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Should Jeremy Hunt give up his powers to intervene?

Robert Peston | 16:53 UK time, Monday, 4 April 2011

I was slightly remiss in my coverage of the green light given by the Culture Secretary Jeremy Hunt to News Corporation’s plan to buy British Sky Broadcasting, in failing to highlight the following statement by the Office of Fair Trading:

“The OFT also advises the Secretary of State that the amendments to the Revised UIL (undertakings in lieu) do not address the essential structural limitation identified in the report, that the UIL offered are unlikely to be practically and financially viable over the long term”.

Culture Secretary Jeremy Hunt

 

If you’ve read this far, you are probably scratching your head: I had better translate.

The competition watchdog was advising Jeremy Hunt that the conditions he is imposing on News Corporation - which are designed to maintain the independence and distinctiveness of Sky News - are unlikely to be effective for more than seven-to-ten years.

Or to put it another way, if News Corp succeeds in buying BSkyB, and if then News Corp does as ordered and floats off Sky News into a new stock-market listed company - which would be 39% owned by News Corp but would have its own board, independent chairman and independent editorial committee - that would preserve Sky News as a distinctive voice in news, more-or-less separate from Rupert Murdoch’s News Corp until around 2020.

But after that, according to the OFT, all bets are off. Sky News could then become completely subsumed into the Murdoch's sprawling news empire, which in the UK includes ownership of the Sun, the Times, the News of the World, and the Sunday Times, inter alia.

So if preserving the autonomy of Sky News is the sine qua non of adequate media plurality in the UK - which is what Mr Hunt has acknowledged - then media plurality (or a sufficient diversity of news providers) would be in jeopardy before this year’s school entrants are sitting their GCSEs.

Now, in the context of the longevity of the brands that have dominated news in the UK throughout the decades of mass media - like the Times, the Sun, ITN, the Telegraph, Mirror, Guardian, Mail and BBC - that doesn’t seem far off.

But it does seem like an eternity away at a time when the technology for distributing news and the business models of news providers are changing at lightspeed and in unpredictable ways (a big hello to the iPad, online paywalls and Twitter).

Either way, the impermanence of the shackles or undertakings in lieu put on News Corp - as perceived by the OFT - offers the best hope for opponents of the takeover, such as BT and the owners of the Telegraph, Mail, Mirror, Guardian and so on, that the courts could frustrate or delay the deal.

So as and when Mr Hunt comes to a final view on all this, having reviewed the submissions he has received during last month’s consultation, what could he do to protect himself from judicial review?

Well he could adopt a recommendation made to him by Ofcom, the media regulator, that would give new powers to Ofcom to initiate investigations of the media industry as and when it believes that plurality is under threat, or when it perceives there may be inadequate diversity of life-forms in the news jungle.

Right now Ofcom can only conduct such a review when asked to do so by the culture secretary in the context of a takeover bid. But quite apart from what you might call the Murdoch issue, the technological revolution in news may well make it sensible - for the health of democracy - for Ofcom to be permanently and continuously scrutinising the health of the ecosystem in news (couldn’t resist the management-speak jargon - sorry).

Rupert Murdoch

 

There is one other thing Mr Hunt could do to reassure those who fear that the big media beasts, such as Rupert Murdoch, will always get their way, because governments live in terror of alienating and upsetting them.

The culture secretary could announce that when it comes to the final adjudication on media plurality issues, he and his successors will be castrated - that he plans to adopt the competition law model, where the regulator’s word is final, and where politicians are wholly removed from the decision-making process.

It is something he has been thinking about, although he does not have a settled view on it.

If he were to give up his role as judge in media plurality cases, that could increase public confidence that verdicts on whether to allow the expansionist ambitions of any particular media mogul would be taken without the risk of a minister’s judgement being tainted by fears of said mogul exacting his or her revenge in the columns of the Daily Bugle.

Apart from anything else, I do not believe that Mr Hunt, or indeed the prime minister, relish being widely characterised as the lapdogs of Mr Murdoch, however far from the truth they may feel that characterisation to be.

Even so, although the depoliticisation of media plurality decisions is a seductive idea, there is a problem with handing that baby over to Ofcom, in all its pink and burping beauty. Media plurality is a young legal construct, invented by the last government, and no one is quite clear exactly what it means.

