Media Ownership Rules - United Kingdom

07 November 2002

Alix Bernard & Patricia McDermott













UNITED KINGDOM


Introduction


 

The current media ownership rules in the UK prevent any one entity acquiring excessive influence in the media sector, thereby ensuring plurality of voice and diversity of content.

However if the recent Communications Bill, introduced to the House of Commons on 19 November 2002, is enacted in its present form, it will introduce sweeping changes to the UK media industry, including overhauling foreign ownership restrictions and relaxing regulations, thereby attracting foreign investment and making the UK one of the world’s most liberal media markets.

In particular, the Communications Bill should introduce the removal of certain cross-media ownership rules. This will lead to a relaxation of the rules on joint ownership of national newspapers and local or national radio, of national TV and national radio, as well as ownership of national newspapers and Channel 5. The Bill will also introduce the possibility for non-EU ownership of ITV as well as potentially clearing the way for the two biggest ITV companies, Carlton and Granada, to merge.

(This is a report on the current media ownership rules in the UK. The rules that are proposed to be abolished by the Communictions Bill are indicated by *).

This report will be updated from time to time to reflect changes to the Bill.

1. Television


  • Foreign ownership restrictions - Can a non-EU entity control the following broadcasting interests in the UK?


Satellite yes
Cable yes
Terrestrial (analogue): Channel 3 no*
Channel 4 no
Channel 5 no*
Terrestrial (digital): Multiplex yes
DPS yes


  • Ownership aggregation limits -


i. Ban on holding two or more licences where an entity has 15% or more total audience share*.
ii. Ban on joint ownership of a national Channel 3 licence and Channel 5*.
iii. Ban on ownership of both London Channel 3 licences*.
iv. Ban on holding more than a 10% stake in 8 or more multiplex licences*.
v. Ban on holding more than 6 multiplex licences.*
vi. Ban on advertising agencies owning broadcasting licences*.
vii. Restrictions on religious bodies being granted digital television licences and restricted services licences*.
viii. Ban on local authorities owning broadcasting licences *.


2. Radio

  • Foreign ownership restrictions - Can a non-EU entity control the following broadcasting interests in the UK?


National analogue radio no*
Local analogue radio no*
National/local digital multiplexes yes
Digital services yes


  • Ownership aggregation limits -


National Level

i. Ban on holding two or more licences where an entity has 15% or more total audience share*.
ii. Ban on ownership of more than one analogue service or digital service*.
ii. Ban on ownership of more than one multiplex service.

Local Level

i. Ban on holding two or more local licences with shared audience, unless one is AM and the other FM, or a public interest test is met. [1]
ii. Disqualification from providing more than one non-simulcast local digital sound programme service on a single multiplex, unless there is another multiplex operating in the same geographical area.
[2]


3. Newspapers

  • Foreign ownership restrictions -


No restrictions on national or regional daily newspapers.


  • Ownership aggregation limits -


Most mergers of newspapers (or newspaper assets) where daily circulation is 500,000 or more can only be effected with the prior consent of the Secretary of State (SOS)*, whose consent can usually only be given after the Competition Commission (CC) has investigated the merger’s impact upon the public interest, in particular the need for accurate presentation of the news and free expression of opinion.

Exceptions to the requirement to refer a merger to the CC exist, where:


  • A newspaper is not economic as a going concern and that, if it is to continue as a separate newspaper, the case is urgent.
  • A newspaper is not economic as a going concern, and it is not intended to continue it as a separate newspaper.
  • A newspaper being transferred has average daily sales of 50,000 or less.


Transfers to entities with no existing interests, either directly or indirectly, in newspapers circulating in the UK are not caught, nor are transfers to proprietors whose newspapers, taken with those to be transferred, have an average paid-for circulation of less than 500,000 copies. Such transfers might however, be subject to general merger provisions of the Fair Trading Act.


4. Cross-media Ownership Restrictions


Newspapers/TV:

National Level


  • Ban on owner of national newspaper(s) with (combined) national market share of 20% being licensed to provide or hold more than a 20% stake in a national or regional Channel 3 service.
  • Ban on owner of national newspaper(s) with (combined) national market share of 20% being licensed to provide or hold more than a 20% stake in Channel 5*.
  • Ownership of a national/local newspaper and a national Channel 3 service or Channel 5 is subject to a public interest test*.
  • Ban on bodies in whom newspaper proprietors (whose national circulation is 20% or more) have a participation in excess of 20%, from holding more than 20% in Channel 3.
  • Ban on bodies in whom newspaper proprietors (whose national circulation is 20% or more) have a participation in excess of 20%, from holding more than 20% in Channel 5*.


Local Level


  • Ban on owner of national newspaper(s) with national market share of 20% being licensed to provide or hold more than a 20% stake in a regional Channel 3 service.
  • Ban on common ownership of 20% of the local/regional newspaper market and a regional Channel 3 licence or a digital service for the same region.
  • Ownership by a national/local newspaper of a regional Channel 3 service is subject to a public interest test*.


Newspapers/radio:

National Level


  • Ban on a newspaper(s) with (combined) national market share of 20% from being licenced to provide or hold more than a 20% stake in national radio services*.
  • Ownership by a national newspaper of a national/local radio service or a national digital service is subject to a public interest test*.


Local Level


  • No restriction on ownership between local newspapers and national radio licences (other than the public interest test*)
  • A local newspaper(s) with 50% market share may not provide a local radio service for the same area, unless that radio service shares its audience with another local radio service, and a public interest test is met.[3]
  • Ban on an owner of newspaper(s) with (combined) national market share of 20% from being licenced to provide or hold more than a 20% stake in a local radio service*.
  • Ownership by a local newspaper of a national/local radio service is subject to a public interest test.[4]
  • A local newspaper with less than 20% market share may hold up to 3 overlapping local radio licences, provided that one AM, one FM and one other type of licence is held (the grant of the third being subject to a public interest test). [5]


TV/radio:

National Level


  • Ban on holding a licence to provide a national Channel 3 service or Channel 5, as well as a national radio licence*.


Local Level


  • Ban on holding licences to provide both a local radio or digital sound service, and a regional Channel 3 service, where coverage area overlaps significantly [6].

5. UK Competition Law


The Communications Act will introduce a new regulator, OFCOM, (the Office of Communications) with competition powers and responsibility for ensuring that dispersed ownership and new market entry is complied with, and powers necessary to prevent unfair competition with a corresponding general duty to promote the consumer's interest.

In addition to the media ownership rules described above, the general statutory provisions applicable to mergers will apply.



Footnotes

[1] This rule is being replaced. Pursuant to a significant simplification of existing regulations, a new local radio ownership scheme will be introduced by The Communications Act, whereby at least 2 local commercial radio operators (in addition to the BBC) and at least 3 local or regional commercial media voices (in TV, radio and newspapers) will exist in most local communities.
[2] The Communications Act will introduce a provision concerning new acquisitions that no-one may control more than one local digital multiplex in areas where they overlap by more than 50%.
[3] See note [1]. In addition, the scheme will ensure that no commercial TV or newspaper company with a significant voice in a local area will be able to own a radio station unless there are at least two other stations in competition . Where such forms of cross-holding exist there will be at least 3 separate commercial owners of local/regional media (radio, TV and newspapers) in addition to the BBC.
[4] See note [3].
[5] See note [3].
[6] The Communications Act will permit joint ownership of a regional Channel 3 licence and a local radio licence in the same area, provided that there are at least 2 other radio stations that reach more than 50% of the population in that area.