No consensus on measuring methods

Media: Report signals first steps towards defining concentration of ownership

MATHEW HORSMAN

Senior media executives were yesterday sharply critical of a Government- funded study on media cross-ownership, calling it complicated and unworkable.

The report, Methods of Media Market Measurement, is a first step toward changing the way the Government defines the media sector, and could form the basis of new rules aimed at limiting excessive concentration of ownership in the print, television and radio sectors.

But the method of defining market share would have to win "general consensus among industry leaders," conceded a spokesman at the Department of National Heritage, which has responsibility for media legislation.

Consensus looked unlikely, to judge by the initial response yesterday. Said one senior media executive, "this was put together by people who have never run a business and have never run a government."

The report's authors, the consultants National Economic Research Associates (Nera), recommend that the market dominance of individual companies be determined by audience share, rather than by the revenues they earn. In addition, different weights are given to different media, in an attempt to account for the varying influence radio, TV and print have on the public.

"This is far too complicated," Frank Barlow, chief executive of media and information giant Pearson said. "I grant that there is no perfect system, but surely we should not create a system that no one has ever tried and that no one accepts."

Mr Barlow, a leading member of an industry lobby group working on media ownership issues, helped develop a market share model earlier this year, based on accepted measurements such as newspaper circulation figures and radio and TV audience ratings.

By contrast, Nera recommends using different criteria depending on the media. For example, circulation figures might be a good guide to newspaper reach, but are not strictly comparable to television viewing figures.

The market share approach is meant, eventually, to replace the current media cross-ownership rules, which the industry agree are out of date and equally unworkable. Currently, newspaper publishers are limited to 20 per cent of an ITV licence, for example, while other restrictions cover cross-holdings between radio and local newspaper groups.

In a three-part reform package unveiled in a White Paper earlier this year, the Government immediately liberalised some of the rules covering media ownership, promising further legislative action by the end of the year.

The market share proposals are seen as a long-term solution to concerns about concentration, particularly following the introduction of new media such as digital TV and interactive services. Once introduced, the new approach would give regulators discretion to halt acquisitions that lead to a breach of pre-set thresholds, probably 10 per cent of the total media market. In addition, there would be limits on market share within any one sector, such as television, set at perhaps 20 per cent.

As part of its recommendations, Nera ran 17 simulations based on different variables. Its core run gave the BBC nearly 19 per cent of the total media pie, while Rupert Murdoch's News Corporation had 11.5 per cent. In virtually every simulation, Mr Murdoch's company exceeded the 10 per cent threshold set out in the White Paper.

Some executives feared that the market share approach would merely hold back competitors to Mr Murdoch without seriously jeopardising his position.

David Montgomery, the chief executive of Mirror Group, said: "If we really want to ensure choice, we should allow British media companies, or groups of companies, to achieve the size that will at least counterbalance the might of News Corporation. Old fashioned regulations with arbitrary thresholds simply hold back that day."