Select Committee on Communications First Report


202.  There has always been a broad political consensus in the UK that ownership of the media should be considered separately from ownership of other assets. In 2001, the Government published a consultation paper on media ownership in which it was stated that "A healthy democracy depends on a culture of dissent and argument, which would inevitably be diminished if there were only a limited number of providers of news"[87]. This was a sentiment shared by the previous Conservative administration "A free and diverse media are an indispensable part of the democratic process. They provide the multiplicity of voices and opinions that informs the public, influences opinion, and engenders political debate. They promote the culture of dissent which any healthy democracy must have. If one voice becomes too powerful, this process is placed in jeopardy and democracy is damaged"[88]. It is also a view of the competition regulator. The Competition Commission stated in written evidence to us that "Whether or not they raise competition concerns, certain mergers raise public interest considerations. Media mergers in particular may raise plurality concerns because they might concentrate newspaper and other media ownership in too few hands, to the detriment of the quality of journalism and broadcasting" (p 604).

203.  These concerns were expressed during the passage of the Communications Bill in 2003, and in part they were addressed by amendments to the Enterprise Act 2002, which provided that in addition to the standard UK merger regime, media mergers may also be subject to a Public Interest Test (see paras 237 to 240).

204.  During the course of this inquiry, some witnesses suggested that there was no need for specific regulation of media ownership over and above normal competition regulation. Three main arguments were put in support of this case. The first is that the proliferation of ways to access the news, and the accompanying increase in competition faced by news providers, means that concerns about ownership levels are out of date. The second is that diversity of voice can be protected through other means such as internal safeguards within news organisations. Another argument relating to the newspaper industry is that the Press Complaints Commission (PCC) could be given an enhanced role. We will consider each of these arguments in turn.

Are concerns about ownership outdated?

205.  Rupert Murdoch told us that he cannot understand why the UK Government is exercised about ownership levels. He believes this concern is "ten years out of date" now that there are so many news outlets for people to choose from. Professor Purvis, Professor of Television Journalism, at City University, told us that "the barriers of entry to the news business are lower than they have ever been … The access to the means of distribution and the access to the content by the consumer have changed radically and I think that that is a major offset to the concern about ownership" (Q 719).

206.  The Newspaper Society also believed that the proliferation of news sources, and the resulting increase in competition that news providers face, points towards a need for "further liberalisation of media ownership controls" (p 106). The Daily Mail and General Trust agreed "rather than experiencing an overall increase in concentration of ownership, the news environment is in fact diversifying at an ever-increasing pace. In addition to the range of commercial radio and commercial analogue television broadcasters, the development of digital television, and an increase in the provision of free rather than paid-for newspapers—all of which offer other sources of news media—there has been a major and continuing expansion of internet news sources" (p 538).

207.  However, the evidence in chapter two clearly shows that while there has been an increase in ways to access the news, there has been no corresponding increase in the amount of newsgathering. The traditional news companies continue to be the source of choice for most readers, they invest most in original journalism and still set the day's political agenda. As Professor Rosenstiel of the Project for Excellence in Journalism said to us in America, "the dirty little secret of the information revolution is that much of it is repackaging existing information rather than newsgathering" (see appendix four).

208.  New media companies such as Google, Yahoo! and MSN do affect the health of the news market because of the advertising they attract but they have not contributed to the amount of news being gathered. Nevertheless, it is clear that they have contributed to the faster, easier and more widespread dissemination of news via their internet search engines.

209.  Professor Gibbons, Professor of Law at the University of Manchester, told us that while the presence of new news providers should be taken into account by the competition authorities, their existence did not affect the need for media ownership regulation: "It is open to the authorities to take those [new news providers] into account … It is still the case that internet news is a small part of total news availability and really serves to complement standard news organisations' offerings. Indeed, much of it is offered by standard news organisations. I think that one would expect the authorities, in applying this test, to take that into account, and indeed I think the Competition Commission did do that in the recent Sky case, but it came to the conclusion that was not weighted" (Q 1961).

210.  We do not accept that the increase of news sources invalidates the case for special treatment of the media through ownership regulation. We believe that there is still a danger that if media ownership becomes too concentrated the diversity of voices available could be diminished.

Internal safeguards

211.  If safeguards can be put in place within a news organisation to prevent an owner influencing content then it could be argued that there is no need for limits on media ownership. In broadcast news, the content regulatory structures outlined in chapter two, have lessened the influence an owner can have on news. This was recognised by the Competition Commission in its recent report on BSkyB's acquisition of a 17.9% stake in BSkyB. It stated that "We note that there are a number of internal and regulatory constraints in the production of television news which are likely to limit any possible single minority shareholder influence on editorial decisions"[89].

