Afternoon Hearing on 17 July 2012

Claire Enders and Robin Foster gave statements at this hearing

Hearing Transcript

(2.00 pm) MR JAY Sir, the first witness this afternoon is Mr Foster, please. LORD JUSTICE LEVESON Thank you. MR ROBIN EDWARD FOSTER (sworn) Questions by MR JAY MR JAY First of all, please, your full name.
A. Robin Edward Foster.
Q. Thank you. You have kindly provided us with a witness statement dated 17 July 2012. Are you content to confirm the truth of its contents?
A. I am. LORD JUSTICE LEVESON Mr Foster, thank you very much indeed for the statement and for the report on news plurality in a digital world, which you've clearly prepared timeously. I'm very grateful to you.
A. Not at all. It was a great coincidence that it was published this very day. LORD JUSTICE LEVESON Oh, it's today?
A. Today, yes. MR JAY Mr Foster, you explain to us your expertise in paragraph 1.1 of this statement and indeed what Communications Chambers is. Can I ask you, in your own words, to summarise that for us?
A. Yes. I'm an adviser on media policy regulation and strategy and I was one of the founding members of Communications Chambers, which is a consultancy organisation which does work in those areas. I was previously in senior strategic positions at Ofcom, the Independent Television Commission, and the BBC, and since leaving Ofcom I've worked in a number of policy roles, most notably being on the independent steering board of the previous government's Digital Britain project. I've written quite extensively on media policy issues, including plurality, and as has just been noted, I've just completed a report on news plurality in the digital world for the Reuters Institute, which was funded by the Joseph Rowntree Reform Trust.
Q. Thank you. We're going to focus on your statement, not the report, although we've read the report, unless there are any particular points at the end of your evidence which you'd like to bring out of your report which we haven't adequately covered in your estimation. The importance of plurality, first of all. Maybe all the witnesses are going to be agreed about the underlying concept here, but in other words could you explain to us how you see it?
A. Yes. I think most people would agree that the news media have a significant role to play in our democratic society and plurality is an important aspect of that. It involves two main things in my view, and this is not new thinking by any means. I think you'd find this in most material about plurality. The two things are to make sure there is a reasonably wide range and diversity of news and opinion available to the public, and the second is to make sure that no single one of those news providers or a few news providers become so powerful that they have too much of an influence on opinion-forming and the political agenda. So two aspects of plurality. As I say in my report, there are a number of different measures available to regulators and policy-makers to try and secure those outcomes.
Q. Thank you. Are you looking at news provision in the main or are you looking at or across the whole range of media industries as other witnesses might be encouraging us to do?
A. Well, I think there is certainly a case for starting with a wide perspective and looking at wider cultural activity and output in the UK. Certainly different aspects of culture and content can have an impact on the way in which we think about society and our understanding of social and political issues, but in my view, one has to be practical about these things and in the end, the most important focus for any debate about plurality, it seems to me, is on news media and related current affairs, opinion and debate. So whereas it would be nice to think about everything, the most important aspects, in my view, are plurality issues related to the provision of news.
Q. So your approach is similar to, if not identical to, Ofcom's approach on that particular point?
A. If I can be described as having an approach, yes, I would agree with that, yes.
Q. You tell us on the second page of your statement three main approaches to securing media plurality. The first one is a structural approach. Could you explain that one for us, please?
A. Yes, I think it's the structural approach which tends to get most focus in the plurality debate. That is about ensuring, through media ownership and concentration rules, that there are, if you like, enough news providers in any particular market. So structural approaches might include things like caps on the number of media outlets you can own as a company or as an individual so, for example, a number of television stations or number of newspapers or they could involve caps on market share so the amount of the newspaper market in terms of readership or revenues. So a couple of different approaches, but essentially they are measures designed to influence the structure of the industry and the number of players in it.
Q. Behavioural approach may be self-explanatory but again, in this particular area, what does it amount to?
A. I hope it is self-explanatory. It already exists in a number of forms in the UK. For instance, we have regulation of broadcast news, which requires a certain amount of an investment in and type of news content. In other countries, behavioural regulation is used to influence the way in which news providers present content and provide access to alternative view points. The idea is that rather than focusing on the number of players or the size of news providers, the focus here is on what they do and regulating a sort of plurality, an internal plurality outcome.
Q. Public support. That one is self-explanatory. We're talking largely about forms of subsidy and other means of encouraging behaviours by paying for them?
A. That's right, and we already have two big interventions in the UK in the broadcasting news market in the form of the licence fee which funds an extensive news gathering operation at the BBC and also the way in which we regulate ITV, Channel 5 and Channel 4.
Q. I asked the Ofcom witnesses about the differences between plurality and competition. You've provided your own explanation of the difference. The one concentrates on individuals as consumers, the other is individuals as citizens, and of course, plurality is concerned with the latter, not the former.
A. That's right. I thought I would insert a paragraph into my statement to that effect just because quite often one response to the plurality debate is: well, can't we just leave it to the normal workings of competition law, competition policy? And while the outcome of competition law can help the plurality of news provision, it doesn't necessarily provide all of the things which we, as a society, might want in terms of range and diversity of news, and hence there is, in addition to competition the competition framework, a public interest framework which I think needs to be applied. I suppose the analogy I would use is rather like if you think about supermarkets, the competition authorities can make sure that there is effective competition between four or five main supermarket chains and that they behave sensibly in terms of pricing and quality of goods, but what competition law can't do, I suggest, is make sure that they all offer a very big range and diversity of products if it's not in their economic interests to do so. So there are similar effects at work in the news market too.
Q. The risk of overconcentration now, Mr Foster. You've identified two important contradictory but related trends affecting the UK and worldwide news market at present which have complicated consequences for market concentration. Those are economic pressures facing established news providers and continued growth in popularity of new digital media and social media. So these trends are, on one level, pointing in different directions, one for a greater concentration into fewer hands, one for greater proliferation, but you also point out that there is a degree of causal link between the two. Have I correctly understood it?
A. Yes, that's exactly so, and I think that there are these two forces working in the market at the moment and I don't think anyone really quite understands what the outcome is going to be. The established news providers undoubtedly are facing significant economic challenges, but there are also substantial opportunities for them in the digital world. The new digital news providers seem to offer quite a lot more scope for, if you like, pluralistic supply of news, but I would suggest in a way that the development of those sources is still at a reasonably fragile state. So a lot of uncertainty ahead. Some opportunities, but also some big risks, too.
Q. You've identified the threats flowing really from the economic pressures. This is paragraph 3.1.
A. Mm.
Q. I think we understand the first four bullet points, but the fifth one, please, on the next page, page 4, where you say: "As yet, no clear sign that enough consumers will be willing, through direct payment, to make up the gap in lost advertising revenues in order to support a full service news proposition." Can you please explain that one for us?
A. Yes. To an extent, that is linked to the previous bullet points and the different trends which you can observe in the market. What's happening to the providers of packages of news, the established media brands, is that they are facing more competition, they are, to an extent, losing readers, their revenues, which are have in the past relied substantially on advertising are moving to new media, not necessarily in the news market but to other digital media companies, and if they are going to survive and prosper in the new digital world, eventually they will have to find new sources of revenues to make up the difference. LORD JUSTICE LEVESON Effectively they've not been able to monetise online newspapers. The Paywall
A. So far some progress is being made. The prospects offered by the new newspaper apps for smartphones and tablets offer greater prospect of future revenue, but you're quite correct; at the moment, I don't think any newspaper firm really knows whether if they're going to be able to replace the lost revenues from the analogue world, if you like, with new sources of digital income. LORD JUSTICE LEVESON It is rather disturbing, in one sense, that a newspaper puts effort and devotes resources into producing news which it then makes available for free to anybody on the Internet.
A. I think that's been one of the big problems, that in the rush to get involved with the early stages of digital media, newspapers took the view that it was important to get readers rather than income. I think now those strategies are starting to change and the uncertainty about the future is how quickly they can change their strategic direction and start, as you say, to monetise their valuable product. I've seen various commentators, for example, postulate that the future of news in the end will be highly polarised. There will be a small number of providers of high value news to those who are really interested and prepared to pay for it, and the rest will be relatively I hesitate to use the word "low value", but probably low investment news which will be made free of charge for those who are less interested, and there is a risk that the middle market might disappear, if you believe that sort of future prediction. LORD JUSTICE LEVESON An example of the former working would be the Financial Times.
A. Yes, and certainly the newspapers which have found it easiest to start to monetise their product are those which have something of special or unique value which their target audience is prepared to pay for. It's harder for general interest newspapers to persuade consumers that it's worth paying for something which they can find a lot of free of charge elsewhere on the Internet. I think, if I may, the point that I was making at the end of all of this was that because of these economic uncertainties, I think it is sensible and appropriate to take a relatively cautious approach in thinking about new caps or ceilings on ownership in the news media market for the very reason that we just don't know what the how those economic forces are going to develop. MR JAY You've already touched on this, but your statement goes on to say: "Even markets the size of the UK may not in future be able to support the range of competing local or national news brands that have been available to date." May I ask you this question: leaving aside the issue of subsidy, can these market pressures be overcome by restricting concentration through limits on ownership or is it simply that the available consumer revenues will not support the level of diversity that we have now?
A. I don't think I know the answer to that. I think the point that I was trying to make is that given those uncertainties, we have to be very careful in introducing regulation which makes it even tougher for the newspapers to make a living, and as I go on in my statement to note that I think one of the good things which Ofcom has proposed is a series of periodic reviews, because this market is changing over time and we need to keep those changes under review while deciding what to do about plurality.
Q. Looking at the digital environment, of course, there are different types of provider and Ofcom have explained those to us. You say though that: "Online only investment in news origination is still comparatively small." To what extent is this because it's comparatively easy to source news from elsewhere?
A. I'm sure that's part of the reason. I'm also sure it's because also part of the reason is that none of this looks particularly economically attractive to new entrants, so the business models don't add up. So we've identified one of the causes of that but there are no doubt other reasons as well.
Q. Would you anticipate that as traditional news generation sources reduce, there will be a corresponding increase in investment in news from online only providers?
