Joint Committee on The Draft Communications Bill Minutes of Evidence


Memorandum submitted by Trinity Mirror Plc

  1.  Trinity Mirror welcomes the draft Communications Bill and is relieved to find that the Government's commitment to deregulating media markets has been translated into policy. It is only a pity that so many of these important decisions, particularly on cross-media ownership, were not taken a decade or so ago. We believe the DTI and DCMS have taken a brave but necessary step towards ensuring that the UK's media businesses have better opportunities to develop and compete.

  2.  The aim of this memorandum is not to respond to the Bill in its entirety but to concentrate on those specific areas of concern we believe would benefit from scrutiny by the Joint Committee. We have two main areas of concern—firstly the proposals for a new regime for newspaper mergers and secondly the local radio ownership scheme, or "three plus the BBC" proposal.

NEWSPAPER MERGER REGIME

  3.  Trinity Mirror fully supports the proposed abolition of the prior consent requirements backed by criminal sanctions for newspaper transfers. The abolition of this prior consent requirement would give newspaper-owning companies a fairer environment to do business in. It would also align the newspaper merger regime more closely with the general merger regime that will be established by the Enterprise Bill.

  4.  Trinity Mirror also fully supports the removal of the smallest local newspapers from regulation altogether. It is unnecessary to include such papers in any penalising regime. However, it was not made clear in the policy document as to what the de minimis provisions for exclusion from the regime are. This is crucial to the way the new regime will operate. And while we support the removal of the 500,000 paid-for "newspaper proprietor" circulation trigger it would seem a nonsense to end up with a "deregulatory" system that actually catches more, not less of the smallest newspapers.

  5.  Our main concern, however, centres on the role of OFCOM in the proposed new merger regime. The draft Bill suggests that initial advice on plurality "Exceptional Public Interest" (EPI) cases and on competition grounds will come dually from the OFT and OFCOM. And later in the process, OFCOM will also be required to advise the Secretary of State after the Competition Commission has conducted a full inquiry. We do not believe that OFCOM is an appropriate body to be asked for such advice.

  6.  Paragraph 9.7.5 of "The Policy" document

    "Where the OFT considers that a newspaper transfer raises the plurality EPI, it will advise the Secretary of State accordingly. The Secretary of State will then be able to refer the transfer to the CC for examination of the EPI together with any competition issues that are identified by the OFT. She will also be able to direct the OFT to seek undertakings in lieu of a reference."

  7.  We understand from this paragraph that plurality EPI issues and competition issues will both be considered by the OFT who will advise the Secretary of State on whether a referral is necessary.

  The paragraph continues:

  8.  "Before making any decision she will seek the advice of OFCOM. If the Secretary of State decides that EPI concerns identified do not warrant a reference she will remit further consideration of the competition aspects of the transfer to the OFT. The Secretary of State will also have powers to intervene on her own initiative to require a case to be treated as an EPI case where plurality appears to her to be relevant to a newspaper transfer."

  9.  So the OFT will advise the Secretary of State on both competition and EPI issues. She herself can make her own case for referral on EPI grounds and a totally new layer of regulation in terms of an opinion on EPI by OFCOM has been added into what is already a complicated merger regime. We will come back to this new layer later in this memorandum but we would like to note it here.

  10.  Paragraph 9.7.6

    "Following a reference by the Secretary of State, the Competition Commission will investigate the EPI aspects and, where appropriate the competition aspects of a newspaper transfer. Where the EPI provisions are invoked in relation to local newspapers the Competition Commission will be expected to carry out effective tests of local opinion; for example by means of Citizens' Juries."

  11.  This paragraph makes it clear that the Competition Commission will be expected to consider the EPI and competition aspects of any merger referred to them. And while they may already consider both of these aspects when looking at a merger, their powers to investigate EPI concerns with local papers will actually be increased with the introduction of Citizen's Juries.