Also, if media plurality is essentially about conditions in the media that are essential for healthy, lively democracy and culture, it may be quite tricky to argue that the judgement of our elected representatives has no part to play.

Comments

  • Comment number 1.

    RP wrote: ...where politicians are wholly removed from the decision-making process.
    .....if media plurality is essentially about conditions in the media that are essential for healthy, lively democracy and culture, it may be quite tricky to argue that the judgement of our elected representatives has no part to play.

    ---------------------------------------------------

    I think you have this completely reversed! Politicians must never be in fear of said mogul exacting his or her revenge in the columns of the Daily Bugle.

    The same goes for all those scientific advisory committees that politicians ignore when the independent advice does not fit in with party dogma.

  • Comment number 2.

    Are we sure all this is not beyond Mr Hunt's view on media life. Is he tempted to depoliticise the decision by fear of Murdoch and a judicial review. It will be very difficult to convince anyone of his independence unless he flies in the face of Murdoch and rules against him. Is this another issue where Cameron will have to be more hands on?

  • Comment number 3.

    I am pleased you translated because the OFT statement is not exactly written in plain English.

    But lets take this translation a little further.

    OFT are concerned that the undertakings may not be a practical response in 7-10 years time to deal with preserving media plurality.

    Why?

    Because they have no idea what the news industry will look like in 7-10 years time. That is not a criticism because no one else knows either.

    So Hunt is being asked to refuse permission for the Sky deal on the basis that the solution to preserving media plurality might not be good enough in 10 years if the industry develops in ways that are not known, with competitors (or lack of competitors) that cannot be anticipated by anyone, that may (or may not) have a market share that is significant, with editorial policies which can not be known at this stage (because we do not know if there will be any new competitors never mind who).

    And Hunt is being asked to make policy on this basis? Maybe I have missed something but this is just plain daft.

  • Comment number 4.

    The OFT are merely stating the obvious.

    However you slice the proposal you can see in due time Sky News being absorbed back into Murdoch's empire.

    In short, Hunt's decision is a fudge.

    The media empire of Mr. Murdoch is too big in both in both printed and broadcast material to be under one management.

  • Comment number 5.

    Justin150. Yes you have missed something. You are right the structure of News Media may have changed beyond all recognition, but if Sky News believes that it would be swallowed up in 2020 it would affect its identity, and development in the intervening years. It would become even more of a bit player reducing plurality.

    There are those who might believe that plurality should be left to market forces, but the volatility of public perceptions would indicate that a straight forward market mechanism may not be for the best in the long run.

  • Comment number 6.

    The spun-off entity will be effectively controlled by Rupert Murdoch in any case, because Sky News will necessarily be operationally intergrated with Sky's other programming, and because Murdoch's 39% will make him the dominant owner in any case. On the other hand, this is much the case already.

    As discussed, the overarching concern is that any minister has a conflict of interest in making a decision of this kind due to the reliance of politicians on the press, so even if Hunt is making a decision for the right reasons, he will never be able to make a pro-Murdoch decision without a large proportion of the population assuming bad faith. So yes, media plurality issues should be decided independently, by the regulator, in the same was as competition issues.

  • Comment number 7.

    "If you’ve read this far, you are probably scratching your head"

    I had actually fallen asleep so I have no comment to make...

  • Comment number 8.

