Media: Ownership

Baroness Rawlings Excerpts

Thursday 4th November 2010 Lords Chamber

[Baroness Rawlings]

My Lords, I, too, congratulate the noble Lord, Lord Puttnam, on securing today’s debate. I am most grateful, too, to all noble Lords for their excellent speeches that were filled with so much experience on the importance of plurality in the media. I genuinely believe that this House is at its best in these debates.

The noble Lord has been over many years a strong and vocal advocate for the media in this House, particularly during the passage of the Communications Bill when he was instrumental in extending the power to intervene in mergers on public interest grounds to media mergers.

As we heard from the noble Lord, Lord Puttnam, this debate is particularly timely, with the Business Secretary announcing his intervention in News Corporation’s purchase of BSkyB. I will speak in more detail on this shortly, but I believe it is important to do this even-handedly against the backdrop of the media plurality regime.

Last month I had the pleasure of closing an excellent debate initiated by my noble friend Lord Fowler on the Lords Communications Committee’s report into digital TV and radio switchover. That debate focused on the changing nature of the media in a digital age, as the noble Baroness, Lady Howe, stressed, and I shall return to it. The media landscape is constantly changing. Its ability to influence the democratic debate and to inform citizens has grown considerably since the old days of Obadiah Slope. Therefore, the principles of plurality and impartiality in TV and radio remain very important. This is reflected in the rules and regulations with which the media ownership is governed. However, noble Lords would agree that there is a balance to be struck between protecting consumers and the democratic debate while promoting competition and supporting innovation. Media ownership rules, while providing a safety net for plurality, are by their definition inflexible. Indeed, it is this inflexibility which can sometimes even result in a reduction in plurality. This has arguably been the situation in local media, where markets have struggled for some time. Indeed, Ofcom’s 2009 review of all media ownership rules concluded that a number of the local and local cross-media ownership rules were no longer necessary and were constraining the local market. We agree with Ofcom’s recommendations and my right honourable friend the Secretary of State for Culture, Media and Sport recently announced that we shall shortly be bringing forward an order that proposes the removal of a number of local rules. We believe that these changes will have a positive impact on the plurality and diversity of news and information at the local level, which, as I have already said, is an essential part of a democratic society and a healthy media sector.

In addition to the statutory media ownership rules, there is a merger control regime which serves to make certain that mergers do not result in a loss of effective competition in markets. This protects the interests of consumers and promotes business competitiveness and growth. I say to the noble Baroness, Lady McDonagh, that News Corporation will be subject to all regulation, as will anybody else. Responsibility for regulating mergers rests with the independent competition authorities. For UK mergers, that is the Office of Fair Trading and Competition Commission. For larger mergers falling under European merger law, it is the European Commission under DG4. Many noble Lords, including the noble Baroness, Lady Jones, asked about bundling. This comes under all these aforesaid institutions.

Merger control is concerned with protecting competition. However, European law also recognises that Governments may take appropriate measures to protect certain other public interests that may arise from a merger. Any such exceptional action is tightly constrained in law and must be justifiable and proportionate. It is not a broad power enabling Governments to interfere as they wish and determine what mergers and acquisitions may or may not be allowed to proceed. Use of the power necessarily involves exercising a degree of discretion and judgment—a role that rightly falls to the Secretary of State rather than a regulator. All decisions are open to legal challenge and must be founded solely on the impact the specific merger might have on a specified public interest consideration. Extraneous factors may not be taken into account.

For mergers involving media enterprises, the public interest must be protected by there being no reduction in standards and quality, and sufficient range of different voices and owners. This complements the separate statutory ownership rules that impose absolute restrictions to prevent unacceptable concentration of media ownership. There is published guidance setting out how the power to intervene in media mergers will be used, and this must be given due regard in reaching decisions on whether to intervene.

As of today, there have been two interventions made in respect of media mergers. The first was made when Sky bought a 17.9 per cent stake in ITV plc. That merger was referred to the Competition Commission on competition grounds and on grounds of a potential impact on the plurality of persons with control of media enterprises. In the event, no action was taken on public interest grounds. However, the Competition Commission found that the transaction resulted in a substantial lessening of competition in the market and required Sky to reduce its shareholding in ITV to below 7.5 per cent.

