18 August 2010

Ofcom Issues Further Report on Reforming Remaining Local Cross-Media Ownership Rules

On 9 August 2010, the Office of Communications ("Ofcom") published its report on possible further reforms to the local cross-media ownership rules.
UK Antitrust/Competition Law
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On 9 August 2010, the Office of Communications ("Ofcom") published its report on possible further reforms to the local cross-media ownership rules. The report was requested by the Secretary of State (for Culture, Olympics, Media and Sport) and provides an update to Ofcom's November 2009 recommendations for liberalising certain of the local cross-media media ownership rules (see Community Week Issue 467).  The Secretary of State asked Ofcom to consider the feasibility and implications of removing the remaining rule to further relax regulation in this area.

At present, a single entity cannot at the same time, in a local radio coverage area, own (i) one or more local newspapers with 50% or more of the local market, (ii) a local analogue radio licence, and (iii) a regional Channel 3 television licence which has an overlapping audience of 50% with the local radio station.

Ofcom's report of November 2009 highlighted that liberalising this rule may confer too much control over the local news agenda into the hands of one person, which could restrict local debate and accountability. On this basis Ofcom recommended that this rule be retained.

Having reassessed the position, Ofcom remains concerned on plurality grounds (particularly at a national level in Scotland, Wales and Northern Ireland).  It notes however that the risk of concentration of control over local commercial news provision needs to be balanced against the arguments in favour of removal. 

Local media is facing growing economic pressure (which is considered to be more acute now than in 2009). Removing the remaining rule would give local media increased options for consolidation, enabling them to better respond to these pressures.  Further it states that there is a growing diversity of local news available through non-traditional media such as the internet.  In addition, there is continued provision of BBC local services. Ofcom also acknowledges the competition authorities' powers to prevent concentrations in local media through the merger regime.

In practical terms, Ofcom states that there appears to be "limited interest" in this kind of consolidation and that there is probably a reasonably low risk of this type of consolidation actually occurring. 

Finally, Ofcom considers that there are no significant regulatory barriers to entry to local media markets (at least as regards regulatory barriers falling within Ofcom's remit).

It is now up to the government to decide whether to retain or relax this rule.

The government has confirmed that it intends to accept Ofcom's earlier recommendations to liberalise the other two local cross-media media ownership rules and that secondary legislation to remove them is to be brought forward as soon as possible.

To view Community Week, Issue 484; 13th August 2010 in full, Click here

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