Media: Let the feeding frenzy commence: As newspaper publishers challenge the curbs on television ownership, the Government is dithering about how to protect the public. Maggie Brown and Michael Leapman report

Whatever happened to Rupert Murdoch the overmighty bogeyman? In an extraordinary about-turn, he has been replaced in the past few weeks by Rupert Murdoch, the man whose cross- media interests are being held up as a model by nearly all media proprietors, and perhaps the Government, too.

It used to be assumed that newspapers and television were so powerful in forming opinion that their ownership had to be carefully restrained and divided; and this principle has been applied to radio, cable and satellite - which is why the 1990 Broadcasting Act specifically prevented newspapers from owning television licences outright, why British cross-media restrictions (see below) are so draconian, and why British Telecom has been held back from using its network to offer entertainment.

No one really started to challenge Eighties media orthodoxy seriously until last year. In passing the 1990 Act, Parliament was putting into law a process of exclusion that enjoyed widespread support. It formed the basis of public policy since the turning point in cross-media ownership restrictions in 1968, when the Thomson Organisation, owners of the Times, Sunday Times, and Scotsman, was forced to cut its stake in Scottish Television in the cause of protecting the public interest.

By the Eighties, the fear of media barons and the political clout they demonstrably can wield by campaigning for a favoured political party, was being focused on Mr Murdoch. Antagonism intensified at every election when his newspapers - though they were not alone - brazenly campaigned for the Conservatives.

Then five years ago he breached UK media conventions by using his power as Britain's largest national newspaper publisher and a Hollywood magnate to cross the divide into what was then unregulated television by launching the Sky satellite service and subscription channels.

But fast forward to 1994, and we find the unthinkable has become the orthodoxy. Rather than cut Mr Murdoch down to size, government policy is being adjusted so that other operators can become big international players.

In the present hurried policy revision, the BBC's dominance as a maker and broadcaster of British programming begins to count in its favour again; it is unlikely to face new demands that it be broken into smaller units, or that its radio frequencies be reduced.

On 1 January the Department of National Heritage, under pressure from Michael Heseltine at the Board of Trade, announced a swift review of cross-media ownership rules, asking for submissions by 25 February. The implication is that the rules will have to be loosened to allow at least newspaper publishers to own ITV franchises - though the review group has still to formulate the key questions it will address.

The review follows the decision in November to bow to the demands of a group of ambitious ITV franchise holders, led by Michael Green of Carlton, that they be free to take over a second licence. The ITV barons played on government fears, however illusory, that unless they were given a free hand, foreign media companies would swoop upon them.

Why has the climate changed so fast? One reason is that the 1990 Act - which, by protected regional programming, was not all bad - has been discredited in the eyes of the public. Revulsion over the auction of franchises and its adverse effects on programming has emboldened lobbyists to seek key concessions once thought to be off limits.

The British Media Industry Group, comprising Pearson, Associated Newspapers, the Guardian Media Group and Telegraph, seized the moment: it has convinced the Government and many members of the Opposition that television is driving newspapers' advertising markets into long- term decline, and that, as committed publishers, they must therefore be given access to the new electronic pastures.

It is an inconvenient fact that this apocalyptic view is not shared by the Advertising Association, which compiles the official statistics. It says television's share (32 per cent) of total UK advertising has been static for 10 years, even since the arrival of satellite, and that newspapers are suffering only a slight decrease.

Newspaper publishers stopped campaigning against Mr Murdoch's unfair advantages when they saw the opportunity of joining in, and gaining control of television assets.

Among the many politicians who have also changed their views, Labour's Marjorie Mowlam favours a review, and the scrapping of the 20 per cent rule. With the prospect of an expansion of channels through satellite and digitalisation, it is argued, there is no need to ration or exclude anyone.

The National Heritage Committee report on the BBC, in December, was heavily influenced by the attitude of its chairman, Gerald Kaufman, to the mega-media mergers he witnessed taking place in the United States. 'The world stands on the threshold of an extraordinary technological revolution,' was its opening statement.

But what should the new rules on cross-media ownership allow? How can Britain modernise without endangering diversity? Steve Barnett, media analyst for the Henley Media Centre, says there is no ducking the the fact of a clash between industrial logic, which is dictating globalisation and multi- media groups, and the desire for cultural diversity.

It is worth reflecting, before the Government leaps in to free the market, that newspapers and television are driven by different editorial imperatives. Look at their respective election coverages: television is required to be impartial.

