There is good reason for the Labour Party to feel embarrassed by the
takeover activities of Lord Hollick, one of its few business supporters.
For the interesting thing exposed by the proposed MAI merger with
Express newspapers, United News & Media (even if it does not go ahead)
is the way that an unpleasant device - the creation of deadlocked
companies - can get around the spirit of the law, and Parliament’s
This practice, of putting shares into a 50:50 holding company with a
bank, so that no one party technically has control, began last year at
news supplier ITN. Its two largest shareholders, Carlton and Granada
were each able to hold on to their 36 per cent holdings, amassed through
takeovers - instead of reducing to 20 per cent, and spreading ownership
more widely. This means that between them they dominate the impartial
news organisation, never the intention of the 1990 Broadcasting Act. But
it sent every ITV company and media group in the land rushing to their
lawyers to see if they could use the loophole.
The defence for Lord Hollick’s deal with Lord Stevens is that not only
is it legal - it was cleared by a reluctant Independent Television
Commission - but that both parties are actually working with the grain
of both Government and Opposition thinking. Indeed, in the current
Broadcasting Bill, now in the House of Lords, newspapers and TV
companies are being encouraged to tie the knot. However, the point is
that MAI and United have anticipated, by some months, the formal change
of rules, which will only happen after Royal Assent. It may be smart
business, but it does not look very upright behaviour to me.
David Glencross, chief executive of the Independent Television
Commission who retires this month, has just spoken publicly about the
need to tighten up the definition of ownership, to create clarity, and
to close such ‘deadlocked company’ loopholes.
Clearly there need to be tighter tests about where control lies - beyond
voting power in a company - and which party has the ‘economic interest’
in a deal. This issue is surfacing all over the world, as the urge to
merge, monopolise, get around local ownership rules and dominate new
streams of revenue grows ever stronger within the media. The public does
need protection. One way may be to give the regulator a greater degree
of discretion, so common sense can decide what is really the purpose of
some convoluted share structure.
At this week’s Royal Television Society dinner to honour David
Glencross, several people were quick to point out that with top media
tycoons it is business, always business that comes first and politics
second. At least they can never be accused of hypocrisy.