A. I wouldn't like to go that far, no. I think this is one of the big issues that we really don't know the answer to are. What I would say, though, is that I don't think we should assume that the game is up for established news providers. The point I'm trying to make is that they have some tougher challenges ahead, but because they have the brands that they can call on, they have the loyalty of still quite large readership bases and because they have the investment in high quality journalism, they do stand a chance of creating compelling new digital products which are better than those offered by new entrants. So the game isn't over by any means; it's just a very tough transitional time that they're going through.
Q. Under the subheading "A wider debate": "If news supply of direct relevance to the UK itself is only modestly improved by the Internet, there's a much greater increase in the volume and diversity of discussion, commentary and opinion." Can I ask you, please, to amplify that point?
A. I don't think I have a huge amount more to say that I have in my witness statement. The point is that although we tend to think of the important aspects of news as being focused around original journalism, investigative reporting and possibly high-cost correspondents around the world, in my view there is some value in what digital media do, which is to allow individuals to talk about these things in a much more wide and open manner than was ever available before. So although the original news reports may be limited in number, the opportunity through blogs, through social media, through like Facebook and Twitter, for example for individuals to take a subject, talk about it, share their views with other people, and indeed even start to create their own news is something we should value and something which adds to the plurality of debate in the country.
Q. Multi-sourcing of news. Of course, that's relevant to plurality, as the Ofcom witnesses have explained. It's on the next page, page 5. A world in which everyone accesses a range of news sources is inherently more pluralistic than one in which most people watch only one channel or whatever, and you say here the data is encouraging, the figure of 4.8 being the average number of sources consumers use for news.
A. Yes, I think it is encouraging and Ofcom are right to start to include this when they think about plurality, because clearly if you have a world in which large numbers of people consume half a dozen sources of news that's different from one where we relied on one or, at most, a couple of sources, perhaps their main newspaper and their main broadcast news supplier. So this is one thing which digital media makes possible. It's a big benefit going forward.
Q. Search and social media. I think this subheading is self-explanatory. Facebook and Twitter and the way in which these are capable of adding to the plural mix. But can I ask you please to explain the filter bubble phenomenon which you do in the next subparagraph?
A. Yes. This, I suppose, is the counter to the benefits which I've just talked about of sharing and creating news, that for various reasons digital media has been accused of limiting the range of news and views which people over time have access to, the reason being because if you're using a search engine to access news, for instance, and you are prepared to have personalised searches, the search engine itself will learn your preferences over time and start to present certain types of news or news supplier in front of you, perhaps to the detriment of a wider range and diversity of sources. It is LORD JUSTICE LEVESON As I said this morning, that's rather like deciding that you're going to go to a newsagent and buy one newspaper as opposed to another.
A. Absolutely. I was going on to say that it's not clear to me that that is any worse than the position we had in the past, although you could argue that even the partisan newspapers did tend to include a sort of range of different commentators and views which you might not otherwise have come across, to varying degrees in varying newspapers, but I was going to say that looking further at this, the evidence so far seems to be fairly inconclusive, because some studies have been done which show that the effect of using digital media channels simply complements what people were accessing already through their traditional news media rather than substitutes for it. So, for instance, there's been a piece of research done by the Pugh Centre of the US, which I think found that social media in particular tend to provide news stories which are incremental to the news which people were already accessing, rather than narrowing down the field. Nevertheless, I think it's one of those things which many people have written about and we shall be aware of. MR JAY A related issue: new digital intermediaries. The rise of those you call them gatekeepers, who are playing an increasingly important role in helping news providers get to market and new users find and access news content on a range of digital devices. And the devices or the mechanisms are identified in the four bullet points on the next page.
A. Mm.
Q. Those are capable of influencing the news to which we have access, presumably?
A. Well, they could be. It's one of the things which I talk about in the report which I've written for the Reuters Institute. As you say, there are different categories of digital intermediary which I've tried to identify, they're not all the same and they have different characteristics, but they all do provide channels by which we, as users, can access a range of news suppliers. So we need to be interested should be interested in what they do and how they arrange their activities. What I did in my report was look at four different aspects of their activity: the extent to which they are increasingly important channels through which we access news, the extent to which they themselves take what I'd describe as editorial-like decisions about the content they provide, their impact on the overall economics of news provision, which could be quite significant, and finally, whether they have the appetite for and the capacity to exercise any significant degree of political influence. It seems to me obviously true that those are four quite important areas that we should try and understand in thinking about the future of the news market.
Q. You point out the current plurality framework has little to say about the activities of these entities at all. I think the Ofcom view was that this was something government or Parliament should address through executive action. Would you side with their view?
A. I would, because it seems to me that at the very least, if Ofcom is asked, as it has, I think, proposed if it is asked to carry out a periodic review of plurality in the news market in the UK, then the influence of these digital intermediaries, how they impact on the news we have access to and the range of different news sources which are easily available, those are the sorts of things which absolutely should be part of an Ofcom plurality review, and my understanding is that there would have to be some definitional change in the Act to make sure that they were incorporated as a media enterprise so that they could come within the Ofcom remit. I have to confess I haven't looked in detail at the sort of legislative changes which would be required but it does seem to me this is one of those changes. LORD JUSTICE LEVESON Mr Foster, let's take as a given that if there is to be a change it requires Parliamentary imprimatur, but with respect, that jumps to the end and may tell me little more than I knew when I began. What I need to understand is what are the risks of doing whatever possible courses of action there are and what are the benefits.
A. Yes. LORD JUSTICE LEVESON Your enormously valuable expertise, I hope, can help me, recognising of, course, that Parliament ultimately has to decide, as it will have to decide about any recommendation I make.
A. Absolutely. I think, as I was saying, it seems to me the minimum step as far as these digital intermediaries is concerned is to make sure that Ofcom has the ability to include them in a market review of plurality and to properly assess both their positive and potentially negative effects in reaching a view about the sufficiency of plurality at any particular point in time. MR JAY The inferences you draw from the market trends you survey. You say, under 3.4: "We should act cautiously when considering the introduction of any new structural rules to address shortfalls in media plurality." Looking at the point really by way of overview, if digital developments, you say, meet more optimistic expectations, then plurality will be secured by those developments without more, and one therefore doesn't need more rules. But in any event, you have some principled or practical objections to ownership and concentration rules which you identify in the four bullet points you see there. Can I ask you, please, about the first? You say that they may well ensure the existence of a number of different news providers but they cannot in themselves ensure that a diverse range of news is supplied. Is that through a want of internal plurality? What's the problem there?
A. I guess one can envisage an outcome in which the plurality rules have formulated have managed to secure, say, half a dozen different news suppliers in the market, but then there is no particular guarantee that those news suppliers will provide a range and diversity of news. They'll be guided by a number of influences, one of which will be what their advertisers want to see. Another will be the may be the political preferences of their proprietors. So all I'm pointing out here is that these are quite blunt tools. They may well achieve a positive outcome but they're not guaranteed to.
Q. There might be some sort of relationship though between the number of news providers on the one hand and the range of news supplied on the other.
A. That might be
Q. The causal link may not be that powerful?
A. Yes, exactly so. That may well be the case.
Q. Can I ask you to explain your third point, the ethics and conduct of the news media. Doesn't that raise a separate point from plurality considerations?
A. I think it does, and you're correct to point that out. The linkage, I guess, would be that and this may be a point I make only in my main Reuters report, rather than in my witness statement, but the linkage may be this: that the larger and more powerful the media company is the more it may come to believe that it itself is beyond the grasp of the law of the land, so it's it may not be a huge point but there is some linkage between the two. Here I was noting really that if you were looking to plurality rules to make a big impact on ethics and conduct, you're probably looking in the wrong place. LORD JUSTICE LEVESON You say that there is some linkage, but is that a linkage which you derive evidentially or just intuitively because of the way in which media companies operate?
A. I think it would be intuitively. LORD JUSTICE LEVESON There may be evidence to support it, but I'm just looking to see whether there was any particular evidence you had in mind.
A. No. MR JAY After your fourth bullet point, you refer to the possible need for consolidation to secure ongoing viability of news provision. Then you deal with the question of organic growth. You may have a commercial entity which is successful enough to acquire greater market share and you're saying: well, if that entity runs the risk of being divested in some way or pruned back in a mandatory fashion, then that would be highly undesirable as a matter of principle, really. But some would say it's essential to achieve greater plurality, wouldn't they?
A. Yes. I think there are trade-offs to be made here. It becomes harder with organic growth, I think, than with the case of mergers and acquisitions. With organic growth, I guess let's imagine we're talking about a world in which it has been suggested or that has a cap on market share has been introduced of, say, 25 per cent and the company is very successful in building readers and breaches that limit. There is then a difficult choice to be made. The plurality case may be to tell that company it has to stop being so successful. The interest of securing high quality news may be which people like to read or to watch or consume may work in the other direction. Where there is a merger and acquisition being proposed, I think it is slightly more straightforward, that you're not intervening in the case of something which has developed in the market. It's, if you like, a more artificial transaction. Likewise, if you think about a threshold applying in a world of organic growth, a company, a newspaper or a broadcaster could find itself going above the threshold purely because somebody else has done badly, which again would seem rather unfair, to take action on the successful company if the reason it has increased its market share is because somebody else has lost readers or viewers or has exited the market.
Q. In the fourth chapter of your evidence, you consider changes which could deal with problems and risks. There are four different areas here. The first one, 4.2 this is: "Improved measurement and processes." Some of those, as you say, have been recognised by Ofcom. In a nutshell, is your view very similar to Ofcom's view on these matters?
A. I didn't hear their evidence this morning, but I have read the paper which Ofcom prepared and I would say that is a fair assessment. It may be worth just saying what lies behind that, because this is all about, it seems to me, whether you can have a hard and fast simple metric for measuring plurality or whether you have a more discretionary judgmental approach, which I would favour and Ofcom, I think, is proposing. It seems to me the way you can see the advantages of a bright line, straightforward ceiling or cap-based on one form of measurement. It provides a lot of certainty in the market. It gives everyone a sense of where they are. It avoids a lot of regulatory wheelspin in making assessments and so on. The problem may be that it is entirely wrong in terms of its impact on the market and there may be other many more nuanced issues which a regulator should really take into account when thinking about real plurality in the marketplace. How do you decide which route to take? I would use a couple of areas to guide that decision. The first, it seems to me, is: can you find a simple and effective single metric which you could use for a bright line cap or ceiling? Secondly: is the market that this would have to be applied in sufficiently robust to withstand getting it slightly wrong now and again? I think in the world in which we live here, first of all, we can't find a simple, straightforward single metric, as Ofcom has explained, and secondly, as I was pointing out earlier on, I think the market is going through a very unpredictable transitional stage, so it seems to me that the dangers of having a single, straightforward bright line approach at the moment outweigh the risks of going down the other route. That might change over time, but at the moment that's how I see it.
