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Volume 530: debated on Thursday 30 June 2011

(Urgent Question): To ask the Secretary of State for Culture, Olympics, Media and Sport if he will make a statement on the News Corporation acquisition of BSkyB.

Earlier today, I placed a written statement before the House outlining the next steps in my consideration of the potential merger between News Corp and BSkyB. In it, I explained that I have published the results of the consultation on the undertakings in lieu offered by News Corp, together with the subsequent advice I have received from Ofcom and the Office of Fair Trading.

As I outlined, the consultation did not produce any information that caused Ofcom or the OFT to change their earlier advice to me. I could have decided to accept the original undertakings. However, a number of constructive changes were suggested and, as a result, I am today publishing a revised, more robust set of undertakings, and will be consulting on them until midday on Friday 8 July.

Significantly, those changes strengthen further the arrangements for editorial independence and business viability of the newly spun-off Sky News. In my view, they provide a further layer of very important safeguards. As amended, I believe that the undertakings will remedy, mitigate or prevent the threats to plurality that were identified at the start of this process. If after this next consultation process nothing arises that changes that view, I propose to accept the undertakings in lieu of a reference to the Competition Commission. Before coming to such a view, however, I will of course seek once again the advice of the independent external regulators.

In the end, it comes down to believing a promise. The Secretary of State has chosen to accept the assurances of News Corp, when it has breached previous assurances on the takeover of The Times, The Sunday Times, The Sun and the News of the World.

The Secretary of State could have chosen to disregard those assurances to protect plurality, or asked whether the acquirer has shown evidence of bad practice in its other media companies. Section 58 of the Enterprise Act 2002 provides for specified considerations, including

“the need for persons carrying on media enterprises, and for those with control of such enterprises, to have a genuine commitment to the attainment in relation to broadcasting of the standards objectives set out in section 319 of the Communications Act 2003”,

yet the chief executive of News International, Rebekah Brooks, openly and brazenly, and without any sense of irony, admitted to a parliamentary Committee that News International paid police officers for evidence.

The Secretary of State has granted the acquisition to an organisation that is currently the subject of three separate police inquiries, and an organisation that a parliamentary Select Committee found guilty of “collective amnesia” of criminality at one of its newspapers. There is emerging evidence that News International conspired with convicted criminals to pervert the course of justice by hacking the phones of serving police officers and detectives, their families and the families of the victims of serious crime. At least one senior executive even collaborated with at least one career criminal while he was serving time in prison. And, most appallingly of all, while the nation grieved, the criminals who were contracted to News International illicitly targeted a parent of the children who were murdered by Ian Huntley in Soham.

Today the Secretary of State has chosen to take these people at their word. No wonder he tried to avoid answering colleagues in the House this morning! Did he or the Prime Minister meet or talk to Rupert Murdoch when he was here last week? Is it true that the Sky News spin-off, NewCo, will have no equity value and no realistic chance of making a profit? How much tax will the newly acquired BSkyB pay in the UK? Does this decision enjoy the support of the Secretary of State for Business, Innovation and Skills?

Does the Secretary of State think it unusual that BSkyB has organised a party at the Foreign Office tonight? How can people realistically take part in a consultation that is to last only eight days? Has he taken advice from the Cabinet Office on how to conduct proper and effective consultations? The ultimate owner of the newly acquired company will be registered as a shareholder in Delaware, USA, but there is no obligation on the company to publish the shareholder register. Will he undertake to oblige the company to do this in the public interest before he finally signs off the deal? We have to know who will be the new owners of 40% of the country’s media estate.

I am sure that the Secretary of State will get his reward for this decision, but he will pay a very high political price. This seedy deal would shame a banana republic.

Let me first address the hon. Gentleman’s final comment, which was beneath what he is capable off. I am perfectly well aware that on such an issue no one will trust the motives of politicians, which is why, at every stage, I have sought independent advice from Ofcom, the independent regulator, and the Office of Fair Trading. I have done it even in areas I did not have to. For example, I did not have to ask Ofcom’s advice on whether these undertakings were robust and I did not have to ask it whether it would address concerns about plurality, but I chose to do so, and I have published its advice. I have tried therefore, at every stage, to strengthen the confidence of the House and the public in the integrity of the process.

I shall move on to some of the issues that the hon. Gentleman raised. First, he talked about past assurances given by News Corps in respect of previous media assets that it has purchased. This is not an issue of trust. These undertakings are legally binding and legally enforceable. Moreover, one of the undertakings particularly addresses the concerns that I think are shared in many parts of the House about broadcasting impartiality, which is enshrined in the broadcasting code. Under the undertakings that I published on 3 March and am publishing again today, the code will form part of the company’s articles of association. Under the strengthened undertakings that I am publishing today, News Corps will not be allowed to attempt to get the new company to breach its own articles of association, so the editorial impartiality for which Sky News is valued will be better protected than it is for any other media organisations in this country.

