Murdoch, Plurality and the Public Interest

There is one Australian who has long loomed large over British politics, and his grip on the media over here may get even stronger. Murdoch's News Corporation is looking to buy an additional 61% stake in BSkyB, the leading provider of pay-TV in the UK, giving the company outright ownership of the broadcaster. That Rupert Murdoch owns a lot of the British media is not news to anyone, but one commentator has said the acquisition of BSkyB will make the mogul into "Britain's Berlusconi".

The deal has had no shortage of vocal opponents. Last month, representatives of the Daily Mail, Daily Telegraph, Guardian, Daily Mirror and the BBC called on the Business Secretary Vince Cable to intervene in the takeover. Murdoch's actions can sometimes bring about some unlikely champions of democracy and plurality of voices.

When Murdoch acquired a stake in ITV in 2007, it was Richard Branson who took up the cause and declared the Murdoch empire to be a "threat to democracy". Similarly, the calls for Cable to intervene may have had more to do with the economic and strategic concerns of Murdoch's rival media companies than a genuine concern for democracy.

Following the pressure from the media rivals and a range of other voices, Vince Cable issued a public interest intervention notice. This means that before the takeover can go head, the impact on the "plurality of persons with control of media enterprises" must be assessed. If the regulators conclude that there would not be sufficient plurality, then Cable has the discretion to block the takeover or permit it subject to conditions. While the intervention risks the wrath of News Corp, there are reasons why the move is politically expedient for Cable.

The Liberal Democrats have faced criticism on a number of government policies, notably the proposals to increase university tuition fees. As a Liberal Democrat in the Coalition Government, being seen to stand up to Murdoch would give Cable a boost with his party's core supporters.  

During the 2010 election campaign, one former editor of Murdoch's newspaper the Sun said that electoral success for the Liberal Democrats could "lock Murdoch and the media elite out of UK politics." That is unlikely, but the Lib Dems at least need to make sure they are not seen to pander to the mogul's interests.

While the main protagonists in this episode have their economic and political motives, there is an important point of principle supporting the intervention. It is undemocratic for one person or company to have so much control over the British media. The complete control of BSkyB, which has an 80%+ share of the pay-TV market, has to be considered alongside News Corporation's newspaper titles, which were recently estimated to have a 37% share of the national newspaper market (according to the Beehive City website).

Ownership of the media on that scale not only provides a greater opportunity to influence the political agenda, but also provides leverage with politicians. Last month, the MP Tom Watson explained in the House of Commons why MPs were reluctant to investigate allegations of intrusive practices by journalists:

... it is almost laughable that we sit here in Parliament, the central institution of our sacred democracy-among us are some of the most powerful people in the land-yet we are scared of the power that Rebekah Brooks [Chief Executive of News International] wields without a jot of responsibility or accountability. The barons of the media, with their red-topped assassins, are the biggest beasts in the modern jungle. They have no predators; they are untouchable. They laugh at the law; they sneer at Parliament. They have the power to hurt us, and they do, with gusto and precision, with joy and criminality. Prime Ministers quail before them, and that is how they like it. That, indeed, has become how they insist upon it, and we are powerless in the face of them. 

Even if there is some exaggeration, there is also some truth. Freedom of Information requests have shown that Murdoch and his representatives have had access to those in the heart of government. While Cable's intervention may buck that trend, other government policies have been more favourable to the News Corporations interests – most notably the recent decision to freeze the BBC licence fee for 6 years.

The core question for the regulators is whether the takeover really will affect the plurality of persons controlling media enterprises in Britain. You might argue that Murdoch already has control of BSkyB (currently a 39% share), so the increase in shares will not affect the plurality of people controlling the media. BSkyB is already synonymous with Murdoch, and an increased stake will not affect that.

Earlier this year, however, the Court of Appeal considered BSkyB's shares in ITV and found that, when considering media plurality, the regulators have to look at the extent to which a company controls a media outlet. That line of argument was pushed by Murdoch's lawyers. They argued that a 17.9% share in ITV gave Murdoch only a limited amount of influence in the company and therefore had little impact on media plurality.

Now that argument works against the mogul. Total control of BSkyB would reduce the countervailing powers within BSkyB (ie the other shareholders) and thereby increase News Corporation's influence. The increase in shares can affect the plurality of media controllers.

You may still think that the concerns are overstated. BSkyB cannot become the Fox News of Britain, as the broadcasters here are required to cover news and politics with "due impartiality", which stop TV channels becoming politically biased. However, the impartiality rules still leave much to the discretion of the broadcaster, such as the selection of stories and the news agenda. The rules on content only guard against the more overt forms of bias. For that reason, even with the broadcast regulations, it is important to ensure that media ownership is fragmented. Controls on media ownership and rules on impartiality are complementary, rather than a substitute for one another. For this reason, the presence of the content regulations should not make us more relaxed about media concentration, and the presence of ownership limits should not be advanced as an argument for deregulating content controls.

There are problems with the public interest test, as it leaves the regulators with difficult questions of judgement. For example, it is not clear what level of plurality is ideal in a democracy. It is also difficult to say when an acquisition of shares will threaten plurality.

Do the same objections arise if Murdoch seeks to control 80% or 60% of BSkyB, rather than 100%? The public interest test has some limits both in the test for plurality and in the remedies that can be imposed. However, it is one of the few tools we have left to guard against media concentration. If it is not used now, when will it be?

As for Murdoch becoming "Britain's Berlusconi", - to many, that has already occurred. There is, however, one crucial difference. The people of Italy can at least vote Berlusconi out of office. In Britain, Murdoch has a presence in government whichever party is in power. That makes it all the more important that any increase in his hold on the media is closely scrutinised.