Examination of Witnesses (Questions 880-898)|
THURSDAY 4 JULY 2002
Lord Hussey of North Bradley
880. I think I had better declare an interest
because I am in receipt of a pension from the Daily Mail.
You criticise the restrictions on national newspapers owning local
radio stations unless there are at least two other separately
owned local radio stations. Is there any editorial cross-fertilisation
between national newspapers and local radio and, if not, what
do you see as the rationale for controls on such forms of cross-media
(Mr Gilbert) I do not think there is
a rationale for preventing national newspapers from owning local
radio. There is no editorial cross-fertilisation between them.
They address different markets, they take different approaches,
have different policies, and in fact, you heard from the previous
team that local radio is much more about entertainment than about
news and whilst news is important for it, it is not its primary
driving force. So I do not think there is a significant cross-fertilisation.
881. I would not actually agree that news is
not a driving force. In many areas the local radio is extremely
strong on news and that is the driving force. Is there any advertising-cross-fertilisation?
I know how these things can be arranged. It is quite easy to have
large receipts from advertising in one part of your organisation
which automatically flow into other parts of the organisation.
(Mr Gilbert) I think at the end of the day you have
to serve your customer, and that is what our group attempts to
do in every market we address, and if the advertiser wishes to
be advertising both in the newspaper and on the radio, that service
could be offered, but I think the opportunity to force advertisers,
if that is at the root of your question, to take both would soon
rebound against the media owner that was trying to achieve that.
882. I think that might well be the case, but
that would not stop you trying. Not yourself, of course.
(Mr Gilbert) In the end, the market will punish those
who try to do it.
883. Just before we leave that, you could not
imagine in any circumstances a kind of general directive going
out to local radio stations saying, "You will notice that
the Daily Mail is campaigning on issue X. We would like
to see this also reflected in your news coverage."
(Mr Gilbert) I could not imagine that in our group,
no, I really could not, and again, the reason is that people who
listen to radio listen to it because they want a particular service,
and those who provide radio services should listen to what their
listeners want and provide that service. Otherwise, their service
will decline and listeners will very quickly turn off if what
they get is a message they think is being pumped at them and not
something which is reflecting local views.
884. You could not imagine it in your group;
you think we should ask other groups then, do you?
(Mr Gilbert) I would not like to comment.
885. ITN has for many of us been one of the
great achievements of ITV, yet you, or certainly Teletext, which
you have just said is one of your companies, has argued that general
licensing conditions could cover the news provider for ITV. How
do you think that will be affected by consolidation in ITV? Could
that still be the case? Would you be relaxed at a consolidated
ITV owning its own news provider?
(Dr Stewart) We would absolutely agree that ITN has
been a terrific success. I think by any analysis, the diversity
and consistency of quality of output of ITN is to be applauded.
The particular thing we are concerned about is that it is necessary
for the prospering and continued development of ITN to invest
very heavily in its content, the quality of its people and the
technology that it has at its disposal. The current ownership
restrictions impede that. They make it that much more difficult,
because what you are looking for and what you require is collaborative
investment, and that is a very difficult thing to encourage. In
relation to your question about a consolidated ITV, I think the
market will determine whether or not that is a necessary development.
I think the output of ITN is regulated by licence and they are
two entirely separate issues.
886. Is it not an anachronism that we have BBC
news, Sky newswhy should it not be ITV news which is simply
part of the ITV station?
(Dr Stewart) That may well be an appropriate end point.
The point I am making is that there is a tendency to bring together
the ownership of ITN and its remit as a nominated news supplier.
The point I am making is that they are two entirely separate matters.
It is noted in the draft Bill that the standard and quality of
news in the UK is very high. The BBC and ITN have played a very
significant role in bench-marking the quality of news that is
887. Are you satisfied with how news is covered
in the Bill or do you have in mind a specific change to the draft
Bill that would give that greater flexibility to ITN?
(Dr Stewart) I think the continued restriction on
ownership of ITN is ultimately a mistake. That is something that
should be corrected. The ownership issue is an entirely separate
matter from the content and editorial independence of ITN, which
is governed by the licence conditions.
888. We received yesterday the memorandum on
the policy detail of the newspaper part of the Bill but we still
have not received the clauses, so that is not terribly satisfactory.
Have you seen this as well?
(Mr Kass) I had an opportunity last night to give
it a quick read.
889. I want to ask a question regarding the
newspaper regime specifically of Associated given some of the
things you have already said in evidence, but I would be very
interested in the views of Daily Mail and General Trust as well.
For Associated, Mr Kass, can I observe that you object to the
complexity of the proposed new regime and also the vagueness of
the concept of plurality and also to some of the discretions that
have been granted to the Secretary of State. Is your argument
that these matters should be left to the Competition Commission
or should this Bill contain a quantitative and as far as possible
objective definition of plurality? The second part of the question
is: how do you view the public interest consideration as a test
for assessing newspaper mergers?
