On 8 June 2010, the Secretary of State for Culture, Media and Sport, Jeremy Hunt, outlined his plans to introduce a far lighter touch regulation for local media outlets. These changes are envisaged to create a new era of local media broadcasters, through which the aim of increased localisation of services can be achieved. Hunt highlighted the fact that there are currently six local television stations in New York, compared to zero in London.
In the keynote speech on the coalition's plans for the UK media environment, various important announcements were made on changes to the provision of local media services, namely that the previous administration's initiative, one of five proposals made by Ofcom in its PSB Review, on Independently Funded News Consortia will be scrapped, after stating that such a regime would have removed the possibility of effective local media sources for the digital age. Also, Hunt acknowledged acceptance of Ofcom's proposals made in November 2009 regarding the liberalisation of media ownership, which is at present subject to restrictive rules on local cross-media ownership preventing one person from owning multiple media platforms over particular market share levels.
As the rules currently stand there is a general prohibition on someone holding a regional channel 3 licence (instituted in Broadcasting Act 1990) if that same person runs a local newspaper, or multiple local newspapers, with a local market share of more than 20 per cent (Communications Act 2003). It has always been stated that such rules have the purpose of ensuring a suitable level of plurality across media platforms. The suggestions made by Ofcom recommended a certain level of liberalisation in order for the sole restriction to be that a single person cannot 'have a radio licence and 50 per cent or more market share of local newspapers and the regional channel 3 licence'.
The Culture Secretary has suggested his intention to go further with such liberalisation by requesting that Ofcom carries out a further investigation into the possible removal of all such restrictions. He has also appointed Nicholas Shott, Head of UK Investment Banking at Lazard, to carry out an investigation into the 'potential for commercially viable local television stations within the local media landscape'. Hunt intends to report on the findings in the autumn through a local media action plan.
The announced changes, and the possibility for even greater liberalisation, open up the way for opportunities within the area of mergers and acquisitions because, for example, local newspaper outlets will be permitted to possess a radio or regional channel 3 television licence - enabling consumers to follow their favoured news providers across multiple platforms. This change in the regulations provides media outlets with greater economies of scale and the opportunity to reduce costs in the sourcing of news, management costs and the costs of advertising sales - reductions which are particularly welcome given the increasing constraints placed upon the local media outlets. Opportunities are also created for media companies to merge their internet operations. There is also a possibility that effective synergies could be achieved through cross-media mergers, given that many local radio and newspapers source their news content from similar locations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
