Lord Puttnam
To call attention to the case for maintaining a broad plurality of media ownership in the United Kingdom; and to move for papers.
Lord Puttnam
My Lords, I declare an interest as deputy chairman of Channel 4 and of Profero, a digital advertising agency. I had the honour of entering your Lordships’ House 13 years ago tomorrow. Since then, there have been three or four big issues with which I have consistently tried to engage, in part because they relate to experiences gained in my former life, but also because I believe they represent the type of issues upon which rests the future of the sort of society most of us would wish to live in. The subject of today’s debate is one of them. Another has been the issue of environmental sustainability. I mention this because in preparing for this afternoon’s debate it occurred to me that the issue at hand, media plurality, in some respects resembles that of climate change. Both concern our capacity to find a sustainable balance in a delicate ecosystem—one in which the true scale of the problem only becomes apparent when you sift through the evidence and consider what might be the ramifications of failing to act in a timely manner.
Why does media plurality matter? Here are a few wise words:
“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”.
Those wise words came from the Conservative Party in a 1995 report on media ownership. The report was endorsed by the Communications Committee of this House just two years ago under the chairmanship of the noble Lord, Lord Fowler, who helpfully offers continuity by contributing to today’s debate.
As some in the Chamber will recall—it is helpful for me to see the noble Lord, Lord Crickhowell, who steered me through the shoals of this issue, in his place—what we now term media plurality first surfaced as an issue of concern during the deliberations of the joint pre-legislative scrutiny committee on the draft Communications Bill in 2002. At that time it was made clear by the Front Bench on both sides of the House that our proposed amendments around media plurality were, unsurprisingly, vehemently opposed by both the broadcasters and the newspapers. Rather more surprisingly, they were believed, in the words of the late Lord McIntosh, answering for the Government, to be based on a “profound misconception”. By that time the official Conservative line was, I am sad to say, somewhat similar.
In truth, the only party that has consistently taken a thoughtfully independent position on this issue has been the Liberal Democrats. In this context, when I use the word “independent”, I am referring to the Lib Dem leadership having felt itself free of prejudicial outside influences. Earlier still, in an important debate on the predatory pricing of newspapers in 1998—an issue I will return to a little later—the noble Lord, Lord McNally, now the Justice Minister, reminded us that with regard to the media,
“concentration of power, married with the advance in technologies, offers a challenge to democratic governments and free societies which we have scarcely begun to address”.—[Official Report, 20/10/98; col. 1348.]
I am certain that his personal views have not changed. Many of us in the Chamber will hold our collective breath in the hope that the noble Lord, Lord Razzall, will confirm that his party has not found the pressures of coalition sufficient to force a change of heart. This morning’s announcement would indicate that we are in safe, or at least decisive, hands.
In proposing the original amendments on media plurality we sought to ensure that there was proper recognition on the statute book that diversity in the media is not reducible to a set of arguable facts regarding the relativity of market share; that the issue was too important to be expressed simply in the language of competition policy. In reality, what is at stake is far more than an issue of consumer interests within an equitably functioning marketplace. It concerns the overriding interest of the citizen, as that earlier quote from the Conservatives’ 1995 report made clear.
The purpose of this afternoon’s debate is to draw attention to the possibility that we are on the edge of a very slippery slope—one that could find us falling further and further under the influence of a single US-based owner with a highly questionable interest in the benefits of a diverse and flourishing plural media here in the United Kingdom. So why this debate and why now? The primary reason is that News Corporation yesterday notified the European Commission of its intention to purchase the 61 per cent of BSkyB that it does not presently own. As I have already mentioned, this morning we heard the welcome news that this proposal had been referred by the Secretary of State to Ofcom. It is my most sincere hope that the coalition’s proposed trimming of Ofcom’s powers will not result in any diminution of its capacity to exercise those powers in respect of important matters such as this.
There are of course several aspects to media plurality, notably the Government’s proposals to repeal the local cross-media ownership laws, but this afternoon I have time to focus only on the really big issue resulting from News Corporation’s power, reach and influence. It is my contention that if regulators and legislators in Europe and the UK remain supine and simply wave this proposed acquisition through, the consequences for the citizens as well as the political class in this country could become deeply troubling. The purchase of these shares would give News Corporation an unprecedented level of control over the UK media—one that to my mind has the potential to be extremely damaging, not just in respect of media plurality, but to informed democratic debate as a whole.
To put all this in perspective, I point out that the media research company Enders Analysis has predicted that, assuming no material changes to the newspaper market, News Corporation’s share of national press circulation alone will steadily increase to more than 40 per cent by 2014. That figure is worrying enough but it becomes a source of even greater concern when the corporation’s ambitions to take full control of BSkyB are brought into play, given Sky’s growing share of the total television market. It is something of a commonplace to assert that the Murdoch-owned press is obsessed with what it believes to be the outrageous size of the BBC and its apparent capacity for unchecked growth and influence. “Chilling” is how BSkyB’s chairman, James Murdoch, has described the scale and reach of the rival corporation. If he is right, it seems worth comparing the relative size of BSkyB and the BBC, not just now but by peering a little into the future—to 2016, the point at which the current licence fee comes up for renewal.
When I entered your Lordships’ House in 1997, Sky had revenues of £1.27 billion—just 63 per cent of the BBC’s then income from the licence fee when combined with the net benefit it receives from BBC Worldwide. BSkyB’s turnover in its last financial year to June 2010 was £5.9 billion, or 163 per cent of the BBC’s current income. Assuming a modest 5 per cent growth in 2016, when the BBC's current charter expires, BSkyB will have reached a turnover of a little over £8 billion, or around 220 per cent of the then projected total income of the BBC.
Sticking with James Murdoch’s description, I suggest that this truly is a chilling prospect leading to a disparity of scale in which all competition, not just the BBC, is frozen to death. The level of media dominance that would result from News Corporation’s ownership of 100 per cent of BSkyB, along with four national newspapers and a variety of other media assets, is one that would simply not be tolerated in almost any other developed democracy, certainly not in the United States where anti-trust laws and tough restrictions on foreign ownership render such levels of control utterly unthinkable. In fact, there appears to be no developed country in which one individual has such control, certainly when measured by market share of the newspaper and TV industries.
Prime Minister Berlusconi controls a proportion of the broadcasting sector in Italy and, for example, Bild has a very big share of newspaper sales in Germany, but nowhere is there the same degree of cross-media dominance as is already the case with News Corporation in the UK. There are, of course, those who will say that, in the age of the internet, such fears are less well grounded and that in the digital era the cornucopia of news, views and comment which are to be found on the web, reaching far beyond the established media outlets, render my concerns about a slippery slope increasingly irrelevant. But many others disagree, arguing that this is to overestimate the power of the blogosphere. As none other than Rupert Murdoch himself said in his recent Margaret Thatcher lecture:
“Bloggers can have a social role—but that role is very different to that of the professional seeking to uncover facts, however uncomfortable”.
So, deep pockets and the benefits of scale remain very significant advantages, even in the digital world. Equally, it is my belief that the opportunities to bundle together News Corporation’s media assets, such as the Times, the Sunday Times, the Sun, the News of the World, Sky subscriptions, online movies from Fox, along with mobile access to all of them, are far, far greater than anything dreamt of when the plurality test was first introduced. Sky already has a billing relationship with almost 10 million customers—a fantastic competitive advantage in an online world in which making people pay for content is one of the biggest challenges of all.
Where once it was his newspapers that subsidised Mr Murdoch's foray into television, it could soon be the other way around, with television underwriting both his newspapers and his somewhat belated attempt to come to terms with the internet. This raises one of the key challenges in this area of legislation as in my opinion competition authorities do not, or should not, make or shape public policy—they simply implement what is already on the statute book. That is why, as legislators, we need the power and flexibility to respond to events that may have been undreamt of when the statutes were originally framed. This is one of the reasons I have consistently argued in favour of post-legislative scrutiny.
During the passage of the 2003 Bill, I failed to get across to the Government the transformative power of cross-media promotion. I also failed to convince them of the need for an economic impact study into cross-media ownership—the very issue that makes the prospect of ever greater bundling such a very dangerous road to go down. Let me offer one recent example. According to the Independent, since Richard Desmond bought Channel 5 in July, the Daily Star and the Daily Express have mentioned that broadcaster 1,073 times. That compares to the year before the deal in which there were just 92 mentions. Now, of course, that could be a coincidence, but I simply ask: where should we in this country seek to draw the line between information and influence? The scope for ensuring that news in particular can be manipulated to reflect a prejudicial viewpoint across different media is considerable, especially since, if the other shareholders were driven out, News Corporation would have all but untrammelled control of Sky News. The potential for such bundling to become a means of reducing competition, most particularly through aggressive pricing strategies, should be all too clear. We should remember that a predatory pricing amendment was successfully passed by your Lordships’ House in 1998 only to be lobbied against and, to my way of thinking, inexplicably turned down in another place.
Of course, there are those who remain profoundly sceptical, doubtless including some in my own party, as well as one or two on the Benches opposite, arguing that once again the liberal chattering class is getting itself in a lather over its favourite straw man, and that in reality there is not that much to worry about. If this really is simply a conspiracy by the chattering class to stoke fear and trembling across the nation, why is it that a recent letter to the Secretary of State opposing the BSkyB takeover was signed by, among others, senior executives from the Telegraph Media Group, Associated Newspapers and British Telecom? This time it is not simply a question of the usual suspects.
