Media plurality in the convergence era: the case of News Corp’s bid for BSkyB

Watching TV, browsing the Internet, reading newspapers and making phone calls with a single device is not the future anymore. Digitalisation of information has been leading to a convergence era, where traditional boundaries between media sectors have blurred. As the current UK case of News Corporation’s bid for full control of British Sky Broadcasting (BSkyB) shows, regulating the media market on the ground of pluralism of information has become a tough task. Several UK institutions – the Government, Ofcom (the independent regulator for communications industries), and, perhaps within a few days, the Competition Commission – in addition to the European Commission, are playing a key role in a case that will reshape future UK media policies.

The story

In June 2010, News Corporation – the company run by Rupert Murdoch – announced its intention to acquire the shares of the TV channel BSkyB which it does not already own, increasing its holding from the current 39.1% to a full 100%. At present, News Corp owns the largest national newspaper group in the UK – which includes The Sun, The Times and The News of the World – accounting for over a third (35.7%) of the combined daily and Sunday national newspaper circulation (figures from Ofcom’s report). Since the proposed acquisition was announced, the UK media have been in upheaval, claiming that it would create a giant company, by bringing together the largest provider of newspapers with one of the three main providers of TV news.

On 4 November, the Business Secretary, Vince Cable, decided to issue an intervention notice under the Enterprise Act of 2002. According to section 67, the Secretary of State is allowed to intervene in order to protect legitimate interests if there are “reasonable grounds for suspecting” that “a relevant merger situation has been created or that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation”. Cable therefore ordered Ofcom to submit a report examining the impact of the proposed acquisition on media plurality by 31 December.

In the meantime, the decision over the case has been passed to the Culture Secretary, Jeremy Hunt, after a political storm hit Cable when he told undercover reporters that he had “declared war” on Murdoch. Cable’s claims have been declared “totally unacceptable and inappropriate” by Downing Street and he has been stripped of all responsibility over the case.

On 21 December, the European Commission cleared the proposed acquisition under the EU Merger Regulation by stating that “the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it”.

The current scenario
Finally, on 25 January, Ofcom’s report was published and Jeremy Hunt announced that “it may be the case that the merger may operate against the public interest in media plurality” and, therefore, he still “intend[s]to refer the merger to the Competition Commission”, which would be the last step of the process. Nonetheless, he has left an open door to News Corporation by giving them a few days to offer undertakings that may address the plurality concerns and, consequently, avoid the referral to the Competition Commission.

However, this solution does not seem to be easily viable. “In order to convincingly address the concerns raised by the Ofcom report,” wrote Damian Tambini, a Senior Lecturer at the LSE, “News International would have to be quite radical. The logic is simple: if behavioural remedies are to be considered, there would have to be cast iron guarantees of impartiality, including editorial independence guarantees to safeguard agenda setting autonomy”.

Not allowed under “Legge Gasparri”

Whatever the outcome will be, Ofcom’s report – which has taken into account a huge number of submissions from many stakeholders – is clear in its conclusions: it is “reasonable to believe that the proposed acquisition may be expected to operate against the public interest since there may not be a sufficient plurality of persons with control of media enterprises providing news and current affairs to UK-wide cross media audiences”.

Drawing on research based on news sources across media platforms, the UK communication regulator states that “the proposed acquisition would see News Corp consolidate its second place in terms of news consumption (rising from 14% to 24% including wholesale news provision)”. The merger would thus create a giant news provider, second only to the BBC.

A similar result also comes from Enders Analysis, an independent media consultant. According to their research, the share of news consumption controlled by News Corporation will rise by 22,6%, a figure that “would breach the 20% threshold of the Legge Gasparri in Italy”. Therefore, the consultant believes that “the proposed transaction would not be allowed under Italy’s cross-media ownership rules”.

Assessing media power

However, according to Ofcom’s viewpoint, the definition of media plurality is not only related to the number of persons with control of media companies, but refers also to a broader “ability to influence and inform public opinion”. Within this context, the UK communication regulator draws a key distinction between external plurality – defined as “the range of opinions and views across the various groups of media enterprises” – and internal plurality – “the range of opinions and views within a group of media enterprises” – which can be found in original German constitutional law and also in the Italian regulatory framework, since the approval of the “Legge Mammì” (6 August 1990). The final aim is to find a way of measuring media power, which is a concept that goes beyond mere economic concentration and concerns the notions of citizenship and freedom of speech.

The key point, as Ofcom states, is the lack of “a single standard industry measure” within this new convergence landscape. How can media plurality be assessed, going beyond simple economic indicators based on competition and market concentration? How can pluralism of information be measured when traditional boundaries between media disappear and news provision is virtually available from many sources at the same time?

Current trends, according to the UK communication regulator, suggest that “convergent cross-media services will become increasingly important”. Whether or not Murdoch will be allowed to increase his hold over UK media, communication authorities will still be facing many challenges for a long time to come.