Memorandum submitted by Trinity Mirror
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 concernfirstly
the proposals for a new regime for newspaper mergers and secondly
the local radio ownership scheme, or "three plus the BBC"
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
6. Paragraph 9.7.5 of "The Policy"
"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
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 rightsonly 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
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.
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
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?