Three-D Issue 22: Media plurality

Jonathan HardyJonathan Hardy
University of East London

 

 

Calls for the break up of large media groups have met with little success in the UK. Official
policy has instead relaxed rules on media ownership. The widespread belief among policy makers that any remaining problems were diminishing in an expanding digital universe bolstered long-standing calls for liberalisation. So 2010-11 marked something of a reversal. Media concentration was brought back to the spotlight, first by News Corporation’s bid for BSkyB, then by the setting up of the Leveson Inquiry, which investigated the toxic fusion of media ownership, media power and political influence across the British establishment. We are still inside this critical moment and the historic opportunity it affords to redraw communications policy. But there are serious efforts underway to limit the scope of any
new measures on media plurality. An unwilling government and reluctant regulator meet powerful industry interests keen to retain as much of the status quo as possible.
The opposition Labour Party may yet link media to the wider themes of unaccountable corporate power but knows it would face the wrath of an already hostile press before a knife-edge General Election. It is up to the supporters of media reform to demand bold action and it is up to academics to contribute new thinking and approaches to tackle 21st century problems of media ownership and control.

The sorry state of media ownership policies

By the time the Conservative led-coalition government replaced New Labour in 2010 a broad policy consensus had emerged. Market mechanisms and digitalisation would deliver increasing media diversity and responsiveness to consumers. Where problems of market power remained, intervening to tackle these by means of ownership limits was neither appropriate nor effective. In place of halted steps towards a new Communications Act, government policy instead favoured business support for the creative industries, measures to curb the BBC, and action to shrink Ofcom’s resources and file down its teeth.

This course was interrupted. News Corporation’s bid for BSkyB triggered concern about an unprecedented level of concentration of media power that would occur in the supposedly pluralising media markets of digital TV and news. The bid also threw a spotlight on the arrangements for handling media mergers. The Government exploited the restrictive legal framing of the public interest test to rule out not only consideration of ‘fit and proper’ governance but also a host of other concerns about the power and behavior of Murdoch’s media empire to exercise market dominance, from ‘triple-play’ TV broadband- telephony subscriptions, to film and sports rights, to corporate cross-promotion. But it was the controversial power given to the Secretary of State that lifted the issue from the specialist policy domain to public scrutiny. When Vince Cable resigned following unguarded comments made in a sting operation conducted by the Telegraph, the Conservative Minister Jeremy Hunt was required to make the quasi-judicial decision. How could a minister in a newly elected government supported by Murdoch’s papers demonstrate sufficient impartiality? In fact, Hunt was days away from approving the deal, involving the decoupling of Sky News, when the phone hacking scandal reignited, and News Corp. withdrew.

It was that scandal and its aftermath that did most to shift the policy ground, highlighting problems of media power and returning media plurality back to prominence. The Leveson report called for a new system for measuring and addressing concentration of media ownership, but offered few concrete recommendations. However, since
then there has been a Government commissioned Ofcom consultation and report on measuring plurality, a House of Lords Communications Committee investigation, and a Department for Culture Media and Sport (DCMS) government review. On behalf of the Campaign for Press and Broadcasting Freedom (CPBF) I gave evidence to all three, but the formal proposals that have emerged so far from Ofcom and the Lords both fall far short of our calls for action. Before assessing these responses, though, it is important to consider the scale of the problems that need to be solved.

Media power problems in the digital age

With an enormously expanded range of communication services surely the problems of media ownership and control have diminished? The DCMS review thinks so, claiming that
barriers to market entry have lowered so that emerging digital markets can deliver much of the plurality needed by themselves. On the contrary, the impact of digitalisation on media industries, while profound, has been uneven. There are still barriers and advantages that favour large providers of ‘legacy’ media, as well as scale and network effects that favour new digital giants such as Google, Apple, Facebook and Twitter. There are advantages for large firms over newcomers in high-cost content creation activities like regular professional news.

While markets are volatile there are advantages for vertically integrated companies over competitors and for those who can benefit from economies of scale and scope, from factors that help to lock in consumers (such as sunk investment in equipment and contract services) and from cross-promotion and other economies of synergy. Some sectors such as news publishing are certainly threatened, creating opportunities for new entrants, but most of the latter are either undercapitalized, or advertising vehicles, or are cross-subsidised by other businesses. The trends,
evident in the US, are likely to become more apparent in the UK. News is becoming a division within large multimedia corporations who are presiding over a disinvestment of resources in newsgathering, with profound consequences for democracy.

