Joint Committee on The Draft Communications Bill Minutes of Evidence


Memorandum submitted by Daily Mail and General Trust (DMET)

1.  INTRODUCTION

  Daily Mail and General Trust (DMGT) welcomes this opportunity to respond to the Joint Scrutiny Committee's consideration of the draft Communications Bill.

  This submissions deals with

    —  DMGT's views on the proposed media ownership rules in relation to radio ownership and newspaper/radio cross-ownership.

    —  Teletext—the public teletext service provider on Channels 3, 4 and 5 (a subsidiary of DMGT).

    —  The nominated news provider on Channels 3 and 4.

  A separate paper will be submitted by Associated Newspapers (a subsidiary of DMGT) in response to the proposals regarding newspaper ownership.

2.  MEDIA OWNERSHIP

  In summary, DMGT welcomes the broadly deregulatory approach taken by the Government in the draft Bill (and accompanying policy narrative) and, in particular, the removal of the restrictions on the holding of national radio licences by national newspapers. We support the emphasis on maintaining plurality whilst simultaneously opening the way for a relaxation of cross media ownership.

  However, there are a number of areas where the existing draft proposals are, in our view, either more restrictive than necessary to maintain media plurality or, in one case, potentially more limiting than the current position. We believe there is still scope for greater liberalisation within the clear parameters the Government has set out for itself.

  DMGT's position, both on the proposals we welcome, and wish to see maintained in the Bill, and those where we would argue for further relaxation, is set out in further detail below.

2.1  Changes Which DMGT Welcomes

2.1.1  Radio Ownership

  DMGT strongly supports the removal of the rule currently preventing ownership of more than one national analogue radio service.

2.1.2  Newspaper/Radio Cross Ownership

  DMGT strongly supports the proposal that the owner of a national newspaper with more than 20 per cent of the national newspaper market may also hold a national radio licence and local radio licences.

  We believe that this change will allow those media companies with significant newspaper holdings, such as DMGT, which already invest in radio, to increase that investment in stations, services and jobs to the benefit of the radio industry and radio listeners themselves.

  We support the extension of this rule to digital radio thus allowing ownership of national digital multiplex and programmes service licences by a national newspaper. Digital radio needs investment and promotion and such a change in the rules would allow newspaper groups both to invest in digital radio and, most significantly, to promote digital through their publications.

  DMGT would broadly support the proposed changes to allow national newspaper owners with a combined market share of 20 per cent or more to own local radio services. However, the new proposal only to allow a national newspaper to own a local radio licence provided that there are (a) at least two other separate owners of ILR stations in that area and (as we read it) (b) at least three separate media owners, goes beyond what we consider necessary to ensure local plurality.

  DMGT also supports the deregulatory principle behind the change to the local/regional newspaper and local radio ownership rules, but as we explain below, we believe that the Government could be more deregulatory in this area without sacrificing plurality.

2.1.3  Public Interest Tests

  DMGT strongly supports the Government's decision to remove the requirement for cross-media acquisitions by newspaper owners to be subject to public interest tests. They are by their nature subjective and opaque.

2.2  Proposals that continue to cause concern

  DMGT does not support all the proposed new media ownership rules. In particular we are concerned about the implications of the following changes:

2.2.1  National Newspaper/Radio Ownership

  Under current rules, national newspapers with less than 20 per cent of the national newspaper market can control a local radio licence (subject to a public interest test). Our view, reinforced by our experience with the regulator, is that public interest concerns and plurality issues simply do not arise in these cases given the necessary differences in style, content and editorial approach taken by national and local media. We therefore welcome the removal of the public interest test procedure. However, we are concerned to see a new proposal—to prevent any national newspapers (including those with less than a 20 per cent national market share) from owning a local radio station unless there are at least two other separately-owned ILR stations in the local area (with a corresponding rule in digital). This could be more restrictive than at present. This flies in the face of the Government's own contention—with which we agree—that "deregulation brings benefits for consumers and for businesses" and is a backward step in an otherwise very forward looking package.

  Such a proposal discriminates against national newspapers by not applying the same restriction to other national media such as cable, satellite, magazines and the owners of Channel 5.

2.2.2  Three ILRs plus the BBC Rule

  Encouraged by the Government's Media Ownership Consultation document in January to make the case for further deregulation, DMGT argued in support of a "two ILRs to a market plus the BBC" rule rather than the "three ILRs to a market plus the BBC" proposal from the Radio Authority. We share the Government's view of the need to achieve a proper balance between deregulation and plurality. However, in so doing we were surprised to see the Government propose such a scheme in addition to (or possible to give effect to) what appears to be a requirement for there to be three commercial media owners to a market, and to make local radio the only sector to be the subject of a fragmented ownership scheme. Radio is the smallest medium, and we believe such a scheme would place ILR at an unnecessary commercial disadvantage.