Q. Ofcom places particular emphasis on the metric of consumption, on my understanding of their evidence. You suggest, as you say on page 8, that more work needs to be done in two areas. Can I ask you, please, to explain what you have in mind there?
A. Yes. Consumption is a very good starting point and I agree absolutely with what Ofcom says there in terms of the need to look at share of consumption, the reach of news media and the multiple sourcing. I think, though, the problem we have with all of these metrics is they tell us about exposure to news media but they don't tell us about impact and influence. Ofcom, I believe, have done some work to look at how you might get a better sense of the impact that different news media have on individuals, as they're thinking about matters of public importance. I think that there is still more work to be done here, which is what I'm suggesting in this report in this statement. Not necessarily that it will provide a single more sophisticated metric to use, but it will add further helpful background when working out whether we have enough plurality or not. One particular example I think is worth noting: a lot of the surveys which tend to be used at the moment talk about news, not surprisingly, and the importance to you of news as an individual. I think that the focus on the word "news" may be missing the point somewhat, in that there are lots of other elements of news media commentary, debate, discussion, investigation which might have more of an impact on the way people make up their minds about key issues than actually reading the news. So I think there is scope for doing a bit more sophisticated research here, which will help us get a better understanding of just how those factors work on individuals.
Q. Then we move to the issue of sufficiency of plurality. Sufficiency, of course, is part of the statutory test in the Enterprise Act, and you, as others have done, have pointed out that there's no objective measure here, which I'm sure is correct inasmuch as it's always going to be judgmental and may always depend on the state of the market and societal expectations; is that correct?
A. I think that is correct, but I think we have to think about how a regulator is going to be able to work effectively against that sort of background. I mean, thinking back to my experience at Ofcom and the work I used to do there, it was always very helpful to have set out in the Communications Act the various duties and responsibilities and criteria which needed to be taken into account on different matters. So the proposal that I'm suggesting here is that there is scope for Parliament, through, I guess, a new Communications Act, to set out in a little bit more detail what it thinks plurality means and how it should be judged and the sort of general criteria that Ofcom would be expected to bring to bear on any analysis they carried out. So they're not operating in a complete vacuum. Now, that guidance could range from a qualitative description of what a pluralistic market might like look like, but I wouldn't rule out the idea that such guidance could be given about such aspects as market shares, consumption metrics and so, not as a cap or threshold or trigger but as a sort of context-setting piece of explanation or analysis which Ofcom would then need to take into account when carrying out a review or reaching a decision. And I think that as I go on to say in my witness statement, I think that may then lead you in a direction of being able to remove some of what is now a sort of political contribution or involvement at various stages of any plurality issue.
Q. So although sufficiency is a necessary fluid concept, you would wish Parliament to set up about seven or eight factors which would be taken into account in assessing whether there is sufficient plurality but it would be for Ofcom or the relevant decisionmaker to decide how to weigh each factor up against the other in any particular case?
A. Yes. That's a very good way of putting it. I think then you can have a debate about what those factors should be, how specific they could be, given the background of uncertainty which we've discussed, but I think that would go some way towards providing a degree more transparency in the plurality application of plurality rules. Of course, one of the criticisms of not having a clear market share cap or ceiling is the uncertainty that that creates in the marketplace. I think to an extent that is inevitable, but you can address that, in my view, by having these sorts of criteria or obligations spelt out with greater clarity, and also by making sure that there is a clear process for Ofcom to follow.
Q. Thank you. The next subheading is dealing with new media, because the current plurality rules are, in one sense, antiquated, looking at old media. Can you summarise your recommendation here?
A. Yes. The recommendation is that new online news providers should be part of a consideration of news plurality in the UK. They do quite clearly provide alternative sources of news and debate. The interesting and difficult question is working out how important they actually are, because they do cover all sorts of different types of news provision. So, as we were discussing earlier, they range from blogs to full-blown news sites. They cover news providers who are focused on the UK and news providers who are focused on international news and debate. So it's not going to be easy, but as the market changes, I think there is there should be an expectation that Ofcom looks at all of this and decides how best to bring them into the fold, so to speak. LORD JUSTICE LEVESON But that's exercising subjective, not an objective judgment.
A. Not well, the objective part is measuring the consumption LORD JUSTICE LEVESON Yes, you have the metrics but there must be sufficient flexibility this isn't just putting the facts in, turning the handle and getting the answer out.
A. Sure. So the first step is to get the metrics in place, but then I absolutely agree that you have to take a view based on accumulated expertise of the extent to which these different types of online news providers do have an impact on plurality of supply. So, for instance, one of the you may say, "Well, of course, we can now get access to the New York Times online. That's another great increase in plurality of news in the UK." Well, of course it isn't really, because not many people will consume it but also it may not be talking about the issues of importance to society and politics here. So you're absolutely right; there has to be some sort of discretion applied in working out whether these are important or not. LORD JUSTICE LEVESON But the question is whether that discretion should be exercised politically or by a body such as Ofcom.
A. Sure. LORD JUSTICE LEVESON Because whatever happens, it's going to have to be open and transparent.
A. Mm. So what I was trying to square that circle, I was suggesting that there is an important role for political discretion and decision-taking that could be accommodated at the start of the process in any new legislation in setting out the parameters which Ofcom should apply, but then the regulator would be then free to exercise discretion within those more closely drawn or clearly drawn parameters when it came to looking at an individual plurality case, and that would not be that different, I think, from the application of regulation in other areas of competition law for instance, where the professional bodies are obliged to operate obviously within the terms of their statutory obligations but do have a degree of discretion as they make their decisions. MR JAY I think you have two related proposals here. First, taking the decisions out of the political domain and handing them to Ofcom, and secondly, having considerations which may be implied in the Enterprise Act made more explicit and listed in the new statute so that everyone knows the criteria which Ofcom must or may apply in any individual case. Is that how you see the issue of accountability?
A. That's correct; whether it's the Enterprise Act or the Communications Act or one of the two. It was designed to try and address the concern that quite clearly exists about political involvement at a detailed level on a case-by-case basis, which at least leads to the perception of influence on decisions, but also to address the concern that: should we really be leaving these fundamental democratic issues to a technocratic regulator to decide? It's my best really, the proposal is my best effort at trying to get a balance between those two conflicting objectives.
Q. People may still say: well, Ofcom has its agenda, which may become apparent through the way it deals with cases over a period of time, in the same way as politicians may have their agenda.
A. Well, I guess so. I do recall, though, from my time at Ofcom that it's quite difficult to have your own agenda when there are some very clear processes in place for carrying out duties and responsibilities, and in a way, personally, I would have more confidence that a professional body constrained by statute would and subject possibly to some sort of appeal process as well, would be able to deal with these issues, perhaps in a more robust way than individual politicians. LORD JUSTICE LEVESON Although there isn't the same accountability.
A. There isn't accountability in the sense that you can vote Ofcom out, I know, and that, for many, is the big issue. The accountability, I think, has to be built in, as I suggest, in the way in which Parliament sets out the approach that Ofcom can take and the factors that it needs to take into account, but I don't deny that these are quite difficult choices to make. I'm not sure, I should add, that Ofcom would particularly welcome doing any of this either. I didn't catch this morning whether they thought this sort of thing would be a good idea or not. LORD JUSTICE LEVESON I think Ofcom have made it abundantly clear they're not looking for the responsibility of regulation in this area. MR JAY Mm.
A. And some commentators have noted the risks, too, which I think I should acknowledge, which are that the regulator could become the subject of a huge amount of expensive lobbying and influence from powerful media companies if it had this sort of responsibility. LORD JUSTICE LEVESON Oh yes. It doesn't solve the problem; it shifts it. Once you say that there isn't a technical answer, there isn't an objective or mechanistic approach to these issues but inevitably there are judgments, so whoever makes the decision is going to be the subject of submissions, lobbying, all sorts of pressure, and therefore the question is: who is best capable of withstanding that pressure to reach a robust decision in the public interest? I'm not suggesting either wouldn't, but it's abundantly clear that there are perception problems probably both ways, and it's a mistake to say: well, the answer is Ofcom or some other regulatory I'm not criticising Ofcom at all.
A. I absolutely agree and I guess what makes me veer towards the Ofcom/other regulator solution is that this is then strength in numbers, in process, in the institutional framework for that regulator, whether it be Ofcom or not, which may be better placed to withstand the sort of pressures that I agree would be there than an individual or a group of politicians. But, as you say, if you don't get rid of the risk, it's still there to be dealt with. LORD JUSTICE LEVESON You've just moved the hole in the wall to another part of the wall.
A. And, I suppose, strengthened the wall a bit. MR JAY You go on to address some behavioural remedies at the bottom of page 9, which might apply if one owner becomes too powerful through organic growth. Can we just understand how these might work in practice? I just take the first one.
A. I've lost it on my screen so I'll read it on my notes. This is about requiring the content investment commitments. In practice, there are precedents in place, as I mentioned earlier, in broadcasting in the UK. In other counties for instance I think in the US, where there are local newspaper mergers, one of the issues which is considered in deciding whether to agree to the merger or not is whether the emerging parties are committing to invest more money in news content. So one can see a number of models around which could be developed for application here if we took the view, as I do, that these may have to become more central to our plurality toolkit than they have been in the past.
Q. I suppose it flows logically that if, in a case of organic growth and a successful company, you're not keen on, some would say, the draconian remedy of divestment, then you're forced back to the position: well, in order to plurality, the next best thing we can do is consider behavioural intervention. There's nowhere else to go, is there?
