The regulation risk

02 May 2018  |  Raymond Snoddy 
The regulation risk

There is a danger that regulators could find legitimate domestic reasons to block deals in the newspaper and TV industries while missing the bigger global picture, writes Raymond Snoddy

It doesn’t seem natural to feel too much sympathy for regulators of the media. After all they don’t make any television programmes or face the daily difficulties of running newspapers in the current environment.

As a generalisation, however, the Office of Communications - Ofcom - has done a decent, rational job since it replaced a multitude of predecessors in helping to maintain media standards and a plurality of views.

The Competition and Markets Authority (CMA), or more precisely its predecessors, have had a less sure grip of media issues, sometimes appearing to abandon common sense in favour of a rigid legalism.

There have been clear examples in the past of drawing markets too narrowly, and above all too domestically, either unwilling or unable to take note of the vast forces flowing from Silicon Valley encompassing the entire world of communications.

Sometimes the words “Titanic” and “orchestra” inevitably come to mind.

Over the next six weeks or so we are going to get a revealing glimpse of the latest state of mind on media plurality and editorial independence in the CMA, Ofcom and from Culture Secretary Matt Hancock who calls most of the final shots in these areas.

Hancock has asked both Ofcom and the CMA to look at the £127 million Trinity-Express merger and make recommendations by the end of the month.

The Culture Secretary must then decide whether to unleash full investigations into the merger, which will delay matters for months.

Moving across his desk has also been the report from the CMA into Rupert Murdoch’s attempt to take control of the 61 per cent stake in the Sky group he does not already own.

Hancock has until 13 June to make up his mind.

By then we should be able to have an almost experimental insight into the state of media regulation in the UK, despite associated complexities and many noises off.

And the big question hanging in the air is the extent to which current regulation and regulators can cope, or are even equipped legislatively, to cope with FANG - Facebook, Amazon, Netflix and Google.

The question is unlikely to go away for the foreseeable future in the face of the great disruption that is leading towards the extinction of corporate species and associated consolidations, worse even in retail than in the media.

The attempted merger of Trinity Mirror and the Daily Express group to form the proposed Reach - hope nobody paid too much for the rebranding - may only be the latest in the industry.

It is of course a sign of weakness, a coming together for comfort and the usual cost-cutting. It is also, in this case, a particularly tricky issue that also encompasses political allegiances.

It pits Labour-supporting against Conservative-supporting newspapers, Brexit against Remain, although, in the case of at least one of the titles involved, an interest in celebrity gossip and sport over-rides such weighty matters.

The management of the proposed merged company has given assurances of the independence of its editors and a continuing adherence to their current political approaches.

We can probably believe the assurances because it would make little business sense to muck about with the traditional loyalties of readers, even in the current fluid political landscape.

In fact the merger could introduce greater political stability after the odyssey of Richard Desmond whose Daily Express veered between Tory, Labour and UKIP as the fancy took him.

Many will welcome the promise by new editor Gary Jones to make the Daily Express a less Islamophobic title.

The difficulty will be in finding a way to turn intentions into firm commitments.

In turns of media ownership the merger will not exactly wipe out competition in the popular and mid sections of the national newspaper market. The Sun will continue to battle the popular titles and the mighty Daily Mail - which itself could take a lesson from the new Express editor on matters of xenophobia - will continue the battle in the mid-market.

For good or ill, because of the number of titles involved, including all the local and regional papers, and the overall scale, Hancock may well decide there should be a more detailed look.

The separate Sky issue is, of course, far more complicated and multi-layered because of the multi-billion dollar manoeuvres by Disney and then Comcast that have followed the apparently “simple” matter of a £12 billion deal in which Murdoch’s 21st Century Fox would seek to own the entire company.

The CMA recommendation that has gone to Hancock has not been published, although the authority issued a preliminary finding warning that the proposed takeover would result in too much media control in the UK resting in Murdoch’s hands.

Presumably the sticking point is Sky News and whether the undertakings given have been acceptable.

There is even an offer on the table from Disney, owner of ABC, to buy Sky News while Sky itself has offered to run the channel with an independent board and with funds for 15 years.

Whether the CMA has the authority to take into account other planned bids even though the Sky board can no longer support the Murdoch offer in the presence of higher bids, is a moot point.

Hancock’s words have obviously been carefully chosen - that he will reach a decision on whether the merger is, or is not in the public interest “taking into account the specified public interest considerations of media plurality and genuine commitment to broadcasting standards.”

Note the word “genuine", but if the Culture Secretary is referring to Sky News then there is no evidence to suggest it has ever been run without a commitment to genuine broadcast standards.

The obvious danger is that the CMA, Ofcom and Culture Secretaries could find legitimate domestic reasons to block necessary deals in the newspaper and television industries while missing the much bigger picture of the FANGS.

Perhaps all involved should read John Naughton’s Observer article at the weekend which highlights the fact that Facebook is a company the like of which has never been seen before - not just a national monopoly but a global monopoly and one destined to leave national regulators trailing in its wake.

Apart from its monopolist dominance, Naughton was emphasising the murderous impact of such a monopoly in stirring up sectarian hatred in developing countries such as Myanmar and Sri Lanka.

But that, however serious, has to be a story for another day.

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