Media owners baulk at Government proposals

The value of television stocks slumped, Rupert Murdoch issued a veiled threat to close Today newspaper – and the Government was still accused of vague and woolly thinking.

Stephen Dorrell, the secretary of state for National Heritage, has done little to puncture the politically sensitive issue of cross-media ownership with his Green Paper “Media Ownership: The Government’s Proposals” released yesterday (Tuesday). There has been a growing demand for liberalisation but initial reaction to the paper precipitated accusations of “vagueness”.

Dorrell has stopped short of establishing a means to define both share of the total media market and what constitutes a controlling interest in individual companies, and has also left the question of appointing a regulator to oversee cross-media ownership in practice open.

Under the new plan, the Government will allow national newspaper companies with less than a 20 per cent share of total national newspaper circulation to hold TV interests which, in turn, have less than a 15 per cent share of the total UK TV market.

No single company can own more than ten per cent of the entire UK media market – and will be restricted to 20 per cent of the media market in either Scotland, Wales, Northern Ireland and each English region, or 20 per cent of any specific market sector (television, press or radio).

The Government proposes a two-pronged plan of action: swift secondary legislation will allow radio companies to own more licences; primary legislation – which will take longer to implement – will allow common ownership between newspaper groups, TV and radio companies within the proscribed limits.

“You can’t have radical change in the TV market now as the main players have been tied up,” observes Jonathan Helliwell, media analyst at James Capel. “That explains the fall in TV share prices, as we had been expecting the two-licence limit [for ITV] to be relaxed.”

If News International and Mirror Group are the big losers, the real winners are the likes of Associated Newspapers and other members of the British Media Industry Group, which have campaigned to be allowed to develop TV and radio interests. “It will have a tremendous effect in improving overall media professionalism in this country,” says Associated Newspapers chairman Sir David English.

It will also allow broadcasters the opportunity to diversify into other areas, although it does not lift the current restriction on owners of ITV companies from holding more than two regional licences. Even so, Carlton Communications chairman Michael Green welcomed the proposals. “Lifting the restrictions that prevent newspaper companies from investing in television and vice versa will stimulate competition in both markets,” he says.

It was not a view echoed in a terse statement from News International – which can see its cross-media ownership ambitions being stymied. “NI will have to consider its position with regard to loss-making newspapers which augment its percentage of the market but not its profits.”

By contrast, radio companies can look forward to the prospect of a speedy relaxation of existing restrictions limiting radio groups to no more than 20 licences, although a secondary existing limit – based on a points system which restricts a group’s market share to 15 per cent – will continue. Ralph Bernard, chief executive of radio group GWR, had some reservations. “I don’t think it adequately addresses important points such as measurement [of market share],” he says. “And I am anxious that radio doesn’t get submerged in the debate involving TV and newspaper groups.”

A number of key issues are still to be resolved. The Government needs a means to define a company’s share of the total media market but to achieve this, a company’s market share must be calculable, either by measuring audience/readership or revenues.

But once the market share within a medium is calculated, a method to translate those figures into market shares for the whole market – a “media exchange rate” – will be required. This could be based on a points system, although Dorrell doesn’t mention this.

A definition of “control” is also required to determine if a company has reached one of the thresholds triggering the regulator to consider the case. The Government proposes “somewhere between 20 and 50 per cent”, at which point the company would be deemed to control the whole operation.

Crucially, the paper makes no reference to advertising sales control – a key concern for agencies and clients. But along with other interested parties they will have until August 31 to respond to Dorrell. The new regime could be in place as early as January 1997.

Current rules under the 1990 Broadcasting Act stipulate that:

– National newspapers can hold up to 20 per cent in terrestrial television and radio and in domestic satellite TV services and then up to five per cent of any others. (BSkyB is the largest non-domestic satellite broadcaster).

– Local newspaper owners can own regional TV or local radio broadcasters where there is “no significant overlap” between the licence area and newspaper’s circulation area.

– National TV and radio are limited in their cross-holdings – to a 20 per cent stake in national newspapers and non-domestic satellite licences.

– No one can hold more than two regional or one national ITV licence or more than one national radio licence or more than 20 local radio licences.

Proposed rules under the new, market share-based system would allow:

– Newspaper groups with 20 per cent market share or less by circulation can own television broadcasters outright and vice versa. Companies below this level would be allowed to control up to 15 per cent of the total TV market (by audience share) including the control of up to two regional ITV licences.

– Newspapers above the circulation threshold would be limited to the current 20 per cent stake in either one ITV or Channel 5 licence and five per cent in further such licences.

– The same principle would apply to radio.

– Broadcasters will be able to expand to 15 per cent of total TV audience share.

– Existing limits on ownership between different means of TV delivery to be abolished.