Fox-Sky Merger

Lord McNally Excerpts

Thursday 20th July 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for repeating the Statement made in the other place. I am grateful to the Government for returning to the Houses of Parliament, both here and the other place, just before Recess to update us on progress.

We have been following the twists and turns of this saga closely. It is obvious, and absolutely right, that the Secretary of State is taking her quasi-judicial responsibilities very seriously. While we regret that she is minded not to refer the bid on grounds of broadcast standards, we support her decision, as I take it to be, to refer the bid to the CMA on the grounds of media plurality.

I have three main points that I hope the Minister will be able to respond to. The first is on the timing. Could I press the Minister on the possibility that the Secretary of State might announce her decision during the Summer Recess? Surely Parliament must have the opportunity to scrutinise any decision that she makes. It is not her job to operate to 21st Century Fox’s corporate timetable; in my view, the company would be better to abide by the rules as they currently are and respect the role of Parliament in this, and it should signal that very clearly. In my view, the Secretary of State should demonstrate to those at Fox that it is she, as an elected representative of the people, who is in charge, not them. I ask that the usual channels in this House also be kept abreast and that we be informed if there is to be a Statement so that we can respond to it.

Secondly, I want to press the Minister on the broadcasting standards investigation. I suggest it needs a bit more work before a decision is finally reached. Recently, compelling arguments for this have been made in the other place by my right honourable friend the Member for Doncaster North and the right honourable Members for Twickenham and for Rushcliffe—noble Lords will be aware that that is a pretty distinguished cross-party alliance. The truth is that the Murdochs have a history of regulatory non-compliance and of corporate governance failure that calls their commitment to broadcasting standards into serious question. Ofcom says that there are,

“significant concerns about Fox’s approach to ensuring Fox News content complies with the Broadcasting Code”.

We saw in the phone hacking scandal that senior employees and executives at News International failed to comply with criminal law or with acceptable standards of journalistic conduct—and, frankly, acted with a flagrant disregard of basic human decency. We see from the ongoing sexual and racial harassment scandal at Fox News in the United States that there is ample evidence of what Ofcom calls “significant corporate failure”.

Does the noble and learned Lord agree that it is time to look again at the fit and proper person test applied in the case of broadcasting standards? I heard it said by a distinguished former member of Ofcom that that test could be satisfied only if the person concerned was caught in the act of murder, had been prosecuted and that the body was exhibited before any such decision could be taken. That is probably a test too far. The noble and learned Lord will recall that, in the Digital Economy Act, several noble Lords from around the House joined together to table an amendment that suggested that there were other models for the fit and proper person test that might be more appropriate—particularly those applying under the Financial Conduct Authority. At that stage, we were persuaded by Ministers that it would be inappropriate to press the amendment to a vote, which I now regret, because they promised an early opportunity in the legislative timetable to bring forward recommendations on it. Can the noble and learned Lord confirm that that is still the plan and share with us which legislative vehicle will be used for it?

Of course, the best way to get at a lot of these corporate failure issues would be to proceed with the inquiry that has already been promised, which is specifically to look into part 2 of the Leveson inquiry. Will the noble and learned Lord confirm that that could still be implemented, because that could be very germane to what we are discussing today?

There is a third issue that we need to look at. On one hand, a lot of the problems that have been caused here are to do with the way in which the corporate veil hides individual actions in a way that would be inappropriate in the broadcasting area. This issue is really about control of media organisations. This is not a battle for the control of a particular broadcasting entity called Sky News; it is really a battle between old media and new media. At the heart of that lies control of personal data, in which there is considerable interest and investment being made. It is about data power—the power to know who is watching what and what their interests are will be more important as competition increases. We are talking about battles between the organisations concerned in this merger and organisations such as Google and Facebook. Does the noble and learned Lord believe that the CMA has the powers to investigate this aspect of media plurality? Without knowing where the data sources and how they are being used, it will be difficult for it properly to assess the impact on media power going forward? I look forward to hearing from him.

[Lord McNally (LD)]

My Lords, like the noble Lord, I welcome the Statement and the courtesy and openness with which the Secretary of State has approached her responsibilities. That is why I find it extraordinary that, having emphasised and carried out her duties to Parliament so assiduously, it could even be suggested that she should make a decision during an eight-week gap between Parliament rising now and returning on an issue that has been before her, regulators and Parliament for years. That would be an absurd assault on parliamentary dignity and responsibility, and I strongly urge her not to follow that road.

