Sunday, November 7, 2010

Puttnam: Murdoch Takeover "Extremely Damaging To Informed Democratic Debate"

Speaking in the House of Lords, the UK equivalent of the Senate, David Puttnam said that News Corp's bid to take control of BSkyB posed a threat to democracy. Here are excerpts from the?speech given by the one-time Columbia Pictures boss:

My Lords... I had the honour of entering your Lordships House thirteen years ago tomorrow. Since that time there have been three or four really big issues with which I’ve consistently tried to engage – in part because they relate to experiences gained in my former life, but also because I believe they represent the type of issues upon which rests the future of the type of society most of us would wish to live in...?My Lords, the purpose of this afternoon's debate is to draw attention to the possibility that we are on the edge of a very slippery slope – one that could find us falling further and further under the influence of a single, US-based owner, with a highly questionable interest in the benefits of a diverse and flourishing plural media here in the United Kingdom. So why this debate, and why now?

The primary reason My Lords is that News Corporation yesterday notified the European Commission of its intention to purchase the 61% of BSkyB that it does not presently own. As I’ve already mentioned, this morning we heard the welcome news that this proposal had been referred by the Secretary of State, to Ofcom. It’s my most sincere hope that the Coalition’s proposed ‘trimming’ of Ofcom’s powers will not result in any diminution of its capacity to exercise those powers in respect of important matters such as this.

There, are of course, a number of aspects to media plurality – notably the Government’s proposals to repeal the local “cross-media” ownership laws, but this afternoon I only have time to focus on the really big issue resulting from News Corporation’s power, reach and influence. It’s my contention that if regulators and legislators in Europe and the UK remain supine, and simply wave this proposed acquisition through, the consequences for the citizens, as well as the political class in this country could become deeply troubling. The purchase of these shares would give News Corporation an unprecedented level of control over the UK media, one that to my mind has the potential to be extremely damaging, not just in respect of media plurality, but to informed democratic debate as a whole.

To put all of this in perspective, the media research company Enders Analysis has predicted that, assuming no material changes to the newspaper market, News Corporation's share of national press circulation alone will steadily increase to more than 40% by 2014! That figure is worrying enough, but it becomes a source of even greater concern when the Corporation’s ambitions to take full control of BSkyB are brought into play - given Sky’s growing share of the total television market.

It’s something of a commonplace to assert that the Murdoch-owned press is obsessed with what it believes to be the outrageous size of the BBC, and its apparent capacity for unchecked growth and influence. ‘Chilling’ is the way BSkyB’s Chairman, James Murdoch, has described the scale and reach of his rival Corporation! If he is right, it seems worth comparing the relative size of BSkyB and the BBC, not just now, but by peering a little into the future – to 2016, the point at which the current licence fee comes up for renewal.

When I entered your Lordship’s House in 1997, Sky had revenues of £1.27 billion – just 63% of the BBC’s then income from the license fee when combined with the net benefit it receives from BBC Worldwide. BSkyB’s turnover in their last financial year, to June 2010, was £5.9 billion; or 163% of the BBC’s current income. Assuming a modest 5% growth, in 2016, when the BBC’s current Charter expires, BSkyB will have reached a turnover of a little over £8 billion, or around 220% of the then projected income of the BBC. Sticking with James Murdoch's description, I would suggest that this truly is a ‘chilling’ prospect – leading to a disparity of scale in which all competition, not just the BBC, is frozen to death!

The level of media dominance that would result from News Corporation’s ownership of 100% of BSkyB, along with four national newspapers and a variety of other media assets, is one that would simply not be tolerated in almost any other developed democracy – certainly not in the United States where anti-Trust laws, and tough restrictions on foreign ownership, render such levels of control utterly unthinkable.

In fact, there appears to be no developed country in which one individual has such control (certainly when measured by market share) of the TV and newspaper markets. Prime Minister Berlusconi controls a large proportion of the broadcasting sector in Italy and, for example, Bild has a very big share of newspaper sales in Germany, but nowhere is there the same degree of cross-media dominance as is already the case with News Corporation in the UK.