I am aware that I am running out of time, so I will finish with this thought. If Mr Murdoch's intentions are entirely even handed and non-political, why is it that he was only the second person to visit our new Prime Minister, entering by the back stairs for what is reported to have been an unminuted meeting, while Mark Thompson, the director-general of the BBC, went through the front door for that meeting, every detail of which will doubtless be available through the Freedom of Information Act? There are those who will argue that media magnates have always used the power of their holdings to influence Governments of every hue. However, it is my belief that the situation we are now dealing with is unprecedented and if unchecked offers a genuine threat to plural, consensus-based democracy in this country. As earlier generations in this place might reasonably have put it, there is a point,
“at which forbearance ceases to be a virtue”.
Speaking last week on the telephone to the altogether admirable Peter Hennessy—soon to be a welcome addition to your Lordships’ House—we discussed the constitutional ramifications of this afternoon’s debate. He finished the conversation by reminding me that it would be a mistake to regard this simply as a media issue. “David”, he said, “this is about nothing less than the nature of 21st-century sovereignty”. I believe that he is right. The United Kingdom is not a banana republic and we do ourselves no favours whatever by appearing to behave like one.
Lord Fowler
My Lords, I congratulate the noble Lord, Lord Puttnam, on the topicality of this debate, his excellent speech and the work that he has done in this area, not least on the Communications Act 2003. Because of his initiative we are able to debate media ownership today and if there are any outstanding questions, they can be cleared up in the Question I will ask next Thursday.
We learnt this morning that Dr Vince Cable has decided to refer to Ofcom the News Corporation bid for full control of BSkyB. It is suggested that a number of Conservatives are unhappy with that decision. I do not know who these unnamed people are but I think that this is an excellent decision, made even better by the fact that it was taken so speedily. I congratulate the Secretary of State on that. It means that in this debate we can get down to the question of where the public interest lies in this and similar cases. I should like to make three points. First, I believe that the news media have a vital role in a democracy. They report news from home and overseas and can expose injustice and challenge officialdom and any Government. Healthy media set out a whole range of views. It follows that a media concentrated in too few hands can have the effect of limiting freedom of expression and diversity of view—the hallmark of a democratic state—and can give too much power to a company or individual.
I add a warning to those mentioned by the noble Lord, Lord Puttnam. We need to treat with caution rivals who make the public interest case. In this case, News Corporation is opposed by a coalition of newspapers and the BBC. I suspect that some of the newspapers would dearly like to have the market position of Mr Murdoch while the BBC is not perhaps in the strongest position to talk about market dominance given its political influence and the enormously strong position of radio news. Above all, we should remember the special interests of the political parties, which are not so much concerned about excessive power as that that power should support them. In this case, there is a nice choice for the political managers between backing News Corporation or one of the prominent members of the coalition opposing it—the Daily Mail. All this means that there is an overwhelming need for independent judgment to be exercised on these issues, which underlines the importance of the Communications Select Committee. Its justification must be its independence, which it needs to be fearless in exerting. I therefore welcome this case being put to the independent judgment of Ofcom.
My second point is that we do not need to speculate about the views of Mr Murdoch. He set them out frankly to the Communications Select Committee. We were well ahead on this issue a couple of years ago, when we interviewed him in New York. On the position of Sky News, he said it would be more popular if, in style, it were more like the Fox News channel in the United States. Why was that not the case, we asked? According to Mr Murdoch:
“Nobody at Sky listens to me”.
That presumably would not be a problem when full control is taken.
On the control over his newspapers, he was again frank. On the Sun and the News of the World, he said he was what he called the traditional proprietor, exercising control on major issues such as which party to back in a general election. As for the control of ownership, he was entirely scathing; he believed that Britain was 10 years out of date, given that there were so many news outlets for the public to choose from.
That brings me to my third and last point. Does the growth of the internet mean that ownership in this area can be left to the market? I do not believe that it does, for the following reason. All surveys show that the main source of news in the United Kingdom is television —74 per cent of the population rely on it—behind that are newspapers, the radio, and finally the internet, at 6 per cent. That may well change, but that is how things stand. Nor do I buy the argument that because News Corporation owns almost 40 per cent of the shares of BSkyB, nothing will change if it takes full control. Self-evidently, full control means just that.
The issue here is that Mr Murdoch’s company already owns newspapers which account for 37 per cent of national newspaper sales in this country. The company now wants to take full control of BSkyB, whose revenue is greater than that of the BBC. The case for this being brought in and reviewed independently is overwhelming, and I am one of those who believes that the public interest is not served by this bid going ahead.
Lord Gavron
My Lords, I, too, congratulate my noble friend Lord Puttnam on initiating this debate at the most appropriate time. I must declare an interest as a former chairman of the Guardian Media Group which, as we have heard, is part of a consortium opposing the acquisition by News Corp Ltd of the shares it does not already own in Sky.
The media business is going through a period of rapid and unprecedented change. Newspaper circulations are dropping at an increasing speed. Profits are falling and many newspapers are making large and growing losses. It is unlikely that newspapers will exist in their present form in 10 or, at most, 15 years from now. We will be getting our news from our screens, which will be cheaper, lighter, thinner, more easily readable, and more user friendly than today. They will be in our pockets or handbags, probably unfolding to a larger format, and on our desks and walls. We will be charged for what we use, rather as we are charged for our credit cards; and I suspect we will pay overall roughly what we pay for our newspapers today. The editorial and news content will be much the same and of course there will be advertising.
Some of this, I confess, is prediction and, as Sam Goldwyn said, never make predictions, especially about the future. However, we have to deal with the situation as it exists and that is not a good situation. Rupert Murdoch was described the other day by the noble Lord, Lord Saatchi, as the most powerful man on the planet. I have known Rupert Murdoch for a great many years. I have found him to be straight, loyal and honourable. He is a man of his word. Although I have frequently, if not usually, disagreed with him, his record as a media proprietor in the UK will stand up comparatively well to analysis by future historians.
However, I am against his plan to acquire the rest of Sky. People have said, “He already controls Sky, so buying the rest will make no difference”. We can all talk about the difference, but Rupert Murdoch is not the sort of man who would spend £7.8 billion buying shares which make no difference. Sky, as the Economist of 16 October said, is Britain’s leading media company. It has almost 10 million subscribers and almost £6 billion of annual revenue—already almost double that of the BBC. Apparently, we spend more on Sky than we spend on bread. In addition to its 39 per cent of Sky, News Corporation’s four newspapers already have 37 per cent of our total national newspaper circulation—a share that is as much as the next two biggest newspaper groups combined.
Next March, Rupert Murdoch will be 80. He enters what I heard rather unattractively defined last week as “the drop zone”. He has said that when his health gives out he will get out of the way. He has made plans for succession. However, history tells us that when a great tycoon goes, his assets tend to change hands. Rupert Murdoch has not maximised his corporation’s profits. He is sentimental about newspapers. There are media experts who think that News Corporation, valued in the market at some $38 billion, is undervalued by almost 30 per cent. So it is an attractive takeover prospect in financial terms alone. In addition, the possibility of becoming the most powerful man on the planet is irresistibly beguiling to many rich men. Quite a few of them have access to, or can raise, the means to acquire the company. We could end up with a Russian oligarch, an Arab prince, or a hedge fund billionaire. Whoever it is might be honourable and principled—or they might not be.
We have the power to prevent a media baron from extending his empire. We have tended not to use that power. I hope that this time we will. Even if we do, my major concern remains. It is very difficult to stop someone who has the money from buying a public company. It is very difficult to say, “We let Rupert Murdoch have it, but we like you less, so we are going to stop you from buying it”. The potential influence of News Corporation in the United Kingdom is enormous. The damage that could be done if it fell into the wrong hands is incalculable. We should be extremely worried.
Lord Razzall
My Lords, in thanking the noble Lord, Lord Puttnam, for introducing this extremely important debate, let me give him the undertaking he asked for. There has been no diminution whatever in the Liberal Democrats’ commitment on this issue; indeed, various colleagues of mine regard this as a significant marker for our involvement in the coalition. I can certainly reassure the noble Lord on that point.
The Liberal Democrat position is not based simply on Murdoch bashing, which has become quite fashionable. Mr Murdoch ought to be congratulated on at least two major achievements since he became involved in our media. First, although I do not know whether everyone on the Labour side agrees, his destruction of militant trade unionism on Fleet Street resulted in the much cheaper production of newspapers. Secondly, he bet his personal financial house on the creation of satellite TV. Everyone thought he was mad when he started that, and his significant financial commitment has resulted in the multiplicity of channels that we see today.
However, the Secretary of State’s decision to ask Ofcom to investigate the public interest consideration of media plurality arising from the proposed bid is clearly right. One of the problems with this issue is that defining media plurality can be “somewhat nebulous”, as the department is on record as saying. So I will, in the time available, give four or five reasons why we think this proposal goes too far.
The first is BSkyB’s strength in broadcast news. Sky News is now one of only three television news providers in the UK, supplying its own channels and Channel 5. It is virtually the only commercial news supplier for radio. We have seen what it has done to ITV news. When it bid in 2001 to provide ITV’s news, ITN was forced to reduce its bid by 25 per cent, which many of us believe resulted in a significant diminution in value, and a dumbing down, of ITV news.
Secondly, BSkyB has a stranglehold over the pay-TV market. It has an unchallengeable dominance in prime sporting rights, it dominates the market in pay-TV rights for films and it has just secured exclusive access to all HBO programming. BSkyB restricts access by other platforms to its premium channels and controls non-public sector broadcast access to satellite and content. That in itself should be a reason to look at this proposal with care.
Thirdly, as a number of noble Lords have said, News Corporation has a dominant position in the national press. One speaker quoted Enders predicting that News Corp’s market share would rise to more than 40 per cent by 2014. The reason is that the Murdoch-owned press, which can absorb losses, will gain market share while smaller and more vulnerable companies will be forced to make significant cost savings to survive.
