Peter Brooke, the Secretary of State for National Heritage, announcing the start of a review of cross-media ownership rules, said it was vital that British companies were not dwarfed and the UK could 'participate in an enormously expanding market'.
The review is expected to report to Parliament by late autumn.
The issue of cross-media ownership touches basic concerns about plural sources of information in a democracy, and any legislative changes will have to contain protection for consumers. However, the National Heritage Department said the Government's aim is to loosen restrictions and anomalies - which at present, for example, prevent newspapers controlling television stations or national commercial radio franchises, and block ITV franchise holders from owning national newspapers.
The Government also assumes that the BBC, back in political favour with an indexed licence fee, will play a major part in Britain's assault on global media markets. It is seen both as ensuring the survival of domestic programme production and as a key to exporting global services, whether through satellite television and radio channels or sales of old programmes. Marmaduke Hussey, chairman of the BBC, has already started talking of the corporation as 'an empire without frontiers'.
Marjorie Mowlam, Labour's heritage spokeswoman, predicted 'a backroom deal will be done right at the top, between the Prime Minister and publishers', giving newspaper groups the right to expand into television as a quid pro quo for imposing value-added tax on newspapers in the autumn Budget.
Mr Brooke was asked on BBC radio's The World at One about Rupert Murdoch's position as publisher of five national newspapers and the major shareholder in BSkyB. The Secretary of State acknowledged that 'concentration of ownership in the UK is a critical factor that won't go away. But it is silly to concentrate on the UK; broadcasting is moving from being a highly regulated activity to an international market.'
Rather than restricting Mr Murdoch, the Government seems anxious to encourage British companies such as Carlton Communications and Pearson to take advantage of the dominance of the English language in global communications.
The Government is unsure, as are most media groups, what the future holds over the next three to four years. Mr Brooke pointed to the rapid developments in home entertainment, whether they were television programmes, computer games, films on demand, or videos delivered down the telephone line, as proposed by BT.
The review was foreshadowed in Mr Brooke's November announcement relaxing ITV ownership rules, which allowed a company to own two franchises and prompted the current takeover activity in which Carlton is buying Central while LWT is fighting a bid from Granada.