A. Absolutely. Let me just be clear in case I've created the wrong impression. I wouldn't rule out those, as you describe them, draconian measures of divestment, spin-off. They should still be kept in the toolkit. The point I'm trying to make is we should need to make sure we don't just think about those and we think about these different types of behavioural remedies too and LORD JUSTICE LEVESON You run the risk otherwise of penalising success.
A. Yes, and I think from the point of view of a situation in which we have organic growth, then perhaps this behavioural remedy list is likely to be more useful or more valuable than telling people to shut down or sell off a newspaper or close down a television channel. Again, these are not straightforward issues. There are problems in devising behavioural remedies which can then be properly monitored and enforced. So it's not necessarily an easy and straightforward approach, but I think there are ways of doing that which could apply in some circumstances and be of some considerable value. MR JAY Yes. Can we consider what the range of remedies logically are? We have divestment, spin-off undertakings in lieu and behavioural interventions. I may be wrong, but I can't think of many others, are there?
A. No, indeed, and the behavioural interventions may be undertakings in lieu, so there's some crossover between the two. The only other set of interventions, as I come onto later, are those which apply specifically to digital gateways so access interventions and then, of course, public support, which is another dimension entirely.
Q. Indeed. Can I as you, please, to explain the access intervention. It applies, of course, to new digital intermediaries but what's the issue there and what is your thinking as to how to address it?
A. Yes. The issue is that new digital intermediaries like Google, a powerful search engine, Facebook as a social network, Apple as a mechanism for getting newspaper apps, all place themselves between the news provider and the consumer. So one concern would be if any one of those, or perhaps a few of them collectively, became so important that they were the main means of getting news. They would at least have the scope then, through their business policies, to start influencing the nature of news suppliers they provided access to and the ease with which we, as individuals, could find the news that we wanted to go to. I'm not suggesting that they do that at the moment. Indeed I think most would say that they try and provide a wide range of news sources which are of some relevance to their consumers, but nevertheless the possibility exists. We have looked at this issue before in the context of digital broadcasting and digital transmission systems, where, at a European level, it was decided that it was important, whatever the distribution channel you chose as a consumer, that you should have access to a wide range of broadcast services, and in particular to public broadcast services, whether you opted for cable or for satellite or for terrestrial transmission. It seems to me there may come a time where these gatekeepers are almost equivalent, in terms of distribution channels, to those broadcast distribution networks, in which case we may think that it's in the public interest to make sure that if you choose to use Google or you choose to use Facebook that you still have access to a wide range of news sources.
Q. Page 11, three bullet points towards the top of the page. You suggest a number of potential obligations that could be put on digital news intermediaries. Are you suggesting that this should be used only when a plurality problem is identified or do you think they should be introduced to avoid plurality concerns developing?
A. It's a very good question and I think I would like to step back from that, if you don't mind, to say that first of all, in my Reuters paper, I suggest that we shouldn't leap to this sort of regulation in any event, because although it's possible to identify the potential threat, it's not clear that a regulatory solution, at least for the time being, is the right one, and indeed my proposal was to, in effect, for government and other interested parties, to challenge these big digital intermediaries to take part, if you like, in the plurality debate, engage in the concerns that we have and demonstrate how they would respond to them. I don't think it is totally ridiculous to think that they might find it in their interests to as a means of continuing to sustain the trust of their users in the UK, to demonstrate that they are on the side of doing all of these good things. Nevertheless, it may be that they are not as public-spirited as I would hope they would be, in which case I think that at the very least, if Ofcom then carries out a plurality review and as I've suggested, they should be part of the remit for Ofcom and finds that there are these problems or concerns, then it's at that point that it should consider what remedies could be introduced. So my own preference would be try to get them engaged. If it fails, Ofcom should monitor through its plurality reviews and then remedies access remedies or their equivalent if needed at that stage. There is a more nuclear, if you like, of saying this is so important we need to have action now along the lines of they must carry regulation we already have in broadcasting. I'm not sure we're quite there yet myself and it would be, I think, very helpful for the digital intermediaries to demonstrate what they can do themselves rather than being forced into doing it. LORD JUSTICE LEVESON But wouldn't there be a complexity in relation to the digital media in respect of those who are based offshore or in countries which operate different legal regimes in relation to free speech?
A. I think that is absolutely right and indeed, it's one of the factors behind my suggestion that in the first instance, we, in effect, try and bring them into the fold, wherever they may be located. I think Google and Facebook have registered in Ireland, I believe, and as you say, there are other international companies too. So setting aside whether it is easy or not to regulate these intermediaries, it would be a good idea to try and bring them into the debate and get them thinking about UK public interest and UK public expectations, and indeed I think they've already started to do that in terms of trying to observe UK laws even if, in practice, they don't have to because they're not always based here. LORD JUSTICE LEVESON The trouble is it's all rather cumbersome. If you want to challenge something online, then you have to get some sort of order and that requires a ruling from an Article 6 compliant court, which has its own problems.
A. I think that's absolutely right. I think the second line of attack, if you like, is then probably not at UK level but on an EU basis, rather along the lines of the Audiovisual Media Services Directive or the E-commerce Directive, because these are organisations which operate across the EU and may be based in other EU Member States, and while it may seem cumbersome, there is, I sense, a head of steam building up in Brussels for looking at and trying to address concerns in these areas. So it may be that if the UK government wishes to work with Brussels, it would be pushing at an open door in some of these areas. But that would seem to be the next stage. LORD JUSTICE LEVESON Parallel to that is another possibility: that you make the incentives of participation sufficiently attractive to cause the relevant companies to want to be involved. Now, what incentives could we use to do that?
A. I can think of a number of sticks as opposed to carrots, which would be LORD JUSTICE LEVESON Sticks will do too.
A. Really, this would be the threat of more draconian regulation. And I don't for a moment suggest that we would want to go down this route, but other countries do find ways of controlling the activities of big international search engines and other digital companies LORD JUSTICE LEVESON We've not done very well on the threat of more draconian legislation for UK-based news outlets, have we?
A. But here there may be some levers that can be pulled. For instance, the Internet service providers would be one way of getting at whether these organisations have wide access to consumers or not. You can look at the extent to which UK advertisers can advertise on compliant or non-compliant digital companies which are based outside of the UK. None of these sound terribly attractive to me at the moment but they are, if you like, sticks which could be waved a bit to encourage, which would be my preference to encourage Google and the others to work very closely with the relevant parties to deliver the sorts of things we're hoping could be delivered. MR JAY Thank you. The subheading "Positive support" is largely self-explanatory but applies more to the BBC and to public service broadcasting, possibly straying outside our terms of residence. Is there anything you'd like to say in conclusion on the effects of the changes that you feel you may not have covered adequately, Mr Foster?
A. If I could just add a word of explanation on the positive support, just to set the context. It seems to me that quite your remit is quite rightly focused on the areas we've discussed so far. More generally though, if we are interested in news plurality, it is worth noting that the majority of news people still get is from television and in that respect not only the BBC but the commercial news providers have a key role to play and it would seem to be missing an opportunity of not taking an overview of plurality measures in this case and omitting a consideration of, for example, the measures which are open to government to sustain high quality news on ITV or to get more of a plurality push from the BBC. So I understand it's not your main area of focus but I think it is quite an important part of the overall toolkit. More generally, thank you for the opportunity of giving you my views. As I say in my witness statement, I think what I was trying to do was think of a set of proposals which provided what I described as a sensible balance between safeguarding plurality, but at the same time as enabling the news market to grow and innovate. I think it will be messy. I don't think there's a single plurality magic bullet, but I think the range of measures which we talked about this afternoon I would hope would go some way towards providing a more flexible, adaptable and predictable environment for these issues to be discussed and regulated. MR JAY Thank you very much. LORD JUSTICE LEVESON Yes, thank you very much indeed. We'll take a break now. (3.12 pm) (A short break) (3.22 pm) MR JAY The last witness today is Claire Enders, please. MS CLAIRE WHITMORE ENDERS (Affirmed) Questions by MR JAY MR JAY Thank you. Your full name.
A. Claire Whitmore Enders.
Q. You've kindly provided us with a witness statement on the issue of media plurality. It's dated 9 July 2012. Are you content to put this forward as your formal evidence to the Inquiry on that specific issue?
A. Yes.
Q. You also gave us a presentation at one of our seminars on 6 October 2011 and the paper which you submitted has now been put on our system. Again, are you content that that be formally accepted in evidence?
A. Yes.
Q. We're not going to run through that today because you explained it very clearly seven or eight months ago. LORD JUSTICE LEVESON Ms Enders, thank you very much for both those contributions. Rather a lot of water has flown under the bridge since the last one, so it's perhaps fitting that you should come in at this sort of stage of the Inquiry, having been at the very beginning, but I'm grateful to you.
A. Thank you. MR JAY Can you tell us briefly about yourself and about Enders Analysis?
A. Yes. It's quite hard to summarise a working life that has spanned for than 30 years but I have been very fortunate in being given many interesting problems to think about and solve and in particular, I just wanted to highlight the fact that I was an expert witness in the proceedings that set digital copyrights in the US congress as well as in the UK, and therefore I can be said at least to be an expert in digital models. I hope that's helpful. I also wanted to stress that my sole nationality is British. I am not American. I ceased to be American some time ago. So I have a I have been in love with this country since I emigrated to it and my concern for it is that of an immigrant.
Q. Thank you. Now, you explain monitoring the plurality of news provision. You say there are several ways of monitoring that LORD JUSTICE LEVESON I think we'd better just record that you've spent 30 years as an analyst, strategist and forecaster in the media and technology sectors in the UK, and 15 years working in cable TV, satellite TV and commercial public sector broadcasting before setting up Enders Analysis in 1997, which creates comprehensive models and forecasts of all parts of the UK media, telecoms and technology sectors.
A. Thank you. LORD JUSTICE LEVESON Well, it's just so that it's all in one place and anybody watching this evidence can know the background from which Ms Enders speaks.
A. And also, if you'd like any background about Enders Analysis, I can provide it to you, but in summary, I own 100 per cent of the company and you know, I work at it every day. We produce written research which the list of companies in the relevant companies in the annex support for by paying for it. MR JAY Thank you. The different means or ways of monitoring/measuring news plurality. There are three of those. In terms of identifying the candidates, your position is the same as Ofcom's. You favour the share of consumption metric. May I ask you to explain why?
