Examination of Witnesses (Questions 560
TUESDAY 5 MARCH 2002
560. The regulation has failed then. If you
are arguing the case that so long as it was competition law, whatever,
whatever, I suppose you are arguing that competition law is not
(Dr Stelzer) No, no. It is strong enough and it has
succeeded. What it has done is it is now enjoining the practices
and they have stopped; they are going to pay enormous fines; they
have had to open up their systems. So competition law has succeeded
in whittling down the monopoly power that they built up through
these anti-competitive practices. Absolutely a success.
561. Following the line of questioning of Mr
Wyatt, could it not be argued that people in this country are
unduly obsessed about what they regard as the baneful effects
of media ownership? If one looks, say, at the past general election,
within Associated Newspapers, The Daily Mail supported
the Liberal party, though not very ardently, while the Evening
Standard supported the Labour party. Of the four News International
newspapers, in the 1997 election they supported three different
groupingsThe Times having this somewhat bizarre
attitude of supporting anybody who was opposed to membership of
the European Union, which means that they supported one of my
opponents. So three different lines among four newspapers. At
this last general election they all supported the Labour party,
but those were the decisions of the editors rather than of the
proprietor. If one looks at your stake in BSkyB, Sky News has
justin my view, rightlyreceived two awards for the
quality of its news service and one has never seen any temptation
by them or any other news organisation that is privately owned
to import bias into its news. To what extent is this British pre-occupation
with the allegedly baneful effects of ownership justifiable?
(Alison Clark) I am not sure there is a British preoccupation
with it. I do not think that most people in this country know
who owns the newspapers they are reading or the television stations
they are watching. I think there is a lot of discussion amongst
the chattering classes and in Westminster but I do not think there
is a general concern. I do not know how many letters you MPs receive
every week complaining about media ownership issues, but I suspect
it is just a few. The other confusion is to separate out this
ownership from content. If you are concerned about content, if
you are concerned about the origin of content, then use content
rules where appropriate. The ownership is irrelevant. We own newspapers
in this country. We are seen to be a foreign company. But those
papers are effectively British. As you say, they take independent
editorial lines which are set by their editors. We own TV stations
in Asia which produce Asian programmes. We own a TV station in
Australia which is thriving by producing Australian programmingyou
know, the ownership of it is not relevant. I do not actually think
that Britain is obsessed with ownership of the medianot
the normal consumers of British media.
562. Dr Stelzer, you said that as long as there
is robust competition in the market and you have a robustly competitive
marketand I think you were talking about broadcasting at
the time but I presume this applies to newspapers as wellall
is well. Yes?
(Dr Stelzer) Yes.
563. My worry is that in the newspaper market
we clearly have a very competitive market. We have more national
newspapers and regional newspapers than, I think, any other country
I know. But that does not mean that you have accuracy in those
newspapers. I would actually argue that, in many ways, if you
have too competitive a market it can mean that you have less accuracy
(Dr Stelzer) I assume that there are newspapers that
are more accurate than others, more authoritative than others.
I assume that newspapers that are traditionally known to make
terrible errors will find their credibility going down and their
sales going down. If you put out all those newspapers every day,
there are going to be mistakes in that. Consider the alternative:
as far as members of the Soviet Union's legislature is concerned
there was never a mistake in Pravda. Ever.
Mr Bryant: I do not think there are only
two alternatives in the world, one being a Soviet understanding
of propaganda and the American free market.
Michael Fabricant: It is the third way!
564. Join the Labour party whenever you feel
free, Mr Fabricant.
(Dr Stelzer) Consider the alternatives. If you are
going to have all those newspapers competing, and some are going
to make mistakes and get things wrong, I guess, the more of them
you have, just by virtue of the total amount of newsprint that
is going out there you will have more errors. The question is:
how do you stop that? I guess, consumers know. They know the difference
between a bit of entertainment and a bit of news and buy different
newspapers for that.
565. I am not sure they do. Or I am sure that
newspapers try to make sure that they do not buy it on that basis.
Newspapers try to make sure that people buy their newspaper according
to all sorts of loyalties, splash things on the top, and of course
(Dr Stelzer) Which is competition.
566. Yes, all of which may be fine but my worry
is . . . . I had a recent experience where I wrote an article
which was used in a British newspaper and an American newspaper.
The American newspaper came back to me and wanted to check through
every single fact, every quotation, every person, whether they
were the secretary of state for this that and the other. The British
newspaper had absolutely no interest in any of that. They did
not check any of the facts. It seems to me that we do have a problem.