Fourthly, full control of BSkyB will entrench a dominant economic and editorial position, providing News Corp with the financial resources to sustain its newspapers for the long term. Once in that position, it can do all sorts of things, ranging from cover price discounting, bundling in a much broader manner, or offering print and digital editions of the Sun or Times to Sky subscribers. It does not require a fertile imagination to think about what other things could happen with this exercise of media power.
The defence coming from News Corp will be that we should not worry about the dominance of Sky News because of the partiality or impartiality rules that apply, and that when Mr Murdoch says that he wishes Sky News could be like Fox, we do not need to worry because of those rules. However, the rules offer adequate protection only against systematic and blatant promotion of a one-sided political view. They are incapable of dealing with stories that are simply excluded, or with more subtle examples of editorial influence, so I do not believe that they can deal with this potential problem.
Finally, media plurality is still an issue for our democracy. Although some suggest that plurality considerations are vitiated by the proliferation of online social networking and other news sources, these arguments fail to understand the nature of news gathering and the continuing pivotal role of the press and television in setting the agenda. This story has a long way to run.
Baroness D'Souza
My Lords, I, too, thank the noble Lord, Lord Puttnam, for securing this very timely debate. Two incontestable truths lie at the heart of it. First, freedom of expression and access to information, as defined by international and regional treaties, require that there be a diversity of media channels, and correspondingly an absence of concentration of media ownership, most especially of cross-media ownership.
Secondly, the proposed purchase by News Corporation of the remaining BSkyB shares undoubtedly reduces plurality and advances concentration of media ownership. This morning’s announcement that the Business Secretary has referred News Corporation’s bid to Ofcom is welcome, but it may be prudent to rehearse for the record why media plurality matters.
The European Commission and Court of Human Rights have ruled that positive action will be imposed on any member state that fails in its duty to protect against excessive press concentration. The European Council Parliamentary Assembly in 1982 called for national laws restricting press monopolies and concentration. The European Convention on Transfrontier Television affirmed the importance of broadcasting in conditions that safeguard pluralism and equality of opportunity among all democratic groups and political parties. However, it is only the American constitution that expressly prohibits indirect methods of restricting expression, such as unfair allocation of newsprint or broadcasting frequencies, and forbids such practices by private persons as well as by government.
Freedom of expression jurisprudence around the world is sprinkled with cases in which judgments have been given to ensure media plurality as a necessary basis for free speech and its attendant purposes. In countries judged by almost any international standard as achieving a high degree of democracy, for example Norway, so important is the plurality of ideas and opinions thought to be that the Government provide all kinds of subsidies to ensure a wide variety of opinions and local perspectives. Those media that fail to plough back any profits into the business lose their subsidies. Despite this, there is a growing tendency towards concentration of ownership, and huge news corporations appear to be gobbling up the media in all directions.
The counter to this is of course the growth in more informal channels of electronic communication. However, it has yet to be demonstrated that these channels are anywhere near as influential as the major daily and weekly press and broadcast outlets; consequently, their ability to hold government to account is also weak. The increase in cross-media concentration of ownership, always regarded as a potential threat, is today doubly dangerous due to the proliferation of broadband and the constant interplay between print and electronic media. One observer has seen politics and media engaged in a dangerous dance, each dependent on the other. To borrow a quote—Orwellian threats come less from the state these days and more from dense concentrations of private power.
Some have argued that major corporations can play a diversity role by having the financial resources to set up new media initiatives or to bolster financially strapped ones. This is to impute a pluralistic vision to these corporations which is not so far borne out by the evidence. For example, in Australia in the 1950s, there were 15 metropolitan dailies and 10 owners. By 1987, the number of major proprietors had been reduced to three, and this was followed by the successful takeover by News Limited—the Murdoch empire at the time—of all the groups. Since then, more than 20 daily and Sunday newspapers have closed. By the 1990s, with the exception of Sydney and Melbourne, no capital city had more than one daily newspaper.
It does indeed matter that News Corporation is proposing to engulf a further broadcast channel. One would hope that referral of the bid to Ofcom will result in its eventual further referral to the Competition Commission.
Lord Lloyd-Webber
My Lords, I, too, congratulate the noble Lord, Lord Puttnam, on introducing this important debate. I am sure we all heartily agree that a plurality of media is important not only in the UK but globally to ensure that citizens have access to a variety of information sources. I hope that noble Lords will forgive me if I speak about the area of television rather than that of politics.
One of the few areas on which I can offer limited expertise to your Lordships' House is Saturday night reality TV. I will concentrate on TV's contribution to popular entertainment, and therefore to plurality. First, I do not know whether I have to declare an interest: for the past five years I have been on Saturday night TV, on the BBC, and one of the programmes won an International Emmy. I say that I do not know whether to declare an interest because I am not in any discussions with the BBC about a future series and indeed am involved with two programmes for ITV next year. However, because I have appeared on five BBC entertainment shows, I have a little expertise now of the BBC, and I will use this opportunity to say “stop bashing it”.
We all know of the superb quality of the BBC's serious output. For instance, anyone who attended this season's prom concerts will attest to the incredible depth and range of music that no other broadcasting organisation could get near. I remind noble Lords of Lord Reith's description of the purpose of the BBC as to “inform, educate and entertain”. I realise that this debate is prompted very much by concerns over News Corporation's hope to buy the rest of BSkyB that it does not own. However, having heard the founder of News Corporation speak in London recently, I am sure that he would be the first to encourage new entrepreneurs to enter all areas of the media and create a cauldron of competition, particularly in the area of popular entertainment. Surely, we have to be fair. Sky News has relatively few viewers compared with the BBC and ITV, although I completely agree with noble Lords that its future impartiality has to be secured.
To return to the BBC, I suggest that the best way to ensure plurality in the entertainment sector, which along with sport is the main revenue-earning area for TV, is to allow the Beeb to compete unfettered in the popular market. I remind your Lordships of Lord Reith’s line: to inform, educate and entertain.
When the BBC commissioned the first show that I was involved with, I had a meeting with the producers—all of whom have, by the way, sadly left the BBC for the private sector—at which they kept mentioning the letters PPU. “The PPU won’t allow this”. “The PPU would object”. “That idea is far too difficult for us to take on television; it’s too commercial”. Being a complete new boy, I wondered whether to keep schtum about the fact that I had no clue what the letters stood for. Eventually I thought that I would own up and ask what the PPU was. I was told that it was the “Programme Prevention Unit”—I see that the noble Lord, Lord Puttnam, laughs—which is what the BBC calls editorial policy.
In the context of Lord Reith’s remarks, I should like to use the same quotation that Peter Fincham used when he was appointed Director of Programmes at ITV in 2008. It comes from a then recent Ofcom report on the BBC. As he remarked, Lord Reith’s three words had grown to 118. Here goes:
“Informing our understanding of the world—To inform ourselves and others and to increase our understanding of the world through news, information and analysis of current events and ideas.
Stimulating knowledge and learning—To stimulate our interest in and knowledge of arts, science, history and other topics through content that is accessible and can encourage informal learning.
Reflecting UK cultural identity—To reflect and strengthen our cultural identity through original programming at UK, national and regional level, on occasion bringing audiences together for shared experiences.
Representing diversity and alternative viewpoints—To make us aware of different cultures and alternative viewpoints, through programmes that reflect the lives of other people and other communities, both within the UK and elsewhere”.
Wow, I wonder how those guys would take on “X Factor”.
I suggest that there is a very strong argument to free the BBC from this gobbledegook that does not even mention the word entertainment. If the BBC were allowed to be free in this area, there is a strong possibility that the licence fee could be sustained at a very low level, perhaps even eliminated, while safeguarding competition in an area where Britain has often led the way. Instead of bashing the BBC, we should be looking at how we can breathe new life into it and how to set it free.
I suggest that an immediate way to ensure plurality in entertainment broadcasting is to allow the organisation that gave us “The Goon Show”, “Some Mothers Do ‘Ave ‘Em” and “Dad’s Army” off the leash.
Baroness Howe of Idlicote
My Lords, I add my thanks to the noble Lord, Lord Puttnam, both for his brilliant speech and for initiating this debate. There is literally no one better qualified to have done so, given his outstanding contribution to both film and television, and the immensely important role that he played in your Lordships’ House during the debates on what became the Communications Act 2003.
The proposed purchase by News Corporation of the remaining 61 per cent of BSkyB certainly constitutes a “relevant merger situation” under the Enterprise Act, as amended by the Communications Act 2003. For many of your Lordships here today who took part in those debates, such a move is exactly the kind of media merger proposal that we had in mind, involving, as it does, potentially adverse effects on the plurality of UK TV and radio news, and current affairs broadcasts and newspapers. Thus, the welcome decision by the Minister to issue an intervention notice and trigger Ofcom’s role will be especially important, as will any subsequent stages involving other ministries that may follow.
Since 2003, there have of course been considerable changes for us all—and not just the appalling economic and financial problems that the world faces today. In the media world, there have been huge changes—not least the arrival of the digital world and, particularly, the growth in the use of the internet for product and other forms of advertising, with all the adverse effect that that has had on British domestic television advertising. Equally, at the consumer/citizen end, there is an increasing ability, wherever people are in the world, to access on various forms of mobile machines whatever they want or need to see, hear or react to.
It is against that background that this threat to the British news’s cross-media plurality and independence is so important. As we have heard, television remains the main and most trusted source of news for 74 per cent of the British population. It is also because of the international respect and reputation that British television programmes enjoy—particularly the news and current affairs programmes—that this represents a national financial, as well as cultural, value which must be protected. It is, of course, the BBC, and to some extent the other PSB broadcasters, that Britain has to thank, and does, for this immensely valuable reputation that has been earned and built up over the years.
