Media rules to let Murdoch keep empire

Senior ministers have thrashed out a new media ownership policy, setting a limit of 15 per cent on the total share of the marketplace for any one owner.

The new limit, which would cap Rupert Murdoch's media empire in Britain but allow other newspaper groups to diversify into television, is due to be published in a government Green Paper, expected early next month at the latest.

A 15 per cent limit, which will be set out as a long-term objective, marks a radical departure in the way concentration of ownership in newspapers, television and radio is measured.

The Green Paper, from the Department of National Heritage, will propose the concept of a national media "cake", with a points system based on levels of ownership in broadcasting and print media to decide shares of the cake.

Ministers have rejected proposals from some national newspaper groups, which have lobbied for immediate liberalisation allowing them to own 29.9 per cent of an ITV franchise, compared with the current ceiling of 20 per cent.

But a range of other smaller but more immediate changes, aimed at easing and introducing some rationalisation in the current muddled, ad hoc system of restrictions, is expected.

The changes were agreed last week at a Cabinet sub-committee attended by Stephen Dorrell, the Secretary of State for National Heritage, Kenneth Clarke, the Chancellor, and Michael Heseltine, President of the Board of Trade. It was chaired by Tony Newton, leader of the House of Commons.

Mr Dorrell is understood to have argued for a low limit of 10 per cent, to ensure democratic diversity. Mr Clarke and Mr Heseltine wanted a much higher limit, 29 per cent and 25 per cent respectively, but finally settled for 15 per cent.

The BBC, which is Britain's largest and most dominant media organisation, outstripping Mr Murdoch in terms of "share of the national voice", is exempt from any new policy.

The exact methodology of measuring combined market shares or dominance has yet to be decided. The Heritage Department is thought to have asked a consultancy firm, the National Economic Research Association, to establish a system of points.

The British Media Industry group, (consisting of Associated Newspapers, The Guardian Media Group, Pearson and the Telegraph) has argued that the media business should be treated as a form of cake, with newspaper circulation, television viewing hours, local papers and radio included. This down-weighted radio by 50 per cent, and included the BBC.

In striking the new figure ministers have been anxious not to disadvantage domestic newspaper companies.

The concept of moving to a total media cake, however assessed, with a flexible points system, has been gaining cross-party support.

Chris Smith, Labour's heritage spokesman, told a conference last month that such an approach was attractive and had merit, but warned that "the devil was in the detail". He has been careful not to commit Labour to a specific policy or attack Mr Murdoch directly.

The warning about the difficulties in framing new rules arises because changes to something so politically sensitive might allow all sorts of unintended surprises, with lawyers able to drive a coach and horses through any new legislation.

The urgency of finding a new approach was underscored by the scramble for the new Channel 5 licence, in which it became clear there was nothing to stop Mr Murdoch expanding into terrestrial television in addition to his satellite interests through BSkyB.