Ofcom, not Culture Secretary, should have final say on media transactions, says Lords

The report is the culmination of a long inquiry, in which the Committee heard from a wide range of witnesses including public service broadcasters ITV, the BBC and Channel 4; online gateways to content such as Facebook and Google; media insiders such as Alan Rusbridger, Lord Puttnam and Sir Harold Evans; and the Minister for Culture, Communications and Creative Industries, Ed Vaizey. They also heard the views of Ofcom, the National Union of Journalists, the Newspaper Society and a number of academic experts in media plurality.

Chairman of the Committee, Lord Inglewood, said:

“Issues surrounding media plurality have come under the policy spotlight during the present Parliament, after concerns were raised about the proposed (and subsequently abandoned) purchase of BSkyB by News Corporation.  We have also seen Ofcom's reports on Measuring Media Plurality, the Leveson report and, most recently, the Government's own consultation on media ownership and plurality.

“Taken together, these have raised a number of ways in which the policy and regulatory framework currently surrounding plurality needs updating. A wide range of different ideas have been put forward, but somehow, after all this, nothing firm has emerged. We hope to enter this debate with a set of recommendations which will stimulate greater consensus and greater action towards reform than appears to have been possible.

“Our proposal is for a framework of two key elements. The first, which is new, is the undertaking of a plurality review on a predictable periodic basis, which should set the context for the second: a modification of the existing arrangements for a review of specific transactions which occur in the interval between one periodic review and the next. We would expect the latter to happen infrequently.

“There are a number of important reforms in our proposal, as we have tried to reshape the role of Government, Parliament, regulator and competition authorities when it comes to the way in which media mergers are assessed, who has the final say and how they should be able to intervene.

“We propose that Ofcom should conduct periodic plurality reviews, providing an assessment of the sufficiency of plurality at the time. The Secretary of State should have a role in giving political authority to the conclusions of these reviews and as such they can be seen to offer a way of providing clear guidance and clarity to media enterprises about the prospects for consolidation in the interval between these reviews. In other words, periodic reviews set the context in which transactions are made.

“Between periodic reviews, there should be a crystal clear distinction between competition and plurality policy, with transactions assessed on both grounds where relevant in a way which keeps competition and plurality considerations apart. Responsibility for reconciling plurality and competition assessments of transactions and for reaching a final decision should then rest with the Ofcom board, not the Secretary of State. Mindful of its twin statutory duties to further the citizen and the consumer interest, the Ofcom board should have the final say about whether specific media transactions can go ahead, balancing the assessments made of a transaction's likely impact on competition and the consumer on the one hand with its impact on plurality and the citizen on the other.

“While interventions in the interest of plurality should, generally speaking, only be imposed in connection with specific transactions, there must also be provision for intervening at the time of a periodic review if organic market change has caused immediate and pressing concerns. However there must be a high bar to intervention at the time of a periodic review.”

Other recommendations in the report include that:

• the BBC should be included in any assessment of media plurality, but it should not be subject to any control measures imposed from outwith its own regulatory framework as a result of that assessment;
• media plurality assessments should not be limited by the media channel through which content is primarily delivered: print, broadcast and content delivered over the internet may all be relevant as could be the influence of digital intermediaries on the consumption of this content;
• media plurality policy should be flexible enough to take into account both the wholesale (third party) and retail (in-house) provision of news and current affairs content;
• the Government and the BBC, in negotiating Charter Renewal, should consider whether the BBC might be given a more explicit responsibility – with respect to its online offer for news and current affairs content – to stimulate consumption of diverse viewpoints from different external sources; and that
• the BBC Charter Review process should make clear what licence fee funding is for.

To read a copy of the report, visit the Communications Committee  page on the Parliament website.

You can watch a YouTube video of Lord Inglewood  giving an overview of the Committee's report by following the link.