212.  However, in newspaper and online news different examples can be found of internal structures put in place to protect editorial independence. A widely respected example is the ownership structure of the Guardian Media Group. As explained in para 155, the Guardian Media Group is owned by the Scott Trust, which was created in 1936 to safeguard the journalistic independence and liberal values of The Guardian. The core purpose of the Scott Trust is to secure the financial and editorial independence of The Guardian in perpetuity: as a quality national newspaper without party affiliation while remaining faithful to its liberal tradition. The Guardian Media Group is bound by the Scott Trust to uphold a set of values laid down by the former Guardian editor, CP Scott, and now enshrined as the Scott Trust values. The Scott Trust model is unique and probably does provide a degree of protection for journalistic independence. We believe it is unlikely that another newspaper will ever choose to recreate the Scott Trust model.

213.  Editorial independence is not only achieved through models like the Scott Trust. Traditions of editorial independence can develop in public companies too. Lord Rothermere, the Chairman of the Daily Mail and General Trust, made it clear that the "convention" at DMGT "is to allow editors to edit" (Q 2585). However, this is a convention and is dependent on the nature of the Chairman and Board, there is no internal structure safeguarding the culture at DMGT.

214.  Another internal structure designed to protect editorial independence is the Independent National Directors at The Times and The Sunday Times. In 1966 the Monopolies Commission reported on the transfer of The Times and The Sunday Times from Lord Astor to Lord Thomson. At the time of the merger there was concern that the transfer would damage the character of The Times; that the purchase would result in less competition and diversity of opinion in the newspaper market; and that the outside influence of the Thomson organisation might be allowed to interfere with the accurate presentation of news. The Times Publishing Company was similarly concerned and negotiated provisions that it considered provided adequate safeguards. One such provision was that the Board of The Times and The Sunday Times would include four "national figures" who it was hoped would represent the national interest. However, the Monopolies and Mergers Commission doubted that "any reliance can be placed on such safeguards" and asserted that "the inclusion of national figures on the board could only be window-dressing"[90]. Despite this scepticism the national figures were appointed to the board but in practice it was Lord Thomson's own hands-off approach as proprietor that provided the real defence of editorial independence during his years in charge of The Times and The Sunday Times.

215.  When Rupert Murdoch sought to purchase The Times and The Sunday Times in 1981 he agreed to strengthen the role of the national figures (now called the Independent National Directors). He made this agreement in order to avoid his purchase being referred to the Monopolies and Mergers Commission. Rupert Murdoch was also responding to concerns from the then editors of The Times and The Sunday Times who both wished to ensure their editorial independence within the new company.

216.  The new Articles of Association of Times Newspaper Holdings Limited were passed in February 1981. Paragraphs 78 and 79 of the Articles state that there shall be no more than 20 directors of Times Newspaper Holdings and that at least six of these shall be "the Independent National Directors". All the directors are paid by Times Newspaper Holdings Ltd. The Independent National Directors serve three-year terms and although they have the power to appoint their successors, the Company has the right of veto. The agreement of a majority of the Independent National Directors is required to:

  • Dispose of the company, i.e. transfer the titles or authorise a sale
  • Appoint and dismiss the Editor-in-Chief; the Editor of The Times, and the Editor of The Sunday Times and
  • Resolve disputes between the Editors and the Company, their decision being final and binding.

217.  It is questionable how effective the Independent National Directors have been, even with the increased powers that Rupert Murdoch agreed to give them. The system was strongly criticised by Harold Evans who was Editor of The Sunday Times when Rupert Murdoch bought it, and who was then appointed as Editor of The Times. Mr Evans had fought for the increased powers of the Independent National Directors but in practice, he found they provided him with no effective protection. In his autobiography he wrote that none of the guarantees that Rupert Murdoch gave to safeguard editorial independence "are worth the paper they are written on—unless the proprietor shares the spirit of them. If he does, they are merely ornamental; if he does not, they are unworkable … Internal freedom cannot be acquired by external rules"[91]. Andrew Neil, Editor of The Sunday Times from 1983 to 1994, agreed "It was a conceit invented ... to allow Mr Murdoch to take over these papers in the first place, and it was put in place for that reason. It was not really put in place to protect the independence of the editors" (Q 1689).

218.  A further example of internal structures to protect editorial independence can be seen in the regional press. In June 1993, the Daily Mail and General Trust applied for the Secretary of State's consent to its acquisition of T. Bailey Forman Ltd, the publisher of the Nottingham Evening Post and other local newspaper titles in the East Midlands. The case was referred to the Monopolies and Mergers Commission, which concluded that "diversity of opinion can only be adequately protected if the Nottingham Evening Post is not in the same ownership as the daily evening newspapers in Derby and Leicester, any condition would have to involve divestment of one or both of these titles"[92]. It advised the Secretary of State to reject the transfer[93]. However, in December 1994, the Government rejected the Monopolies and Mergers Commission's advice and consented to the transfer subject to conditions. These included the establishment of an editorial board responsible for maintaining editorial independence at the Nottingham Evening Post. They also included some competition specific safeguards[94]. We have no way of knowing whether this internal structure proved effective because the competition authorities do not monitor the post-merger situation.

219.  Some of our witnesses suggested that no media mergers should be allowed if there was enough doubt about the effect on the diversity of voices available that pre-merger commitments were needed. This was the view of Andrew Neil "If you have to ensure commitments before you allow a merger to go ahead, you probably should not let that merger go ahead" (Q 1797).

