On 5 October 2012, Ofcom published supplementary advice to the Secretary of State for Culture, Media and Sport and the Leveson Inquiry following Ofcom’s report on the feasibility of measuring plurality of media across platforms of June 2012.
The June 2012 report followed Ofcom’s consideration of plurality in relation to the proposed NewsCorp/BSkyB transaction published in December 2010, which suggested that the existing framework for considering plurality might no longer be equipped to achieve Parliaments policy objective.
The June 2012 report made recommendations to the Government and Parliament for improving the existing framework on review of media plurality, including the introduction of periodic review of plurality. The supplementary advice contains responses to further questions by the Secretary of State relating to further thinking on the issues raised and the practical implementation of Ofcom’s recommendations.
Ofcom provided advice on the following topics:
- Timescales for periodic reviews could be fixed in statute to give a degree of certainty to stakeholders.
- Timescales for appeals are likely to be more open-ended so as to allow for an effective right of appeal, but Parliament could ensure an appropriate balance is struck with the desire for certainty and timeliness.
- The compliance stage may be inherently open-ended – some remedies may have specific deadlines, but others may involve ongoing obligations.
Effective working between periodic plurality reviews and existing merger provisions
- The so-called risk “of double jeopardy” (ie the risk that a merger is reviewed under both a merger and a periodic review, potentially with different outcomes) would be difficult to rule out completely, but the regulatory framework must be consistent to ensure that the same cause does not trigger more than one plurality review.
- Reviews should have regard to, but not be bound by, previous decisions. Periodic and merger reviews could be undertaken by different bodies coordinated by guidance or by a single body.
- Parliament should determine the appropriate decision-maker for plurality reviews. It may be appropriate for the final decision to be made by a democratically-elected decision-maker.
- A periodic review would not require an equivalent to a phase 1 merger review (the initial phase used to determine whether the review should proceed), as the review would be required by statute. A periodic review would be broadly equivalent to a phase 2 decision (a full investigation).
Review of online players
- The framework should include in a plurality review online companies with a material influence over the news presented to the public.
- No definition of “media enterprise” for periodic or plurality merger tests should be attempted.
- The “special public interest” merger cases should not be extended to apply to online players as this may stifle innovation.
- There may be a range of remedies which would be appropriate in different circumstances, including structural remedies, behaviour rules and positive interventions. Parliament should lay down the set of remedies available, and a decision-maker should decide which is appropriate in a specific set of circumstances.
Guidance on “sufficiency”
- Ofcom’s June 2012 report noted that existing public interest considerations are based on the concept of “sufficiency” of plurality, a term which is not defined.
- Some form of guidance on meaning of “sufficiency” is likely to be desirable, probably in the form of indicative ranges, with additional qualitative guidance as to how those ranges should be interpreted.
The 20/20 rule
- The 20/20 rule prohibits a newspaper group with more than 20% of national newspaper share from holding a Channel 3 licence or a stake in a Channel 3 licensee that is greater than 20%. It was put in place in 2003 to prevent an unacceptable concentration of influence among newspaper groups and Channel 3 licensees, and in its June 2012 Ofcom recommended that Parliament consider whether the rule is still required.
- Parliament’s review of the 20/20 rule may wish to consider whether the underlying issues which gave rise to its introduction still apply, and if so, whether the rule is the most effective means of addressing them.
- Ofcom’s June 2012 report concluded that it may be desirable for a plurality review to be triggered by the exit of a major player from the market or other event which dramatically alters the market (eg a change in commercial strategy of a major player).
- There are several challenges presented by trying to pinpoint which particular market exits should trigger a review. The trigger would be difficult to precisely define, and the effects of a market exit on the market would be difficult to forecast in advance.
- The only possible way to prevent an entity in financial trouble from exiting the market would be for the Government to provide a subsidy.