  12.  Could the Committee also consider how these Juries might actually work. If they are there to gather intelligence on what readers think about the changing ownership of their local paper surely these readers already have channels to make their opinions known to the Competition Commission. Secondly, if and when the Citizen's Jury reaches a verdict will the Competition Commission have to take their verdict as a guideline for concluding their inquiry irrespective of whatever expert advice may suggest a conclusion to the contrary? And thirdly, how is a Citizens Jury to be chosen and can those parties under investigation by the Competition Commission have any say into their shape and make-up?

  13.  Paragraph 9.7.7

    "The Commission will make recommendations as to any remedies it deems appropriate to meet competition or plurality concerns. The final decision on any action to take with respect to issues raised by an EPI newspaper transfer will rest with the Secretary of State. However the Secretary of State will not be able to dispute the findings of the OFT or the Competition Commission on competition, and she will seek the advice of OFCOM on the Competition Commission's recommendations on the EPI aspects of the transfer. She will be entitled to disregard the competition authorities' proposed solutions to competition problems, but only where the plurality issues justify this course of action. The Secretary of State will decide overall on the basis of a public interest test that will take account of both plurality and competition."

  14.  The new, more general, merger regime, as the Enterprise Bill will establish it, aims to remove political decision making from merger policy. We have consistently argued that newspaper mergers should be treated in exactly the same way as other business transactions and wholeheartedly support this as a public policy aim. However removing the politics from a newspaper merger regime was not something we understood this Government would consider. We therefore believe that the political decisions and the final say should come from the Secretary of State with advice from her department. As long as there is an overt political process to authorising a newspaper merger the Secretary of State is the person to control that process.

  15.  In our response to the Media Ownership Consultation document we argued that the rigour and sophistication of a civil service approach, one that would retain a characteristic political independence, would offer more educated and helpful advice to the Secretary of State than advice from a body such as OFCOM. The DTI and the officials there have a history of dealing with newspaper transfer and they have accumulated knowledge of the issues such transfers and mergers might raise. Trinity Mirror believes DTI officials are entirely more able to offer advice to the Secretary of State than OFCOM on plurality EPI issues.

  16.  The new body OFCOM is set up to regulate broadcasting. Its staff will come from those five merging regulators who have no newspaper experience. The entire ethos and culture of OFCOM will be steeped in traditions of broadcast regulation. Trinity Mirror believes that there is a fundamental flaw in the draft Communications Bill and that is an assumption that a body such as OFCOM can regulate any aspect of the newspaper industry as well. The management of a limited spectrum in broadcasting has resulted in a quid pro quo bargain involving strict laws of due impartiality particularly from a public service broadcasting perspective. Trinity Mirror does not believe OFCOM will be comfortable or capable of regulating an industry that is entitled, and some would argue obligated to be partisan. It is not the right body to advise the Secretary of State on those plurality EPI issues that are of such crucial importance to our business.

  17.  To allow a new body such powers over the press is deeply worrying and we urge the Committee to spend some time considering this issues and consider how much more able and suitable the DTI would be than OFCOM at considering plurality EPI issues of a newspaper merger. Once legislation is adopted it will be difficult to retrace a path away from OFCOM. And if OFCOM has access to one aspect of press regulation how long before it tries to interfere with the self-regulatory jurisdiction of the Press Complaints Commission?

  18.  This matter cannot be underestimated and Trinity Mirror would like to reiterate that a free press is a basic human right. This freedom has been widely recognised for centuries and is now incorporated into English law by the Human Rights Act under Article 10 of the European Convention on Human Rights. Any attempts to restrict this freedom must be fought against in the interests of a modern democratic society. The role of the press in acting as purveyor of news and opinions on matters of public interest is essential to a healthy democratic society. The press seeks no special rights—only to exercise the citizen's right to free speech. The press is not governed by limited spectrum but is governed by society itself.

