The transcripts of the official inquiry into the culture, practices and ethics of the press. More…


  • First of all, please, your full name.

  • 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?

  • 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.

  • Not at all. It was a great coincidence that it was published this very day.

  • 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?

  • 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.

  • 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?

  • 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.

  • 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?

  • 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.

  • So your approach is similar to, if not identical to, Ofcom's approach on that particular point?

  • If I can be described as having an approach, yes, I would agree with that, yes.

  • 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?

  • 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.

  • Behavioural approach may be self-explanatory but again, in this particular area, what does it amount to?

  • 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.

  • 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?

  • 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.

  • 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.

  • 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.

  • 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?

  • 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.

  • You've identified the threats flowing really from the economic pressures. This is paragraph 3.1.

  • 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?

  • 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.

  • Effectively they've not been able to monetise online newspapers. The Paywall --

  • 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.

  • 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.

  • 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.

  • An example of the former working would be the Financial Times.

  • 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.

  • 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?

  • 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.

  • 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?

  • 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.

  • Would you anticipate that as traditional news generation sources reduce, there will be a corresponding increase in investment in news from online only providers?

  • 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.

  • 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?

  • 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.

  • 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.

  • 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.

  • 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?

  • 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 --

  • 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.

  • 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.

  • 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.

  • Those are capable of influencing the news to which we have access, presumably?

  • 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.

  • 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?

  • 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.

  • 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.

  • 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.

  • 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.

  • 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?

  • 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.

  • 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.

  • The causal link may not be that powerful?

  • Yes, exactly so. That may well be the case.

  • 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?

  • 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.

  • 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?

  • I think it would be intuitively.

  • There may be evidence to support it, but I'm just looking to see whether there was any particular evidence you had in mind.

  • 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?

  • 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.

  • 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?

  • 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.

  • 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?

  • 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.

  • 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?

  • 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.

  • 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?

  • 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.

  • 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?

  • 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.

  • But that's exercising subjective, not an objective judgment.

  • Not -- well, the objective part is measuring the consumption --

  • 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.

  • 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.

  • But the question is whether that discretion should be exercised politically or by a body such as Ofcom.

  • Because whatever happens, it's going to have to be open and transparent.

  • 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.

  • 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?

  • 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.

  • 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.

  • 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.

  • Although there isn't the same accountability.

  • 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.

  • I think Ofcom have made it abundantly clear they're not looking for the responsibility of regulation in this area.

  • 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.

  • 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.

  • 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.

  • You've just moved the hole in the wall to another part of the wall.

  • And, I suppose, strengthened the wall a bit.

  • 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.

  • 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.

  • 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?

  • 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 --

  • You run the risk otherwise of penalising success.

  • 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.

  • 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?

  • 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.

  • 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?

  • 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.

  • 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?

  • 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.

  • 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?

  • 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.

  • 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.

  • 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.

  • 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?

  • I can think of a number of sticks as opposed to carrots, which would be --

  • 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 --

  • We've not done very well on the threat of more draconian legislation for UK-based news outlets, have we?

  • 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.

  • 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?

  • 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.

  • Thank you very much.

  • Yes, thank you very much indeed. We'll take a break now.

  • (A short break)

  • The last witness today is Claire Enders, please.