Thanks to frantic politicking in the House of Lords, the 2003 Communications Act endorsed, but didn’t quantify, the idea of a “sufficient plurality” among news organisations in the UK. In the wake of the deal to spin off Sky News from News Corporation last week, have we now got a definition?
In part, perhaps. Last week, Jeremy Hunt appeared to map out something entirely new: the beginnings of a cross-media regulatory regime specifically designed to maintain pluralism in British media markets.
Ofcom’s initial report on the proposed merger carried research on viewers’ preferred sources of news — across print, online, TV and radio. News Corp’s newspapers and web sites were cited as a “main” or “regular” source of news by 12% of the population. Across online and broadcast, content produced by Sky News was named as a “main” or “regular” source by 10%.
An unfettered merger, therefore, would have resulted in News/Sky becoming the “main” or “regular” source for 22% of users who get their news from the TV, radio, the web or newspapers. (On another measure used by Ofcom — minutes of news consumed per head per day — the total for News-Sky would have been 23.7%).
For Jeremy Hunt, 22% was too much. Hence the proposal, if the News-Sky merger goes ahead, to spin off Sky News and limit News Corp’s shareholding in it to current levels.
Actually, Hunt’s single-owner plurality limit is lower than 22%. From one perspective, it appears to be 16% of UK adults who describe themselves as regular news users. Here’s the maths:
News Corp’s existing audience share: 12% of the UK’s cross-media news audience (newspapers + sites)
plus:
The 3.9% of the UK’s cross-media audience attributable to News Corp’s 39% holding in Sky News. (As a whole, Sky News accounts for 10% of the UK’s cross-media audience.)
equals:
an upper limit of 15.9% for single-company cross-media news audiences in the UK, if “sufficient plurality” is to be maintained.
The flaw in this argument should be apparent. If the merger proceeds, News Corp will not control Sky News. Perhaps, then, Hunt is implicitly arguing that News Corp, with its 12% share of cross-media consumption, is as big as a commercial news organization should ever become in the UK if it is using M&A to expand.
But if 22% or 16% or 12% of the UK’s cross-media news market is too much for News Corp, the same restriction should apply to everyone else. Hence the suggestion that we’re witnessing the beginnings of a new regulatory approach.
There could be more novelty to come. Interestingly, Ofcom has floated the idea that plurality regulation might be necessary not just when companies try to merge, but when rivals leave the market and even in the wake of “steady organic growth” on the part of one competitor. (For more on this, see p15 of Ofcom’s initial report, here.)
Whether the government decides to take this approach further in the forthcoming Communications Act remains to be seen. True enough, it might involve an expansion of Ofcom’s standing bureaucracy, a prospect that won’t please Hunt.
But in other ways, ongoing regulation of cross-media plurality might result in outcomes that the government finds positive. For one thing, Hunt’s ruling casts into stark relief the huge influence of the BBC, which accounts for 37% of self-reported news consumption under Ofcom’s preferred measurement.
The argument that the BBC shouldn’t be included in any assessment of plurality (because its output is editorially independent and therefore intrinsically plural) isn’t particularly credible. In fact, it’s downright wobbly. Restricting the BBC’s huge volume of news output could become one way of encouraging diversity among commercial providers.
National newspaper publishers will bristle instinctively at the notion of more regulation. But should they be concerned about constraints it might impose? Perhaps not.
Take, for example, the notion of a three-way merger between the national newspapers of DMGT, Telegraph Group and Trinity Mirror. Outlandish? Today, yes. But in 5-10 years’ time, things could look very different. Digital economics will continue to make consolidation attractive. In the fight to be the last man standing in newsprint, scale will be vital. In the end, someone will need to take on News Corp.
If we look at the newspaper market in isolation, a roll-up like this looks aggressive. The aggregate NRS readership of these three companies (including overlaps) amounts to 16.5m, or slightly more than one-third of British newspaper readership. Given the huge cost cuts that would result from such a deal, few would instinctively describe the outcome as plural.
Yet if you look at a merger of this kind from a cross-media perspective, it doesn’t seem nearly so bad. According to Ofcom, only 11% of Britons cite DMGT/Telegraph/Trinity Mirror as a “main” or “regular” source of news in print or online. That’s less than the 12%/16% market share threshold that Hunt has created in the case of News-Sky. On this basis, a three-way merger of this kind might be approved.
Plurality regulation? The events of last week suggest that its time may have come. Lord Puttnam’s last minute victory in 2003 may have given birth to something significant.
Photo credit (pencils): Flickr CC / Nick