There are of course those who will say that in the age of the internet, such fears are less well grounded. That in a digital era the cornucopia of news, views and comment which are to be found on the web, reaching far beyond established media outlets, render my concerns about a ‘slippery slope’ increasingly irrelevant. But many disagree, arguing that this is to over-estimate the power of the blogosphere. As none other than Rupert Murdoch himself said in his recent Margaret Thatcher Lecture: “Bloggers can have a social role - but that role is very different to that of the professional seeking to uncover facts, however uncomfortable”.

So, deep pockets and the benefits of scale remain very significant advantages, even in the digital world.

Equally, it’s my belief, that the opportunities to ‘bundle’ together News Corporation's media assets – such as The Times, The Sunday Times, The Sun, The News of the World, Sky subscriptions, online movies from Fox; along with mobile access to all of them – are far, far greater than anything dreamt of when the plurality test was first introduced. Sky already has a billing relationship with almost 10 million customers – a fantastic competitive advantage in an online world in which making people ‘pay for content’ is one of the biggest challenges of all. Where once it was his newspapers that subsidised Mr Murdoch’s foray into television, it could soon be the other way around, with television under-writing both his newspapers and his somewhat belated attempt to come to terms with the internet.

And this raises one of the key challenges in this area of legislation as, in my opinion, competition authorities do not – nor should not - make or shape public policy – they simply implement what is already on the statute book. That’s why, as legislators, we need the power and flexibility to respond to events that may have been undreamt of when the statutes were originally framed – this is one of the reasons I have consistently argued in favour of post-legislative scrutiny.

During the passage of the 2003 bill, I failed to get across to the government the transformative power of cross-media promotion. I also failed to convince them of the need for an ‘economic impact study’ into cross-media ownership – the very issue that makes the prospect of ever-greater ‘bundling’ such a dangerous road to go down. Let me offer one recent example; according to The Independent, since Richard Desmond bought Channel 5 in July, the Daily Star and the Daily Express have mentioned that broadcaster 1,073 times. That compares to the year before the deal in which there were just 92 mentions!

Now of course it could be a coincidence?

My Lords, I simply ask, where should we in this country seek to draw the line between information and influence? The scope for ensuring that news in particular can be manipulated to reflect a prejudicial viewpoint across different media is considerable, especially since, if the other shareholders were driven out, News Corporation would have all but untrammelled control of Sky News. The potential for such ‘bundling’ to become a means of reducing competition, most particularly through aggressive pricing strategies, should be all too clear. And remember, a ‘predatory pricing amendment’ was successfully passed by this House in 1998, only to be lobbied against and, to my way of thinking, inexplicably turned down in another place!

Of course, there are those who remain profoundly sceptical – doubtless including some in my own party, as well as on the benches opposite – arguing that once again ‘the liberal chattering class’ is getting itself in a lather about its favourite ‘straw man’, and that in reality there’s little to worry about.

My Lords, if this really is simply a conspiracy by the ‘chattering class’ to stoke fear and trembling across the nation, why is it that a recent letter to the Secretary of State opposing the BSkyB takeover, was signed by, among others, senior executives from the Telegraph Media Group, Associated Newspapers and BT. My Lords, this time it is not simply a question of ‘the usual suspects’.

I’m aware that I’m running out of time My Lords, so I’ll finish with this thought.

If Mr Murdoch’s intentions are entirely even-handed and non-political, why is it that he was only the second person to visit our new Prime Minister, entering by the back stairs for what is reported to have been an un-minuted meeting; while Mark Thompson, the Director-General of the BBC, goes through the front door for a meeting, every detail of which will doubtless be available through the Freedom of Information Act?

There are those who will argue that media magnates have always used the power of their holdings to influence Governments of every hue. However it’s my belief that the situation we are now dealing with is unprecedented and, if unchecked, offers a genuine threat to plural, consensus-based democracy in this country. As earlier generations in this place might reasonably have put it: "there is a point at which forbearance ceases to be a virtue"!

Speaking last week on the telephone to the altogether admirable Peter Hennessy, soon to be a welcome addition to your Lordship's House, we discussed the constitutional ramifications of this afternoon’s debate; he finished the conversation by reminding me that it would be a mistake to regard this as simply a 'media issue' – "David, he said, this is about nothing less than 21st century sovereignty".

I believe he is right My Lords; the United Kingdom is not a ‘banana republic’, and we do ourselves no favours by appearing to be.

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