'A de facto licensing of the press': Response to Media Reform recommendations

Robert Kenny
18 December 2011

The CCMR paper rightly highlights the importance of media plurality. Plurality contributes to a vibrant democratic discourse and acts as a safeguard against any one entity controlling the news agenda. However how best to measure and protect plurality is much debated, and the CCMR paper is welcome as a contribution to that discussion. That said, I believe the CCMR paper understates the current level of plurality; proposes far too low a threshold for allowable share; and suggests remedies that (in conjunction with the low threshold) would amount to a de-facto licensing of the press.

CCMR underestimates current plurality by focusing unduly on newspapers. They state: “a small group of owners in the national and regional press have a large market share, thus a limited number of people and approaches potentially dominate the media agenda”. But the latter does not follow from the former. The news agenda is not in the gift of the press – it is the collective creation of all news media, and over the years newspapers have been becoming ever less important.

Since 2000 national daily newspaper circulation has fallen by over 30%, and according to Ofcom only 6% of UK citizens now say that newspapers are their main source of national news, behind TV, radio and the internet. Moreover, even within the decreasingly important national newspaper market, there has been no increase in concentration, and there are eight newspaper groups offering their wares to the market, rather more than the six CCMR later state is the minimum number.

CCMR’s concern about the status quo may in part be based on a misreading of Ofcom’s report on the potential News acquisition of Sky. They say Ofcom “concluded that the merged company would have 51% share of the UK news market”. In fact Ofcom said that the merged company would have reach of 51%. Reach is a measure of how many people would see any news from a provider, but because consumers take news from multiple outlets, it is a very different thing from share. In fact Ofcom said that share of the merged entity would be in the range of 20-24%.

To deal with the perceived problem, CCMR suggests that there be a standing requirement for a public interest test if any player has more than a 15% share of news in any of radio, TV, newspapers, video on demand and the internet. (The basis for the 15% is that there “should be no less than six owners in a market” – in fact, a 15% threshold would mathematically guarantee at least seven owners, and in practice far more because share is never evenly distributed). This is an incredibly tight cap – three different companies have higher share of the national newspaper market than this, virtually all regional markets would have players above this, ITV exceeds it for TV news and so on. The CCMR essentially sentences the entire UK media sector (and Ofcom) to perpetual plurality tests.

In fact, the CCMR proposal may be even more extreme than this, since it seems to suggest that the plurality test should be specifically for non-public service media. In TV, such an approach would leave Sky News with virtually 100% share (once the main five PSB channels were set aside). Presumably CCMR would wish this to be reduced to 15%, perhaps by forcing audiences to watch a certain ration of Al Jazeera or Fox News each day?

It is entirely appropriate to exclude the BBC from the remedies of a plurality test, since it is a market intervention that (in part) is intended to ensure that balanced news is available. But there is no reason to discount the benefits of this intervention when assessing whether the market overall has sufficient plurality.

CCMR has a number of remedies to suggest for news organisations that are so rash as to offer products which attract more than 15% of consumers. These include loss of the right to appoint editors, a requirement to subsidise competitors, a requirement to put new business into a non-profit entity and so on. Particularly coupled with such a low threshold, this represents a drastic set of interventions, one likely to do significant damage to the already worrying economics of the news business.

Finally, CCMR says that part of Ofcom’s plurality test (for newspapers and other media) should be cultural diversity, the quality and range of content and “contribution to the public good (democratic, social and cultural)”. In essence, CCMR’s proposal amounts to the licensing of the press, or at least the majority of it, with Ofcom being forced beyond simple quantitative judgements about market concentration and into highly subjective assessments of the quality of newspaper content.

The current plurality regime can certainly be improved. For instance, it provides little clarity to market participants and has been unduly focussed on market share to the exclusion of other vital metrics such as multi-sourcing (news sources per person). However, the CCMR proposal is not the path forward – indeed, it would represent a giant step backward.

Rob Kenny has extensive experience in telecoms and media strategy, policy and transactions. Before joining Communications Chambers where he is currently a board member, Rob was MD of Human Capital, a consulting firm. Past roles include heading Strategy and/or M&A for Hongkong Telecom, Reach and Level 3 (all multi-billion dollar telcos). He was also a founder of IncubASIA, a Hong Kong based venture capital firm investing in online businesses.

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