The Mission of Media in an Age of Monopoly

Respublica, by Justin Scholsberg

May 2016

How do you regulate concentrations of media power in a post-digital age? This is a question that has confounded media policy debates across Europe over recent years and it is one which, in spite of a number of inquiries and consultations following the unfolding phone hacking scandal in the UK, remains deeply unresolved. This essay is an attempt to move the debate forward by outlining how more virtuous media markets (those markets that serve to inform, defend and represent citizens) could be created in the UK and across Europe. The discussions and proposals of this essay are based on three widely accepted premises:

1. that the crux of plurality concerns rest on the potential for a small number of media voices to dominate
public conversation;

2. that the BBC – by far the dominant source of news across broadcasting and online platforms – should be
part of a new plurality framework; and

3. that online news intermediaries – especially in search and social networking – play an integral and
expanding role in directing information flows and should therefore also be included.

The challenge facing policymakers in the creation and preservation of virtuous media markets has been underlined by the impact of new technologies on the public sphere and the emergence of new forms of gatekeeping and monopoly power wielded by digital intermediaries. At the same time, ‘old media’ bottlenecks have not gone away in Europe and much of the world. Consolidation has been the prevailing trend in online news consumption throughout Europe favouring a relatively small number of mostly ‘legacy’ media brands.

Added to all this, the power vacuum left by evaporating profits and retreating corporate investors has put many newsrooms back in the hands of wealthy individuals, from local oligarchs in Eastern Europe hoping to capitalise on opportunities for political influence, to dot com billionaires in the US seeking to redefine the business of news.

Whilst the growth of participatory news platforms and an emergent ‘fifth estate’3has offered a challenge to dominant and incumbent news voices, it has far from levelled the playing field. Mainstream press and broadcasters still, in the main, have a much wider reach across fragmented audiences, and a far deeper reach into the corridors of power. Indeed, the broad thrust of empirical research suggests that news agendas on social media and blogging platforms are still predominantly shaped by legacy media, notwithstanding a small number of new entrants over recent years.

In response to these deeply unresolved problems, plurality and transparency have become contemporary buzzwords in media policy discourse across Europe. They seem to capture the ideal of what a healthy, virtuous and democratically legitimate media system looks like, as well as the limits of what governments and regulators can do before encroaching on media freedom and independence. If the number of media ‘voices’ is plentiful, and those who exercise voice are open to public oversight and scrutiny, the risks of political capture posed by media concentration (of politicians by proprietors or vice versa) are dissolved.

But of course, the reality is infinitely more complex. For one thing, increasing or preserving the number of media players in any given market is no guarantee for ensuring diversity of expression. Whilst some studies have indeed demonstrated an inverse correlation – suggesting that lower media concentration corresponds to greater diversity – others have found the opposite, suggesting that the more competitive a media market is, the more prone it is to producing homogenised content across the board. As the author of one such study concluded, “in the age of information plenty, what most consumers get is more of the same”.

As for transparency, complex financial structures remain a key mechanism by which the ultimate beneficiaries of media groups can remain in the shadows, even when apparently robust media transparency laws are introduced. Though this is not generally a problem in the UK and northern Europe, it explains why much of Ukraine’s TV, for instance, continues to be bank-rolled by non-disclosed offshore sources in Cyprus, in spite of a new law on media ownership transparency that came into effect in 2013. A report by Freedom House notes that whilst the new law prohibits the financing of broadcast companies from offshore zones, it is “easy to evade by creating a chain of three or more shell companies with a Ukrainian broadcasting company on one side and an offshore company on the other. Indeed, offshore companies have not been removed from corporate structures of Ukrainian TV channels as a result of the law’s enactment”. Alongside this, in Romania there is a marked problem with scrutiny and ownership transparency, with several government figures being implicated in corruption proceedings. This includes the charging of the former chief executive of US listed and regulated company CME, which was also owned by a US citizen at the time (more is detailed on this case later).

Nevertheless, plurality and transparency provide useful starting points for thinking through solutions and, ultimately, developing new legislation that replaces legacy frameworks. There is broad consensus that these frameworks across Europe are out-dated and not fit for purpose. In the UK, the adequacy of the existing ‘public interest test’ regime for monitoring media mergers was first called into question by Ofcom in 2010 when it recommended to the Government regular periodic reviews of media plurality. Since then, this recommendation has been endorsed by Lord Leveson following the 2012 inquiry he led into the ethics and practices of the press; by the Lords Select Committee for Communications in their 2014 report on media plurality; and by the government itself in its own communications review in the same year. And in 2015 Ofcom raised doubt on the necessity of the last remaining media ownership law prohibiting significant cross-ownership of ITV and national newspapers.

All of this has underlined the need for a new legislative and regulatory framework, which Ofcom has intimated in its repeated deference to Parliament in determining how plurality judgements should be made, how the balance between regulatory ‘bright lines’ (that can act as clear triggers for intervention) and flexibility should be struck in a new plurality regime, and what sorts of remedies could be applied. But more than five years since Ofcom first called into question the adequacy of the public interest test, and after more than five related public inquiries, we are still no closer to determining answers to these questions.

Whilst recognising that plurality and transparency are concepts that can be applied to the full range of established and emergent media policy arenas – from net neutrality to privacy and surveillance – the focus here is restricted to three areas of concern. They are particular to the UK context but have strong resonance for broader policy debates at the EU level and in many parts of the world.

The first addresses redistributive measures to promote plurality ‘on the ground’. The effects of media concentration in the UK are most acutely felt in the local news sector where, according to a recent report, just four companies now control more than 70% of the total market for local and regional news. At the same time, spending on long form and in-depth news coverage – especially current affairs programming – has faced the thin edge of resource cuts in news organisations across local and national media and both public service and commercial broadcasting. There is clearly a public interest in sustaining these forms of journalism. The most logical and achievable means of support is via a nominal levy on the revenues of large scale news intermediaries in online search and social networking, including Google and Facebook.

The second area of focus is the future of the BBC in response to the Government’s recent White Paper for Charter Renewal. Since the BBC accounts for a dominant share of news consumption across platforms, its independence, accountability and structure are fundamental to delivering on wider plurality goals. This paper argues that whilst BBC production must remain not-for-profit and entirely in public hands, decentralisation of both management structure and delivery is essential to ensure more robust independence, genuine  accountability, and internal plurality. Decentralisation in this sense should not be confused with, or used as a basis for rationalisation or cuts.

The third area concerns dominant news market players not subject to public service regulation – namely large scale newspaper and online news providers – but which nevertheless wield demonstrable influence over the wider media agenda and whose owners often enjoy privileged access to senior government ministers and officials. Given the acute risks of policy capture posed by such influence and access, there is a need to subject meetings between senior media executives and government ministers to greater public oversight and for clear bright lines in determining when to intervene in media markets with a view to remedying concentrations and bottlenecks that may have a detrimental effect on media plurality. Finally, there is a need for a new European task force to investigate potential ways in which news algorithms, operated by major online search and social networking services, could be subjected to regulation aimed at protecting and advancing plurality in the online news sphere.

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