A. Well, like Ofcom and indeed other commentators, this metric ends up by being one of the best ways of giving a guide, a set of estimates, to (a) the number of media and of course the actual minutes of viewing or listening or reading and so on that are allocated by members of the public, and as a result of that essentially, consumption is a very good proxy for how the public interacts with all media and indeed how the public interacts over time. I do agree with Robin Foster that the issue of the impact on politicians is left outside of this measure, and indeed that is not Ofcom's job. But that is something and indeed, Ofcom thought relatively deeply about this matter when it was considering the News Corp/BSkyB merger in 2010. So it thought quite deeply about this matter and it ended up with a metric that involved share of consumption measured at the time as being around 17 per cent for News Corporation's share of total UK news provision, plus BSkyB rising to 21 per cent. So this is something which has been dealt with and is relatively advanced as a metric.
Q. Is one of the other advantages of the share consumption metric that it's reasonably objective, non-judgmental and uncontroversial some of the other metrics have a greater judgmental and subjective element and therefore there's more argy-bargy about what they might mean on the one hand and amount to on the other?
A. Yes. These are all imperfect measures and they involve estimates and so on, and they are quite complicated calculations to make, but what matters in any case is not absolute specifics. It's actually trends or you know, the big pieces in any story are what matter. But also the problem with share of consumption is also that it doesn't measure the relative impact of I think Robin Foster also alluded to that various types of different forms of consumption, and indeed supporting consumption and debate, around any particular use of a medium. So it's a soft measure but it's as good as we've got.
Q. The television might be on, but one might not be watching it?
A. Correct, and indeed in the case of radio listenership, people do leave their radios on for very long periods of time and may be in and out of listening and so on. So it is a very imperfect soft measure, but it gives an idea. LORD JUSTICE LEVESON How about the news? Is there Data Research on how long people read newspapers for?
A. Yes, there is, actually. LORD JUSTICE LEVESON So that's how you do that?
A. On the other hand, just to the point made by Mr Jay, although for instance, in this country, an average newspaper reader again, who's an average? would read a newspaper for 40 minutes a day, a consumer of a newspaper website will only consume for around 15 minutes a month. So these are very, very different media in terms of impact, but also in the case of newspapers, the work that we submitted to you subsequent to the first appearance indicated that, depending on the newspaper, the idea of news is a very broad picture. It includes news of celebrities, news of TV shows, news of movies, news of a million things that we wouldn't really put in the serious buckets. Indeed, news of bridge triumphs and sporting triumphs as well. So there are many different kinds of things that are encompassed in newspapers, so even newspaper readership itself is not a good proxy that 40 minutes a day is not a good proxy for the readership of hard news. Of course, in the vast continuum of newspapers, which the UK is blessed in having an extraordinary number and indeed, newspaper readership in the UK is exceptionally high by comparison with all other nations except for certain very small ones, but nonetheless, within that, the fact is that the tabloids have relatively less hard news, and the quality papers, which are a very small subset of total circulations themselves, have more. So I think that it is a very, very difficult thing to get a grip on in any kind of adequacy, but it's as good as we have. MR JAY You say in relation to the next metric, which is reach, it has less value. You explain how it's calculated. The modes of calculation appear to be about as objective or as subjective, depending on your point of view, as the consumption modes of calculation. Is that a reasonable assessment?
A. Yes, that's right, but remember that these calculations came about out of a chance remark made by Lord Puttnam. When he was asked what plurality meant, he said "share of voice". So these calculations have somewhat emerged from sort of an accident off-the-cuff remark, so one can one is trying to find something that fits with the law.
Q. Why is reach of less value than consumption?
A. Well, we think that the can I get back to you about that? It's just not something I really
Q. Yes, fair enough.
A. Thank you.
Q. So the multi-sourcing, which is again, you say it has some use but less than the consumption measure. You refer to the modes of calculation again. Really, it's the same point. They're as good or as bad as the consumption and reach modes of calculation, are they?
A. Mm-hm.
Q. I think the point that Ofcom sought to make can I sort of put it to you in these terms? is that really one has to combine these measures to get at the best end point, when my understanding of your evidence is that you would prefer to focus on consumption but not look at reach and multi-sourcing. First of all, have I correctly understood where you're coming from? And if I have, what's wrong with the combined approach?
A. We don't make any suggestions about the combined approach or indeed you know, Ofcom's really very expert in these matters. I must say, to our credit as an organisation, Ofcom decided to use the methodology that we had advanced in November 2010 in order to come to a view, but I wouldn't want to underestimate the difficulty of coming to those views or the effort that Ofcom has put, nor its greater understanding than I have about the different impacts. It is still a measure that is a proxy and gives only a sense of what is going on in the media marketplace. But Ofcom has thought very deeply about this because it prefers this kind of measurement and it prefers measuring. So it's very fond of that. LORD JUSTICE LEVESON Because it's more objective than subjective, but it actually buries within it this is what I was rather suggesting all sorts of subjective questions.
A. That's right. And also I sometimes wonder whether the focus and I think it's something I point out in my submission I wonder if Ofcom's almost exclusive focus on news and plurality as calculated in this way is in fact what was originally embodied in the legislation, the 2003 legislation, and my understanding is that it is not. I think I make the arguments in my submission that there are many other forms of plurality that should be more important than counting this kind of impact, although it is important it is important to have an understanding of how it is that people in the UK are consuming all kinds of media outlets. I mean, for instance, it is always a source of great surprise to people that the BBC has such an extraordinary share of voice in the UK, mainly because there are apparently so many news media, there is of course, this is the most digital nation, there's the most extensive use of online news and media in this nation than there is anywhere in the world. So it is a paradox of plenty versus a concentration on the supply side. So this you know, Ofcom is right to put a lot of emphasis on it, but I think that in the recent report that Ofcom put out on these matters, I felt that the emphasis on what it can count reliably in terms of consumption rather missed the point of the whole plurality debate in its totality. MR JAY May we look next, please, at paragraph 8 of your witness statement, Ms Enders. We're identifying here a definition of plurality. You commissioned Professor Brewer to examine this question for you and she made it clear that plurality unambiguously means a large number. When we talk of plurality, we're talking of a profusion, a multiplicity and an abundance. Aren't we also talking about difference, not just large quantity?
A. Yes, absolutely. I mean, diversity. Diversity, differentiation and so on. Yes, definitely. As I go on to say in my submission, that is definitely how it is that different points of view can be expressed in a complex and interesting society.
Q. Yes. Ofcom have pointed out that the reality of the news market is such that there will be a tendency these days to consolidate and that sustainable provision may not be compatible with a profusion or abundance of provision. Do you agree with that?
A. That's certainly true on the news side. There is a great difficulty in economic models for all news, whether it's in the newspapers or on TV or on radio.
Q. I suppose the point is that one can't force new voices into news provision, so plurality must be dependent on the willingness of the market to provide it, mustn't it?
A. Or the willingness of its patrons, because after all, it is a patronage it is funded by patronage. I mean, the BBC is funded by public patronage and the Times is funded by News Corp and the Guardian is funded by the Scott Trust and so on. Patronage is quite a common feature of the provision of newspapers and of news more generally. I believe there are only two major news organisations in the world that are profitable and very significantly profitable, and that's Fox News and CNN, and that's probably because of the size of the American market.
Q. It may be market forces are working against new patrons coming into being?
A. Well new patrons come into being because they make money in other places. You know, they make money through property in the case of the Barclay brothers or they make money in mining in the case of Ms Rinehart or indeed, in the case of Lebedevs, in other activities in Russia. So actually new patrons for newspapers come into being, I presume, at least once a month.
Q. Fair enough. Question one, which you now address in paragraph 9 and following LORD JUSTICE LEVESON I wish it was once a month.
A. That would be nice. Well, they come along regularly. MR JAY The question was, in question one: "Is there a risk that there is or could be an overconcentration of control over news and current affairs provision?" You point out that: "Society has said that news plurality is important." And you give a number of reasons why that's so. Can I ask you about point (b): "All other matters being equal, plurality is greater if providers have roughly equal shares of news consumption than if one or two news sources have large shares and others have very small shares." Why is that so?
A. I'm just using the sort of economic theory around oligopolies, which is that ologopolies are more effective if there's more equal strength between the parties. In the UK, for instance, there is ITV, Channel 4 and Channel 5 that all sell advertising and indeed there is a plethora of multichannels that do so too, but ITV has 50 per cent of net advertising revenue, and that's quite a concentrated market. The other two main players are very, very small indeed, one really very small. So it's just the effectiveness of real competition is always based on economic power and financial muscle. That's the truth of the world. LORD JUSTICE LEVESON It's also the size of the megaphone, isn't it?
A. Yes, absolutely, and the megaphone across many different places, you know, in the City or in government and so on. Financial power is immensely significant in every way. LORD JUSTICE LEVESON So if there are lots that are broadly the same I don't say they cancel each other out, but there is a fairer hearing for all than if some have particularly large multi-decibel megaphones that actually can
A. Also they can also invest there's more leeway. But obviously we're not talking about a country in isolation; we're talking about the UK and the UK as it really is. MR JAY Point (d) on the next page, 01769, page 4: "Regulatory and court judgments and departmental guidance documents Sorry: "Although the point is poorly expressed there, it seems to be the conventional assumption that at some point decreasing plurality would result in an overconcentration of control over news and current affairs provision." And that carries with it the associated vice of too much power in too few people and that, you say, is a matter of common sense; no more, no less than that?
A. I think it's also been constantly considered at regular intervals, anyway. Certainly in the 2003 concept, which I remember very well, there were a number of issues around the specificities of the UK which Lord Putnam and many other peers sought to frame. So they have always been conscious that there is always a danger and actually, I think that this is not the only society to look at those issues. I mean, there are every major country in the world has thought of these issues and fears overconcentration of control in news and current affairs and believes that would be anti-democratic for that to be allowed to develop. Although Robin didn't mention it, there are other kinds of structural remedies that people have in place, indeed to even remove the prospect of a foreign owner, for instance, having being an actor in an overconcentration.