In the UK today, three companies control some 70 per cent of daily national newspaper circulation, the five largest regional newspaper publishers control 70 per cent of circulation, just four companies have an almost 80 per cent share of the commercial radio market, while one news wholesaler, Sky, provides bulletins for the vast majority of those stations. In May 2014 Richard Desmond’s Northern and Shell agreed to sell Channel 5 for £450 million to Viacom, one of the top five global media groups. Until then, alongside Five’s channels, Desmond owns four national newspapers, celebrity magazines such as OK!
and Portland TV’s suite of adult and entertainment channels. All employees know they must cross-promote the business empire, with the anti-immigration, neoliberal editorial agendas of the Express and Daily Star informing a string of Channel Five programmes like Gypsies on Benefits and Proud.

It would be wrong to conclude that the massively increased availability of digital content of itself diminishes concern about the sources and supply of news, controls over access to films or sports, or the multiplatform share and reach of large media companies. As Ofcom has highlighted, ‘traditional media providers account for 10 of the top 15 online providers of news (eight newspaper groups plus the BBC and Sky), with the remainder predominantly being news aggregators rather than alternative sources of news’. Content supply does not equate with ‘exposure diversity’. Networked communications have transformed the capacity for messages to be exchanged, yet problems of scarcity and control remain.

Plurality policies and media reform

If markets don’t simply deliver media plurality, what should be done? Some have proposed a cap on ownership either for the total media market (variously defined), or in specific sub-sectors. Enders Analysis proposes a cap on total media market revenues of 15 per cent for any single firm. This is simple and impactful. However, calculations like Enders’ that
include publishing and computer games are problematic as they would permit significant concentrations within sub-sectors like news publishing, television and radio services before total market thresholds were met. Defining the market by revenue would also not provide a sufficiently sensitive instrument to identify problems of market and media power.

The CPBF has proposed a more compound approach that involves:

  • A total market threshold for media content services across UK television; newspapers and periodical publishing, radio and online.
  • Thresholds in key markets for news, and for media content services.
  • Powers for the regulator to carry out a public interest test when market thresholds were reached, by periodic review, and on other grounds.

The CPBF proposals, adopted by the TUC and in modified form by the Media Reform Coalition, have been described as hybrid, as they combine market caps with investigations that can result in other action than simply the break up of firms. The CPBF proposes that the public interest (PI) test, established by the Communications Act 2003, should be revised and extended. It can provide a key means of helping to secure media pluralism across converging media, and extending obligations to commercial media firms that
have a significant reach and influence. The proposals are guided by a key principle: for media that serve public audiences, with size and reach come responsibilities. Providers with significant market share should meet requirements and obligations to safeguard
communication rights.

Fixed caps alone are regarded as too restrictive and cumbersome in rapidly changing markets. The CPBF agrees, and proposes that market share should serve as a guide for triggering investigations that would consider plurality concerns as they arise across local, national and supranational media markets. Firms with a large share in news and other media markets should have to meet public interest requirements or face possible divestment. At the light end such requirements would include compliance with relevant industry codes of conduct, measures to safeguard editorial independence and prevent editors being sacked at the whim of owners; at the stronger end they would include undertakings to ensure greater plurality, for instance by sharing resources with other suppliers or community users. A news organisation might have public duties to sustain investment in newsgathering or meet undertakings to pool and share resources with other media providers where this benefits pluralism. At the stronger end too would be requirements to establish new forms of public governance. The maximum market share for privately owned media in key markets should be 30 per cent, the CPBF argues. Above that, the company would either need to divest or reorganise the service to comply with public interest requirements – for instance by establishing a public trust or community enterprise.

We now have responses to these proposals. The Lords Communications Committee report on media plurality offers tentative steps forward. The Committee affirms the importance of plurality, agrees that it raises different concerns from those addressed in competition regulation, and concludes that plurality must address digital intermediaries as well as content providers. It accepts advice that the BBC should not be included in new ‘control measures’ whose purpose is to sustain plurality beyond the public service system, and it strongly rejects top-slicing the licence fee: all very welcome. The Committee’s key proposal is that Ofcom should be given a statutory responsibility to conduct plurality reviews every 4-5 years. The Secretary of State can reject Ofcom’s report and proposals but must give reasons for doing so. For ‘media transactions’ (mergers or takeovers), the power to decide should be taken away from the Secretary of State altogether. The Committee proposes that Ofcom investigates plurality, the Competition Commission investigates competition issues, and the Ofcom Board gives the final decision.

