Ofcom should have final say on media mergers, says Lords committee

Media regulator Ofcom, rather the UK culture secretary, should have the final say on whether media mergers should go ahead, according to the House of Lords Communications Committee. 

Publishing its report on media plurality today, the committee called for a new framework for regulating the ownership of media companies engaged in news and current affairs, with Ofcom taking a leading role in deciding whether transactions should go ahead.

The call for a new regulatory framework follows the controversy surrounding News Corp’s move to take full control of BSkyB three years ago, which unwound spectacularly amidst the furore surrounding the News International phone hacking scandal.

According to the Lords committee, Ofcom should conduct periodic plurality reviews, providing an assessment of the sufficiency of plurality at the time. The Secretary of State should have a role in giving political authority to the conclusions of these reviews, giving guidance and clarity to media companies about the prospects of any transaction going ahead,

The committee called for a clear distinction to be established between competition and plurality policy, with transactions assessed on both grounds, with responsibility for a final decision in both cases resting with Ofcom. The latter should also have the power to intervene after periodic reviews if there are significant changes in the market. However, the committee called for a “high bar” to be set before the regulator can intervene.

Separately, the committee called for the BBC to be included in any assessment of media plurality but said it should not be subject to control measures outside its own regulatory framework. It also said that the government should, in any future Charter Review, support the BBC that the licence fee should be for the BBC alone, although it did not call for funding to S4C, which is now supported by the licence fee, to be removed.

“Our proposal is for a framework of two key elements. The first, which is new, is the undertaking of a plurality review on a predictable periodic basis, which should set the context for the second: a modification of the existing arrangements for a review of specific transactions which occur in the interval between one periodic review and the next. We would expect the latter to happen infrequently,” said Lord Inglewood, the Conservative chairman of the committee.

“There are a number of important reforms in our proposal, as we have tried to reshape the role of Government, Parliament, regulator and competition authorities when it comes to the way in which media mergers are assessed, who has the final say and how they should be able to intervene.”