    Well, it seems the the 80-year old Rupert Murdoch will get his way. He alway does, doesn't he?
    Never mine, when he eventually departs News Corp, there will come (for better or worse) significant changes to the way the group is structured.
    He's been a micromanager. Not bad for a guy who started with single newspaper in Adelaide, and now micro-managing one of the world’s biggest and most powerful media companies.
    Rupert has secured his family’s voting control of the group, which stands at about 40%. With the planned acquisition of daughter Elisabeth’s Shine Group for $670M, he has ensured that 3 of his kids will be on the News Corp board.
    James Murdoch is the heir apparent. Despite speculation that Elisabeth was being brought back within the News Corp fold to compete for the job with James, she is said to have no desire for it.
    If all goes according to Rupert’s plans, he will remain Chairman and CEO of News for some time to come – long enough to ensure a seamless succession, but hopefully not long enough to see the print medium deteriorate.
    Murdoch has built an empire. He’s never been particular concerned about shareholder returns, but has been driven by ambition for a global media conglomerate.
    In spite of the family voting power, it can’t be taken for granted that the market or the company will passively accept a simple transfer of power within the family.
    James is assembling the kind of CV that would provide the credibility to defuse resistance. He is chairman of News Corp’s European and Asian operations & appears to have pulled off a major coup with the acquisition of the non-News shareholdings in BSkyB.
    What he doesn’t have, and needs to have, is experience within the heart of News Corp, its Fox film and television businesses in the US. An attempt to provide James’ older brother Lachlan (the previous heir-apparent) with that experience ended in a fued between Lachlan and the powerful head of the Fox businesses, Roger Ailes, ended with Lachlan leaving the company.
    If James is deemed under-qualified, there will be tension between the family and other shareholders, and perhaps within the board and senior management, if the family attempts to dictate the succession. James has to be given the opportunity to demonstrate his ability to manage and compete with the corporate dog-eat-dogs in the US if there is to be a seamless succession.
    Whether it is James or someone else who succeeds Rupert, it is likely that News Corp will be transformed.
    The influence of newspapers is diminishing in the digital age, along with their profitability, and this may be the family Waterloo. James does not have any meaningful hands-on experience in newspapers and may not share dad's passion for print, a passion that ate up The Wall Street Journal and propped up The New York Post.
    After Rupert, whomever succeeds him, there is likely to be a significant restructuring, focus on its global and integrated film and TV businesses, with loss-making print media businesses eventually be sold or closed.
    As for Jeremy Hunt, doesn't matter; it's the nsture of the undustry that matters;
    for News Corp, life after Rupert will never be the same...

  • Comment number 9.

    Murdoch has a simple mantra. - He simply wants to control what he can.
    The problem with this idea is that it simply does not fit in a changing world.
    There will be new media where he will have to play catchup. Serially.
    That will not fit his funding model of using retained profits to buy up competition.
    The competition will come from just about anywhere. Unseen.
    But that will not stop the likes of Hunt simply toadying up to him.
    Expected by both of them and me.

  • Comment number 10.

    'Media plurality is a young legal construct, invented by the last government, and no one is quite clear exactly what it means.'
    ...............
    It 'means' the bungling botching Labour Party has been there meddling up another mess!

    Sometimes following on from the mess left by a mess in the form of the last labour govt is an advantage to the incoming new govt ... the non-transparent vague regulation and competition mess that Mr Hunt inherited ... has given him a completely free hand to intervene and/or pass the buck; as circumstances arise and/or suit his political agenda.

    Cynics might say that the political objective is to stand back and allow a covert rabid right wing media beast to be created here ... to offset the poltical effects of the neo-liberalised left leaning BBC state media monopoly.

    Well I must naturally be a cynic ... but this BBC/Sky News siutation is, IMO, unfair for the likes of ITV, C4 as more UK competition is needed here without the Culture Secretary hiding behind EU law when it suits him in terms of feeble advice from e.g. Ofcom.

    Another situation where the purpose and duties and powers of a govt Minister do not match the needs of the country... in terms of the Minister being required by law to examine ... Is their sufficient competition in the industry and do/will any vested interests control too much of the sector?

    Some basic questions and issues here are being continually ignored ... Why?

  • Comment number 11.

    Hands up all those who no longer buy newspapers. Well, I for one have not bought one for 5 years. There is easily enough information on t'net without having to be told what to think by megalomaniac press barons.

  • Comment number 12.

    This is what Rupert Murdoch said to his biographer Thomas Kiernan. It was quoted in the last Private Eye and is verifiable all over the web:

    'You tell these bloody politicians whatever they want to hear, and once the deal is done you don't worry about it. They're not going to chase after you later if they suddenly decide what you said wasn't what they wanted to hear. Otherwise they're made to look bad, and they can't abide that. So they just stick their heads up their asses and wait for the blow to pass'

    Here is one of many sources:

    http://www.corporatewatch.org/?lid=359

  • Comment number 13.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 14.

    6. At 19:03pm on 4th Apr 2011, Westmorlandia wrote:
    The spun-off entity will be effectively controlled by Rupert Murdoch in any case, because Sky News will necessarily be operationally intergrated with Sky's other programming, and because Murdoch's 39% will make him the dominant owner in any case. On the other hand, this is much the case already.

