Ofcom’s report on measuring media plurality

Summary and Report, 19|06|2012

Executive summary

1.1 In October 2011, Jeremy Hunt MP, the Secretary of State for Culture, Olympics, Media and Sport asked Ofcom to answer five questions relating to media plurality.

1.2 This request followed Ofcom’s consideration of plurality in relation to the proposed NewsCorp/BSkyB transaction (the Public Interest Test) published in December 2010. Our report on that proposed transaction suggested that the existing framework for considering plurality might no longer be equipped to achieve Parliament’s policy objective.

1.3 In answering the questions, which are summarised below, we first considered the underlying goals of plurality, its definition and scope:

  • Plurality matters because it makes an important contribution to a well-functioning democratic society through informed citizens and preventing too much influence over the political process.
  • We have defined plurality as a) ensuring there is a diversity of viewpoints available and consumed across and within media enterprises and b) preventing any one media owner or voice having too much influence over public opinion and the political agenda.
  • Plurality needs to be considered both within organisations (i.e. internal plurality) and between organisations (i.e. external plurality).
  • In terms of scope, a review of plurality should be limited to news and current affairs but these genres should be considered across television, radio, the press and online.

1.4 An effective framework for measuring media plurality is likely to be based on quantitative evidence and analysis wherever practical. However, there are also areas where a high degree of judgement is required. The appropriate approach to exercising such judgement is ultimately for Parliament to debate and determine.

Ofcom’s answers to the 5 questions

1.5 What are the options for measuring media plurality across platforms? What do you recommend is the best approach?

  • There are three categories of metrics relevant to measuring media plurality: availability, consumption and impact. All should be included in a review of plurality, but the consumption metrics, especially reach, share and multi-sourcing, are the most important.
  • In addition to metrics, other relevant contextual factors should be considered, for example governance and regulatory frameworks such as those which ensure impartiality.
  • Given the dynamic nature of the news market, the metrics framework itself should be assessed during each review to ensure its continuing efficacy and relevance.

1.6 Could or should a framework for measuring plurality include websites and if so which ones?

  • Online news, in a wide variety of forms, is used by a significant and rapidly growing proportion of the UK population. It is a dynamic and diverse sector. Online should be included in a plurality review.

1.7 What could trigger a review of plurality in the absence of a merger, how might this be monitored and by whom?

  • We have considered the merits of different potential triggers for a plurality review, in the absence of a merger. On balance, we believe a periodic review every four or five years provides the best approach. We do not believe reviews should be triggered by metrics or complaints, nor do we believe there should be scope for discretion to trigger a review between the fixed periodic reviews.
  • In addition, there may be merit in an “exit trigger” (i.e. a plurality review being triggered by the exit of a news organisation) but only if a mechanism can be designed that avoids subjecting the market to continuous review, and avoids too heavy a reliance on discretion. The need for such a trigger will also depend on the frequency of the periodic reviews.
  • Further consideration is required to determine whether the existing merger process would sit within a new proposed plurality regime or continue in parallel with it. Either scenario may be desirable but the regulatory framework needs to be consistent and avoid a double jeopardy outcome such that more than one plurality review is triggered by the same cause.

1.8 Is it practical or advisable to set absolute limits on news market share?

  • Absolute limits could take the form of a prohibited share or a prohibited transaction.
  • A prohibited share would provide the clarity of a simple binary rule. However, setting absolute limits leaves no room to take account of the broader context, and this creates a risk that it is not possible to address issues of commercial sustainability and innovation in an appropriate manner. On balance, we do not believe introducing a prohibition on share to be advisable currently.
  • The only prohibited transactions currently are those subject to the “20/20” rule. This prevents an organisation with more than 20% of national newspaper circulation from holding a share of 20% or more in a Channel 3 licence or licensee. The case for retaining or removing it in the context of a new proposed plurality regime (including the existing merger framework) needs to balance the benefits of clarity and certainty on the one hand versus flexibility on the other. We believe it is for Parliament to decide where this balance should be set.
  • Any review of plurality needs to consider what level of plurality is sufficient. However, an assessment of sufficiency at any point in time is challenging as it requires a subjective judgement there is no analytic test analogous to the economic criteria used in competition analysis, and no single accepted measure for plurality nor consensus as to where the level should be set. Further, it is unrealistic to seek an absolute statutory definition of sufficiency, as the market is dynamic and notions of sufficiency change.
  • A first step could be to describe sufficiency in qualitative terms. We believe the features of a plural news market would include many or all of the following: a diverse range of independent news voices; high overall reach and consumption with consumers actively multi-sourcing; sufficiently low barriers to entry and competition to spur innovation; economic sustainability and no single organisation accounting for too large a share of the market.
  • It may also be possible to develop a view as to what levels of the key consumption metrics provide an indication of a potential plurality concern, so that these levels are taken into consideration within a plurality review, without being regarded as absolute limits.
  • It will be for Parliament to consider whether it can provide any further guidance on how sufficiency should be defined, and possibly, in so doing, the extent to which the current level of plurality delivers against this. Absent such guidance, this may have to be left to the discretion of the appropriate body empowered by Parliament to undertake any plurality reviews.

1.9 Whether or how should a framework include the BBC?

  • The BBC has a leading position in television, radio and online news and should be included in any plurality review. On the basis of a new proposed plurality regime involving periodic reviews, with the BBC included in such reviews, there is no separate need for the BBC’s position itself to trigger a review.
  • Given the BBC’s significant presence in news, and the pressures it faces to consolidate its newsgathering operations in order to deliver savings, we recommend the BBC Trust assesses the BBC’s contribution to plurality, both internal and external, and considers establishing a framework for measuring and evaluating this periodically.

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