Media ownership 'needs clear and simple rules'

Edinburgh Television Festival: Government plan on cross-holdings welcomed
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Media Correspondent

The Independent Television Commission broadly welcomes the Government's proposed liberalisation of the rules governing cross-media ownership, it was announced in Edinburgh yesterday.

In its official response to the Department of National Heritage, the commission agrees that the present laws are in "urgent need of reform" and argues the need for regulation of the media to go beyond general competition law to guarantee diversity of ownership.

The ITC says: "The present system of tightly drawn rules has tended to encourage schemes of avoidance by those who wish to circumvent regulation.

"But it has also provided an important element of certainty for investors who know what the rules are and can make plans accordingly. Any new rules should be as clear and simple as possible to expound and apply."

Following intense lobbying by the industry, the Government last May announced a long-awaited liberalisation of the cross-media ownership rules. In the short term, it means that radio holdings can be expanded while newspaper groups with less than 20 per cent of national circulation can own up to two terrestrial television licences. Television groups will be allowed to move into newspapers, but otherwise remain pegged to a maximum of two licences.

In the longer term, the Government proposes to sweep aside the divisions between the different media and establish a national media market. A threshold would be established beyond which no single group would be allowed to grow. The system of market measurement - by audience size or revenue, for instance - and regulation is open to consultation.

The ITC supports the limited relaxation of the restrictions between newspapers and television companies, but expresses reservations about limiting ownership to two licences. "This does not take account of the widely differing size of the licence areas and their value. The limits should be set on a market- share basis, such as 25 per cent of total advertising revenue," it says.

t Programme quality could deteriorate during the next decade as terrestrial television's share of total revenue falls from 80 per cent today to 58 per cent by 2005. according to forecasts released yesterday.

Jonathan Davis, a consultant at the London School of Economics, told the Edinburgh International Television Festival that the share of viewing held by BBC, ITV and Channel 4 would not fall much below 70 per cent (compared with 90 per cent today) during the next decade, despite increasing pressure from satellite, cable and new media.

However, as terrestrial's share of revenue fell, so would the proportion of overall revenue spent on programme production. Subscription income would continue to rocket, helping satellite and cable companies lift their share to pounds 7bn by 2005, leaving the BBC and ITV under more pressure to compete in the hyper-inflationary market for sports rights.