    ==========================

    You are wrong in this, check the schedules and look for any Sky News on any of the other Sky channels, look hard, because they isn't any - it is a stand alone as their normal channels have no news whatsoever on them.
    Broadcast onto the satellite network is already done and needs no additional costs.

    What the OFT report is acknowledging is that Sky News loses money - it has never made a profit and is unlikley to make a profit in the long run.
    Therefore as a standalone company is extremely unlikely to last the course until 2020 without significant shareholder subsidies in the form of repeated capital injections. Even if Sky were to offer free carriage to it , it will not be profitable.

    Far from controlling the media Murdoch needs Sky (the company) to bolster flagging profitability from his core operations of news. He does not want Sky for Sky News, he might be attached to it emotionally (he at least is a news man, not sure about the offspring) but as a business it is the least important part of the whole enterprise hence the willingness to sacrifice it on a nominal altar to secure the real prize - the footie revenues.

    No doubt Murdoch will be quite happy if the report is accepted and he can watch SkyNews PLC collapse and be snapped back up at a bargain price by BSkyB to maintain a plurality of media news to balance the BBC.

  • Comment number 15.

    Robert - I think if we have concerns about media plurality we should begin by looking at the position of the BBC. If ever there was an organisation with an agenda you are working for it, and we have to pay a tax on TVs whether we like it or not.

    At least I don't have to pay for Sky if I don't watch it.

  • Comment number 16.

    Sycophancy is a depressing spectacle to behold, generally. It also usually ends up having a seriously negative effect on its offerer, but oddly sometimes on the object too.

    Now, I don't know whether the "persona" of the BBC is afflicted by this discomposure towards anyone, but I personally would forgive someone who thought it was...


  • Comment number 17.

    3. At 17:49pm on 4th Apr 2011, Justin150 wrote:

    > they have no idea what the news industry will look like in 7-10
    > years time. That is not a criticism because no one else knows either.

    Actually, if the deal is allowed, we do know what the news industry will look like in 7-10 years. It will be dominated by the Murdoch family, and our culture will be represented by The Sun. Imagine that!

    Maybe there are Sun readers here today - it's (almost) nothing to be ashamed of!

  • Comment number 18.

    @ 15. At 20:51pm on 4th Apr 2011, not_Shakespeare wrote:

    > Robert - I think if we have concerns about media plurality we
    > should begin by looking at the position of the BBC. If ever there
    > was an organisation with an agenda you are working for it

    Yes. The BBC's agenda is to enrich people's lives with programmes and services that inform, educate and entertain. Murdoch's agenda is to provide 600 channels but you have to pay for it.

  • Comment number 19.

    15. At 20:51pm on 4th Apr 2011, not_Shakespeare wrote:
    Robert - I think if we have concerns about media plurality we should begin by looking at the position of the BBC. If ever there was an organisation with an agenda you are working for it, and we have to pay a tax on TVs whether we like it or not.

    At least I don't have to pay for Sky if I don't watch it.

    ________________________________________________________________
    But is it really so? The very issue with monopoly is it's capacity of creating “Catch 22” situation (and one might remember that the meaning of this phrase is explained in the book twice). Namely, you either pay for the product with the “monopoly rent” included in the price. This rent might be monetary, but it might be also expressed in Shannon entropy increment (one can rant on this rent as so many do, but it hardly moves the agenda any further)... This rent might as well be expressed in breadth of your social network, (your sense of belonging to switch to a softer language). These are not trivial issues. The parameters above, if considered for a peasant of medieval village, would probably be closer to maximum (full information, breadth of social network close to the size of the network itself – except, maybe, for a customary village idiot)... So either you pay this rent in any of these aforementioned forms or you pay again while not subscribing; now in a form of exorbitant price of information from alternative sources, even stricter insulation from even more of the network's nods... At a most general level, if we are after the society that implies crises as a way of checking direction and watertightness of the vessel (and the man in question seems to be one of the main exponents of this thesis), than we have to accept, that media empires, mining holdings, financial networks of broadest scope have to collapse from time to time. It is an absolutely unwarranted supposition (if we stick to science) that the social system will emerge better from this purgatory, but that's the logic of evolutionist philosophy behind this movement. In this sense we had a “very bad crisis”. So, to finish this transparent rhetoric, the ideal propagated and the strategy pursued seem to point N-S.