(Mr Kass) First, by way of background, because it
affects all my answers, I would just like to mention one or two
statistics. Over the last ten years national newspaper circulation
has declined by 13 per cent, despite Associated Newspaper circulation
going up by 24 per cent. Over the same ten-year period the worst
performing five papers in percentage terms have gone down from
37 per cent to 50 per cent. We share the diversity and plurality
objectives. We have a grave concern that the search for the perfect
plurality approach will lead to seriously damaging consequences
for diversity. In answer to your question, our first position
as set out in our first consultation paper was that we believe
that general competition law under the Enterprise Bill with the
"substantial lessening of competition" test would suffice.
We recognise that the Government is very keen to move forward
with a special test. We want to contribute to that debate and
we have some very firm views on the correct way forward. The Government
set out to introduce a more streamlined, light-touch approach.
What we are faced with is potentially four regulators: the OFT,
the Competition Commission, OFCOM and the Secretary of State.
We feel the objectives are correct but we feel this Committee
should ask itself very clearly what each extra level of regulationyou
only have to look at the table at the back of the Memorandum to
see that it becomes very complexgives. We start off with
the OFT as the initial vetting process. We believe the Competition
Commission provides a world-class regulatory body. The Memorandum
that came through last night serves as a tribute to the work of
the Competition Commission, and I would urge the members of this
Committee to ask for copies of two or three of the decisionsmaybe
Trinity/ Johnston Press and the Trinity/ Mirror
decisions-, and see the approach, see how thorough it is,
see the extent of consultation, see the extent of public involvement,
and then ask: what has OFCOM got to offer here? OFCOM has been
set up under the Communications Bill. I know newspapers communicate,
but really you are talking about telecoms and the media that have
statutory duties of impartiality. The whole mind-set of OFCOM
will be completely different, and the question has to be asked:
what will OFCOM add? In our view, it will not add anything at
all in the way that is proposed. We believe that the Competition
Commission is the ideal body to decide these things. That is not
to say that OFCOM cannot have a role. OFCOM can fully consult
as part of any competition investigation, transparently and publicly,
instead of, what appears to be the case, advising the Secretary
of State in an untransparent way, which we think is wholly unsatisfactory.
I ask this Committee to ask what has OFCOM to offer to this debate?
What are the problems it poses? First of all, it creates uncertainty,
as doesthis is my second pointthe Secretary of State's
role. We feel that one of the overall objectives here is to ensure
some sort of political balance in this process. We think it puts
the Secretary of State in a somewhat invidious position to be
the ultimate arbiter, notwithstanding the fact that there is a
Competition Commission in place with an excellent record of sound
analysis that stands up to great scrutiny. We think whether a
Secretary of State might in the future be politically motivated
is only one point. From the public interest point of view, we
cannot see any extra public interest being served, and the perception
is not right. We feel if it ain't broke, don't fix it. The Competition
Commission coupled with the initial screening process by the OFT
we think can do an excellent job. That brings me to the last point:
what about the test? Although we mentioned in our paper that plurality,
this vague notion that three different bodies and the Secretary
of State would be considering without any point of reference,
we looked at the Memorandum last night and that is still very
much the case. We think that is going to inhibit commercial decisions,
we think it is unnecessarily vague if there is going to be something,
and we have a suggestion for what the test should be. We suggest
these, in very brief terms, should be the relevant elements of
an EPI test, and I will leave a copy with the Secretary. First
of all, all relevant matters should be considered. Secondly, the
question should be asked whether any individual or company is
likely to exercise an excessive level of influence over the views
expressed in all mediastress all mediaavailable
to citizens of the UK. We think it is perverse to have a situation
where we recognise that some newspapers over 20 years have lost
up to 70 per cent of their circulation because of the introduction
of new, competing media, and then when it comes to the ownership
test, the destination of at least some of that influence is not
taken into account as part of this test. But, most importantly,
we are spoiled in this country. We have a broad spectrum of diverse
newspapers like nowhere else in the world. We feel very strongly
that we should strive to preserve that diversity. We share the
plurality objective, but over-focusing on plurality is a major
threat to diversity. By that I mean struggling papers, of which
there are quite a few, turn into doomed papers. If an existing
owner is going to be prevented, because of an overly strong plurality
test, from taking over a struggling paper and turning it round
using its synergism and expertise with editorial independence,
we think there is a major threat. The next part of the test is
to take particular account of the need for accurate presentation
of news and free expression of opinion. That comes from the existing
rules. Finallyand we think this is very important- the
likelihood of the purchaser maintaining standards in those respects.
People buy newspapers for different reasons. People might buy
a trophy asset of a newspaper because of the entre«es and
influence in the short to medium term and the relative advantages
they think that might give. We think that if there is going to
be an EPI test, the question should be asked and an assessment
should be made: is the proposal in the long-term interest of the
paper? If not, if the paper falls into the wrong hands, the paper
may cease to exist three or four years down the line, a few Downing
Street dinners later.