David Mellor, the Home Office minister responsible for piloting the Broadcasting Act through Parliament and still smarting from his personal brushes with the press, pointed out last week: 'The ITV companies have their faults, but only rarely do they sink to the depths of the gutter press in this country. Could this happy state of affairs be guaranteed to continue once the tabloid boys move in? It takes a bold spirit to be entirely optimistic. For all its faults, the present cross-media restrictions offer a substantial measure of plurality of ownership.'

The review will also have to address nitty-gritty merger and concentration issues. Should the media suddenly be treated as just another industry? Will the public's access to information and diverse publications be safeguarded by the Office of Fair Trading (which has jurisdiction to investigate when an operator controls 25 per cent of a 'relevant market', and has already played a key part in overseeing the ITV network arrangements) and the Monopolies and Mergers Commission (whose recommendations can be overruled by the Government)?

David Zeffman, media lawyer at Frere Cholmeley Bischoff, says that when a market is adapting so rapidly, the OFT/MMC method may be the most pragmatic. But even those such as Andrew Knight who favour this route say that great care is needed in defining such tricky technical questions.

And how will concentration be measured if cross-media ownership is allowed? Will it be 25 per cent of all advertising revenue, or 25 per cent of readers and viewers and revenue in a particular region of the UK? The two proposed ITV takeovers of Carlton/Central and Granada/LWT, which will control half of ITV advertising, have yet to be cleared by the OFT.

And should the BBC, though paid for by licence fee, be free to run subscription satellite channels as well, on the grounds that it is a good for it to become even bigger? Should ITV companies be allowed to take over radio stations, cable stations and satellite stations?

Those who administer section 2 of the Act, which contains the ownership restrictions, say it will be a nightmare to unpick.

Start asking these tough questions and even government experts back away. It is clear that they have embarked on a review of a highly sensitive area with little clear or principled idea of what should come next, or how the public should be protected.

A blank sheet of paper may indicate an open mind. Or it may smack of weak government. It could provide a wonderful opportunity for the toughest lobbyists and traders to get what they want. An imperfect Broadcasting Act could be followed by a botched deregulation.

BRITAIN'S MEDIA MUDDLE

Television companies cannot hold satellite licences from the Independent Television Commission; only 20 per cent of a firm's shares.

The BBC cannot directly hold a licence or participate in satellite services licensed by the Independent Television Commission.

If a British company bought a television station anywhere in the world, it would be disqualified from classification as a UK independent television producer. Even Associated Newspapers' 20 per cent ownership of Westcountry means that it cannot become an independent producer.

National commercial radio restricts newspapers and holders of ITV franchises to 20 per cent.

In local radio, operators can hold either 20

local radio stations or 15 per cent of the radio market.

There are two sorts of cable licences: one restricts local newspapers and ITV companies, but not national newspapers; the second, for 'local services', has easier rules which would allow, for example, an ITV company to hold a franchise in part of its area (eg, LWT could hold the franchise for Croydon).

AN OPEN MARKET

Ian Hargreaves is former director of news and current affairs at the BBC and the author of a recent pamphlet advocating its privatisation

EXISTING rules are incoherent and damaging to the health of broadcasting. There needs to be cultural plurality, but the present system is not the most promising way to generate it. The Tory position in the 1990 Broadcasting Act, to maintain the duopoly with some modest reforms, is untenable.

There ought not to be restrictions on ownership, except on heavy concentration of ownership of a kind that the existing system has encouraged. The system has been based on the protection of monopolies, which are always bad for the price and quality of what the consumer gets. Sweeping away the protection granted to the ITV system will ultimately increase choice.

The idea that you can have one set of restrictions for the old commercial broadcasters and another for the new is unsustainable. I would like to see a completely open market in the ownership of broadcasting and all media, but with restrictions on concentration. There may not be much of an international market, but there is one: Mexican soap operas are top of the pops in Moscow.

LET'S HAVE LESS LUNACY

Sir David English, chairman of Associated Newspapers

THE restrictions are frustrating for a newspaper that wants a stake in electronic publishing. With 20 per cent of WestCountry, one of the smallest television stations, we couldn't invest more than 5 per cent elsewhere. We can't be independent producers because of that stake. That's why I started this lobbying group. The first stage was to get a review. Now we've done that, we have to persuade them to reduce these lunatic restrictions so we can have flexibility in running our business and create jobs.

