Media frenzy

The media has recently had some fun with a 'silly season' story on the demise of the male newsreader, but the real issue behind the news at the moment is not who reads it, but who provides it, and – one of the shibboleths of a civilised society – ensuring the plurality and diversity of sources of information.
The Government is currently involved in a wholesale review of media legislation, a key component of which is a major review of the rules governing cross-media ownership. Last autumn the Government opened a new round of consultation specifically on this issue. The deadline for submissions has just passed and everyone involved in the industry is waiting to see what the Government is going to propose in the forthcoming communications legislation. So what will be the challenges facing the Government in deciding policy in this area?
The Government, and indeed the European Commission (EC), seem convinced that this is an area that cannot be left to pure competition rules alone, although BSkyB and News Corp beg to differ on that one. The majority view is that the principle at stake is so important that it needs the bolstering of an additional layer of specific protections. The publication of the Communications White Paper in December 2000 disappointed many, because it failed to clarify the Government's thinking in this area. It gave the impression that the topic had been filed under the 'too difficult' heading and had been effectively shelved in order to buy time and not hold up publication of the rest of the paper.
This has always been one of the trickiest areas to deal with legislatively, and if you ever felt inclined to sympathise with a government having to grapple with a difficult policy issue, then this is probably one area in which it is deserving of your sympathy.
Whatever the current problems with our railways, we do know that at least France, Germany and Japan seem to have worked out a way of getting theirs to work efficiently. Unfortunately, no one has the master blueprint for dealing with cross-media rules, and so far there are no signs that the Government has cracked the conundrum this time round. It appears to be wavering between a 'plurality test' and a 'share of voice test'.
A plurality test involves evaluating whether, in the event of a particular aggregation of media interests taking place, Joe Public would have access to a sufficient number of different sources of content controlled by different people. The kindest way to describe the Government's published thinking on this basis is 'rudimentary'. Its principle intent seems to be to propose the principle and leave all of the detail as to how it might operate to the new sector regulator elect Ofcom.
The challenge with the 'share of voice' test is to devise an objective system of evaluating the influence one particular media sector has against another. This is much broader than just a numbers game within each sector (ie audience ratings for television programmes or circulation figures for newspapers), as you need to devise an 'exchange rate' to compare share and influence across different media (ie what is 20 per cent of the national radio market worth in terms of influence compared with 20 per cent of the television market?). The Government is understandably sceptical as to whether this can be done.
Then there is the challenge of future-proofing the legislation. Cross-media ownership legislation seems to have a lifespan of about six years at most. The 1990 Broadcasting Act's principles were materially overhauled in the 1996 Broadcasting Act, and here we are six years on, looking for an even greater change. This is reflective of, among other things, the changes in the media landscape. It is amazing to be on the verge of a single ITV company when it was only just over a decade ago, under the 1990 Broadcasting Act, that the Independent Television Commission confirmed the same 15 regional fiefdoms and monopolies that comprised the old ITV structure.
At that time nobody could have guessed that, within the decade, Sky – which in 1990 was itself on a life support machine – would have achieved a market capitalisation substantially in excess of the entirety of ITV's. This is a useful warning of the problems involved in this area. The changes in the industry that brought about the changes to the rules in 1996 are as nothing compared with the changes that have taken place since 1996, even taking into account the bursting of the dotcom bubble.
But the dotcom bubble does raise the spectre of the internet over all of this. All media organisations have a major internet-linked facility. The traffic to news sites on 11 September was phenomenal. Unlike the rest of the media, there are little or no barriers to entry in the internet world, so how is the internet going to be factored in to the evaluation of a newspaper or a broadcaster's share of audience/influence in the overall media world? It would appear to be crass to ignore it when looking ahead, but at the same time it is difficult to decide how to evaluate and include it.
So, if the world is going to continue to change at this sort of pace, what hope does the Government have that it will be able to introduce rules of sufficient clarity and certainty – and also flexibility – to adapt to the changing media environment? It is currently undecided as to whether it should try to deal with the issue of flexibility in primary or secondary legislation. It is, of course, very tempting to put only the most basic principles in the primary legislation and leave all the details to the secondary legislation; but then there is the concern that the issues at stake here are so important that they should be subject to the increased level of scrutiny that they would receive as primary legislation, compared with the passing nod given to secondary legislation. If the Government leaves it to secondary legislation, there is a risk that the rules will be vulnerable to a weak government trying to shore up its political reputation and lifespan by bowing to the needs of a friendly media mogul.
There is often a feeling that much of the agonising over cross-media ownership rules are really designed to try to curb the potential reach of one man – Rupert Murdoch. Is he still the media ogre he once appeared to be? He has moved from being the sworn enemy of the Labour Party to best buddies with Tony Blair. He now seems to be concentrating his efforts outside Europe, so should we be trying to design restrictions focused on him and his aspirations? If commercial terrestrial television is drowning, whose hand will there be other than his to relieve the current problems?
Given ITV's, and in particular ITV Digital's, current woes, there is an irony overshadowing the debate on cross-media ownership rules at the moment. The EC competition regulators decided that Murdoch should not be allowed to be a one-third part of the fledgling ONdigital service. As a result of this decision, ONdigital and the Sky platform were forced to become arch competitors, with the result that the renamed ITV Digital is now regarded as being in intensive care. It is interesting to speculate just how the public's interests have been served by forcing the two platforms to be so competitive and to wonder what the financial health of ITV Digital, and therefore ITV, would be at this stage if Murdoch had been allowed to stay inside the tent.
In theory, the Government should be devising these new principles on an objective basis as pure principles in an ideal world. However, given the bad state that the media industry is in at the moment, it is hard to see how it can ignore current financial realities. If a radio station or a newspaper is so financially stricken at the moment, is it better that it should be sacrificed to the principle of plurality and allowed to go under rather than allow it to be supported by a potentially dominant media player, who is the only one with the resources and economies of scale willing or able to keep it afloat? The principle of plurality can operate only where the marketplace is sufficiently attractive to many operators.
Finally, in the background to this, lulls the spectre of the EC. Its latest statement in this area came in 2000, when it issued an opinion which is a prime example of Euro-babble. The chief decision seemed to be that plurality and diversity are good things, and therefore cross-media ownership rules are good things too, so member states should do something about them. This may seem innocuous stuff but, perhaps a little worryingly, the EU bureaucrat behind the paper was one Machiavelli. Enough said.
Michael Ridley is a partner in the technology, media and telecoms department at Denton Wilde Sapte