I remind the hon. Gentleman that he has campaigned— I think very honourably and impressively—on the phone-hacking issue. At root, I agree with what he says: no company should be above the law. But just as no company should be above the law, no Minister should be above the law. I have to follow due process, and due process under the Enterprise Act 2002, which was put in place by his Government, says that I have to consider this on the basis of media plurality—a very important issue—to make sure that no one person has too much control over our media. That is why James Murdoch and Rupert Murdoch will have less control of Sky News after this deal goes through than before it because of the undertakings in place.

On the other issues that the hon. Gentleman raised, I cannot speak for the Prime Minister but I have had no contact with the Prime Minister over this deal. I am deciding this deal on a quasi-judicial basis, but I have not met Rupert Murdoch or James Murdoch in recent weeks, and all the meetings I have had with them have been minuted and done through official channels. On the tax issue, obviously, like all companies, News Corp will be subject to UK law, but this issue has been decided on media plurality grounds.

On the consultation, I remind the hon. Gentleman that I could have chosen to conclude this issue today, but I have not. I am launching a further consultation. This issue has been in the public domain since last summer, but I want to make sure that this House and the public have every possible opportunity to comment on what is being proposed. Not only that, but I have listened to them. In fact, I think we have made the undertakings more robust and stronger so I am confident that what I am proposing to the House will protect plurality of the media, which I know is highly valued in all parts of the House.

May I congratulate the Secretary of State on the meticulous care that he has shown in his handling of this matter? Can he confirm that every single concern that has been raised by the regulatory authorities has been addressed? On the wider question of impartiality, does he agree that the value of Sky News is not because it makes money—it does not—but because of the benefit to the overall reputation of BSkyB that comes from the integrity, objectivity and the quality of its news gathering, and that it would therefore be madness for any new owner to seek to change that?

I completely agree with what my hon. Friend is saying. The regulatory authorities have both confirmed, both on 3 March and today, that they are satisfied that the undertakings I am putting before the House address the concerns that were raised about media plurality. I have taken that advice very seriously indeed.

My hon. Friend’s second point about Sky News is particularly important today because in the revised undertakings that we have published there are two things that particularly strengthen what the public value about Sky News. First, News Corp undertakes that it will not do anything to cause Sky News to contribute less to media plurality in this country if this deal goes through. Secondly, it agrees that it will continue to cross-promote Sky News on the Sky platform at the same level it currently does. In terms both of financial viability and of that all-important contribution to media plurality I am satisfied that if I proceed with the undertakings as published today, we will continue to have a free and plural media.

The Secretary of State could have made different choices. He could have chosen to appear before the House today and make an oral statement rather than be dragged kicking and screaming to the House. He could have chosen to refer this acquisition to the Competition Commission for an independent inquiry to remove any doubts about the objectivity and transparency of the process. Will he answer the following questions? In view of the fact that this process has now taken six months, why did he not follow Ofcom’s original advice and refer this deal to the Competition Commission? How can he say that he has delivered greater independence for Sky News when it will be almost entirely dependent on News Corp for both distribution and funding? Will he publish in full the independent legal advice he has received on all aspects of this acquisition?

In relation to media issues, the Secretary of State has responsibility for media policy in this country, and it is therefore very disappointing to say the least that he has had so little to say about the phone-hacking scandal. The current police investigation must, this time, lead to full disclosure of all evidence, with those responsible brought to justice. Does the Secretary of State agree that once that investigation has been concluded there should be an independent inquiry into the conduct of the British press? The issues go further than one newspaper group. We have made it clear that we support self-regulation, but self-regulation must be accompanied by responsibility and accountability. It is surely time for lessons to be learned and reforms to be put in place so that such unlawful practices can never happen again.

Order. I say to the shadow Secretary of State that we are on the subject specifically of the proposed acquisition, so I feel sure that the references that the hon. Gentleman has made to another issue are now at an end. I think that we are clear about that. Does the hon. Gentleman wish to complete his remarks?

Thank you very much, Mr Speaker.

Does the Secretary of State agree that such an inquiry is now necessary?

I am quite bemused by what the shadow Culture Secretary is saying. He has said that the phone-hacking issue is not linked to the BSkyB merger. Those were his words. Now he is telling the House that there is a link. He says that I could have chosen to refer this to the Competition Commission but have chosen not to. Would he have chosen to refer it to the Competition Commission, because he has not said so? If he is now saying so, that is a big change in the Labour party’s position. Let me tell him that it is the Enterprise Act 2002, introduced by the last Labour Government, that gives the Secretary of State the right to accept undertakings in lieu instead of a referral to the Competition Commission. I am following precisely the process that was set up in law by his Government. I am doing so after expert, independent advice by regulators who understand the market extremely well—Ofcom and the Office of Fair Trading—and I am publishing that advice so that people can see the basis on which I have made the decision.

