Memorandum submitted by Daily Mail and
General Trust (DMET)
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
Teletextthe 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
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
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 proposalto 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 contentionwith which we agreethat "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
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
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.
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
2.2.6 Grandfather Clause
In relation to the proposed "grandfather
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.
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.
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.
1 There are no plurality restrictions on other distribution
media such as ntl, Crown Castle and BT. Back
The draft Communications Bill-The Policy dated May 2002, at paragraph