In his speech to the ISBA AGM lunch yesterday (July 2), the MP, who is a director of the advertising agency Clemmow Hornby Inge, told the audience that market forces offered a better chance at competing with Murdoch than legislation did.
He also said that those looking to curb Murdoch's power with his TV business were looking in the wrong place, because his power was in his newspapers.
"Indeed I think, all these years on, they would have to acknowledge that if ownership problems are associated with his media powers in Britain these are located in his newspapers not in his television operation, as Sky offers an excellent news service and overall product, which has added greatly to consumer choice and allowed Britain to lead the digital revolution."
On the issue of Channel 5, which Murdoch could now make a bid for when the communications bill goes through, he that he saw no reason why Murdoch should not be allowed to buy Channel 5 if he so wished. "There is always the channel's licence available to guard against erosion of standards or concern about restricted news provision, in the case of any possible change of ownership," he said.
Mandelson said it was this very lack of competition that had stunted the growth of the UK media business, stopping a major international media player emerging. He pointed to the fact that the UK had nothing to compete with the likes of the US media giants or, for that matter, France or Germany with Vivendi Univeral or RTL.
He said the British media industry had suffered from being cosseted and protected for too long. He welcomed the changes the communications bill will bring in opening up the market and ushering in a merged single ITV company, but bemoaned the fact that it would never grow into a serious player.
"ITV now represents a weak third broadcasting pillar after the BBC and pay TV and, in its present state of ownership and under-investment, it offers no prospect of growing into anything approaching a formidable player. Originally, it had a strong hand which it has played badly and, in the process, frittered away the international advantages associated with the English language."
He concluded that it was still important for the UK to have a strong international media company. He said that it helped the UK punch above its weight and that a big media player would have a knock-on effect to industry as a whole.
However, in his conclusion he warned the government off about intervening to bring this about or stopping foreign ownership of UK media firms.
"The government should not retain regulations and policies that prevent a big player from emerging. But that, in throwing open the industry to allow it to grow, it can not stop foreign ownership either. Indeed, foreign investment -- and the pool of management skill and talent that this brings -- will be a positive fillip that should benefit British media companies," he said.
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