We would still be controlled by the Monopolies and Mergers Commission. Acquisitions should be judged on their merits, not by some pre-fixed determination of the share of the market we control. I don't believe deregulation would lead to great consolidated groups. As for political diversity, no sensible proprietor lets politics interfere with his commercial interests. The Daily Mail is Conservative because its readers are, the London Evening Standard is less Conservative, and our group's paper in Leicester is not political at all.

This revolution may make newspapers obsolete. Any normal business would move to get its share up by going into television.

LABOUR'S WATCHING BRIEF

Marjorie Mowlam, Labour heritage spokeswoman

MY TWO main concerns are to ensure choice and diversity. I want to see greater regulation of regional television by the Independent Television Commission, to protect regional production and quality regional programmes.

Monopoly ownership is a problem that needs to be considered at both national and regional levels, but because of technological advances it is not simply a question any longer of counting up how many papers, titles or stations one group owns.

I would be happy with the Office of Fair Trading and the Monopolies and Mergers Commission (to investigate undue concentrations), but they must carry out much more careful and detailed work, with earlier trigger points.

The 20 per cent rule (restricting newspapers from controlling TV companies) is irrational when Europeans can buy 100 per cent. It is ludicrous to put print at such a disadvantage. I want the 20 per cent limit to be reviewed, but I have no new percentage in my head at this moment. The flaw in the argument by UK media groups, who want to get larger and expand into Europe, is that I doubt whether they will find access any easier, even when they are bigger.

To ensure editorial diversity (as holding groups get larger), I would like to look at ways of creating independent editorial boards, backed by shareholders.

Home-grown film-making needs help. The European directive stipulating that 51 per cent of output be originated in the EU wherever practicable must be tightened up. I don't know whether film should have a levy, all I know is that it has got to be done.

The Labour Party will be holding a media conference in the spring to thrash out more detailed policy.

THE US KNOWS HOW

Andrew Knight, non-executive chairman, News International

I HAVE been arguing for a review for three years, since joining News International. Rupert Murdoch is the harbinger of things to come. The media ought to be regulated as any other industry. You would expect to have a very stringent (anti) monopolies regime instead of artifical rules saying you can't go into this medium or that. I imagine the study will look into key questions of how you define a mar ket (a preliminary to deciding whether one operator has undue power within a niche). Markets are a sophisticated business.

I feel very confident about maintaining a diversity of editorial views. The key thing in America is that the cross-media rules prevent newspaper publishing and television stations in metropolitan areas from being owned by the same person. In this country it would not be very good for the Guardian Media Group (owners of the Manchester Evening News) to own Granada, or Associated Newspapers (owners of the Evening Standard) to own LBC. All these sorts of things need to be looked at carefully.

Media owners such as Conrad Black or Lord Rothermere have passions for publishing. Discouraging them is not sensible. As for decreasing choice, that happens in a declining market, and that's not happening in television or newspapers.

EXPANSION OR BUST

Frank Barlow, managing director of Pearson Group

'THE MEDIA should be allowed to buy as it wants, subject only to the rules of the Office of Fair Trading and Monopolies and Mergers Commission. The lack of reciprocity (by which foreign companies could buy UK TV companies, but UK companies were barred from buying in many countries) had to be corrected.'

He is sure newspaper groups will be able to buy TV companies after the review is concluded. He says Pearson, with shares in Yorkshire Television and BSkyB, would have bid for ITV licences had it been allowed to, and will want to expand here and abroad when the rules change.

'Television is a natural extension of newspapers, both rely on advertising, and papers have been in long-term decline. Canal owners didn't end up owning railways, or railway owners running airlines: they went out of business. That's what this legislation will do to publishers unless it is changed.'

THE MORE VOICES, THE BETTER

Brian Winston, Director of Journalism Studies, University of Wales at Cardiff

I THINK cross-media ownership is a terrible idea because I believe in a multiplicity of editorial voices. The news is already too much the same.

There are more things at stake here than the market. The answer to Rupert Murdoch being allowed to do this while the others aren't is not to let the others do it, but to stop Murdoch.

The dominant organisations in the areas of cultural production need not be very large at all. They require a viable enough base to have editorial and creative independence, but to suggest that you can only do this by being an international mega-conglomerate is a nonsense.

The trade in international cultural artefacts is limited because we don't share culture that much. What is this chimera they're all pursuing? Most of the stuff isn't saleable - it doesn't keep and it doesn't cross frontiers. A decade or more ago we had the push for the pan-European advert. Forget it. It doesn't work. If you can come up with a pan- European advert or pan-European joke, you can talk to me about the need for globalisation.

(Photographs omitted)