  19.  The suggestion in the draft Communication Bill of giving powers over newspaper mergers to OFCOM seems to be indicative of a general desire to challenge the way newspapers are regulated. The Lord Chancellor's department seems equally keen to challenge the existence of our self-regulatory system in proposing legislation to make it a criminal offence to make payments to witnesses. His proposals are ill-considered for a number of reasons, not least the absence of persuasive evidence that payments to witnesses have prejudiced the administration of justice. Indeed, the current regime, under Clause 16 of the PCCs Code of Practice, is swift, transparent and effective. Trinity Mirror is increasingly concerned that this Government seems determined to introduce legislation that would undermine the existing self-regulatory model that has been so effectively managed by the Press Complaints Commission.

  20.  Untested, untried and unknown regulation of the press through OFCOM is unnecessary particularly given the expert advice already available to the Secretary of State through the OFT, the DTI and the Competition Commission. To add another layer of regulation via OFCOM onto an already protracted and complicated regime is ominous and we totally oppose it.

LOCAL RADIO OWNERSHIP SCHEME

  21.  The three plus the BBC rule is the Government's third policy proposal for cross media regulation.

  22.  Paragraph 9.4.2

    Cross-media regulation will be reduced to three core rules, to regulate the three forms of media voice: national, regional and local:

    1.  A rule limiting joint ownership of national newspapers and Channel 3:

      —  no one controlling more than 20 per cent of the national newspaper market may hold any licence for Channel 3;

      —  no one controlling more than 20 per cent of the national newspaper market may hold more than a 20 per cent stake in any Channel 3 service;

 

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

    2.  A parallel, regional rule: no one owning a regional Channel 3 licence may own more than 20 per cent of the local/regional newspaper market in the same region.

    3.  There will also be a scheme to uphold the plurality of ownership that exists in local media. This should ensure that at least three local commercial radio operators and at least three local or regional commercial media voices (in TV, radio and newspapers) exist in most local communities.

  23.  Paragraph 9.6.1

  For Independent Local Radio the Secretary of State will introduce by Order, in consultation with OFCOM, a scheme to ensure that in every area with a well developed choice of commercial radio services (typically five or more stations) there will be at least three separate owners of local radio services in addition to the BBC.

  24.  Paragraph 9.6.2

  In respect of cross-media ownership, the scheme will ensure that no commercial TV of newspaper company with a significant voice in a local area will be able to own a radio station unless there are least two other stations in competition. Where such forms of cross-holding exist there will be at least three separate commercial owners of local/regional media (radio, TV and newspapers) in addition to the BBC.

  25.  The policy document suggest that joint-ownership of local newspapers and local radio should be allowed as long as there are two or more other radio stations that reach more than 50 per cent of the adult population in the newspaper owned radio station's area and that the newspaper owner stays within the limit established by the local radio ownership scheme.

  26.  Trinity Mirror supports deregulation of cross-media ownership rules particularly at a local and regional level but we can't see how the three plus the BBC rule is actually deregulatory. Current legislation dictates that if a person owns one or more local newspapers with a market share of 50 per cent or above in the coverage area of a local radio service the newspaper owner can apply for that radio licence (either FM or AM) as long as the area is served by at least one other local commercial radio service.

  27.  Admittedly the Government is planning to remove the public interest test that would be used to determine whether ownership could go ahead or not but a comparison of current rules versus new proposals leaves the new ones looking more not less deregulatory. In a document that frees up cross media ownership between national newspapers, national radio and national terrestrial TV this seems at best odd and at worst very worrying.

  28.  Trinity Mirror would argue that the existing rules that allow a newspaper company to own one or two competing licence holders in an area with audience overlap is sufficient to maintain plurality. We suggest a two plus the BBC rule. The BBC is the UK's most formidable radio force and it commands a 50 per cent audience share. Commercial stations, however owned, will always have to consider the BBC's impact on their market place and take into account the BBC's six national stations and 42 regional ones. The BBC can hardly be considered an unimportant force for a local commercial radio station however owned and we believe a two plus the BBC is fair though hardly deregulatory.

  29.  Lastly there is a Grandfather Clause in the policy document that explains that the radio ownership rules will only apply to new acquisitions. Where existing holdings exceed the new limits there will be no insistence on divestiture. The Government claims that this will only happen in a small number of instances. If so, could we be told what these instances are?

June 2002


 
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