On Sunday mornings, one of my favourite games is to get The
Sunday Times, read the front page of the newspapergreat
headlines always, encouraging you to buy the newspaper by the
headlinesand try to find a single attributable quote or
attributive quote or a single fact that stands up.
(Dr Stelzer) I am not the editor of The Sunday
Times. I can tell you that when I file my column there is
pretty elaborate fact checking. It may be this is peculiar to
the business section, I do not know. I can tell you that my experience
with the British press is exactly the opposite. The Guardian
reprinted a piece of mine when I
Chairman: A document of fiction.
567. The Guardian.
(Dr Stelzer) Well, it asked me for permission to reprint
the piece, I said no. They asked the magazine for permission,
it said no. They printed it anyhow. They took out a sentence in
which I had declared an interest and they took out the date, which
was really the relevant thing about this whole thing. So I understand
your problem with at least some of the British press. But if you
have all those newspapers out there, the chance that, if somebody
makes a glaring error . . . As I understand, for instance, if
you look at the wars between The Mirror and The Sun
(which are amusing but also informative), they jump on each
568. But it does not make any difference as
to whether people actually buy the newspapers. I think what I
am trying to say is that competition does not give you truth or
accuracy in the media in any sense. When we had Mr Ball here from
Sky, he said that the BBC was congenitally programmed constantly
to grow, and I think my worry is that Sky is congenitally programmed
to seek monopoly power. Do you think there is any competition
law problem inherent in being vertically integrated throughout
the value chain for Sky?
(Dr Stelzer) I do not recommend this but if you have
read a lot of pieces I wrote, I am concerned about vertical integration,
especially where there is monopoly power at one of the horizontal
levels. If there is monopoly power at a horizontal level, that,
let's say, BT has of the last mile, I am concerned about vertical
integration. That is why I am not discouraged by the fact that
the Office of Fair Trading is doing a rather comprehensive review
of Sky's practices. I think that is appropriate and I am reasonably
confident that a fair result will come out if Sky has not been
abusing things. Mr Ball assures me it is not. The OFT will have
any needed remedy. That is what competition policy does, that
is why it is a good thing.
569. Dr Stelzer, one other question, which is
about small regional media worlds, as it were. South Wales has
one body which has probably about 60 per cent of the market which
is the BBC/S4Call the news for S4C is produced by the BBC
because it is in the Welsh language and that is part of the contract
that the BBC has. So you have effectively one news' source that
has approximately 60 per cent of the television market for news,
then you have HTV, then, in my own patch, we have three main newspapers
that affect people's lives, all of which happen to be owned by
the same body. I am relaxed about the three local newspaperswhich
the average person thinks are three completely different newspapersbeing
owned by the same body, until the moment when they decide that
there should be only one person reporting from parliament for
each of those three sources. Do you think that if we simply rely
on competition law we will have a robust enough system to make
sure that the kind of diversity that people expect will remain?
(Alison Clark) We do not own any local newspapers
in the UK. None of those newspapers are ours. I do not know who
owns them. Our national papers have political teams for each paper
and there is not any cross-over between them. I cannot answer
for the owner of your local paper. I do not know who it is.
570. In your very robust, aggressive, market-driven
paper, you are arguing for sweeping away the foreign ownership
rules and sweeping away the cross-media ownership rules. It seems
to me that those are the only ways that we have of maintaining
(Alison Clark) How are those rules affecting what
is happening at the moment in your local paper market?
571. I am not advocating that we should keep
them exactly as they are. I think there is still an issue to be
addressed for the future.
(Alison Clark) I do not understand your argument,
572. But you are arguing in favour of completely
getting rid of all the regulation and I am not sure that we will
then have anything to be able to protect diversity.
(Alison Clark) There are no foreign ownership rules
in the local newspaper market already, so we are not lobbying
to get rid of them if they are not there.
573. And the cross-media ownership rules as
well. What I am saying is that if in a local market you have very
few operators, really very few points of entry into the news market,
then there is a danger, if you solely rely on competition law,
I am sure, that we will have nothing to maintain the diversity
in the market.
(Dr Stelzer) Competition law has the flexibility of
being applied by people who are expert in it to accommodate the
fact of local monopoly. Competition law does not just deal with
national monopoly power. If there is a regional market that makes
sense as an economic market, and if that market is not served
as well by national media as by local media, competition law can
take care of that. There is case after case in which the first
thing you do is define the geographic market. If the geographic
market is as you have described it, competition authorities would
be able to act.