When our Select Committee, under the brilliant chairmanship of the noble Lord, Lord Fowler, took evidence for its Ownership of the News report, three things became abundantly clear and convinced me that News Corporation’s proposed takeover of BSkyB should be subject to such an intervention notice.
First, although newspaper proprietors believed that they did not interfere with their editors’ independence on the news material covered or the line to be taken, nevertheless, when choosing such an editor, both the proprietor and the would-be editor would be perfectly aware of the line that they were expected to take.
Secondly, the control issue was made even clearer by the evidence that Murdoch himself gave to the Lords Select Committee while some of our members were on a visit to the United States. Here, he admitted that the Sun and the News of the World were, indeed, both subject to his more direct editorial influence.
The third point, illustrating perfectly how vital sufficient plurality in ownership is if content, quality and independence are to be maintained, was the concession made by the former editor of the Sunday Times, Andrew Neil. After having described, in his evidence to the Select Committee, the circumstances of his own fall-out with Murdoch, he went on to say,
“no newspaper group … none, covers its own affairs well”.
For those reasons and the many others already given by other noble Lords, I fully support the Government’s decision announced today for there to be an intervention notice in this case. My only hope is that the final decision will not take as long, nor be subjected to such costly legal appeals, as the only other use of this procedure, which again—surprise, surprise—involved a takeover by the Murdoch empire.
Lord Borrie
My Lords, like many noble Lords who have already spoken and no doubt others yet to come, I welcome the announcement today by the Secretary of State, Mr Vince Cable. Good on Puttnam! Even before speaking a single word in the debate, he has won the basic argument. I wonder why we are sitting here this afternoon but perhaps it is because we would like to give some advice to Ofcom, the Competition Commission and whoever else is going to determine these matters in due course. If that sounds a bit vague, it is deliberate, because on Tuesday next we will be debating the Public Bodies Bill, which threatens either to abolish Ofcom or to merge it with other bodies. By the time an inquiry is finished, goodness knows who will be doing what. The Constitution Committee of the House of Lords has this very day published a most powerful criticism of the Government’s non-constitutional approach in introducing that Bill.
One phrase that has already cropped up several times is “plurality of ownership”. What does it mean? I should think that it means a plentitude or plentifulness, if not a profusion, of different suppliers of news and views. The noble Lord, Lord Fowler, was correct in all the three points that he emphasised, in particular when he said that to develop from a percentage to 100 per cent ownership of BSkyB makes a world of difference. I agree with the noble Baroness, Lady Howe, that it makes a difference legally, too. Moving from a position of so-called material influence into one of real control is bound to make a difference. Another closely related point that the noble Lord, Lord Fowler, made is that, after all these many decades of knowing about Rupert Murdoch and his methods, we need not query or discuss further whether Rupert Murdoch interferes with editors’ independence. One value of this investigation by Ofcom is that it can probe again—this was not properly probed in the past—what that editorial independence amounts to. That is especially the case, as the noble Lord, Lord Fowler, mentioned, when you want to know whether to support this or that party at a general election. The assertions by News Corporation about the high degree of independence of its editors need once more to be questioned.
One leading text on the subject of media regulation, by Mr Feintuck, and Mr Varney, rightly focuses on the law on,
“whether the proposed new company would have too powerful a presence across the media as a whole”.
That is what we want Ofcom and the Competition Commission to get at, and in due course what we want the Government to accept—that in this field there is an unduly powerful presence in the media by the News Corporation.
Some people have worried that a lot depends on the discretion of the Secretary of State. In so far as he has discretion, which I believe he does, he is exercising it in a sensible way today. It is a political decision. In other respects, one could perhaps argue that it has been done according to some party-political bias or influence, which some of us do not like. However, in this case, the discretion has certainly worked in a sensible way, in the direction of an inquiry. I congratulate the noble Lord, Lord Puttnam, on bringing this about by his subtle methods before the actual debate began.
Lord Myners
I also congratulate my noble friend Lord Puttnam on securing this timely and important debate. I declare a past interest, as I was a journalist for the Daily Telegraph and chairman of the Guardian for nearly 10 years.
I have eight points, which I shall make briefly. First, I commend Dr Cable’s swift action today in initiating an intervention notice. This is one case in which Liberal members of the coalition have been able to moderate the views of the other party by the expression of a separate viewpoint. I should like to have listened in to some of the phone calls to Mr Coulson over the past 24 hours, but of course that would have been illegal.
Secondly, I have had some business dealings with Mr Murdoch and members of his family and have always found him a very impressive businessman. He is very focused and driven, and he has been very successful, because he has delivered what the customer wanted. I do not think, however, that we should form our judgment on the issues in hand today on the basis of Mr Rupert Murdoch alone because, as my noble friend Lord Gavron said, ownership can change. We need to recognise that we are coming to a conclusion in our debate that relates not to one person or one point in time but rather to a broader set of principles that should shape the cartography of media ownership in the United Kingdom.
As Dr Cable said at the Liberal Democrat conference in Liverpool, there is a natural tendency for business folk to seek to dominate markets and to extract some monopolistic rent as a consequence. We have Parliament to ensure that we do not have a situation in which there is abusive economic dominance—of customers or suppliers—in any particular sector. It is therefore an important role for Ministers and Parliament to be vigilant in connection with any area where there is a risk of excessive concentration.
However, particular issues are raised by media ownership, because the media are the source of information and they inspire and inform intelligent debate that should shape our behaviours and the society in which we live. Clearly, the intention behind pluralism and diversity of ownership is to encourage the blossoming of many flowers rather than the presence of dominant voices that could outshout others in the market. My noble friend Lord Borrie talked about pluralism being associated with a profusion of participants in the market. It is clear that it is difficult to argue that that is the case in major and identifiable parts of the media at the moment, in television, radio and newspapers. At the same time, we must be mindful of the fact that the media landscape is changing rapidly, with new forms of communication based around digital formats.
If we are concerned about dominance, I would not want to limit my comments to News International and Mr Rupert Murdoch. The noble Lord, Lord Lloyd-Webber, said that it was time to stop bashing the BBC, and in the areas to which he referred I would be sympathetic with his view. However, the BBC is a very dominant institution, and we must ask ourselves whether we are comfortable with that. In particular, we must ask ourselves whether we can be comfortable with a BBC that seems to have a remarkably inept BBC Trust, a management that has no clarity about what the BBC should be doing and that allowed itself to be bullied 10 days ago by the Secretary of State for Culture, Media and Sport over issues relating to the licence. Frankly, if the chairman of the trust had more principle and backbone, he would simply have said to Mr Jeremy Hunt, “This is not acceptable, we will not agree to this—and if you insist on it, you will have to appoint a new trust”. As it was, the trust acquiesced like sheep, which reflects very badly on the BBC. Given its dominance, the failure of strong and principled leadership should be a matter of considerable concern to us at the moment.
I hope that when the BBC licence is next reviewed we start from a presumption that the BBC should not be doing certain things. The BBC should have to prove why it should continue to operate Radio 1 or Radio 2, for instance. It is extraordinarily difficult to explain to a foreign visitor why Radio 1, a popular music station, is a nationalised industry, and why it is necessary for it to be provided by a public service as opposed to a competitive one. I have certainly witnessed the BBC inhibit, intimidate and effectively snuff out competition in regional news and broadcasting. There are some core questions that we need to ask about the BBC.
In closing, I come back to News International. The tests of plurality must be a matter for the experts in Ofcom, and that will clearly be a difficult judgment. There is also a parallel issue for the Competition Commission around the issues of economic concentration —that is to say, even if this was not a media industry, would the concentration proposed as a result of the acquisition of the outstanding shares in BSkyB represent an unacceptable degree of concentration? From the perspective of the media, I would ask what the advantages are of News International buying BSkyB. Clearly the primary advantages are economic—in profit and access to cash flow.
However, I find it much more difficult to see the social advantages of such concentration. In fact, it would clearly lead to a further elimination of choice. I suggest to Ofcom that it starts from the premise that, if it cannot find convincing arguments to agree to the acquisition, it should disagree. The risks here are not symmetrical. The consequences of making the wrong decision could be deeply harmful and we would have to live with them for several decades.
Lord Birt
My Lords, I hope that this House on another day will have a full opportunity to discuss the important recent events at the BBC. Today I congratulate, as others have done, the noble Lord, Lord Puttnam, on his immaculate timing, and focus my remarks on the immediate issue of News Corp.
News Corp and its antecedent manifestations have had both a benign, as others have suggested, and an adverse impact on the UK’s media environment. Echoing the noble Lord, Lord Razzall, we should not forget that News Corp bravely and boldly eliminated pernicious and indefensible restrictive practices in the newspaper print shops—and, in doing so, not only paved the way for the improvement of the financial health of all UK newspapers, but facilitated lower-cost entrants and thereby fostered diversity. Again echoing the noble Lord, Lord Razzall, we should remember that Sky itself was an extraordinarily high-risk, pioneering and groundbreaking venture, with then unproven technology. Sky has blossomed, and in the process it has vastly extended viewer choice, especially for sports lovers and movie buffs.
News Corp’s newspapers, like them or not, are—like their ultimate proprietor—vigorously and energetically journalistic in outlook. The Sunday Times maintains a long and honourable tradition of investigative journalism in the public interest. I think that the Times is currently an exceptional newspaper. It is cool, rational and analytical. It carries a diversity of stories and offers, for instance, excellent coverage of science. It offers a politically diverse but particularly astute and entertaining mix of columnists. So I, for one, cannot but admire the bold buccaneering spirit and journalistic pedigree of Rupert Murdoch, the pater familias. But I recall, too, that challenging journalism for him does not always come first.