The Committee broadly rejected both fixed ownership caps or the CPBF’s ‘hybrid’ approach. It did so in part on the politically pragmatic grounds that there is a lack of consensus on public interest obligations across industry. In fact, the CPBF proposals anticipate and accommodate such differences. However, the opposition to even Leveson-compliant self-regulation from amongst powerful commercial media may have been enough to convince the Committee to duck the challenge. Ownership caps also contravene committee’s stated principle that ‘the assessment of plurality should drive the decision about which remedy or intervention is appropriate, not the other way around’. Yet the rejection of caps is highly problematic.

To be clear, a system without caps could work. The Committee recommends that Parliament lays down in statute ‘narrative’ guidelines on what constitutes sufficient pluralism for Ofcom to follow. The problem is that the approach proposed is highly discretionary, rules out divestment in all but ‘exceptional’ circumstances, and lacks publicly accountable safeguards. Thresholds for action and caps based on market share, audience share or other measurements have limitations and should not be the only route to action but they do provide a level of transparency and certainty for citizens and market players alike. That contrasts with the real risks of opaque deal-making, or worse protracted litigation, between industry players, regulators and government. After decades of inaction it is time to move to a system that can instill public confidence. One requirement for that is to bring the public properly into regulation, something the CPBF advocated, but the report entirely ignores. Ofcom should be required to have regard for evidence of ‘significant public concern’ and to initiate pubic interest tests in response as one of the triggers for action. Public involvement has been the vital missing component in communications regulation;
public concern needs to be placed at the heart of democratic media policy-making.

The other major problem concerns scope. In future, the Lords Committee and Ofcom both argue, plurality policy ‘should be limited to the activities of media enterprises engaged in news and current affairs content’. Everyone agrees that plurality matters most in news. Many of the academics and indeed campaigners support this as focusing on what is simple,
do-able and may have the best chance of tangible results. It is a strong case, but there are problems. Shrinking plurality to news would narrow action even beyond the scope of the
current public interest test, which includes the quality and range of broadcasting services. We must ask: does supply across the range of commercial communication content and services involve problems of control, editorial influence, content diversity, and access? Would it matter for media plurality if 21st Century Fox bought the 49 per cent of BSkyB that Murdoch does not own? The CPBF believes it would, and will continue to call for a much broader pluralism policy capable of addressing when media power and market power work together to the detriment of entertainment, sports, culture, content and communications services as well as news.

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An expanded version of this piece appears in Granville Williams (ed) (2014), Big Media & Internet Titans, London: Campaign for Press and Broadcasting Freedom. £9.99
Available from: www.cpbf.org.uk
Jonathan Hardy’s new book Critical Political Economy of the Media is now available from Routledge: http://www.routledge.com/books/details/9780415544849/

Endnotes
1. Leveson Inquiry (2012) An inquiry in the culture, practices and ethics of the press, Available online: http://www.officialdocuments.gov.uk/document/hc1213/hc07/0780/

2. House of Lords Communications Committee (2014) Media Plurality, HL Paper 120. Available at http://www.publications.parliament.uk/pa/ld201314/ldselect/ldcomm/120/12002.htm (accessed 27 April 2014).
Department for Culture Media and Sport (2013) Media Ownership and Plurality: Consultation Document. Avaialble at https://www.gov.uk/government/consultations/media-ownership-and-plurality (accessed 27 April 2014).

3. McChesney, R. (2013) Digital Disconnect, New York: The New Press.

4. Arsenault, A. and Castells, M (2008) ‘The Structure and Dynamics of Global Multi-Media Business Networks’, International Journal of Communication 2: 707-748.

5. Fenton, N (ed.) (2009) New media, old news: journalism & democracy in the digital age, London: Sage.
McChesney, R. and V. Pickard (eds) (2011) Will the last reporter please turn out the lights, New York: The New Press.
Pew Research Centre Project for Excellence in Journalism (2013) The State of the News Media 2013, available at http://stateofthemedia.org/2013 (Accessed 10 April 2013)

6. Ofcom (2010) Report on public interest test on the proposed acquisition of British Sky Broadcasting Group plc by News Corporation, London: Ofcom. p13.

7. House of Lords Communications Committee report on Media Plurality, p.13

 

Posted by Auguste Janutaite