  • Comment number 20.

    So the BBC says Murdoch is too powerful? Don't make me laugh! The BBc currently has 8 national TV stations, 11 national radio stations and 48 local radio stations. Add to that an extremely powerful website and aa budget of £3 billion per annum and you have the real monoploy problem in British broadcasting.

    As for the newspaper business it's fading fast, within ten years all you'll be able to get in physical form is the free rags they give away in London.

  • Comment number 21.

    "Yes. The BBC's agenda is to enrich people's lives with programmes and services that inform, educate and entertain."

    No, that's their stated mission. Their agenda is another matter, and if you don't know what that is I suggest you read a little more widely.

  • Comment number 22.

    This really is bordering obsession now Robert

    Plus seeing that the BBC is after all the leftwing mirror image of Sky, allowing them to keep control merely maintains the status quo surely?

  • Comment number 23.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 24.

    Like his predecessor - the first baron of "Fleet Street" … Beaverbrook (Max Aitken) - are power and glory boys, they surface about every fifty years or so.

    They are all “one offs” so no need to worry.

    Eyes should be turned to who is controlling what will become the news mediums communication networks. This has only just started with some ISP’s stating that they will/could (if paid enough money) “profile” certain businesses (like the BBC iPlayer) to give it precedence over other traffic, just like they’ve done in the other direction to peer-to-peer networks on the back little else other than roomers of copyright issues.

    It’s this issue that’s being missed and before you know it some minor seemingly insignificant legislation regarding network traffic will give you access only to what the chosen few have decided.

    All the groundwork for this is already in place but seems to have been missed, especially by journalists and its happening in real time all over the world.

    The free and open internet won’t be for much longer… its being dismantled as I type by the large international companies. Google was the fist to go prioritising who’s paid it the most money so as to appear at the top of their searches.

    I haven’t brought a newspaper for over thirty years since most became “comics”, television is now in the same ballpark. All my info comes from the net but I see it being corrupted now almost by the day.

    Make no mistake; in a few years time terrestrial television will be no more, your TV will be connected directly to the internet. Freeview will be only a memory… think on - who will control this?

  • Comment number 25.

    Why on earth did the commission not just say "No...too big..."?

    Its obviously the right thing to have done.

  • Comment number 26.

    "Apart from anything else, I do not believe that Mr Hunt, or indeed the prime minister, relish being widely characterised as the lapdogs of Mr Murdoch, however far from the truth they may feel that characterisation to be."

    Whether it is true or not Cameron and Hunt have created the strong impression that the government accepts instructions from Murdoch in return for editorial support. Political integrity like justice must not only be done but seen to be done.

    Using your media empire to deliver votes in return for political favours is indistinguishable from handing over cash for political favours. The integrity of government is critically damaged if it allows even a suspicion of it to arise.

  • Comment number 27.

    As each day passes we seem to have more and more evidence that we have a plutocracy rather than democracy. It also comfirms my belief that party polictical funding should be dropped in favour of a central pot from which everyone gets a fair and even cut.

  • Comment number 28.

    If the competition authorities / ofcom, are given the brief to review "media plurality" then the BBC has to come into the mix.

  • Comment number 29.

    Corporate Fascism!

    Maybe Hunt could end up as CEO in 2020?

  • Comment number 30.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 31.

    Your perspective is laughable.

    So our elected policians should not have a say in matters that the BBC (or you, at least) clearly think will affect our society. No, we don't elect them for that. Instead such important decisions should be handed to unelected officials. Because unelected officials are cut above, uncorruptable, have no agenda of their own.

    Mmm. Sounds mighty suspicious to me. To me it sounds more like those opposing the deal know more about where the regulator's bodies are buried than they know where Murdoch's are buried so can have greater - maybe even undue - influence over the regulator.

    No, we have system of governance which requires difficult decisions to be made by an elected official not an unelected one.

  • Comment number 32.

    Robert - although there are a number of individuals, who for a variety of self serving reasons will go on the record to support Murdoch's acquisition. There are very few who would wish to do so under oath. David Cameron and his 'Boy Wonder', Jeremy Hunt have done there best to brush the issues of media plurailty under the carpet but guys the elephant is still in the room. No amount of spin will get away from the fact that the vast majority of the electorate does not want this deal.

 

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