Back room bargains should be brought into the public domain

Now that the publication of the Scott Report has put open government – or lack of it – at the top of the political agenda, let me draw your attention to another example of secretiveness in public bodies.

This isn’t quite in the same league as changing the guidelines to permit arms exports to Iraq and then denying you’d done any such thing, but it is an indication of the problems that arise when government sets out to police an industry as dynamic and competitive as the media.

The latest wave of mergers and takeovers in ITV has seen the New Labour Lord Hollick of Notting Hill and MAI clambering into bed with the defiantly Old Thatcherite Lord Stevens of Ludgate and United News & Media. It’s also seen a “dawn raid” in which Granada/ LWT bought ten per cent of Yorkshire Tyne-Tees to add to the 14 per cent it owned already.

It has also created considerable speculation (at the time of writing) about the intentions of the third of ITV’s Big Three, Michael Green’s Carlton Communications, which it is thought might mount a spoiling counter-bid for either United or MAI, conceivably a bid for Yorkshire, or, more probably, a bid for HTV in Wales or for Scottish Television.

All this activity has been prompted by the Broadcasting Bill now before the House of Lords, which will permit one company to control more than the two ITV licences currently allowed, up to a maximum of 15 per cent of total television viewing.

A very handy briefing paper produced by City solicitor Slaughter & May spells out what combinations of ITV companies would produce what shares of TV viewing: only a combination of Carlton/Central and Granada/LWT would breach the 15 per cent ceiling.

A Carlton/Central takeover of Yorkshire-Tyne Tees would produce a combined viewing share figure of 14.9 per cent; a Carlton/Central takeover of MAI’s Anglia and Meridian franchises would give 14.8 per cent.

But, as Slaughter makes clear, if Michael Green does decide to pounce on Yorkshire or MAI he faces another hurdle, laid down by the Office of Fair Trading: the undertakings given by each of the Big Three after the last round of ITV takeovers to limit themselves to a maximum of 25 per cent of UK television net advertising revenue.

Which is where the question of open government comes in. Slaughter & May implied that Carlton takeovers of Yorkshire or MAI would breach the 25 per cent ceiling, but it seemed a good idea to check. I rang the OFT. Could they tell me each ITV company’s share of NAR? No, they couldn’t, but the Independent Television Commission could, because the Commission compiled the figures. The Department of National Heritage also referred me to the ITC. But at the Commission they first said they didn’t have the figures, then they admitted that they did, but didn’t publish them.

Stephen Cooke at Slaughter & May sees nothing odd in this. He says it is customary for the OFT, when looking at other industries, to take evidence from the parties themselves as to their market shares – partly because there will often be disputes about what criteria to use in defining the market.

But few markets are like that for television airtime. All those operating in it have to be licensed by the ITC. There is an authoritative definition of what does and does not count towards NAR, and authoritative figures for market size and share, and the Commission keeps them.

I would have thought such a crucial measure of influence, administered by a statutory body like the ITC, could and should be in the public domain. Perhaps somebody ought to cry “foul” (though don’t, please, call for Lord Justice Scott).

For what it’s worth, Slaughter’s Cooke reckons Laser, which currently sells LWT, Granada, Border and Yorkshire Tyne-Tees, is just under the 25 per cent threshold. Carlton and Central between them have about 23.5 per cent share, and would have 31 per cent with Yorkshire Tyne-Tees or 38 per cent with MAI. Even the takeover of a relative tiddler like HTV would breach the limit.

The undertakings to the OFT are so broadly framed that, even if Carlton were to leave Yorkshire’s sales with Laser, or HTV’s with TSMS, it would still fall foul because the undertakings refer to “receipt” of advertising revenue and not control over the business of selling it.

Cooke reckons Carlton might be able to take over HTV, say, by renegotiating the undertaking, agreeing to leave its sales with TSMS and promising not to try to control sales policy or practice. Such ring-fencing devices have proved acceptable to the OFT in other areas.

Perhaps that’s what Carlton will do. But, given the fact that we’re not even allowed to know what any ITV company’s real NAR share is, don’t be surprised if you never discover what deals the OFT and the broadcasters eventually cook up.