Q. Thank you. In paragraphs 10 and 11, you point to the distinction in the legislation between newspaper mergers on the one hand and cross-media or broadcast mergers on the other. In relation to the former, the statute looks at a sufficient plurality of views in newspapers but in relation to the latter, the statute looks at a sufficient plurality of persons with control. So in one case, it's views which we want a significant or sufficient number of but in the other case it's persons. In terms of the background to the legislation, could you help us, please, as to why in newspaper mergers it's points of views which count and not numbers of persons?
A. I'm not a specialist in this area, but it is a long-running leitmotif around issues of local markets and local advertisers, as well as local consumers. So recently there was a case involving the Kent Messenger Group in which a small local merger was turned down, and so in practice, you know, the existing legislation has precluded consolidation in local papers to an extraordinary degree because of a fear of loss of means of entry for advertisers as well as consumers more importantly for advertisers. In most of the cases that I have some knowledge of, it has been around allowing advertisers to reach that local market through separate media because local media are quite concentrated. I mean, it's very hard to if the economics of supply are quite questionable on a national and global front, I can tell you that on the local front they're also quite difficult in many cases. So there has been a longstanding view that local media markets should be looked at separately and on a case-by-case basis. It is quite an extraordinary paradox that these small scale mergers have been systematically rejected by the Competition Commission. LORD JUSTICE LEVESON I think the consequence of that was that some papers closed.
A. Indeed, that is what happens when those mergers are not allowed. So it is a paradox of our situation in the UK that indeed, with a few behavioural remedies, the News Corp/BSkyB transaction was well on the way to full approval with Ofcom's blessing. MR JAY In terms of plurality of views or rather the lack of plurality of views, the risk you identify in paragraph 15 is that the range of news, comment and opinion reaching the citizen is lower than is beneficial for a healthy democracy and so that's, as it were, the policy underlying the relevant provision in the Enterprise Act. Here, I think, we're looking at section 582A and 2B. Can I ask you, please, to develop what you mean in paragraph 15 about the risk to a democracy?
A. I think this is a very conventional view and also a theoretical one, in the sense that reading all the literature on these matters, whether produced by academics and so on, there is a sense a systematic sense that to Lord Leveson's point, it's that noisiness of the voices, the differentiation of the voices, it's something that you feel is there or isn't there, and that what it does the fourth estate has always had this extraordinarily important role in society in terms of being almost a confrontational force to power blocs and indeed vice versa. So I think that part of the protection of plurality as envisaged in the law is a protection of consumers, of citizens, from forces that are around them that they may not understand that would end up by diminishing the range and diversity of the voices that reached them, and which they can't understand, as it were, on the ground, going about their daily lives. And I think that that is something which I think is extraordinarily important to any healthy society, but above all to this one, because this one is a very creative society, not only with the highest per capita consumption of printed material and so on in the world but also one which depends for its lifeblood many economic sectors in the UK depend on plurality as a whole to survive, flourish, prosper and innovate. This is an exceptionally wonderful country from that perspective, so there's such a range of creative enterprises. I mean, to give you an example, this market which, after all, has about 50 per cent smaller number of households than Germany 36 million in Germany and around 25 million here has a media market which is almost the same size as Germany's. So it is actually of vital economic importance as well as democratic importance and this is why plurality of owners is an immensely valuable concept here.
Q. I think you mean plurality of views is a valuable concept because you go on in paragraph 16 to look at plurality of owners.
A. Indeed.
Q. Which is
A. Which is related.
Q. Yes, related but separate, because we're looking at a different provision of the Act this time.
A. That's right.
Q. It's section 58.2C. You draw attention to the fact that the News Corp/BSkyB merger was considered not under the newspaper rubric, which is "plurality of views", but under the cross-media rubric of "plurality of owners". That, I suppose, was inevitably really given the issue but you then say what the risk is in paragraph 17: "Low levels of ownership plurality cause problems for different reasons to poor plurality of views." Can I invite you to expand on what those different concerns are in a low plurality of owners type of case?
A. As I explain in here, the world is so made that there are only so many patrons and only so many news outlets and inevitably the further concentration one gets, the less diversity, you know, the less porousness of the system. In the UK in particular, but in many other nations, you know, this problem of ownership plurality I think Italy comes to mind as a country where ownership plurality has been at the top of the political agenda for some time, and I think that these situations emerge and people are extremely concerned about them and also understand and have understood historically what the negative impact and I go on to talk about, you know, capture of politicians and vice versa. But I think these things are a matter of historical record, really, that in effect there have always been examples of those patrons of news organisations seeking to gain political or other kinds of favours.
Q. So it's a risk of corruption, really. You put it as boldly as that in paragraph 20, that compacts will be entered into.
A. Yes. I think that's a good I think it's a harsh term, perhaps, and people may wish to see compacts between politicians and media owners in other terms or there may, in fact, be many different levels of compacts, but I think that the risk to society is significant if a group of politicians or a single politician becomes the bearer of a specific agenda of a specific owner, an agenda which may affect the lives of many ordinary people. For instance I can give you a very good example of this. There was a lot of lead-up to the 2010 election around issues to do with the existence and powers of Ofcom or the income of the BBC, and all of those decisions, taken very much on the spur of the moment as the incoming government had intended, would have had very, very far-reaching consequences. The original proposal of a 40 per cent cut in the BBC's income would have had far-reaching implications for people's lives and although the people advancing these various ideas may not listen to Radio 4 or may not enjoy medium wave or may not ever listen or view any of the services which are available to people in this country, all of these media public service broadcasting in particular are a bedrock of our culture and our understanding, and if these products, if these services are removed by people by political fiat through the pursuit of a specific agenda, especially when that organisation is not exactly co-adventuring with the rest of us, it is quite a threatening state for a society to be in. Or I saw it that way. I mean, I may be exceptional in seeing things this way, but I did feel that the agenda carried forward by News Corp in particular, in the years leading up to the transaction, was very threatening of services and products that people in this country consume and enjoy. Perhaps others don't, but they certainly do here. So I feel that's quite threatening.
Q. Thank you.
A. And especially because I must tell you as I've been a media analyst for over 30 years. The fact is I've often found that politicians don't actually understand how people consume media. I've often found that a politician will tell me: "I don't like my local service, my local news", and I sit there and say, "Other people do. Have you checked out how many do? Or maybe you could try something else." So I think politicians themselves have a very distant contact with the media which is very sporadic and they may find it difficult to put themselves in the shoes of people who consume, after all, as the British do, a very large amount of radio and television and newspapers and books.
Q. Paragraph 22 of your statement. You move on to a slightly different theme, namely whether the concept of plurality refers just to news and current affairs or whether it applies also to other types of information and entertainment. We heard from Ofcom, and I think Mr Foster as well, that a fairly narrow definition of news is relevant here and one shouldn't allow that to overspill into other areas of entertainment, but you, I think, are keen that we should look more widely. Can you explain in your own words, please, why that's appropriate?
A. Yes. Firstly, I think in the earlier part of my testimony I made the point as to how difficult it is to disintermediate what is news and entertainment anyway within the context of newspaper readership. So I think that again, the idea of news is such a broad concept already and there are many, many different kinds of programmes that might fit into that thing. Similarly, the issue of plurality also works across a very large number of different kinds of material entertainment or documentaries and so on and I think that it's in a sense, we know it when we see it because in this country, the public service broadcasters have been greatly encouraged to be plural in their provision of material that is of interest to the population as a whole, and that's a well understood and well established concept here. But in economic terms, what I'm really talking about is the number of gatekeepers. So in this country, in reality, as I've pointed out in our annex 1 of media ownership rules, there is actually in the Ofcom submission outline material, there is in fact quite a lot of information around the specific numbers involved. In this country, the BBC turns over around 3.5 billion, BSkyB, excluding its telecoms activities, is at around the sort of 6 mark and so on, so 6 billion mark. So we're looking at a very small number of very significant organisations in this country, and the oligopolistic nature of the media indicates that that's also true in the book publishing business and so. So you have a number of gatekeepers and they're the people who are going to commission scripts or allow a writer to spend the time to develop its material. This was the role that was once effected by, say, book publishers. Book publishers used to give advances, writers would have the time to complete their work and so on. So the whole creative landscape is formed by gatekeepers making investments in individuals or teams of individuals who will then bring creative enterprises to fruition. It is also, to my mind, incredibly important to look at plurality, especially because of the difficulties we face in defining news and current affairs is to define plurality in the effect, particular of a transaction, across all of its broadest elements and I think that the public that the politicians, as I point out in paragraph 23, have understood that at some level plurality is about our whole cultural vitality, and in my view, as a business analyst, part of our economic vitality.
Q. Once we're outside the realm of news and current affairs, aren't the matters here so soft, so difficult to concern, that if they weigh in the balance at all we're talking about plurality in entertainment or those sort of areas it's scarcely worth taking into them into account even if they might feature theoretically?
A. I think that in economic terms that wouldn't be right. First of all, I don't think that definitionally they're all that difficult because Ofcom actually I mean, public service broadcasting licences require public service broadcasters to fulfil a number of commitments anyway and they are expressed in terms of entertainment, and the industry in this country certainly understands what Ofcom means by those words. So definitionally, there's no real difficulty with measuring plurality and entertainment any more than there is it's actually easier, I would say, than measuring plurality in news. Secondly, it's really a broader economic point about not forgetting that plurality in a society actually operates, again, around the plurality of owners of large enterprises and in reality in this country there are but a handful of those.
Q. You've covered the disintermediation point in paragraph 27.
A. Yes.
Q. Unless there's anything else you'd like to say about that. Can I ask you, please, to explain the point you're making in paragraph 28: the unusual economics of mass media. The marginal cost of serving an extra customer is often zero.