I recall, when I was at the BBC, how Mr Murdoch responded to the Chinese Government’s extreme hostility and agitation in respect of BBC World and its forthright journalism about human rights in China. When Mr Murdoch took ownership of the Star satellite, which beamed BBC World into China, to our very great distress indeed he immediately dropped BBC World from the satellite, explaining with characteristic candour to the New York Times:
“The BBC was driving them”—
that is, the Chinese—
“nuts. It just wasn’t worth it”.
Other parts of News Corp’s newspaper empire hold less appeal than the Times. At best they are rumbustious and amusing. At worst, they have contributed to the coarsening of our national culture. We now know that some of News Corp’s newspapers appear to have utilised tactics which have grievously, unlawfully and unjustifiably breached privacy—possibly in a systemic way.
While Sky has brought more choice, it is a financial behemoth, now dwarfing other players, including the BBC, financially. Yet despite its awesome revenues, only a tiny fraction translates into original UK production, if we exclude sport and news. So I hope that government and regulators will resist News Corp’s desire wholly to own Sky. The opportunities that sole ownership would bring News Corp to drive synergies between old media and new media, between newspapers and—not much mentioned today—publishing and broadcasting, would be enormous.
News Corp, as others have mentioned, already has 35 per cent of newspaper circulation in the UK, and even on current trends its share is likely to rise. With the opportunities that cross-subsidy, cross-promotion and the bundling of services would bring, we could easily see News Corp’s dominance in newspapers increase far beyond its present share. It is not in the interest of a plural society for a singular mindset or entity of any kind to hold that degree of influence, political patronage or commercial power.
When the Conservatives were last in power, governing alone and unaided, I dined with a Minister who the very next day was to have breakfast with Rupert Murdoch—and this at a time when there was a similarly important regulatory issue to be considered. I do not exaggerate—the Minister was actually shaking at the prospect. So I, too, applaud Dr Cable’s decision today to refer this matter to Ofcom. It was the right first step.
Lord Hollick
My Lords, I, too, thank the noble Lord, Lord Puttnam, for his brilliant timing. I have sat on two media boards with him and can testify that his robust pursuit of plurality of opinion extends not only to this Chamber but to the boardroom. I declare an interest. I am a director and shareholder in ProSieben, a Munich-based broadcasting business with 30 channels throughout Europe. In our home market of Germany, we by turn co-operate and compete vigorously with Sky, which is not such a dominant player in the German market.
As the noble Lord, Lord Borrie, said, one test of plurality is to take a snapshot at a moment in time by reviewing the number and independence of media outlets, such as TV news and newspapers. Another and I believe more important test is to examine the sustainability of that plurality over time. That needs to be considered in the context of what is likely to, or may, happen to the dynamics of the general media sector—in this case, if News Corp owns 100 per cent of Sky. While past behaviour is not always a good guide to the future of a sector that is undergoing unprecedented and disruptive technological change, as many noble Lords have said, it can give a clue to the likely consequences of the proposed merger.
I first met Rupert Murdoch in 1969 when I was a junior member of a team advising him on the purchase of the News of the World. I recall being struck by the strength of his determination and resolve, his bold vision for the paper, his grasp of what the reader wanted and his outsider’s disregard for convention—but, above all, by his gambler’s instinct. These traits were in greater evidence as he successfully launched the Sun, revitalised the Times and the Sunday Times, killed off Fleet Street’s antiquated work practices, took effective control of a failing satellite business on which he basically bet the bank, and, more recently, has breathed new life into the Wall Street Journal. At every turn he—and I have to say from my experience of dealing with this organisation that his DNA runs right the way through it—is totally focused on radical measures to improve the product, increase market share and, as a consequence, make life much more difficult for the competition. The breadth and scale of News enables it to take big bets and to be unafraid of failure. I can testify to the fact that News is a very tough competitor indeed, to be respected and often copied.
So how will this consistent approach to business work if News acquires 100 per cent of Sky? The enlarged group will enjoy market-leading positions in pay TV and newspapers and a strongly growing share of the broadband market. Sky itself is at the end of a significant capital expenditure programme and will provide the enlarged group with an unfettered access to a very substantial cash flow. The group will have the opportunity to fund cross-promotion of all of its products across all of its platforms, to bundle its products to subscribers, to acquire the best content and to market its products more extensively through advertising on non-owned media. When in 2000 I attempted to merge United and Carlton—which together would have owned 50 per cent of ITV and the Express newspaper group and a host of production businesses and websites—the ability to implement cross-promotion, to cross-subsidise and ultimately to bundle products and to develop content which could be deployed on all platforms was the key strategic and economic benefit. That merger was squashed by the Competition Commission as being too large a concentration, particularly in commercial television. The full integration of Sky and News Corp would create a combined business broader in scale and with far greater market power and financial resources.
So how will News Corporation’s competitors in the UK respond to this cuddly new 800-pound gorilla? The competitive set is fragmented and relatively undercapitalised with no great record of concerted action. The BBC provides a powerful countervailing force and is now assured of funding until 2016—albeit on meagre rations. Commercial television is coming out of a deep advertising recession and continues to suffer from the punitive effect of CRR, which has reduced ITV’s revenue by between £75 million and £100 million a year. That of course seriously compromises its investment in programming, which is the very lifeblood of TV and an important part of the British production sector. The newspaper groups are doing a remarkable job in staying afloat in fast-declining markets, often thanks to profitable non-newspaper businesses, but they do not have the financial clout to tackle News Corp.
The launch next year of You View will provide a significant opportunity for broadcasters and publishers in the UK. You View will bring video, still images and texts over the broadband network to the computer and, crucially, the domestic TV set and mobile devices. It is likely to become the most important distribution platform for media. It will deliver both free and paid-for content, will be open to all content providers and will provide a programme guide to rival Sky’s. It is a most welcome competition to Sky—
Baroness Anelay of St Johns
My Lords, I reluctantly remind the noble Lord that he has already reached the fifth minute and has now exceeded the time allocated to him.
Lord Hollick
I have nearly finished. As Ofcom now ponders the proposed acquisition, it must take into account sustainability; otherwise, looking at the marketplace as it now is—
Lord Smith of Finsbury
My Lords, I begin by declaring my interest as chairman of the Advertising Standards Authority. In terms of media policy, it seems to me that there are four key ingredients for a civilised society. The first is access for all citizens to full, fair, informative knowledge about the workings of society, government and current affairs, as well as to the full riches of their history, culture and scientific traditions. The second is free and untrammelled expression of opinion across the whole range of books, newspapers, magazines, pamphlets and the internet. The third is the widest possible range of views and voice available to the widest possible range of people and by a wide range of routes. The fourth is enjoyment and engagement for the citizen and consumer, alongside and integral to the provision of education and information.
Some of those objectives will intermingle and overlap, and some may at times come into conflict with each other. But getting the balance right between them and keeping them constantly in view, and seeing them as the key necessities for the public interest, is what we need to be doing. The noble Lord, Lord Puttnam, has done us great service not just in seeking this debate today, but through his actions in this House ensuring that we have a public interest test to apply to media ownership and media policy.
In my view, three crucial elements of policy are needed to secure the public interest. First, we must maintain firmly in place the requirement for impartiality in broadcast news provision. Heaven forefend that we create a Fox News here in the UK. There must of course be robust partisanship in the press, but broadcast is different. Let no one claim that the internet removes the requirement for impartiality because one-to-many broadcasting will remain very firmly part of all our lives for many years to come.
Secondly, we must maintain and sustain the BBC as the benchmark and guarantor of quality in broadcasting. It must be adequately funded and properly regulated. Over both these provisions, there are question marks. The BBC Trust is an imperfect model, and it would be much better to have a clear separation of management and regulation in relation to the BBC. But the BBC remains the best in the world, and the best bulwark we have for ensuring that the generality of our broadcasting continues to enhance our lives.
Thirdly, we must ensure the plurality of media ownership, and therefore of media voice. There are serious doubts about whether the ownership of four major national newspapers and the entirety of the major national privately owned television network fits that test. Like, notably, every single speaker in this debate, I welcome the decision of the Secretary of State to refer to Ofcom the bid for the remaining shares of BSkyB. How important it is that we have an independent regulator to refer it to. Let the Government be careful what they wish for when they embark on a bonfire of quangos.
Finally, let me give a word of advice from hard-won experience to the Minister and her colleagues at both the DCMS and BIS. They will be lobbied—they will be lobbied heavily and vociferously by News Corporation. I remember when, as Secretary of State, I gave the authority for the BBC to embark on News 24, and to supply it to regional and local news channels. Mr Sam Chisholm, who then ran BSkyB, telephoned me in somewhat acerbic terms. Indeed, I held the telephone at arm’s length and could still hear what he was saying. The Government will be lobbied, but they must resist. They must be impartial and must assess everything against those important tests of principle, and they must hold fast at all times to the genuine public interest.
Baroness McDonagh
I want to join in heaping praise on my noble friend Lord Puttnam. He has continuously brought to our attention the importance of our creative industry. It is what defines us as a nation and gives a shared identity. It glues us together as a society and as citizens, for which of us here has not heard people talk about Ann Widdecombe’s paso doble on Saturday night—or at least that’s what I thought it was?
Our creative industries define us around the world, and the most important of these creative industries in the UK is television. TV is what we do well, and it is what makes the UK that little bit special. We do it so well we even make money out of it. The UK is the second-largest exporter of television programmes and television formats in the world. This position has not been reached by accident. It has happened by design because successive Governments of all political persuasions have ensured a plurality of ownership across public and private sectors, which means the UK is now one of the few countries in Europe that makes the majority of its own TV programmes.
