The Heart of the Matter: Why media ownership limits are practical, beneficial and essential to restore democratic integrity

By Media Reform Coalition / Friday December 13, 2013 Read More
by Justin Schlosberg In response to my brief on media ownership limits, Rob Kenny helpfully moves the discussion forward by questioning some of the claims and detail in that brief. Before offering my response in kind, it is important to make clear Rob’s interest as a member of the Communications Chambers, which includes News Corporation among their list of clients, particularly as much of his arguments are made with a focus on Rupert Murdoch’s news assets. (I myself declared an interest at the outset of my brief to which Rob responds, stating that I have been actively involved in preparing evidence on behalf of the Media Reform Coalition). With that out the way, I will now turn to Rob’s response which is important because it reflects the prevailing opinion among commercial media lobbyists in response to any fundamental change in the status quo of ownership regulation. Rob understandably focuses on a crucial question in this debate: would a system of fixed ownership limits along the lines proposed in my brief necessarily threaten growth, competitiveness, or sustainability, particularly in ailing newspaper markets? He highlights that my brief comes out in favour of a firm ‘no’ to this question. But he takes issue with this finding in two areas. First, he points out that: “Both the Mail and the Sun have shares of the national newspaper market of over 20%. Thus under the MRC’s rules, both these titles would need to be publicly floated as independent entities.” He then remarks on the associated costs and risks of a public floatation and suggests that these would pose an additional threat to the stability and sustainability of newspaper markets. But it is not quite clear whether he is suggesting that a public floatation is part of rules advocated by the Media Reform Coalition (MRC), or whether a public floatation would be a necessary consequence of any attempt to dilute a controlling interest in a dominant media group. In any case, neither claim is quite accurate. First, MRC rules do not specify the need for floatation and second, it is quite conceivable that alternative remedies and means could be used to achieve the overall objectives of fixed ownership limits along the lines reflected on in my brief. Indeed, Rob goes on to address these alternatives in the second area that he focuses on, in respect of Sky’s overwhelming control of the wholesale market in commercial radio news. He points out that “In such cases [Justin’s paper] allows that ‘an equity carve-out or the transferral of voting rights from shareholders to employees’ would be appropriate'” He subsequently questions the practicality of the first alternative on the basis that no one would likely “be interested in owning any number of shares that had no prospect of paying dividends, but rather required constant subsidies”. This claim is questionable. There are certainly examples in other industries where consortia of NGOs and individuals have taken up the opportunity to own shares in companies as a means of holding them to account ethically, including the oil and arms industries. But even if this was not feasible for any reason, Rob’s critique of the alternative – transferring voting rights to employees – is particularly problematic. His arguments rest on a somewhat dubious set of assumptions and misconceptions about the ‘practical benefit’ of such a measure in terms of enhancing editorial independence, and the potential costs in terms of a threat to sustainability which “could put Sky News’ life at stake”. Such hyperbole is reflective of a general discourse of fear that routinely emanates from commercial media amidst the prospect of ownership regulatory intervention. For one thing, it is not clear why targeting the overwhelming dominance of Sky News Radio should threaten the viability of Sky News as a whole, particularly the former is a relatively small arm of the latter (and presumably at least as loss-making). But more acutely, Rob seems to dismiss out of hand just the kind of potential remedies that were acceptable to none other than Newscorp themselves in the build up to their proposed merger with BskyB in 2011. During that process, plurality concerns raised by Ofcom resulted in the suggestion that Sky News could be ‘spun off’ if the deal was to be approved with a prescribed limit on Newscorp’s stake. This was to be accompanied by the establishment of an editorial board made up of a majority of independent directors (with no other Newscorp interests), responsible for ensuring the news channel’s editorial autonomy and integrity. The latter undertaking constitutes precisely the sort of public interest obligations advocated by MRC and other civil society groups, in addition to structural remedies aimed at reducing proprietors’ direct influence over news making. Of course, Rob is right to suggest that such measures offer no panacea to the problems of media power exposed at the Leveson hearings. It is certainly conceivable that more robust forms of intervention might be considered than the undertakings accepted for the Newscorp-BSkyB merger (or that which has long already existed in respect of Rupert Murdoch’s purchase of the Times and Sunday Times newspapers in 1981). But he is simply wrong to suggest that any potential benefits would be outweighed by the assumed costs in respect of innovation or growth. Newspaper owners themselves – including both the Murdochs and Daily Mail owner Viscount Rothermere – were at pains to stress to Leveson that they considered editorial independence to be ‘good for business’. Rob himself argues elsewhere that the editorial influence of proprietors is waning amidst competing influences over content stemming from social media, as well as financial pressures. The implication is that the exercise of editorial influence by proprietors is more in conflict than in consonance with strategies of commercial survival. In effect, the inverse of what he is arguing here. If exercising editorial control is somewhat inimical to the commercial interests of media titles, why would holding media bosses to their word pose “a major disincentive to investment”? I am certainly not aware of any evidence in support of this claim (including from countries that do have more stringent ownership limits in place, including France and Germany). Yet there is considerable evidence to the contrary. In fact, in several areas where there has been sustained and unchecked growth in ownership concentration within news markets, there has been a concomitant fall in standards, quality and ultimately, consumer demand. This was well documented in the US by Pew research just this year and has been similarly demonstrated in the UK in respect of the rapidly converging local and regional news market. It may well be said that the incentives for owning newspapers these days is not commercial at all, but consists precisely in the capacity of an editor to exercise editorial influence. In other words, people only continue to invest in, or subsidise newspapers because they offer a return measured not in pounds but in power. But this only adds more weight to the case for ownership limits. And if they were to result in the withdrawal of subsidies or investment in titles that exist ultimately to promote the views or interests of their extremely wealthy owners, that is surely a gain rather than loss for plurality and democracy. Perhaps most concerning of all, Rob makes no mention of the social and democratic costs in respect of the intimate relations between media and political elites laid bare at the Leveson hearings. There is a reason why owners of smaller media groups do not – like Murdoch – get regular invites for tea at number 10 (and leave by the back door), or – like Rothermere – get to spend ‘private’ weekends with the Prime Minister at Chequers as he did last year. The reality is that whether or not consumption or exposure diversity is improving or getting worse (and we can cherry pick data to argue the case either way), size matters in respect of media power. If we are to place any value on democratic health as opposed to just competitive health of markets, then we need real plurality reform to address the real and existing accumulations of that power. A full report of Justin Schlosberg’s findings can be found in his brief Modelling Media Ownership Limits, published as part of the LSE policy brief series.
Justin Schlosberg is a media activist, researcher and lecturer at Birkbeck, University of London, and author of Power Beyond Scrutiny: Media, Justice and Accountability.