LONDON –- U.K. culture secretary Tessa Jowell and filmmaker David Puttnam, who has been lobbying the government, came to a last minute deal on an amendment to cross-media ownership rules in the Communications Bill late Tuesday night.
The amendment will give super regulator Ofcom the power to apply a plurality test to any media takeover. “Ofcom will have to ask how much share of the public voice does a media owner control and, at a certain point, if it is too large it has to be trimmed back,” said Puttnam.
The government has also agreed to underwrite any legal fees and damages incurred by Ofcom if media giants choose to appeal its decision. In the past, regulators have been concerned that multinational media giants would take them to court.
Ofcom will be responsible for deciding the test and deciding when media groups fall foul of it. Puttnam believes the change would effectively prevent Rupert Murdoch’s News International, which owns four Blighty newspapers, from owning commercial web Five.
However, Jowell made it clear that the wording of the test, which would only be applied to large media mergers, should not be seen as an attempt to “block Murdoch” expansion.
As a compromise, Puttnam withdrew his support for an amendment to the so-called “Murdoch clause” in the bill, making a government defeat in the House of Lords, parliament’s upper chamber, less likely.
Ministers are now confident that the bill will be passed before the summer recess.
Ministers also agreed Tuesday to lift the ban that prevents individual shareholders owning more than 40% of commercial news provider ITN. ITV’s largest shareholders Carlton and Granada each own 20%, along with Reuters, Daily Mail & General Trust, and United Business Media.
The amendment could trigger a scramble to take control of ITN. Carlton and Granada are awaiting merger approval from the Competition Commission and will probably try to buy out the other shareholders to create a unified commercial broadcaster with an integrated news operation.