In this mix of broadcast is our jewel in the crown: the BBC. If I had more time, I would be happy to explain to my noble friend Lord Myners why it is important that it runs Radio 1, but I agree with him that the BBC needs to start speaking up for itself with a stronger voice. It must not be cowed, and it must not allow a small minority to push its programming and technology back into the 20th century. I am proud of the BBC website and the fact it is the UK’s window on the world. It does our economy and our standing so much good. As an aside, I was recently talking to a senior Sky executive, and I asked him whether he was ever worried that he would not have the capacity to cover breaking news. In a flash, he said, “No. We just do what everyone else does; we look at the BBC website”.
The BBC is not a brake on creativity and enterprise; it is the engine room. The BBC trains and puts talented actors, presenters, programme makers, sound engineers, cameramen and entrepreneurs into other broadcasters and independent production companies. That is what gives us the profitable and vibrant sector that we have at home and abroad. We should praise the plurality of our current media ownership and do all we can to protect it.
Much of this debate so far has featured loss of plurality, but the Communications Act 2003 also requires us to maintain a wide range of TV and newspaper companies as well as high-quality broadcasting standards. The latter can mean only a degree of choice that needs to be made and not just brought in. Equally, other legislation requires us to ensure fair competition. If we allow Sky to be bought by News Corp, we will meet none of these conditions. We will create a situation of unfair competition, kill off the plurality that makes us the world’s best television maker and leave the UK with one massive TV and newspaper company.
We have discussed the figures on a gross scale, but Sky is currently a giant, and it does not come cheaply for its customers. The cheapest Sky package at the moment is £284. The BBC licence fee is £140. Sky is not a company that invests much in non-sport UK programming. Last year, it spent more money on marketing than on entertainment and drama.
So let us be realistic about what will happen to our stand-alone publishers, telecommunication companies, broadcasters and newspapers. If we allow the amalgamation of the largest publisher, subscription services TV company and newspaper company, does anyone here think that we will get better TV and better newspapers that will be cheaper for customers? The new giant company will be impossible to regulate. Let us not even pretend we can put in Chinese walls and that everything will be fine. News Corp will be beyond regulation. This is not because News Corp is bad but because it will lead to unfair competition. It would drown out the market. No one would be able to compete against it. Of course, I completely understand why News Corp wants to buy Sky. If I were in its shoes, I am sure I would want to do the same, but it is because these things are not always in the public interest that we have public ownership rules in the first place. It is because some companies are impossible to regulate that we refuse to allow some companies to buy others. Who of us here would allow the BBC to start to publish daily newspapers? We would refuse to allow it, and we should refuse this.
Most of us got involved in politics to be active and to change the world, but sometimes the role of government is to step in to protect and preserve what we have and to prevent something happening. Now is just one of these times. I wholeheartedly welcome today’s decision to refer the matter to Ofcom, but it will look only at plurality, which is a small part of this complex issue. I agree with what Vince Cable said in January, four months before the general election:
“It is time to restore some of the old checks and balances whereby takeovers can be referred to the competition authorities to establish whether they serve the public interest. The Kraft takeover would almost certainly have failed that test”.
I hope his will prevails.
Lord Judd
My Lords, like others, I deeply appreciate my noble friend Lord Puttnam having introduced this debate today. It is particularly important that he has done so, because his whole life has borne witness to his deep commitment to the quality of civilisation and the indispensability of democracy. He approaches this subject in that context.
We live in a globalised society, and we need to remember that the importance of plurality and the quality of our media are important not only to us in Britain but to the world as a whole. In too many places in the world, oppression, tyranny and the absence of human rights are still the reality, and access to what we generate in our own media is vital to those who struggle for a better society. That is why the BBC is so crucial, and why nothing must ever be done to undermine the quality, integrity and reputation of the Overseas Service. This is true not just of the BBC but of our whole media, and we need to be able to show the world a healthy, thriving, plural media in our own society.
This is not simply about plurality; it is also about the ethics, quality and commitment of journalism itself. Journalism, to be effective, needs courageous people, and plurality is important because it is important for journalists to know that they are not dependent for their communication on the person who happens to employ them at the moment. It is also important that alternatives are available. Indeed, it is an essential element of the characteristics of journalism that people can confidently be themselves and say what they believe, because there are various channels through which they can speak. That is not true in the world as a whole.
In my own work, I have been deeply moved by, and profoundly fortunate to have met, two of the most courageous women in recent history, Anna Politkovskaya and Natalya Estemirova: two women who were absolutely dedicated to truth and integrity and determined that the Russian people and the world should know what was happening in the North Caucasus. What always impressed me about them was that they had absolutely no doubts about what their fate might be, but they remained totally committed to the high calling of journalism as they saw it. That sets terrific challenges to the profession elsewhere in the world, not least here.
We need the structure of plurality, but we also need the ethic and the principles of what journalism is about. We need that courage. That, of course, relates to editors and proprietors. What was important for Anna and Natalya was that they had a courageous editor and proprietors who were prepared, in the reality of Russian society, to support them. Let us remember, incidentally, that they are not the only two; too many journalists in Russia have been assassinated.
I totally share others’ conviction that journalism and the media are the lifeblood of a healthy democracy. There are, of course, immense complexities, and we have heard about them tellingly today: the tensions of power, profit and the newspaper as a commodity against the historic indispensability of journalism to the effectiveness of democracy itself. Plurality is a huge challenge, but it will not be furthered unless we are dedicated to the principle within it.
Lord Lipsey
My Lords, when you think about it, I am afraid that Vince Cable has shot our fox—whether from high principle or from funk at the thought of the ferocity of the assault that he should expect from the noble Lord, Lord Puttnam, I do not know. Seriously, however, we should not for one minute underestimate the importance of the decision that was taken this morning. Just think of the counterfactual of no reference being made. Whatever arguments Mr Cable’s department could have cobbled together for that, the message would have been absolutely clear—that Rupert Murdoch stood above any British Government and their powers. By making that reference today, that myth is destroyed. Power, as a famous American columnist once said, is being believed to have power, and today the complete belief that Mr Murdoch had total power has been set back—a great moment for our democracy.
I think that I am in a unique position among those who have spoken in this debate: I have worked for Rupert Murdoch. I was economics editor after he took over the Sunday Times and Simon Jenkins’s deputy at the Times. I am glad that this debate has not demonised the man. I can report frankly on Mr Murdoch’s interventions. I remember only one instruction that came down from the chairman; namely, Simon and I were told that whatever we might think of the column written by the late Lord Wyatt, he was under the chairman’s protection and could not be removed. We sometimes had difficulty in explaining that to our critics who were not as enamoured as the chair of the content of that column.
What happened by way of self-censorship is another matter. These things are much more complex than they are believed to be. But the idea that a crudity of power is exercised is badly overdone. The fact of ownership conveys quite a lot of power in itself. We have heard a lot about news today, which is important. We are protected in news to some extent by the impartiality rules, which is a great thing, although those rules are always under siege, including from the great chairman himself. We cannot take it for granted that they will always by there.
I worry slightly more about a different kind of plurality—cultural plurality. If you think of a News International of the size that is contemplated—two BBCs—imagine the effect that that would have on the marketplace for the cultural product that is television; for example, for the balance on our screens between American productions, European productions and British productions. I do not think that you will find Mr Murdoch, an American, saying, “Oh, we must keep up the European and British content”. That will affect what is made and what is shown. There are many other ways in which ownership, in effect, affects culture. Although I yield to no one in my admiration for American culture, I would like plurality of culture as well as plurality of media.
Following the sentiment expressed by the noble Lord, Lord Lloyd-Webber, although not perhaps the content of his recipe for it, my final point is that the single biggest protection we as a nation have of plurality of provision and of variety of what we consume is the BBC, especially so in a week when ITV has admitted that its object is to achieve the lowest common denominator.
Lord Lipsey
I defer of course to the opinion of the noble Lord, Lord Fowler, in that matter.
A strong BBC is absolutely at the centre of a varied and plural media in this country, which is why the brutal beating administered to the corporation last week by the Government is one which we will repent of at leisure.
Lord Stevenson of Balmacara
My Lords, I thank my noble friend Lord Puttnam for securing this debate and, like many other noble Lords, I congratulate him on his exquisite timing. This has been a fantastic debate with many fine speeches. I particularly welcome and enjoyed the speeches made by the noble Lord, Lord Smith, and my noble friend Lord Myners. The problem for people speaking late in this debate is that the hard work that we have done in preparing our speeches has rather gone to waste, so all the finely crafted phrases and wonderful lapidary comments I was going to drop in to the stunned attention of the House have been used by others rather better than I may have done.
I am left with a couple of thoughts which I hope to share with noble Lords. First, why on earth is there so much agreement? It is not just that the fox has been shot because there is still a long way to go for this particular fox. But there is a sense around the House that the agreement across the two sides—although there is quite a lot of disagreement on this side; we probably would not want to go too far into that, particularly about the BBC—reflects a wider concern about the way in which we have arrived at a twin track for regulating our media. We are at one in saying that the media are too important to be left on their own and that a free market will not be sufficient in that it will not satisfy our culture or deal with our democracy. But we have come up with a rather ugly compromise both in terms of the BBC, where the trust has to do the impossible job of cheerleading and regulating and, as others have said, in terms of Ofcom, which faces the possibility of having its wings clipped. In the wings, we also have the Competition Commission with its different focus on the economic outcomes of many of the issues before us.
Let us look back at the way in which we developed television and many of our media outlets in this country. We have done a sensible and interesting thing by trying to separate over time the delivery of the various channels from the money. In that sense, we have brought out the best in them by creating competition for quality. BBC1 was followed by ITV, and BBC2 by Channel 4 and Channel 5. But, of course, that all changes in the multimedia world, and the differences have been mentioned by many noble Lords. However, it is worth bearing in mind the essence here, that of trying to make sure that what we are separating out are the economics from the quality, which is still terribly important.