Part of the problem is the siloed nature of the decision, when what is needed, as the noble Lord said, is a holistic judgment about the fitness of this takeover. But that is how it has been played. The problem is also the siloed nature of modern business structures. Various parts of the structures can clear part of the siloed questions when we all know, as I have said, what the web is and that the spider is at the centre of that web.

I also press the Minister on whether this could lead to the second stage of Leveson and on the point made right at the end. I remember a few years ago somebody buying a canal and everybody thought what an absurd price he had paid for a canal—the age of canals was over. Then it suddenly dawned on everybody that he had not bought a canal; he had bought miles and miles of land on either side of the canal and made a fortune as a property developer. The same is true now, as the noble Lord has said. I have often pondered what on earth niggles Murdoch that he has tried, year after year, to get 100% control of Sky. What act of vanity is this? He may be vain but he also knows where a quick buck is to be made. It occurs to me that there is ample evidence that what Sky has is a database of some 13 million people, which could become increasingly valuable in the data battles ahead. I wonder whether the Secretary of State has asked the Information Commissioner’s advice on this aspect of the takeover and on how it fits into other legislation that we are considering. This is a foreign bid for a British database, which should give concern about how it is being handled. I go back to the friendliest of warnings: the Secretary of State would be very wrong to consider making this decision while Parliament is in recess.

[Lord Keen of Elie]

I am obliged to the noble Lords, Lord Stevenson and Lord McNally, for their observations on this matter and I appreciate their acknowledgement that the Secretary of State is endeavouring to treat this matter in as open a way as possible. Given the quasi-judicial nature of the task that has been laid on her by statute—one that she cannot alter by her own whim, as it were—and bearing in mind the quasi-judicial process that we are in, it is implicit that the Secretary of State must act promptly, for the benefit of both the public and the parties interested in the proposed merger. It is in those circumstances that she has to consider the matter of timing. I appreciate the point made by the noble Lord, Lord McNally, about the dignity of this House, the other House and Parliament in general, but the Secretary of State is in a position where, because of the timing issues, the announcement is liable to be made during recess. As she has said, however, she is intent on assuring the House by way of intimation to the Speakers of both Houses when the decision is made and the nature of that decision.

The noble Lord, Lord Stevenson, referred to her decision. I reiterate that the Secretary of State has made no final decision on any matter. She has reached a preliminary view on the basis of the information before her at present.

So far as standards are concerned, further work will be done before a final decision is made. In particular, the Secretary of State will look at all the representations that have been submitted to her until Friday, which cover both media plurality and broadcasting standards. She will look at both issues before coming to a final decision. It is possible to reach an informed decision and verdict without a body. The circumstantial evidence may be compelling in itself, and all the circumstantial evidence will be taken into account.

As for the reference to the CMA, it would not be for the Secretary of State to constrain the scope of the CMA’s phase 2 investigation, and I would not suggest that any constraint should be placed on that investigation by the Secretary of State.

I hear what is said about data protection but we have to remember that personal data held by Sky, or indeed by Fox, are protected by the Data Protection Act. That applies not only to personal data but to more extensive caches of data held by Sky, so there is already a degree of protection in place.

Part 2 of Leveson was raised. No final decision has yet been made on that. Indeed, no final decision can be made until the chair of that inquiry has been consulted on the point. A statutory provision under the Inquiries Act dictates that the chair of an inquiry will be consulted before any final decision is made about the second phase of an inquiry programme, so that remains outstanding.

In these circumstances, I again commend the Secretary of State’s Statement to this House and reinforce the point that she has arrived at no final determination but will do so only after she has considered all the representations submitted to her.

--- Later in debate ---

[Lord Keen of Elie]

My Lords, regulators do not have a role in scrutinising what data are held by companies involved in mergers, but if representations are made about the issue of data, such as data-scraping or data accumulation, those are matters that the Competition and Markets Authority will take into account in arriving at any decision that it makes in the context of a phase 2 inquiry.

[Lord McNally]

Has the Information Commissioner been consulted? I did ask that question, and the noble and learned Lord did not answer.

[Lord Keen of Elie]

I am not in a position to answer that question at this time, but I shall endeavour to make inquiries and write to the noble Lord to advise him on the positon on that point. I shall place a copy of any letter in the Library.