A. That's right. It's one of the great truths of broadcasting companies and one of the reasons why they have such extraordinary longevity that once they're past the stage of covering their fixed costs, they can actually bar, obviously, economic cycles, they can actually increase their profitability, assuming that they face no competition. So in a sense, they're completely different kinds of enterprises anyway. TV broadcasters tend to be very significant. BSkyB is a good example. ITV, the BBC. These are very, very significant enterprises which need very large scale investment and an ongoing capex, but once they're basically past their innovation stage, which is usually thought to be around eight to ten years, then actually they can just deal going. Unfortunately, the economics of broadcasting also work against organisations where, for instance, there is a fall in consumption and in fact, it becomes very difficult for organisations to recover unless they savagely cut their costs. But it's I mean, broadcasting is a large-scale model. It is in every market in Europe, you see apart from Germany, which has a lender system, so very strong local broadcasters you see no more than three or four mainstream broadcasters in general, including state broadcasters and so on, and the mix is different. I think the point I wanted to make was also just in response to Robin Foster's evidence earlier in which he said that there was so much uncertainty over digital models and actually I wanted to remove that uncertainty because I think we can say with certainty that digital models will not fill the role of traditional enterprises. We can say it with certainly because we have the evidence. The MailOnline started a decade ago almost. The impact of that is very simple. It's, I believe, the second-largest newspaper website in the world, but the website turned over 16 million 16 million in the financial year that just went by, and in contrast, the Mail and the Mail on Sunday turned over 608 million. I believe that the MailOnline's website, which, as I said, is the second most popular newspaper website in the world, is going to be breaking even this year, but this is a very small enterprise. This is really small, even though, as I said, it is one of the most popular websites in the world. So I think we do know that the digital revenues there is a very famous view by an American which referred to digital as the transition between anaogue dollars and digital pennies, and I think we know that those digital pennies do not pay for origination and that the origination of hard news has continued to be the preserve primarily of the newspapers regional and national newspapers in this country and elsewhere, and I think that is why we do know all of this myriad of enterprises, whether it's HuffPo, Huffington Post or that they're interesting phenomena, they may be heavily used online, they may get a lot of buzz in the papers, but in terms of being able to really employ journalists to do very complex work I mean, the Trafigura investigation, the Wikileaks, the MPs' expenses scandal, the phone hacking story these are not enterprises that have been taken forward by any enterprise but print enterprises. LORD JUSTICE LEVESON But doesn't that merely serve to underline the need for these organisations to find a way to monetise what they're doing online? I don't know the figures; you probably do. You mentioned the Guardian, without naming it. Stories put out by the Guardian, read by X and online by
A. Millions more people. I mean, the Guardian is another very good example of an extraordinarily successful digital operation. I believe that the revenues of its digital operation were around I'm talking about the newspaper; I'm not talking about the other stuff that they do, although they do other things was around 14 million in their last financial year, which compared to 150 million of revenue from the Guardian and the Observer. So it's around one tenth. If you look at other newspaper groups, their digital revenues tend to be below 10 per cent, or at 10 per cent in the case of the Guardian. It isn't through want of trying that these organisations are having a struggle. There have been many different experiments. You mentioned earlier pay walls. The New York Times has gone down that route, as has the Times and the Wall Street Journal and the Financial Times, but the Financial Times and the Wall Street Journal have made a better first of it and that's because they have very specialised business information that people really will pay a lot of money for. So, you know, we have the paradox that the consumer of the newspaper is prepared to pay a pound plus to consume a product that that person will read for 40 minutes a day. That is the reality. That product is really quite different from a website, which is grazed, you know, to the tune of I think the average news site user is 15 minutes a month, as I mentioned. That's half a minute a day. It's not a significant engagement. People will not pay for something with which they're not significantly engaged. I mean, an American writer called Nicholas Carr has referred to this as the shallows. This is a shallow world full of facts and they just buzz by and people aren't reading long form online. And so it is quite frightening and the digital media are no substitute for the kind of engagement that people have with newspapers in this country and the effort that people who read newspapers make to think about political issues which they will subsequently vote on. So it isn't the fault of the newspapers for not having found the magic bullet, because my heavens, they have all tried and they've tried from one end of America to the other. They've tried from one end of Europe I mean, the organisation called Mecom, which owns newspapers, is one of the organisations we've looked at in detail and it runs newspapers in the Netherlands. In every single nation apart from Japan and Norway, which are very strong language groups and strong language groups will help to solidify the hold of the traditional media and to keep them going, but elsewhere, I really wouldn't task the newspapers with finding some wonderful model, because my heavens, they're desperate to do it and we, as their advisers, would be delighted if they could but so far the only method of staying alive has proved to be cutting your costs. LORD JUSTICE LEVESON Sounds all rather depressing, actually.
A. It's the way things are. MR JAY Paragraph 29 now, Ms Enders. To be clear, you say: "The plurality rules must have as their explicit purpose the distortion of the natural processes of competition." Do you mean by that natural market processes?
A. Yes.
Q. You say: "They have to hold back the more successful, larger, financially stronger companies in order to help the smaller competitors." The point has been made before, but many would say all you're doing there is penalising success. How could that possibly be justified, save in quite minor respects?
A. Well, actually but in this country people have a very well understood idea of competition and it's been applied for many years and again, I'm not a competition specialist but all I can point to you is that there has been a large scale series of mergers of supermarkets, for instance, and divestments of supermarkets within the acquiring group are a constant feature, and in fact, the Competition Commission has developed a whole means of establishing which supermarkets should be sold where and it has done so also in the cases of cinema transactions because cinemas are also quite concentrated in this country. I think where there is a lot of concentration, the Competition Commission has a habit of forcing divestments and indeed of wishing to sustain competition thereby. So again, I think there may be a misunderstanding around the proposal that we've advanced that it's systematically penalises success, which of course is a no-go area. But actually in practice, in Britain, there are many, many examples of very successful, very innovative organisations which have secured the capital to take over their brethren and which are not backed by the Competition Commission to preserve choice for consumers or for suppliers or for advertisers or for whoever. I think this is a well understood thing. The idea that somehow especially in this country, where we have real enterprises we have a real BSkyB, a real BBC. We're not talking about any other country. In this country, we have very large media enterprises and then a plethora of very small ones. That's the way it is. So holding back the very, very large ones from predatory pricing, from engaging in destructive activity or indeed in leapfrogging their brethren in some way or in dominating the political agenda to knock another one back I don't think that that is something that we shouldn't be concerned about. I think that is a very real concern. It is very important. I think I do point out that, you know, we're really looking at ideas around transactions, around M&
A. We're not talking that much about organic growth. The big shifts occur primarily through transactions, not through organic growth. Indeed, organic growth for the BBC well, we know what that's going to be because the licensee formula is set out. For ITV, we know for the television sector as a whole, we know it would be at best a 2 per cent growth rate in the next five years. We know those outcomes. There's no mystery.
Q. If success is penalised, if that's the right way of putting it, to meet the public interest reflected in anti-competition law, you say logically there's no difference between that and pro-plurality law. So you can do one in one case, which you can for competition see your supermarket and why can't you do it in the other case? Because the public interest is of equal force, really. Is that what you're saying?
A. I think so.
Q. Thank you. Can we deal then with question 2, which is the introduction of the proposal of a cap. Can I understand first how it's going to work. You outline the proposal in paragraph 32. We're going to look at total UK media market revenues and that each participant is only going to be permitted up to a certain ceiling within the percentage ceiling, rather, within the total media market revenue. You propose a ceiling of 15 per cent, which will allow, therefore, for at least seven players on the arithmetic. Is that basically
A. Yes, it's just a proposal. The fact is, as we point out, there are definitional issues. Whether you include books and games is an interesting question and so on. So I don't want to attach any real significance to the figure of 15 per cent. Nor indeed I mean, although we've calculated it with some difficulty, the media market value those are real figures but how you draw that market and how many participants you want I mean, it might be, to your earlier point to Mr Foster, that a market share of four players with 25 per cent each is what society deems to be all right, or four players with a market share combined of 70 per cent. But I'm just trying to lay out for debate, in this society going forward, what would be the comfort zone. I mean, in supermarkets, I think the end point has been around, you know, a three to four player market. I think it's something to actually ponder: what is the right level? Particularly in the context of the real context of the real transaction that was introduced in 2010, which would have very substantially moved the market towards a higher level of concentration than it had before. So I think I'm not proposing 15 per cent. I put it on the table. I just put it there. A seven player market, a six player market, a five, a four. You know, what are we comfortable with? In mobile telephony, we have a five-player market. In broadband, effectively we have a five-player market. These are very important issues and I hope that this will be the beginning of a debate or indeed that the debate will actually continue as to what it is that society feels most comfortable with, because of course we always have, as a given, the BBC as a player and actor. So one of those slots is always taken.
Q. It's clear from the companion document you've submitted, which is annex one, that the media market might well include advertising and subscription revenues, ticket sales, news stand payments and sales of physical media such as DVDs; is that right?
A. Well, we put as many items that seemed to fit in there and of course, we discussed this with a number of organisations and they felt that this was a sense of it, but of course, you can expand and contract this and it's really a question of relevance, what fits together. I mean, you could draw the market much no narrowly, and indeed Parliament has spent time doing that, believing that the closeness between newspapers and television should be something that's much more monitored. So that's why there are cross-media ownership restrictions on newspaper owners and ITV, for instance, ITV licences historically. That's been brought to fit in political terms and to be an issue.
Q. Why would you include something such as advertising revenue within your media market? Why is it relevant to the issue of plurality?
A. Well, I mean, we were just trying to draw a media market, not actually a media market for plurality purposes. If one went down that route, one would obviously exclude for instance, the video games market would not seem to fit naturally within that, but we didn't we were trying to get at the numbers that the European Commission uses and which would be useful for in fact, just to put them down so people can make a judgment around whether that particular medium should be included. Because you know, I agree with you. I mean, these are all subjective views. Apart from the easy ones for instance, music and books are quite questionable to include in any market that has to be measured for plurality, but they do
Q. If you want to cap revenue, why aren't we capping revenue which is relevant to the issue of plurality? Why are we including revenue which may probably be irrelevant to the issue of plurality?