  We believe a rule as restrictive as "three ILRs plus the BBC" is unnecessary in the context of a proposal to ensure three owners of commercial media in each area. We believe our view is shared by others in the radio industry and that further work is being undertaken in this area. We look forward to seeing its results. It should also be said that a three ILR rule could in many circumstances merely fragment local radio and add nothing to plurality as under the proposals all ILRs could be owned by all other local media (ITV and newspapers) and still fulfil the three ILR rule.

  In any event we believe that after a suitable time a local digital sound programme service should be counted as a local commercial media voice and not be subject to its own separate rules. To do otherwise would inhibit digital investment.

  Local radio is a less than ideal medium to support a plurality policy on its own and we believe the cost of the Government's proposals may well outweigh the benefits. The growth of digital radio, the rule prohibiting cross-ownership between a local newspaper proprietor having more than 20 per cent of the market and ITV, and in many areas competition from more than one local newspaper, should be quite sufficient to provide at least three, and if not more, local media owners in practice.

2.2.3  Ownership of National Digital Services

  In relation to ownership of national digital licences, DMGT favours national newspaper owners being able to also hold national digital licences and vice versa. It is unclear as to whether this will be permitted under the new proposals but we assume this is implied from the Policy statement and the draft clauses. Although at present, there is currently only one national digital licence, we recognise that the Government intends the Bill to cater for changes in the UK media market over the years to come. The Government has stated that a key aim of the Bill is to be flexible in allowing legislation to adapt to changing market conditions and this is an area in which we consider it important for there to be flexibility.

2.2.4  Ownership of Local Digital Services

  In relation to ownership of local digital sound programme services, the Policy document proposes that the Secretary of State will introduce a scheme to ensure that in any locality there will be at least three separate owners of local digital sound programme services. As above DMGT considers that such a rule constitutes over-regulation and will stifle investment in digital radio. We believe that after a suitable time all analogue and digital licences should be counted together for the purposes of determining local media plurality.

2.2.5  Multiplex Ownership

  In relation to national and local digital multiplex ownership, the proposal is that no one will be able to control more than one local digital multiplex in areas where they overlap and no more than one national digital multiplex. DMGT disagrees with such an approach and argues that there should be no restrictions on multiplex ownership. As we have previously argued, DMGT is firmly of the view that ownership of the multiplex is not an issue of plurality at all as multiplexes are merely distribution systems. [1]The imposition of new rules on ownership of radio multiplexes in a backward step. In a post-ITV Digital environment these restrictions would curb investment in digital radio and discriminate against such transmission simply because of the method of delivery.

  At a national level, other electronic media already compete with the national multiplex, so no ownership restrictions are necessary here. At a local level, we would propose that a rule such as a "three local commercial media owners" rule or a rule limiting the number of digital sound programme services controlled by the multiplex owner, would be sufficient to ensure plurality, and that diversity be catered for by license conditions.

2.2.6  Grandfather Clause

  In relation to the proposed "grandfather clause," [2]DMGT believes it should be clear that all the clause applies not only to new acquisitions but also in circumstances under the new rules where, for example, following an acquisition other radio owners merge or one of the other local media owners becomes insolvent, so that disinvestments in not required.

2.2.7  Uncertainty

  DMGT is concerned that the draft media ownership clauses still do not set out the proposed scheme for radio ownership and cross-media ownership but that this will be dealt with by SIs. The Policy narrative lacks certain areas of crucial detail, and this continues to create a climate of uncertainty to the radio industry which should be avoided. We urge the Government to publish detailed draft proposals as quickly as possible.

2.3  Conclusion

  DMGT is a broad based media group growing internationally. Our businesses include: Teletext; DMG Radio Australia (62 radio stations in Australia); Associated Newspapers (including the Daily Mail, The Mail on Sunday, Evening Standard, Metro) and Northcliffe regional Newspapers; and we are also investors in UK Radio with a 27 per cent interest in GWR Group, one of the leading UK radio groups, and the pioneer of digital commercial radio.

  Our experience in running local newspapers and local radio services in different markets across the world shows that it is the quality of the local service that is crucial to maintaining local audiences, which are in turn crucial to the survival of local radio. The liberalisation of ownership restrictions may enable the creation of large groups (as in Australia) but that in turn brings to bear greater resources for the provision of services to local communities. DMGT firmly supports the maintenance of plurality, but this must be balanced against the need to have sufficient resources to provide those quality local services audiences rightly demand. This is a difficult balance to strike, but we believe the Government's proposals, amended in the ways we advocate above, will strike that balance successfully for both businesses and audiences in the UK for years to come.

June 2002


1   There are no plurality restrictions on other distribution media such as ntl, Crown Castle and BT. Back

2   The draft Communications Bill-The Policy dated May 2002, at paragraph 9.6.4. Back


 
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