890. I think many people will be heartened to
hear that in principle you think there is sufficient public interest
in this, that there is a case to be made for a public interest
test. It is just a question of what form it takes.
(Mr Kass) It is not our first position but we understand
the argument. It is a valid argument, and we want to contribute
to that debate. We feel opening up the comparison to influence
in all media and looking at the likelihood of the purchaser making
the paper are critical.
Paul Farrelly: I would love to hear the voice
of Middle England.
Baroness Cohen of Pimlico
891. We were a little startled to hear you sweep
OFCOM aside with such speed. It has a brief that covers electronic
literacy, relations with self-regulated electronic media like
the Internet, as well as cross-media ownership. In a rapidly developing
environment where methods of delivering content are changing all
the time, do you not think it makes OFCOM reasonably well placed
to offer informed advice on newspaper ownership?
(Mr Kass) No, I do not. The OFCOM areas of regulation
are a completely different culture to newspapers. There are statutory
duties of impartiality but I am not for a moment saying OFCOM
should not have its full say, in a transparent way, by however
detailed submissions it cares to make to the Competition Commission,
which in turn will consider those and make its decision and give
its reasons in a fully transparent way. We are not suggesting
OFCOM should be excluded from this consulting. We are not suggesting
the Secretary of State should be excluded from consulting. But
we do not think either OFCOM or the Secretary State should have
a formal regulatory role in this process.
892. You do not make reference in your evidence
to the proposal to lift restrictions on foreign ownership, neither
did the Scottish Media Group, and Mr Cruickshank turned out to
have quite trenchant views nevertheless. I would invite you to
give your views on this particular aspect.
(Mr Gilbert) We have been the beneficiary ourselves
of a very liberal regime in Australia, where in the radio sector
foreign ownership is allowed, and we have established a very substantial
and successful radio group in the last few years. It would therefore
be somewhat churlish of us to deny that opportunity to others
investing in the UK. We believe it can bring benefits, and in
fact, the Minister for Communications in Australia has said to
us that he believes we have been a very good example of the way
foreign ownership can bring benefits to a country. But having
said that, I think it would be a great shame if our country was
not allowed to invest in others on a reciprocal basis. We do believe
that the Government should pursue that as an objective, not to
prevent ownership here but to pursue ownership in other countries,
to achieve reciprocity if it can be achieved. I think the balance
question really is this: it is all very well to look at the benefit
to come to the UK, but we also want our own UK companies to be
able to grow and flourish and stand up as equivalent on the world
893. Could you see a stage if that were allowed
where your group might be wanting to buy American radio stations
(Mr Gilbert) If we were allowed to, we would certainly
be interested, because I am sure we could improve some of the
894. Would you see reciprocity being such an
issue that you would rather deny the British industry inward investment
if it were not forthcoming?
(Mr Gilbert) Not at all. I do not think I said that.
It is something where we would believe benefits could accrue to
the UK. I would just like to have as an objective the reciprocal
arrangements with countries which can invest here; not to preclude
them from investing but simply to pursue that objective.
(Mr Kass) We think it should be a very high priority
for the Government to prioritise ensuring reciprocity. We do not
think the shutters should be put down. We do think it should be
a high priority for the Government to prioritise that and that
there should be a review process periodically to see how that
Lord Pilkington of Oxenford
895. You know as well as I do that there is
no possibility of America allowing reciprocity. Do you really
think America would allow a reciprocal arrangement? I agree with
your ideals, but as a practical man of affairs, do you think the
British Government is going to persuade President Bush and the
party in power to do that?
(Mr Gilbert) I think it unlikely.
896. When I said I wanted to hear the voice
of Middle England, I meant the Daily Mail. Very briefly,
we would be interested in your comments on the newspaper merger
issue and reform in general, and the principle and substance of
the public interest test.
(Mr Gilbert) You have heard at length from my colleague,
who works with an organisation that owns the Daily Mail.
I do not think I could add to what he said. He has made all the
points that we would wish to make.
897. The overall thrust of the Bill is deregulatory,
and I think the Committee has largely brought it into the spirit
here. Regulation does not remain static; it tends to either suffer
from regulatory creep or you begin to back off, which brings in
the whole issue of self-regulation. We had an interesting and
productive discussion with ISPA about self-regulation in the advertising
industry. Mr Kass in his evidence talked about perception being
a big thing. Do you have any suggestions as to how we could create
a credible self-regulatory framework, one that one could say "By
what test is natural justice being served?" This seems to
me a very important issue and something which, if we could develop
it, we would all be much better off. Do you have any suggestions
as to how to create a self-regulatory framework that people can
really believe in, which has some transparency attached to it?
(Mr Gilbert) For cross media ownership?
(Mr Kass) It is a very interesting concept and one
that is appealing. We would like the opportunity to give it some
thought and drop the Committee a note if that is possible.
Chairman: We would be very grateful because
it has raised its head and we are all tremendously attracted to
it if we can find a mechanism that gives it some kind of quality
stamp. Thank you very much indeed.