A. Well but remember that my sense of plurality is perhaps a bit broader than that put forward by Ofcom anyway. I'm including in that a number of creative areas like music and books where a number of different enterprises is an important factor in terms of ensuring creativity and is understood that way. Anyone who's following the Universal/EMI transaction in Brussels will see that those issues are much to the fore. What's the right number of big players in Europe to ensure creativity and innovation? Certainly I mean, this is, you know, for discussion and consideration, but I do think that the entertainment market as a whole is the right locus for a view around plurality, particularly because, as I said, there's a lot of blurring of categories around programming, but also there are potential bottlenecks which would inflict damage on either the economic side of the equation for the UK or the consumption picture for consumers if growth in power went unchecked. But these are all for debate and consideration and we don't you know, we don't have a new Coms Act yet but we may do some day and there will be a lot of debate around these points. I'm just throwing them out there and hoping that people will take a view and take an interest in this issue, because it's fundamentally about how many major actors are the right number for the UK. For the UK specifically. Four, five, six, seven? People will take a view.
Q. You set up two contrary arguments against your proposal. You've already dealt with one of them, I think, very clearly. This is the penalising success point. But the arbitrary limit point, Ms Enders, in paragraph 37 you address. Isn't it fair that you're really accepting in paragraph 37 that your limit is an arbitrary one?
A. I am accepting that it's an arbitrary one, but I am also positing that it is very important to have a sense a multi-player active multi-player market and therefore you do have to have arbitrary limits to guarantee that.
Q. In principle, you wouldn't want to have arbitrary limits. You'd want a limit which was based on some sort of principle, wouldn't you? It's objectionable a priori to have a limit for which you can't justify, which you're just plucking out of the air?
A. No, well, I'm I didn't want to use the word "arbitrary" in that way but it is, in a certain way, arbitrary to take a decision that six players or seven players or this media market definition or that. There is a certain arbitrary there is going to be an area of judgment involved in all of these phenomena.
Q. I've been asked to put to you these points on the idea of the cap as you have envisaged it. The first point is this: is it not theoretically possible that under your definition, all of the news provision in the UK could be in the hands of one provider without triggering the cap as long as they had no other media interests?
A. Well, the purpose of our proposal is additive to proposals put forward by Ofcom and indeed other proposals under or indeed existing law, and other mechanisms of review of transactions in any case. We're not proposing that this would replace all existing media ownership legislation, but rather that it would be additive. Because also when the News Corp/BSkyB transaction was announced, we seemed to enter into unknown territory in relation to scale and scope of enterprises in the UK. So this would be a mechanism of forcing any large actor, whether that actor is specifically Google because Google is, after all, a very significant organisation in the UK or News Corp, from you know, at some level this is what is behind our proposal. The trigger is really M&A sorry, mergers and acquisitions.
Q. You could overreach the cap by organic growth, could you not?
A. That would be something where, again, if you looked at it deeply, you would have to come to a view about what is (a) the right definition of the market, and (b), the number of players you want. It would not be our intention for organic growth foreseeable organic growth to cause that kind of breach. That would not be our intention. So that's really a question of setting it at the right number. It's not our objective to penalise the success of any enterprise that is generated through organic but again, we're not talking about any other nation but this one, and in this nation, commercial broadcasting is going to struggle to grow at more than 2 per cent a year. Newspapers will continue to dramatically fall, both in circulation and in revenues, and that will continue. The share of voice of the BBC will grow. BSkyB will become more powerful in the mix. These are all things that are baked in to the way things really are.
Q. If one looks at the figures for 2010 this is figure 2 to your April 2012 report, which is annex 1. It's page 7 of 8, our page 01729.
A. I have page 7. This is figure 1, the size of the UK media market in 2010.
Q. I think figure 2.
A. Oh, figure 2.
Q. This will tell us how the cap might operate. If you look at News Corporation and you include the 39 per cent BSkyB, which was the position as was, the market share was only 11 per cent.
A. That's right.
Q. But you will say if you included the shares which News Corporation wanted to buy, so therefore the 100 per cent BSkyB, you would then overtop the cap because you would arrive at 20 per cent. So the way the cap would operate would be on this approach: to prevent News Corporation buying those extra shares or indeed all of those extra shares. They could buy some of them to keep them at 14.9 per cent presumably. Is that how you envisage it working?
A. Indeed, or they could choose to divest themselves of other interests in the UK, or indeed the position could change over time and indeed, the newspaper circulation and revenues would decline over time and at some future point, there would be the right mix of things. But again, it is not for me to say that 15 per cent is the right number, or indeed 20, but it's to put perspective into the proposals of what, after all, is a transaction which seemed to cause all politicians to pause very long and hard last year, and indeed, which caused me to take a great interest in the situation when it first emerged in June 2010, precisely because of the issues of scale and scope and of course, of increasing scale and scope because, of course, as newspaper or other enterprises decline, then of course, other BSkyB in particular will continue to grow strongly and will become more powerful in the market and have more economic power and more leverage and more opportunities for regulatory capture.
Q. One of the points Ofcom makes is that the cap would limit the economic strength of any one company, obviously I suppose, but doesn't target the issues of diversity or influence with any precision. What is your assessment of those criticisms?
A. I think that's absolutely right. It's just one proposal and there are other proposals. I mean, Ofcom is keen and it is important to measure news plurality the way that it wants to measure it. That is one measure. It's also important to have competition legislation. That's another measure. This would be something that would preclude the UK from being colonised entirely by, say, two very large-scale global organisations, which might not be an outcome that the British public has really bought into, but is possible. After all, what is possible under existing legislation is the transaction that we saw withdrawn last year.
Q. The third question which you address in paragraph 39 of your statement, the effects you seek to achieve and why they're desirable, you explain that the principle effect of your proposal is to block any single owner controlling too large a share of the total media market now or in the future. It is through financial muscle that proprietors exert most of their influence and seek to ensure that no company ever gets too large: "The point I'm asked to put to you is this: if it's the financial power rather than use of media channels that is the root of influence, why do you consider that financial muscle in the media market needs to be limited in a way which would not happen in other markets such as banking or retail?
A. Again, it is one measure. The only reason I put it forward so strongly is because it tends to be dismissed in favour of the softer sense of influence, the touchy-feely aspects of it and also the hearsay elements of influence and impact on politicians and so on. What I'm really trying to get at is financial power in the real world, in the global world that we live in, is of immense importance in terms of a company's ability to carry out transactions, to capture regulatory processes or to defend them, and then that is the reality in the UK, so there are many wonderful thinkers in this field which give a very wide array of views. Mine is just the view of a business analyst with the emphasis that I make on the forces that I see more clearly, which are the forces of the economic forces and the capital forces which power the world's largest media organisations and which are not really accessible to companies that have come out of the local culture, companies like ITV, which are relatively small.
Q. I've been asked to put these points to you by another core participant. Do you accept that your proposal has in effect, rightly or wrongly, been rejected by Ofcom?
A. No, I expected it to be rejected by Ofcom because it's very outwith the powers that Ofcom has and it's a completely new approach. But I have only advanced it not because of any certainty that it would be the right single answer to the question of plurality in the UK, but in order to advance the idea that people should consider how many participants and core participants are probably a good way to put this how many is the right number for the UK at minimum. In the real world with its structure of financial forces which are of immense importance and, of course, as you know from having heard a great deal of evidence on the matter, the massive challenges and issues around the monetisation of existing newspaper models and their future. So it's on the threshold of the future where we know that although the titles may not disappear, certainly their resources are in very significant and sustained decline.
Q. The other point this core participant wishes me to draw to your attention is if you look at the submission you made on 16 November 2010, which of course was in the context of the BSkyB bid, our page 01731, you explain that the position was commissioned by a small group of Enders Analysis clients to provide them with clear and coherent arguments and relevant supporting data and references.
A. That's right.
Q. Presumably those clients were opposed to the bid, and I think the point which I'm asked to make is whether you were putting forward a completely objective analysis or whether you were putting forward an analysis which reflected the underlying views of your client, which was to oppose the bid?
A. No, there was a group of clients and they're actually well-known because they opposed the merger, but this was the only work that they commissioned us to do. Looking further back in time, the work that we did which initially brought to Vince Cable's attention a number of matters on which he should intervene, and subsequent all of the time that we've spent on these matters subsequent to that particular submission I mean this has all been my time and my gift to my wonderful nation. So I'm afraid that these are not even the views of my company. These are my views that I advance. LORD JUSTICE LEVESON The reason it's important to ask that is this: we're very familiar with barristers getting the cause and then thinking of arguments that justify the result that their clients want. That's what they do most of the time in litigation, I'm sure you're aware. Therefore I think it's a sensible question. Whatever you might have done in relation to this piece of work, what you're now providing me with, it's not a brief that you've been asked to deliver. This is your assessment of the position and how one could go forward in the light of your years of experience in the business. Is that
A. That's right. And it is a slightly quixotic cause, since no one agrees with me. MR JAY Okay. That's very frank. The final point they wanted me to put is that we know that you met Dr Cable at City Airport, I think, he referred to it in his evidence. Can you remember what you discussed?
A. Well, yes. He didn't discuss anything with me because but he did smile at me, so that was nice. All I did was say, "Dr Cable, would you mind sitting down and listening to what I have to say, because I sent you a document and I have had no official or unofficial sense that you actually received it or read it, and I sent you this document about six weeks ago and so I'm wondering if I can just quickly explain to you what it's about and why it is that there's no doubt in my mind that a ministerial intervention in the News Corp/BSkyB transaction is something which you must do without question." Anyway, he didn't say a word but he did politely sit down and he did give me a nice smile, and then his assistant sat right there and they listened to the whole thing and he said, "Thank you very much", and walked off to get his plane. So he never said a thing, but he was he did smile, so I did take that as an invitation to go forward with my pitch, and I managed to get it across in about five or ten minutes, I think. Maybe even five. Unlike today, sorry. MR JAY I think it's clear from your evidence at all material times he acted quasi-judicially in relation to your representation. That's very helpful. Thank you very much. LORD JUSTICE LEVESON Ms Enders, thank you very much indeed. Thank you for your help both at the beginning and now here we are approaching the end. Thank you.
A. Thank you so much. MR JAY Tomorrow? LORD JUSTICE LEVESON 10 o'clock tomorrow. (4.35 pm)


Gave a statement at the hearing on 17 July 2012 (PM) ; and submitted 5 pieces of evidence
Gave a statement at the hearing on 17 July 2012 (PM) ; and submitted 2 pieces of evidence


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