Media Ownership (Radio and Cross-media) Order 2011
Debate between Lord Gordon of Strathblane and Lord Clement-Jones
Lord Gordon of Strathblane
My Lords, I, too, welcome the draft order. I have no current interest to declare, except membership of the Select Committee on Communications, but it would be wrong to conceal the fact that I was for 33 years chief executive and subsequently chairman of a group of radio stations. The commercial radio industry, which has recently gone through a fairly rough patch, welcomes this draft order. Advertising revenue is down, in common with most media. Some of it may be down permanently with the arrival of the internet and some of it may recover if there is an economic upturn.
At the moment, more than half of local radio stations are losing money. Well over half the industry is off the stock market and controlled by private companies, one of which is Global and the other being Bauer Media in the United States. That is propping up companies which otherwise would go bust. Worse still, audiences have slumped, partly because far too many radio stations have been created by the Radio Authority and, to a lesser extent, by Ofcom.
I think I can prove that point by taking the House back to 1994-98 when, with 120 stations, commercial radio had a 50 per cent-plus share of audience against the BBC. Let us fast forward to 2008 when there were three times the number of stations—another 250—and the commercial radio share of the audience had slumped to 41.1 per cent. The problem was that the extra stations did not increase commercial radio’s share. It cannibalised commercial radio’s share and nibbled away at the successful stations which then, in my view mistakenly, cut back on their local output, which was why they got their audience in the first place.
It is good fortune for the radio industry that this draft order gives the industry a chance to reshape itself and to get it right this time. Stations faced with declining revenue and the high costs of running two transmission systems, one analogue and one digital, made the mistake of cutting back on the variable—the local output. I am referring to chains of stations which perhaps owned stations in six cities. As regards local output, a combination of the accountants and the marketing people said, “Oh well, we could cut that out”. They did that while forgetting, as the programme people could have told them, that that was what delivered the audience. The idea that local radio stations were superior in quality to the BBC is ludicrous. Yet even the smallest local radio station would wipe the floor with the BBC in terms of audience precisely because of its local output. Therefore, when the local radio industry lost or reduced its local output, it did a grave disservice to itself as well as to the public.
This draft order gives the radio industry a chance to regroup. It is permissive and not mandatory. No one has to do anything but if they want to do something they now can. I hope that my colleagues in the radio industry will realise that vertical chains do not make much sense for the public or themselves. Some station swaps will go on and there will be groups which own perhaps four stations in one town.
If you are one owner with four stations it is in your own interest to make those four stations different from each other, as do the BBC with Radio 1, Radio 2, Radio 3, Radio 4, Radio 5 and so on. At the moment, four separate owners all chase the same market and duplicate themselves. One owner would serve four markets, so already there is a gain to the public good. More importantly, with four revenue streams coming in, there would then be no excuse for not amortising the costs of local news provision over those four revenue streams. It can be required by Ofcom to return to the glory days of ILR when a first-class local news service was creating the audience.
There will be a gain for both the industry and the public because we are all concerned about the democratic deficit in terms of local news coverage. If we have local radio playing its full part as it once did in local news coverage, we have done something to reduce the democratic deficit. For that reason, I very warmly welcome the draft order.
Lord Clement-Jones
My Lords, I want to add the support of these Benches to the order. I do not have anything like the experience of my noble friend Lord Fowler in local newspapers or the noble Lord, Lord Gordon, in radio, but the importance of local media is obvious to all of us, whether it is radio, television or newspapers. Surprisingly, we are looking at this order rather late in the day. The other place looked at it in March and, in view of its importance, I do not understand why it has taken us quite so long to consider it.
It is clear that this is extremely evidence-based. As the Minister mentioned, we had the CMS report in April 2010 and the Ofcom report in August 2010. Although the noble Lord, Lord Fowler, did not refer to it, the Communications Committee, of which I declare current membership but was not at that time a member, looked at this whole area and was rather more prescient, strangely enough, than the Newspaper Society. The Newspaper Society’s evidence was described as rather upbeat but the committee was rather more sceptical. It said that such figures which were produced by the Newspaper Society showing buoyant advertising revenue and so on can be deceptive. Of course, 2008-09, in terms of the dropping away of classified advertising revenue, readership and consumer habits in the recession, has been crucial and is why we are in the position that we are today.
In a sense, Ofcom was told to go away and do its homework again by the Secretary of State. I shall come to what I think the reasons are for that. Ofcom acceded to the argument to deregulate further than it originally thought it would on the basis that it thought that local TV, which is very much the brainchild of the Secretary of State, would impact positively on diversity and plurality. I suppose the other argument it gave, quite apart from the competition points that the Minister mentioned, was that the BBC will always be there to provide plurality, and it is very much to be hoped that the BBC will be there. But there is no doubt of the scale of the crisis or of the necessity, exactly in the way that the noble Lord, Lord Gordon, mentioned, to have cross-media businesses that really get to grips with the need for these organisations not to concentrate just in one area of media. In debate, I remember a positive speech made by the noble Lord, Lord Fowler, on free sheets. Perhaps it may have been rather over-regulatory as regards local authorities. Nevertheless, I am sure that the greater regulation of those free sheets from local authorities will help local media organisations, which would be a positive effect.