220.  We do not believe that an internal company structure can be an adequate substitute for competition law and statutory regulation in ensuring that no single voice becomes too powerful. We are clear that regulation to ensure a plurality of media ownership is still relevant and necessary.

Self-regulation of the newspaper industry

221.  The newspaper industry is subject to common law, including the law of defamation. In addition it is subject to self-regulation by the Press Complaints Commission (PCC). The PCC is a non-statutory body which deals with complaints from members of the public about the editorial content of newspapers and magazines. The Board of the PCC is made up of 17 members, seven of whom are senior editors of national and regional newspapers and magazines. The remaining ten members form a lay majority who are appointed by the PCC's Appointments Commission, which includes the Chairman, one industry representative[95] and three independent members[96]. The PCC's role is to investigate breaches of the industry Code of Practice, which is drawn up and maintained by the Code of Practice Committee (composed of editors of national and regional newspapers and magazines). It does this by investigating complaints from members of the public about the content of newspapers and magazines. It does not pro-actively investigate compliance with the Code, it only investigates if there has been a specific complaint by someone specifically and directly affected by the story in question.

222.  The worth of the PCC as an industry watchdog was called into question by a number of our witnesses. Alastair Campbell, Director of Communications and Strategy for the former Prime Minister Tony Blair 2001-03 and Chief Press Secretary 1997-2001, said "it is a pretty useless organisation" (Q 1869). He went on to explain that "I do not think actually that it offers a real system of redress for people who are traduced by newspapers. I think it is part of a cosy media club" (Q 1870). Lord Puttnam agreed with this assessment when he said, "I have very limited respect for the Press Complaints Commission and the organisations that surround it because I think essentially it is a cartel. It is a self-regulatory organisation that will very seldom do anything that will discomfit [the press] or make its life difficult" (Q 2113).

223.  Dr Moore, Director of the Media Standards Trust, agreed, "I think that it is astonishing how anachronistic the governing structures of the PCC are … You have someone who is the Executive Editor at News International sitting on both the funding committee and the editorial committee. You have an editor of the Daily Mail sitting both on the editorial code committee and on the PCC. In other words, they are both setting the rules and policing the rules themselves and then monitoring themselves. The whole thing is slightly absurd in a way which I think is why there is an urgent need to review it and to undertake an independent review of the self-regulation particularly as it expands" (Q 769).

224.  The system of self-regulation, as currently constituted, has particular implications for ensuring ethical and journalistic standards are upheld. This is because as Sir Simon Jenkins, former Editor of the Times from 1990-1992, told us, one of the defences against "buccaneering newspaper ownership is the way in which the profession regulates itself … I think that one of the defences that journalists and journalism have against proprietorial interference or unethical practices is a far more rigorous structure of self regulation … and I don't think you are getting it at the moment at all" (Q 1798).

225.  Sir Christopher Meyer, the Chairman of the PCC, strongly defended the Commission but also admitted that the remit of the organisation is limited. When asked whether the PCC would ever investigate a complaint about cross-promotion within a newspaper, he was clear that "I do not do commercial" (Q 1860). Given its current remit the PCC is not currently equipped to carry out a role in protecting editorial independence and there is no sign that the newspaper industry would agree to a wider role for it.

226.  The Press Complaints Commission is an internal complaints body, which lacks independence from the industry. Its own terms of reference are to deal with complaints about the editorial content of newspapers and magazines. It was never designed or established to proactively promote journalistic standards or ethics. It does not have the powers necessary to prevent the voice of any one owner becoming too powerful and there is no prospect of the industry giving it such powers.

227.  In summary we are clear that none of these developments in the media industry mean that regulation of media ownership is now out of date or unnecessary. In light of this, the next chapter will examine whether any changes are needed to the current system of media ownership regulation.

87   Consultation on media ownership rules, Department for Culture, Media and Sport, 26 November 2001, para 1.7. Back

88   Media Ownership: The government's proposals, Department of National Heritage, 1995, para 1.4. Back

89   Acquisition by British Sky Broadcasting Group plc of 17.9 per cent of the shares of ITV plc, Competition Commission report, para 5.69. Back

90   The Times newspaper and The Sunday Times newspaper: A Report on the proposed transfer to a newspaper proprietor, Monopolies and Mergers Commission, December 1966, para 176. Back

91   Harold Evans, Good Times, Bad Times, Weidenfeld and Nicolson, 1983, pgs. 461-462. Back

92   A report on the proposed transfer of seven local newspapers published in Nottingham, Monopolies and Mergers Commission, para 1.11. Back

93   Ibid, paras 1.4, 1.7, and 1.10. Back

94   These include a requirement not to re-enter the market for weekly paid-for newspapers in the East Midlands area; a requirement not to behave in a way that distorts or restricts competition in the newspaper market in the area; and a requirement not to initiate a regional edition of the Daily Mail in the area. Back

95   Tim Bowdler, Chief Executive of Johnston Press. Back

96   Lord Phillips of Sudbury, Sir David Clementi and Baroness Smith of Gilmorehill. Back

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2008