MEDIA: More powerful media tycoons need a tougher regulator

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 intentions.

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

intentions.



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.



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