 22 vibrant national newspapers that we have? I do not think
we would. There can be crowding out and we are concerned with
those elements of it that are using taxpayers' money funding powerful
64. How would you like to see it? Would you
basically like to see a higher level of regulation for the broadcast
web sites to bring them down to your level?
(Ms Clark) Sorry?
65. You are seeking a higher level of regulation
(Ms Clark) I think we are seeking scrutiny. We are
seeking a higher level of scrutiny about what they do with taxpayers'
66. In your memorandum you deal very understandably
at some length with the issue of cross-media ownership. Now the
Government has left over pretty well completely the issue of cross-media
ownership in its White Paper. You are, of course, an extremely
powerful organisation and there would be those who would argue
because you are so powerful with considerable interests in the
electronic media as well as the print media that you are a very
good example of the need for stringent cross-media ownership.
On the other hand, there will be those who argue, and I think
perhaps I will be one of them, that in an age of proliferation
of media, particularly electronic media, the stringent regulation
of cross-media ownership, particularly on the basis of what seem
to me to be highly suspect figures that were in the last Broadcasting
Act, means that certainly cross-media ownership is over-regulated
and maybe we are approaching the time when it need not be regulated
at all because there are so very, very many voices. It may well
be that your inclination is to agree with the latter point of
view. I would be interested to hear the reasoning behind it to
add to what you say in your memorandum.
(Dr Stelzer) I have been invited to respond to that
by Alison. First of all, I think that there would in any event
be residual regulation of cross-media ownership if the specific
rules disappear because the normal Competition rules would apply,
so the danger of excessive concentration of economic power in
the media would be coped with by standard competition policy,
and no-one is proposing to eliminate that. The question of just
how powerful a media organisation is is difficult to come to grips
with. There is no question in my mind that media are somehow different
from other industries in terms of their effect on public opinion
and so on. But, in the end, there are no franchises in the media
business, as we have seen some newspapers not do well. I think
the power lies at least in part with the consumers who have to
be lured into buying these newspapers every day or turning on
the television programmes. My feeling is that the trouble with
the cross-media ownership rules is what you pointed out, Chairman,
that they pulled the number 20 per cent out of somewhere and it
does not really have any meaning. But I think the main thing is
that there are the Competition rules in place and it seems to
me that they would prevent any excessive concentration. Your point
about proliferation adds to that. We are seeing more and more
and more ways that people can communicate to consumers. I know
in America right now they are reviewing the cross-media ownership
rules. It is 90 per cent likely that they will be gone before
the year is out. They are just obsolete.
67. If one is looking at a multiplicity of voices
or single voices, there is a view extended that your organisation,
which as I say is very powerful, is liable to concentrate and
dominate in public opinion. Yet if one looks at your newspapers,
at the last General Election one of your newspapers supported
the Labour Party, the other newspaper did not support any party
though I have to say it did support the candidate who was standing
(Dr Stelzer) It was not a policy I made, I hope you
Mr Maxton: You still have not been forgiven.
68. I do not think it singled me out. BSkyB,
in which you have a substantial interest of course, has not got
any political voice at all and has never attempted to have one.
Do you think that there is some lurking fear of the principal
figure in your organisation that arouses certain emotions that
make people feel that cross-media ownership regulation has got
to prevail in order to prevent the potentiality of something happening
which is not, in fact, happening?
(Ms Clark) We would not want to be accused of being
paranoid or anything but what do you think the reason is?
Chairman: Everybody in this place is
paranoid, if we were not then there would be something wrong with
69. It is the Peter Principle.
(Dr Stelzer) I do not think there is any question
that that is a factor that is in people's minds, that there is
an aura around Mr Murdoch that seems to me every time I come hereI
spend more than half my time here nowquite amazing. I think
about it a lot as to why it is. I think it is the price a revolutionary
pays when you revolutionise broadcasting by competing with the
established monopoly, when you revolutionise work practices in
the print industry. We have the same thing in America, when you
take on the oligopolies in television broadcasting it engenders
resentment and fear. I think those factors do overlay people's
approaches. They do not say it, they dress it up in economic concentration
ratios and so on, but I think that is a factor that is present.
