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
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
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.
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