Joint Committee on Draft Communications Bill Report


(VI) RADIO OWNERSHIP AND REGIONAL CROSS-MEDIA OWNERSHIP

260. Unlike proposals relating to ownership of Channel 5, foreign ownership and newspaper mergers, the measures envisaged by the Government with regard to radio ownership have remained broadly unchanged since its consultation paper on media ownership issued in November 2001. They are designed "to ensure that in every local area the listener will be able to receive a plurality of voices, rather than a variety of different stations under a common ownership".[492] The Government proposes to implement a scheme developed jointly by the Radio Authority and the Commercial Radio Companies Association (CRCA) which, the Government contends, both delivers this aim and facilitates substantial liberalisation of the radio market. The rule preventing anyone owning more than one national analogue service will be removed; diversity will be protected by licensing and competition law. The existing national points system for United Kingdom-wide ownership of radio will be abolished; limits will be determined by competition law. Third, a scheme will be introduced, based on a new points system, "to ensure that in every area with a well-developed choice of commercial radio stations (typically five or more stations) there will be at least three separate owners of local radio services in addition to the BBC" ("three plus one").[493] Finally, comparable rules will be introduced for digital radio ownership, to ensure that there will be at least three separate owners of local digital sound programme services.

261. The substantive debate on the desirability or otherwise of the measures has been hampered by a lack of clarity about the Government's exact proposals. Although the original proposals from the CRCA and the Radio Authority were relatively clearly explained in November 2001, it is implicit rather than explicit in the Policy document that the scheme will be adopted in this form.[494] It remains uncertain how the Government proposes to define, and regulate ownership within, radio markets that are not well-developed.

262. The draft Clauses published on 31 May deepen the mystery and have strengthened the "climate of uncertainty for the radio industry" that has been very apparent to us in evidence.[495] Paragraphs 11 to 14 of Schedule 14 enable the Secretary of State to make orders imposing restrictions of an unspecified character on local radio. The Government sought to justify the absence of any meaningfully debatable content in two ways: first, flexibility was needed to change the scheme in future; second, it "is a potentially technically difficult complex scheme".[496] We find these arguments inconsistent with the Radio Authority's defence of the "three plus one" rule for mature radio markets on grounds of its simplicity.[497] Referring to the CRCA's past support for the "three plus one" scheme, Tessa Jowell told us that "the proposal that we put on the face of the draft Bill was their proposal".[498] It is hard to discern any such proposal on the face of the draft Bill, which is, in effect, little more than a skeleton to be fleshed out in due course. We recommend that, if the "three plus one" scheme is adopted, the Government amend Part 3 of Schedule 14 to place both an objective and measurable definition of a "mature" or "well-developed" local commercial radio market to which the "three plus one" scheme applies and the broad parameters of the proposed scheme on the face of the Bill.

263. Having worked together with the Radio Authority to develop the "three plus one" rule, the CRCA has now become the proposal's fiercest critic. The CRCA and radio companies individually have advanced several objections to the scheme to explain their about-turn. They contend that what appeared liberalising in November 2001 seems less so now in the light of the consolidation being permitted in the television market; consolidation of radio will be hindered by unique single medium ownership rules.[499] They contend that radio, the least well-developed medium, is bearing the main burden of plurality.[500] They consider that radio's influence is limited compared with other media: local commercial radio is predominantly music-based and subject to formats and content regulation, including obligations on balance and impartiality.[501] Finally, they argue that the radio proposals cut across the separate principle of three distinct media voices in any region.

264. The Government, the Radio Authority and others have rejected these arguments. The Radio Authority considers that the comparison with television is flawed, since competition in commercial television is principally national in character.[502] The Authority disputed the notion that the case for radio consolidation had somehow become more compelling since the CRCA supported the "three plus one" proposals.[503] The Saga Group argued that, with limited spectrum available for commercial radio, ownership regulation of the kind proposed by the Government was essential if new entrants were to emerge.[504] Finally, the notion of local radio as a medium of limited influence was almost universally challenged. Tessa Jowell said that local radio stations were "a very important vehicle for local debate and, therefore, underpin local democracy in a very important way". She explained that she took representations from local Members of Parliament on this issue seriously.[505] The Radio Authority pointed out that content regulation required impartiality in local radio news and current affairs, not in presentation of local events as a whole.[506]

265. Three models emerged as options instead of "three plus one" in well-developed radio markets. The first, preferred by the CRCA, is a system reliant upon competition law, plus regional cross-media rules.[507] The second, advocated by SMG, is for competition law backed by plurality criteria applying to all media.[508] The third, supported by Daily Mail and General Trust and Trinity Mirror, is a system of "two plus one", with the extent to which the system would apply in all radio markets and the percentage under the points system that could be held by one owner unspecified.[509] Tessa Jowell indicated that she remained willing to examine other options.[510]

266. We have listened to and examined with care the criticisms now made by the CRCA and commercial radio owners of the "three plus one" proposals for well-developed radio markets that they assisted in developing. We recommend that the "three plus one" rule applying to local radio ownership in well-developed local commercial radio markets be incorporated in legislation, but be subject to a "sunset" provision enabling the rule to be disapplied if OFCOM identifies that there is no further need for the rule in the light of a review of media ownership conducted under Clause 268.

267. The single medium rules for radio are to be complemented by a system of regional or local cross-media ownership rules, which can be summed up as requiring "three distinct media voices". This brings together the restrictions we referred to earlier on a major newspaper owner in a particular region owning the relevant Channel 3 licence and a separate restriction on a commercial television or newspaper company with a significant voice in a local area being able to own a radio station unless there are at least two other stations in competition.[511] Both SMG and the Plaid Cymru Parliamentary Group drew attention to the lack of clarity and consistency about the use of the terms "regional" and "local" in the context of these rules.[512] Radio and television services are licensed to serve markets of a different size; newspaper market sizes are even more variable. Tessa Jowell spoke of the three distinct media voices operating "at a regional level", but the Policy document refers to a scheme to ensure that at least three "local or regional commercial media voices (in TV, radio and newspapers) exist in most local communities".[513] We welcome and support the concept of three distinct media voices in the commercial sector as a benchmark for cross-media plurality at a sub-United Kingdom level, but we consider it essential, as parliamentary scrutiny progresses, for the Government to clarify how this system will operate in Scotland, Wales and Northern Ireland and in the regions and localities of the United Kingdom.


492   Media Ownership Rules, para 6.3.3. Back

493   Policy, paras 9.6.1.1-9.6.2.1; Media Ownership Rules, section 6.3. Back

494   Media Ownership Rules, p 48; Policy, para 9.6.2.5. Back

495   Ev 351, para 2.2.7. Back

496   Q 733. Back

497   Memorandum submitted by Radio Authority. Back

498   Q 998. Back

499   Ev 248, para 15; Ev 253, para 3.6; Q 731. Back

500   Q 869; Ev 244. Back

501   Ev 342, para 2.4; Ev 244. Back

502   Memorandum submitted by Radio Authority. Back

503   Memorandum submitted by Radio Authority. Back

504   Ev 533. Back

505   Q 1000. Back

506   Memorandum submitted by Radio Authority Back

507   Ev 247. Back

508   Q 869. Back

509   Ev 360, para 28; Ev 349. Back

510   Q 998. Back

511   Policy, paras 9.4.2, 9.4.4, 9.6.2.2. Back

512   Ev 342, para 2.2; Ev 612, para 5.2; Q 869. Back

513   Q 1000; Policy, para 9.4.2. Back


 
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Prepared 31 July 2002