I do not think there is any way out of it.
70. Mr Faber was asking you about regulation
and regulation on the Internet. There is a strong basis for believing
that such regulation in the longer term is just not possible.
Clearly under the kind of regulation that exists in the Broadcasting
Act 1996 cross-media ownership can exist and can continue to exist.
Does News International believe that there should be any kind
of regulation of cross-media ownership and, if so, what? Is there
a belief that the time has come when what some people might regard
as a very old-fashioned approach to the media that is out of date
should be abandoned entirely in any Broadcasting Bill brought
forward in the next Parliament?
(Ms Clark) The latter is true but obviously we do
understand that competition law will still be in place.
71. Could I just take up a question coming back
to Mr Faber's questions on regulation of the Internet. Are you
saying that this is impossible? Do you think that it is impossible
to regulate the Internet?
(Ms Clark) I think there are various ways in which
the Internet can be regulated. Obviously normal laws which apply
offline will apply online and I think the way forward is for self-regulatory
codes to be developed by the industry.
72. Self-regulation is not the same as regulation,
strictly speaking, is it? Self-regulation by an industry is not
necessarily the same as a Government saying "this is what
you will do"?
(Ms Clark) No, it is not.
73. It has to be self-regulation, does it?
(Ms Clark) I think the only reason to have content
regulation in any electronic media is when there is spectrum scarcity.
I think the market will provide enough choices and that self-regulation
is okay when you have not got this scarcity of spectrum.
74. But the Internet is international and even
self-regulation is going to be difficult to work, is it not?
(Ms Clark) I think it is going to be easier than state
75. Certainly it will be easier than state regulation,
but is it possible to regulate at all? If somebody is putting
out some material on the Internet that is highly undesirable and
within a particular country they say "you are not going to
put that out", all they have to do is move to some other
country that says "yes, we will allow you to put it out".
What do you do about that?
(Dr Stelzer) It is easier in a totalitarian society
to do that. The Chinese have been relatively effective and some
of the Middle Eastern countries have been relatively effective,
but those are societies where you really control what people get
access to and there are very severe penalties if you violate them.
It is still difficult there, there are a whole lot of freedoms
you would have to be willing to give up, among other things deciding
what is highly desirable.
76. So looking at some of the content on the
worldwide web, on the Internet, which is, as you have admitted,
basically not able to be regulated, why on earth do you want to
stop the BBC from producing such a superb web site? What is your
problem with that? Why can anybody put out whatever pornography
they like around the world but the BBC is not going to be allowed
to put out superb services to people around the world?
(Ms Clark) To be fair, we did not say we wanted to
stop the BBC having web sites. What I said was I am concerned
about where they go into commercial areas.
77. What do you mean by a "commercial area"
(Dr Stelzer) In the White Paper there is an interesting
page on market failure in which they discuss with as much precision
as is possible from a Gavyn Davies' report as to what possible
boundaries might be set. On the one hand you can say that there
ought to be no limit, the BBC can do anything it wants, and no-one
is saying that, and on the other you can say they should not be
allowed on the web, and no-one is saying that. So you have got
this difficult middle area and what you try to do, I think, as
a matter of public policy at least from an economic point of viewI
do not presume to comment on the social policy in Britainis
to say "What will commercial broadcasters provide? What is
not being provided because of various kinds of market failure
and the peculiarities that are set forth in the White Paper?"
That would be a proper role for a public broadcaster to try to
fill. You can then lay over that social policies, if you want
to, but at least I think you can start with an economic dividing
line that is hazy of the sort that Alison described.
78. Let me ask you a specific example. Virgin
Radio stream live on the web and so do Radio One, which is a very
similar type of pop broadcasting, although they may play different
music I accept. Are you saying in those circumstances Radio 1
should not be on the BBC web site?
(Ms Clark) I do not think I have ever given that any
79. It seems to me that that is commercial competition
between two people providing a similar service.
(Ms Clark) I think the problems we have seen are if
the BBC has a particular programme which is based, for example,
on a motoring programme and they then launch a commercial site
linked to that programme, how is the market ever going to compete