Media Pluralism and Regulatory IndependenceRachael Craufurd SmithUniversity of Edinburghr.c.smith@ed.ac.uk

Two Key Issues

Specific concerns raised by the proposed BSkyB/NewsCorp merger

General concerns relating to the formulation and operation of the media pluralism provisions in the Enterprise Act 2002

An International Legal Dimension?

Article 10 European Convention on Human Rights: right to…receive and impart information. App 13936/02 Manole v Modova 17/12/2009‘a situation whereby a powerful economic or political group in a society is permitted to obtain a position of dominance over the audiovisual media undermines…Article 10’

An International Legal Dimension?

Independence of broadcasting regulatory authorities also recognised as important by the EU and Council of Europe, see, for example, CoE Committee of Ministers Recommendation(2000)23 on the independence and functions of regulatory authorities for the broadcasting sector.

BSkyB/NewsCorp Merger

Questioning NewsCorp’s starting point:

Focus on qualitative assessment of variety of voices not number of controllers. Voices: retail outlets, not wholesale sources.

Focus on specific content: provision of news.

Focus on cross media audience.

BSkyB/NewsCorp Merger

How to establish what is ‘a sufficient plurality of persons with control of media enterprises’: s 58 (2C) EA 2002?

Multiplicity of Speakers v Diversity of Voices?‘It is therefore necessary for the Sec.State to consider to what extent the transaction changes the status quo ante (in which News Corp already has a degree of control of Sky), so as to create a situation of insufficient plurality’ (News Corp.p 7)

NewsCorp/BSkyB Merger

Multiple criteria rather than alternatives? OFCOM on Diversity of Voices

Impartiality requirements on TV not enough to keep News Corps print/tv content distinct

New online media? Primarily aggregators or replicators not additional news sources

Multiplicity of Speakers: How Many?

OFCOM looked at audience share of reference (all news sources used regularly at least once a week) and reach. Found:

• Merger reduces Group 2 providers from 3 to 2, • Ability to influence increases from 12% to

22%, • Reach increases from 32% to 51%.

Multiplicity of Speakers: How Many? How do we know 22% share of reference is

too much: gradual accretion of principles through case law or contestable value judgement?

US FCC attempts to render ‘formulaic’ through a diversity index - Prometheus Radio Project v FCC 373F.3d 372 (2004)

An Objective Test?

Hirschmann-Herfindahl (HHI) Index: sum of the squares of the market shares

1,800 ‘concentrated’ market Application to Ofcom’s share of reference:

Wholesale before: 1,941 after: 2,181Retail before: 1,812 after: 1,941

Difference 240 and 129 respectively

Is the HHI applicable here?

In terms of individual references to news sources, application of the HHI indicates that the market is already troublingly concentrated.

But is this a relevant test in the media context – ‘diversity index’ overturned in the USA as a guide for shaping regulation.

The HHI and Share of Reference

But use of share of reference figures does respond to some of the concerns raised in Prometheus:

Able to incorporate any news source used – internet, user-generated content etc.

It does not subjectively weight different media according to assumed influence. But, as Ofcom notes, it indicates only potential influence in that one minute of tv exposure is treated as the same to one minute of print exposure – real impact may be different.

Can reflect importance of sources – Ofcom provided figures for both wholesale and retail provision.

Relevance of the HHI?

Initial indicator of a problem in specific case/used to set regulatory thresholds/continuous monitoring?

Should there be a lower HHI threshold for the media?

Alternatives – Noam Index, Hill Index…

News Focus and Divestiture

Concern – focus on news by all parties, not other genres. But may be questions over wider social and cultural influence – eg scientific programming, programming relating to other corporate interests? Craig Arnott 2010 2 Journal of Media Law 245-275

Possible divestiture – will this resolve concerns? Likely to be aware of interests and potentially responsive …

General Concerns Regarding The Enterprise Act Media Plurality Test Uncertainty, time, cost: bad for business and

citizens. Needs updating – references to ‘broadcasting’,

now internet and new media. Focus on news – see above. Different tests for different media sectors –

print/broadcast. Controversy over examination of wholesale

sources – need for review.

General Concerns Regarding The Enterprise Act Media Plurality Test The problem of endogenous growth – HHI

monitoring, other alternatives? Regulatory independence – questionable role of

Secretary of State given potential political interest. Wide freedom to decide to initiate investigation, determine exact plurality issue raised and proceed with investigation.

Regulatory expertise: Competition Commission cf OFCOM?