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How will the government judge if a media merger should go ahead?

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Many of the media forecasts for 2009 suggest it will be a year of consolidation. Buffeted by ever colder winds of economic woe – and an even harsher financial climate than 2008 – many media companies will, the forecasters suggest, look to merge with one another, try to piggy back off one anothers resources, and sometimes even ‘bunk up’ together (most notably in the case of the Independent and Daily Mail).

But, when mergers happen, how will the government decide when it ought to intervene? And how will it make a judgment on which mergers should go ahead and which shouldn’t?

Last year the House of Lords Select Committee on Communications thought long and hard about this question, and wrote up its studiously gathered evidence, its thoughts on implications, and its recommendations, in the excellent The Ownership of News report.

The Select Committee unfashionably emphasised the importance of owners and ownership structures on journalism. This was not, they said, necessarily in terms of proprietorial interference – though that can still be the case with respect to some owners. Rupert Murdoch, for example, told the Committee he was what one might call a ‘traditional proprietor’ – meaning that he determined the position taken by some of his publications on major political issues like elections and Europe.

But ownership structures could, the Committee suggested, have an even more important influence on journalism than owners themselves – particularly on the way in which news is collected and the type of news that is published. Publicly owned companies, for example, are under more pressure to show a regular return on investment, even if this meant cutting editorial resources like newsgathering.

It was for this reason that one of their recommendations was:

that the public interest considerations for newspaper mergers and broadcasting and cross-media mergers are amended to refer specifically to a need to establish whether a merger will impact adversely on news gathering

Though it is difficult to determine how this would be evaluated or policed, it’s still a laudable principle – especially if one believes that original newsgathering is important – particularly at a local level.

Other recommendations included giving Ofcom the power to initiate a public interest test, and getting Ofcom to investigate whether newspaper mergers are in the public interest. These recommendations were based on the – quite sensible – assumption that Ofcom is probably better placed to the assess threats to the public interest in the case of media mergers than the Monopolies and Mergers Commission.

And how did the government react? Well, in response to the newsgathering recommendation it said:

we consider the current media public interest consideration, including the considerations relating to accurate presentation of news, free expression of opinion and sufficient plurality of views in newspapers, provides a sufficient basis for dealing with this issue to the extent that it may give rise to public interest concerns” (from Government Response to Ownership of News)

The equivalent of a shrug of the shoulders, let’s leave things as they are.

This response was similar to those made to the other Ownership of News recommendations – We think the current safeguards are fine thank you.

Such government responses have particular piquancy now that it looks as though local ownership rules are ‘likely to be relaxed’ (from Leigh Holmwood in Media Guardian).

If – when – they are, there will probably be a flurry of mergers and consolidation. The government, in its wisdom, will then have to make decisions without the benefit of suggestions from the House of Lords to deal with just this situation.

Written by Martin Moore

January 5th, 2009 at 4:58 pm

Posted in Uncategorized

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