We need to think again as we go forward. I hope that one of the things that will come out of this incident is that we look once more at how this country regulates its media. Film and television in particular, but the published and electronic press as well, reflect the nation to itself. I am sure we can all recall the case of the primary school in the south-west of England where the pupils were asked to say what the number for our emergency services is. Rather than answering with the number 999, they said 911 because that is what they hear in the American television programmes and films they watch. There is nothing wrong with that because in some sense we want a plurality of cultures, as my noble friend Lord Lipsey said, but we have to be careful that we do not lose what we have in the rush to try and ensure that everyone is heard.
My final point is this. Given the centralised nature of broadcasting and the media in the UK, with the majority of our key decision-makers based in London—pace the BBC and its move—it is surely a concern in the English regions and the nations of Scotland and Wales that, while we should have excellent UK-wide services, there must be a fundamental requirement for high-quality content that addresses the distinctive cultural and democratic needs of audiences outwith the south-east.
We are on common ground that media content which purports to be for the public good and in the public interest can survive, grow and flourish, but this will not happen through market forces alone. There is a wider question about how we regulate properly for that, and this is a good opportunity for us all to reflect on it.
Lord Maclennan of Rogart
My Lords, like the noble Lord, Lord Stevenson, I say that speaking at this stage of the debate runs the risk of repetition. But that is a happy outcome for it appears that not just a narrow consensus on a narrow point has been expressed in this distinguished discussion, but there has been a broad acceptance of the thesis so ably and crisply expressed by the noble Lord, Lord Puttnam, in opening the debate as he did. It is important to put on the record at this stage that we have had contributions from people who have a direct financial interest in broadcasting, from people who have run the BBC, from a Secretary of State with a distinguished record in his position, from those who have been paid to consider the standards of broadcasting, and from journalists. That is a spectrum of opinion that should not be ignored when this matter is further considered, which it will be as the result of the wise decision of the Secretary of State today to refer the matter to Ofcom. In my opinion, the debate has demonstrated the House of Lords at its most authoritative and persuasive.
A consequence of that is that there have been relatively few questions. In fact, I do not believe that the Minister has actually been asked a single question so far, which is an unusually happy position for her. It is also the case that the intention of News Corp to buy the remaining 61 per cent of shares in BSkyB has been referred to the European Union’s regulatory procedure. I underline, and hope the Minister will accept, that that process can be conducted in parallel. It is allowed, as I understand it, by the European Union’s regulations. There may be criteria of competition law in that inquiry which are somewhat different from those which will be considered by Ofcom and, if it is proposed, the Competition Commission. It is appropriate that the national inquiry should be carried through and I hope Ofcom will so recommend.
The issue that this is simply the acquisition of what is left of BSkyB should not defeat the arguments that plurality is threatened. It is evident that the change of management which will be brought about could favour not only the fortunes of BSkyB and its shareholders, which have to be considered by that company at present, but also the wider interests of the newspapers that are owned by News Corp. That could narrow the perspective of a successor owner in a most unfortunate way.
As far as I can see, editorial control has not been exercised heavily with BSkyB, but that it could be is quite clear. From what we have seen, it can be compared to Fox in the United States. Despite what was referred to by, I think, the noble Lord, Lord Gavron, as a sentimental attachment to newspapers, Mr Rupert Murdoch is not averse to influencing television in the United States in an extremely debilitating and counterproductive manner.
I am happy that the Government have taken the decision they have and I am delighted that this House has shown its unanimity in backing it.
Lord St John of Fawsley
I apologise for my late arrival at the debate. This was due to trying to get across the death track that masquerades as a road outside this House. And, while I mention that fact, why is it, when there are more Members in this House than there are in the House of Commons, we have only eight minutes to get to a Division whereas they have 10? Perhaps the Minister will answer that even though it is marginally wide of the issue.
I declare an interest as an adviser to Sky Broadcasting on arts and religion. As the anti-British BBC has now abandoned its interest in both subjects, we should be grateful that Sky is doing so much.
Baroness Garden of Frognal
My Lords, I respectfully point out to the noble Lord that there are speaking times.
Lord St John of Fawsley
I have made my point. I am quite content to leave it to distil into the minds of Members who have heard only one point of view so far apparently.
Lord Parekh
My Lords, I am sorry for that prelude to my speech. I congratulate the noble Lord, Lord Puttnam, on securing the debate and I thank him for introducing it with the clarity, wisdom and eloquence that we have come to expect of him.
In the UK, the national newspaper industry is run by eight companies, one of which—namely, News Corporation—has 35 per cent of the national newspaper market. This is likely to rise to about 43 per cent in the next three or four years. It now wants to buy the 61 per cent of BSkyB which it does not currently control. I am glad that this has been referred to Ofcom and that we will be able to see what the outcome is, but I am a little worried that the criteria to be used by the Secretary of State may not be conducive to the outcome that we have in mind. That simply goes to show how important it is that we are clear about the criteria that the Secretary of State or Ofcom should employ in deciding whether to sanction a particular merger or venture. One sees an even more marked concentration of ownership in the regional and local press. Four publishers control almost 70 per cent of the market share.
This raises two questions. Why does media ownership matter and is it enough? Media ownership matters because, as the noble Lords, Lord Puttnam and Lord Gavron, pointed out, it affects the quality and range of views available to the public and the health of our democracy. Owners shape news, and they decide what becomes news and why it is important. They also shape views—how to interpret that news and how to respond to it. They do so directly by intervention as well as by appointing like-minded editors, and rewarding and promoting journalists who hold the right kind of view. They might also use newspapers to settle personal scores or to discourage certain types of investigative journalism. Even if their control is benign, profit is the sole consideration and public interest becomes a casualty. For all these reasons, media ownership is important and there has to be a strict regulatory framework.
But my question goes deeper than this. How plural should media be? Let us suppose that, instead of three, we had 25 people owning media, or 100 or 200. Would that necessarily achieve the objectives that we have in mind; namely, plurality of views and dissent, and the health of our democracy?
In a free-market economy, you cannot control the ownership of the media beyond a certain point. Having many owners does not necessarily guarantee quality journalism or an impartial press, because competition will tend to push people to the lowest common denominator. It can also take the form of informal alliances. There is also the danger that this various, multiple ownership might share a common cultural perspective and, therefore, not allow differences of view to emerge. Newsgathering can be poor because of competition. It can also limit investigative or specialist journalism.
In order to ensure that we meet those objectives, therefore, we must obviously control media ownership. But that is a necessary condition, not a sufficient one. What else do we need to achieve those objectives? I end by suggesting three. First, we must strengthen public service broadcasting. In this context, the BBC becomes critical, and it must be defended against subtle and not-so-subtle attempts to undermine its credibility. Secondly, we need greater media openness and transparency. The media rightly demand that politicians should be honest and transparent. They should be subject to the same standards. After all, although privately owned, they are a public institution and therefore publicly accountable. I suggest with some humility that there is no reason why the salaries of journalists or their political affiliations should not be disclosed or conflicts of interest when they write on certain issues. I see no reason why there should not be speedy redress for injured members of the public or a public explanation by editors and proprietors of how certain events have been covered.
Secondly, there must be public support for citizen or community journalism. This can be secured in a variety of ways, of which an industry levy is one. The IPPR has shown, for example, that a 1 per cent levy on pay TV operators such as Sky and Virgin Media would bring in £70 million. Those sums could be used to make sure that local newspapers do not close and to allow media start-ups by individuals and community groups.
Thirdly, we must encourage philanthropy. The Potter Foundation awarded a grant of £2 million to the Bureau of Investigative Journalism to promote investigative, not-for-profit journalism in the public interest. Charity law should be organised in such a way that the media are seen not simply as a political activity but as a charitable one, and tax relief should be given.
Baroness O'Neill of Bengarve
My Lords, I, too, express gratitude to the noble Lord, Lord Puttnam. He has been immensely knowledgeable and tirelessly persistent in pursuing this nexus of issues raised by the plurality of media ownership, in and beyond your Lordships’ House.
At the heart of the debate lie the importance of press freedom and the role of the media in democratic societies. It is because we are committed to a free press that there are rather few ways of ensuring that the media, taken together, serve the public interest by offering diverse and thorough coverage of issues of public concern. Anti-monopoly provisions matter here, as nowhere else, because we need not only competition that protects the interests of consumers but diversity that protects the interests of citizens. That is one reason why most democracies conclude that anti-monopoly provisions are particularly important in the case of the media. Many have additionally been concerned to prevent overseas control of their media, or large sections of them.
Parliament recognised these issues in the basic sections of the Communications Act 2003. Section 3 reads:
“It shall be the principal duty of OFCOM, in carrying out their functions—
(a) to further the interests of citizens in relation to communications matters; and
(b) to further the interests of consumers in relevant markets, where appropriate by promoting competition”.
Noble Lords who remember the debates surrounding this part of the legislation will remember that the priority given to Ofcom’s duty to protect the interests of citizens was very hard fought. There will be those who think that Ofcom has not always accorded the interests of citizens that required priority. Now is the time for Ofcom to demonstrate that it takes both of its general duties and the priority which the Act assigns to its duty to citizens seriously, as it adjudicates the matter referred to it.
I take it that in a democracy we want not merely media that are free to publish but media that, taken together, cover a wide range of information, positions and arguments in depth for a range of audiences. This is particularly but not only important in the matter of covering news, where we hope that citizens will have opportunities to read, hear and view news and current affairs produced by a plurality of organisations, but also that they read, hear and view news and current affairs representing a diversity of voices, which will help them to judge matters of public interest.