574. But the definition of market nearly always,
in my experience, in Europe and in the UK takes two years. In
a market such as, for instance, satellite television, where things
are moving so fast, by the time you have defined your geographic
market you have lost the revenue or you have a monopoly or a near
monopoly in place. In actual fact, in large parts of Scotland
and Wales Sky has an entire monopoly on digital and multi channel
television, full stop.
(Dr Stelzer) You have built in the market definition
575. I have but it is not one that is ever accepted
by any of the books.
(Dr Stelzer) Fortunately because it is bad economics.
Chairman: They have got a monopoly because
people want to buy it, do they not?
Mr Bryant: No, they have got a monopoly
because there is only one provider.
Chairman: But they do not have to do
it. They can abstain from doing it.
576. Editorial quality, to take up the point
we were discussing earlier. Witness today's Telegraph,
a serious broadsheet newspaperthat is its reputation. Frankly,
today it looks not unlike the fashion pages of a women's glossy
magazine. There are pages and pages of political content given
to the fact that the Prime Minister wore a blue shirt and his
wife wore a yellow thing with shells on it. This is not a little
piece; we are talking pages, major pages. How a serious newspaper
gets itself into that situation, I really do not know. I would
be attracted to it because it had serious content, so I do not
know what is driving this other side to it at all, but it is of
concern. On the larger point, Alison, yourightly, I think-
say that the public are unaware of media ownership. I totally
agree with you. Nobody knows. The general public are not interested.
But I do think there is potentially a problem because they do
not know. It is only a potential, it is only projecting into a
pretty cynical future, but, if you have a global ownership of
a serious amount of communication in a large number of countries,
the power base that you have is absolutely enormous. And if you
chose to use that for some illegal means, you could, simply because
the vast majority of people are unaware of it. It is not particularly
difficult to construct a scenario where such mechanisms could
be brought into operation. I think that itself is a serious consideration
but is not one that is on the agenda at all.
(Alison Clark) Obviously The Telegraph is not
one of our newspapers. The editor of The Telegraph will
take a decision as to what he thinks readers want to read. We
are very lucky in this country, in that we can choose to read
another paper if we do not like what is provided. In some countries
they do not have that option. We do have a very diverse press.
577. It was actually addressing the competition
issue, because you can see all the newspapers actually manoeuvring
that way. I just gave an example of what is happening here today.
The global question was actually directed to you.
(Dr Stelzer) I do not share that nightmare.
578. Which one?
(Dr Stelzer) Of the global media-owner above all restrictions
by countries, the laws of the countries in which he operates,
manipulating the political leadership of those countries because
he owns various media outlets. It is not the world I see. I see
a world in most democratic countries of widespread adverts in
newspapers, lots of sources of information, people smart enough
to sort out fact from fiction, fraud from news. If The Telegraph
decides to do that every day, they may find they get a very negative
reaction. It is hard for me to conjure up that world because,
first of all, media ownership is not that concentrated anywhere.
I cannot see America's freedoms threatened by Vivendi's ownership
of media assets in America. I think that countries that bar foreign
ownership cause great problems for themselves, as Germany is now
doing, trying to find a German solution for the Kirch problem.
So I am afraid I just do not share that fear, at least to the
extent of wanting to legislate about it in 2002.
579. You seriously cannot think of any scenario
where a global ability to communicate in that way could have serious
detrimental consequences? Let me give you an example: environmental
issues at a global level. If a very large business person had
concerns, financial concerns or something, and they wished to
manipulate countries here, countrieswhich we are working
on when we are talking about global environmental issues of a
major, major sortit is not inconceivable to be able to
plant a number of stories over a mass of media to manipulate an
understanding of a particular topic, particularly if it is only
done on a single issue amongst a morass of other issues, and actually
to build a particular point of view around a subject. It is extremely
difficult then to differentiate one that has been manipulated
from one that has not.
(Dr Stelzer) But you are assuming that somebody would
have monopoly power in each of the separate countries. I think
the environment is a good example, because it is of international
importance. Kyoto is of international concern and the diversity
of press reports in most countries is interesting. To the extent
there is a consensus, that anyone has been able to get a point
of view across all nations, it has been the environmental groups
not some media mogul or some businessmen with an interest to protect.