Media Forum: Ofcom brings clarity to its role on press

Are newspaper publishers reassured by the new merger guidelines issued by Ofcom? Alasdair Reid investigates. You'd be excused for laughing last year when the Government sought to reassure us that the creation of Ofcom could actually reduce the amount of red tape in the media industry. The first instinct of any organisation is self-preservation and, on the principle that you grow or die, they tend to grow. Any media regulator worth its salt will find much with which to occupy itself.

That's why media owners were not exactly shocked when, in one of its first acts as it came into being around the turn of the year, Ofcom issued a consultation document reminding media owners that its remit (particularly as regards mergers) had now been extended from broadcast media, which has always laboured under the likes of Ofcom and its predecessors, into the press, which has not.

Newspaper proprietors were neither slow nor shy when it came to formulating their responses. Having taken these on board, Ofcom has now issued a new guidance document that seeks to allay media owner fears on its role in mergers. Basically, it says that it won't get involved unless asked to do so by the secretary for trade and industry; but when it does get involved in newspaper mergers, it will draw upon a panel of "newspaper experts" for advice.

Ofcom's chief executive, Stephen Carter, praises the industry for the speed and the quality of its response where this issue has been concerned, and assures us the latest document was produced after "an intensive and formative consultation" with the industry.

Sources at the regulator also make clear that it has no intention of embarking on empire-building exercises - it reminds everyone that its role in newspaper mergers was outlined by the Enterprise Act of 2002 as amended by the Communications Act of 2003. Ofcom did, however, acknowledge the need to clarify the extent of its role.

By and large, though, is the industry reassured? Revealingly, publishers don't want to go on the record, even though the response is by no means all negative.

But many remain suspicious. One senior newspaper executive stated: "Ownership of newspapers is a political issue, of course it is, and the Government will find a way to have its say. Broadcast has been regulated because the Government had to make best use of a scarce resource - the airwaves.

If and when the Government owns all the trees and feels there is a shortage of them, then all well and good, but until that happens it has no business getting involved to the same degree in the press."

On the other hand, those who take a "let's wait and see" line may not have long to wait. Many in the industry would be astonished, for instance, if Ofcom did not become involved in the sale of the Telegraph titles.

So what's the City view on this? Lorna Tilbian, a media analyst at Numis, states: "The feeling you get from talking to publishers is that this sort of thing doesn't make their lives any easier and I think there is sympathy for that line."

Many observers point out that, actually, the Ofcom document says very little about the amount and type of information it would seek if and when it becomes involved in a merger adjudication.

But Jim Marshall, the chairman of Starcom UK Group, points out that there is nothing new in this whole scenario. He comments: "When Rupert Murdoch bought The Times, the Government sought certain reassurances, if memory serves, and one of the issues was who was to be the editor. I don't think Ofcom will ever believe that it is its responsibility to get involved at that level."

The new guidelines cover the radio and TV media too - although there is far less potential for controversy here because they are a continuance of the old guidelines as overseen by the Independent Television Commission and the Radio Authority. Still, this is a new regime with slightly updated rules.

Nathalie Schwarz, the strategy and development director of Capital Radio, states: "The Capital view is that this guidance does set out the process but doesn't indicate how Ofcom is likely to implement it."

Some also worry that there are effectively now three regulators: first, the Department of Trade and Industry; second, the group of people within the DTI whose job it is to decide whether an Ofcom referral is appropriate; third, Ofcom itself.

But many senior radio sources say they are impressed with what they've seen of the Ofcom people. As one put it: "They are sharp and they listen. They are sincere when they talk about a consultative approach, which has to be welcomed because, by their very nature, regulators can become dogmatic."

- "We recognise there was a limited amount of time to comment on the guidance and we appreciate the high quality of the comments. The guidance on this specific role for Ofcom is clearer and hopefully more useful for prospective buyers and sellers." - Stephen Carter chief executive, Ofcom

- "With newspapers, it is always complicated by the fact that decisions affecting the industry tend to be based on factors other than purely competition ones, largely because of the way that politicians like to make use of papers, not just at a national but at a regional level too." - Lorna Tilbian media analyst, Numis

- "All we know so far is that from the evidence of the broadcast market Ofcom has behaved pretty sensibly and realistically. It has been genuinely consultative. I can see why newspapers are very concerned - they have never been subject to these sort of controls." - Jim Marshall chairman, Starcom UK Group

- "We are happy with the procedure outlined here and the assurance that the secretary of state will issue an intervention notice only in exceptional circumstances, though we are still unclear as to what those might be." - Nathalie Schwarz strategy and development director, Capital Radio.

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