Until a few years ago, we might have been reasonably confident that if we could secure plurality, diversity would be its natural consequence. I do not believe that is now so easy. We have plurality as never before, not only in the fact that new technologies enable us to access the media via multiple routes but in the fact that some of those whose voices were never heard by their fellow citizens can now make themselves heard via the internet. Yet these forms of plurality do not always support diversity of content and presentation for citizens. There are two fundamental reasons why the link between plurality and diversity has become weaker. One, which I think the lesser problem, is that some of the new voices that use blogs, Twitter, or specialist websites reach very small audiences. We indeed have more originators of content, but citizens may not thereby gain access to greater diversity. Bluntly, plurality is not now by itself enough to secure diversity but it is one of the weapons that we have, so we should prize it and use it.
We have to face the reality that media organisations are prone to repeat, recirculate and restate what is already public. No doubt some, on blogs and Twitter, surprise us by adding grace notes—or disgrace notes—to current debates but all too often they simply echo more powerful voices. What matters is not just concentration of ownership or its ramification through cross-promotion, cross-subsidy and bundling but concentration of editorial control. If we have no ways of ensuring a plurality of editorial views and approaches directly, we need to use these measures to prevent concentration of control, including editorial control.
Baroness Jones of Whitchurch
My Lords, I echo the thanks from all around the House to my noble friend Lord Puttnam. He has both the knowledge and the wisdom on this issue that withstand the utmost scrutiny and a respected history for building Cross-Bench consensus on what is undoubtedly a sensitive and complex issue. His contribution today has further enhanced his fine reputation.
This has been a powerful and well informed debate with an impressive degree of consensus. Many of the contributors have experience that I cannot hope to match, so I hope that I can be forgiven for approaching the issue as an active citizen and as a democrat who seeks a strong, independent media to help promote healthy and informed political debate. Indeed, as the noble Lord, Lord Lloyd-Webber, persuasively argued, plurality is also a great bonus for entertainment and the BBC’s strong record in the field is not given enough credit. On that subject, I support the many noble Lords who have spoken up passionately today in defence of the BBC.
I have been conscious during the debate of a temptation to narrow the focus of the discussion to News Corporation’s application to take over BSkyB. On that issue, Labour has made it clear that we welcome Vince Cable’s decision to intervene. As the shadow Secretary of State for DCMS has said, we will stand up for the public interest without fear or favour, and if the Government do likewise and fulfil their obligation to transparency at every stage with due process, they will have our support. As many noble Lords have rightly identified, though, the issue goes much further, to the heart of a free market versus interventionist philosophy and it raises fundamental questions about the role of the regulator, on which I hope we can find some agreement.
It is worth trying to put the debate in some context. Already, the internet has a penetration rate in the UK of around 82 per cent and growing. Diverse news sources are expanding in both predictable and less predictable ways. As we have heard, networking sites such as Twitter, YouTube and blogs are becoming increasingly valuable alternative sources of news information and will no doubt multiply and innovate further. Where traditional media sources are not trusted or are slow to inform, the new media will fill that breach and consumers will happily scan multimedia outlets until they find what they are looking for. At the same time, traditional newspaper readership rates are falling.
That is the media world today, but its future will continue to be fast-flowing and unpredictable. It is this challenge that large and small operators are focused on addressing. In fact, this very unpredictability has been used as an argument for allowing market forces to intervene flexibly and unfettered. I agree with the noble Lord, Lord Fowler, that the domination of TV over the internet as a source of news means that these are not sufficient grounds to duck the plurality test.
Against that backdrop, we are pursuing what I hope is a common goal of a free, well informed, diverse media—or, as my noble friend Lord Myners rather nicely described it, “the blossoming of many flowers”. What does that mean in practice and how can it be delivered? I am grateful to Martin Wolf, writing in the FT, for setting out the issue rather succinctly. He asked:
“Should we view the media market as similar to the market for baked beans? Or should we view it, instead, as being unique?”.
I would hope that his answer is non-contentious when he argued that,
“the media do not just provide information; they mould opinion and so shape the public debate. They are the engine of democracy”—
and as such, of course,
“The ownership of media is a source of power”.
That is the crux of the debate and the heart of the concerns expressed by those who hold the concept of plurality dear.
So far, however, we have failed to engage debate with the key players on this territory. For example, the News Corporation leadership and its supporters are positioning its current BSkyB bid as an everyday commercial decision driven by market forces—although, as my noble friend Lord Gavron made clear, BSkyB would not buy the extra shares if it did not identify a broader advantage to doing so. Its supporters are less keen to acknowledge the enhanced political influence that could flow from the takeover or to promote solutions that could uphold the principles of plurality. My Lords, I would go further. Obviously, we cannot compel global media leaders to admit their influence and power over people’s beliefs and behaviour, but I hope that they will take a more active role in promoting an open debate about responsible media ownership, its capacity and its limitations.
Several important challenges arise from this debate. First, what are the implications of cross-media owners being able to bundle their assets by using, as we have heard, strength in television revenues to prop up failing print revenues in a way that would not be open to competitor newspaper groups? Is this inherently unfair and anti-competitive? Is this, therefore, something in which the Government or the regulator should intervene? I would be grateful to hear the Minister’s views.
Secondly, the key to applying the plurality rule effectively is a strong and independent regulator. Ofcom has earned a widely respected reputation in the industry but, as we have heard from my noble friends Lord Borrie and Lord Smith, the Government continue to talk of reducing its functions to technical and enforcement responsibilities. I hope that this debate has helped to underline the crucial role that Ofcom can play in the future, and I hope that the Minister is able to give some reassurance on that point. What is more, although I am a strong advocate of the European Union, I would have thought it in our interest to have a clear lead from within the UK on the type of free press that we demand within our own territory rather than rely on a ruling from Europe.
Thirdly, one of the current safeguards regarding the quality of TV news broadcasting is the requirement to maintain impartiality. In practice, as the noble Lord, Lord Razzall, identified, this has proved to be rather a slippery concept, particularly in the commercial sector, where the choice of stories and their prominence has led to allegations of bias. Can the Minister reassure your Lordships’ House that the concept of impartiality in news broadcasting will be held sacrosanct and its interpretation and application kept under review?
Finally, and most importantly, surely the main worry about any proposed reduction in plurality is that it is a one-way street. There is no reverse gear. If, in the course of a takeover or merger application, commitments are made or reassurances given that persuade the Secretary of State that the public interest is protected, what recourse is there if subsequent evidence shows that this is not so?
For these reasons, we on these Benches argue that extreme caution should be applied to any application that could threaten the principle of plurality. That is why we have been active in calling for Vince Cable to intervene in the specific application from News Corporation to take over control of BSkyB, and why we are concerned about rumours that the Cabinet might be split on today’s announcement. Perhaps the Minister could shed some light on this. Without Vince Cable’s intervention, News Corporation would stand to control up to half of Britain’s television revenues and half its newspaper revenues. Arguably, that would be the single largest concentration of media power in any large democracy and, as my noble friend Lord Puttnam has highlighted, that would certainly be more than would be allowed in Germany, France, Italy or even the great free-market states of the US and Australia.
There are important democratic issues at the heart of this debate. They relate to the kind of society that we want to be, the access to diverse opinions that we demand, how we want to hold our key institutions to account and how we want to balance power among those who seek to shape our society for the future. This country rightly has a reputation for a free and fair press. I hope that the Minister will be able to reassure this House that the Conservative Government will take all necessary steps to uphold that.
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.
Lord Puttnam
My Lords, I know that at this point it is entirely traditional to thank all noble Lords who have spoken, but it is hard for me to express the depth of my gratitude not just for the prescience and clarity of what has been said but for the extraordinary unanimity with which the views of this House have been expressed. It is invidious to pick out one particular person but my heart leapt with joy when the noble Lord, Lord Razzall, used the phrase “significant marker”. The coalition is an interesting experiment in government, and those of us who want it to be seen as a true coalition must be hugely encouraged by what he had to say this afternoon.
I also thank the noble Lord, Lord Fowler. He has been assiduous and utterly consistent in the furrow that he has ploughed. It cannot always have been entirely easy and I take my hat off to him for his consistency and depth of knowledge.
Lastly, in my judgment the speech of the noble Baroness, Lady O’Neill, was typically brilliant. If I may, I would like to take and extend something she said, because it is very important. She mentioned that during the passage of the Communications Bill in 2002 and 2003, we argued long and hard over Ofcom’s principal duties and the order in which they should appear. At the time, the noble Lord, Lord Currie, the chairman-designate of Ofcom, found the notion of juggling the duties towards the consumer and the citizen extremely difficult. Many pages of Hansard were devoted to this discussion and, in the end, it came out just as the noble Baroness, Lady O’Neill, said—with the interests of the citizen in first position and the interests of the consumer second.
However, if noble Lords scour those pages, they will find a number of references to something else. It is to the effect that, when these two duties are in conflict, the rights of the citizen shall be paramount. One problem that Ofcom, and indeed the Secretary of State, will face is that there is an inherent conflict and it will not be easy to disentangle. If officials go back and look at those debates, they will see that, despite the discomfort of some, it was made very clear that the rights of the citizen shall be paramount. Under any constitution, written or unwritten, that really should not have been cause for much of an argument. Noble Lords should note also the use of the words “where appropriate” and ask themselves the following question. In what circumstances is the prospect of an ever more dominant media player either desirable or appropriate? I think that this afternoon your Lordships have offered a pretty clear and unequivocal answer to that.
Again, I thank all those who have taken part in the debate and I am sure that we shall be hearing more on this subject.