The second intervention has been made today by the Secretary of State, who has now decided to intervene in respect of News Corporation’s plan to acquire the remaining shares of the BSkyB group. This will give it 100 per cent ownership. This means that Ofcom will provide an initial report by 31 December, examining whether there are substantive reasons to believe the merger may result in outcomes detrimental to the public interest as it relates to ensuring sufficient plurality of media ownership. On receipt of Ofcom’s report, the Secretary of State must then decide whether to refer the merger to the Competition Commission for a more in-depth investigation of the merger’s likely impact on the public interest. Many noble Lords, including the noble Baronesses, Lady D’Souza and Lady Howe, and the noble Lord, Lord Lipsey, mentioned that complaints, if any, should be on plurality, which is what we are debating today. The European Commission will examine separately whether the merger raises competition concerns, and take action as appropriate.

I can reassure the noble Baroness, Lady O’Neill, and the noble Lord, Lord Maclennan, that the plurality review will take place concurrently with the competition review. The two are, however, separate. It is possible for one to conclude that no action is required, while the other could conclude that some remedy was necessary.

Although I am sure all noble Lords already know them—as my noble friend Lord Fowler said—I should remind the House of the share of viewing figures on news audiences in multichannel homes. My noble friend Lord Lloyd-Webber referred to this in his entertaining speech. According to Ofcom, in 2009, the BBC news broadcasts averaged 19.6 per cent of the viewing audience, ITV took 14.5 per cent, and Sky News took 0.5 per cent.

I turn to questions from several other noble Lords. The noble Lords, Lord Gavron and Lord Myners, asked about future protection should News Corporation be successful with the merger but subsequently be taken over by an undesirable owner. I reassure noble Lords that the broadcasting Acts contain “fit and proper” tests: Ofcom may not grant a licence to someone unless they are a fit and proper person, and will do all it can to ensure that they do not retain their licence if it ceases to be satisfied that they are a fit and proper person. In addition, there are impartiality requirements that safeguard the information needs of citizens.

The noble Lord, Lord Borrie, was worried about Ofcom. He need not be. Ofcom, with all its responsibilities, will stay.

The noble Lord, Lord Myners, and several other noble Lords stressed the importance of the BBC. I agree with their comments that a strong and independent BBC is an essential part of the UK's media industry that is admired around the world. I will report back on his views of the BBC.

[Lord Myners]

My Lords, I wonder whether the Minister would be kind enough to give the House an assurance that there can be no continuing suspicion that the independence of the BBC will be placed at risk by the Government threatening to put further financial burdens on it, forcing it to bear the costs of services and of the provision of other broadcast-related activities that are currently paid for through government expenditure. A reassurance from the Minister on that point would do a great deal to buttress her defence of the independence of the BBC.

[Baroness Rawlings]

I thank the noble Lord, Lord Myners, for that question. In fact, I addressed it a couple of weeks ago. He can be totally reassured that the independence of the BBC will be untouched.

The noble Lord, Lord Judd, made a moving intervention on the importance of plurality, especially in Russia. I very much agree with him.

I turn to the requests for assurances on impartiality made by the noble Lords, Lord Razzall and Lord Smith, and by the noble Baroness, Lady Jones. The Government acknowledge the importance of impartiality requirements, especially for PSBs, and consider them an essential part of the regulatory framework, safeguarding the information needs of citizens. There are statutory impartiality obligations in the Communications Act which are supported by Ofcom’s standards code.

Finally, the media sector remains a very fast-moving market—ever more so with digital broadcasting and the internet. We are aware that the sector is in need of a review and intend to start this in the short-to-medium term, with a view to making changes in a new communications Bill. Any new legislation will have to be flexible in order to take account of the fast-changing market. I am sure that we will be watching with keen interest the developments on the News Corporation purchase of BSkyB.

This has been a fascinating debate. I repeat my thanks to the noble Lord, Lord Puttnam, and to all noble Lords who have given of their wisdom. In my position, it is right that I have listened very carefully and with great interest. Noble Lords know that I am here to clarify procedure: I am not in a position to take decisions.

I hope that I have spoken clearly and I repeat: all these decisions will be taken in time by the Secretary of State, the Competition Commission, Ofcom and the EU, and I trust that all noble Lords who have spoken respect those bodies.

We will no doubt be debating this issue again but, in the short time available to me today, I hope that I have answered the few questions or points raised. However, where I have been unable to respond directly to the noble Lords, Lord Birt, Lord Hollick, Lord Stevenson and Lord Parekh, I will of course write to them.