The hon. Gentleman also raised issues of the dependency of the new company on News Corp for its funding. He is right: the financial resilience of Sky News is central to the sustainability of the deal. That is why, as part of the undertakings, we have reached agreement on a carriage agreement, which will give financial security to the new company for a 10-year period, which addresses those concerns. The company is able to develop its business outside Sky during that period, which will make it less financially dependent on Sky, but even if it does not do that, it has the security of a 10-year funding agreement, which is considerably greater than that of the BBC, for example, in the licence fee settlement.

I am publishing more advice than any Secretary of State has ever published on any comparable deal. We are being completely transparent about the processes because we want to ensure that the public have confidence, and it would be good if the shadow Culture Secretary could at least acknowledge that transparency.

The Secretary of State has rightly said that this is an issue about plurality in news and current affairs. Does he recall that in 2002 the Labour Government opposed a general plurality test, and that it was only because of the efforts of Lord Puttnam and others in another place that one was included in the Enterprise Act? Given that that was a watered-down test, does he believe that the time is now right to set up an independent commission on plurality so that it can inform the future communications Bill?

My right hon. Friend makes an extremely important point. The process that we have gone through has revealed that both he and I would like to make sure that there are better protections for media plurality, not in situations such as this—we have a process that involves exhaustive public scrutiny—but where someone might develop a dominant position in the media, and the public might not be as protected as they should be. That is why the coalition Government have said that we want to do something that the last Labour Government did not do: look at whether plurality protection can be strengthened, which we will do in the new communications Bill that we will be putting to the House in the second half of this Parliament.

Is not the Secretary of State in this position because of the acts of the Secretary of State for Business, Innovation and Skills? The Enterprise Act was very clear that difficult decisions such as this should be taken out of the hands of politicians and given to the Competition Commission.

I am afraid that the hon. Gentleman is wrong. I have often wondered why the Act specifically gives the duty of deciding an issue such as this to an elected politician when in, for example, competition law, such decisions are taken out of the hands of politicians. That is the way the law operates at the moment under that Act. Hon. Members will want to take a view as to whether that is the right way for the law to operate, and we have said that we will look at all these issues in our communications Bill.

Does the Secretary of State agree that the procedure in the Enterprise Act puts him in the position of judge in these circumstances, and he therefore has a clear duty to be extremely measured in his remarks, to be meticulous in what he does, and to ensure that he has independent advice, including legal advice? Does he agree that that is what he has done in this case, and one of the great lessons of the whole affair is how important it is to follow such an approach?

I thank my hon. Friend, who understands these issues very well. There is a legitimate question as to whether it is appropriate to give elected politicians the responsibility for arbitrating on a decision for which many members of the public will inevitably question their motives. That is why I have tried to be completely transparent and have sought, published and, after careful consideration, followed independent advice at every stage. We can debate in the House whether the law is right to insist on the procedures that it does, but I know that hon. Members feel passionately that due process must be followed, and that is why I am doing that in this case.

How on earth did we—and I mean all of us, not just the Minister—become so spineless as to allow a company whose directors not only failed in their fiduciary duties to prevent criminality at the News of the World, but actually participated in its cover-up, to hold dominion over such a vast swathe of the media in this country? No other country in the world would allow somebody to have so much power.

Phone hacking is incredibly serious, and the police must follow their inquiries wherever they lead. The fact that we are having those inquiries at the moment and that they have been as extensive as they are demonstrates that no company is above the law, and no company should be.

Will the Secretary of State comment on how the new undertakings from BSkyB will strengthen the operation or financial viability of Sky News?

I can reassure my hon. Friend on that front. There are two particular revisions to the undertakings that will strengthen the financial viability of Sky News. The first is a requirement that the operational agreements entered into between Sky and Sky News are fair and reasonable, and the second is a requirement that Sky will continue to cross-promote Sky News across the Sky network at the levels that it currently does. That, combined with a 10-year carriage agreement, which gives guaranteed financial income for 10 years—a very long time in the media marketplace—means that this will be a very financially sustainable and resilient model, which of course it needs to be.

Why is the new consultation period that the Secretary of State has announced so short, and how can it be meaningful?

This is a fairly short consultation, the primary purpose of which is to give people a chance to look at the amendments to the undertakings that were published on 3 March. The core undertakings have been in the public domain since 3 March, and indeed the wider issue of the merger has been in the public domain since last year. This is the conclusion of a long series of consultations, and I will listen to all the submissions that I receive before making my final decision.

The Secretary of State previously stated that he was content with the proposals to keep Sky News independent from the rest of Sky. He has today announced further safeguards. Are those safeguards that he had pushed for, or were they proposed by the regulators?

I suppose the answer is a combination of both, because I have been absolutely clear that I want the independent regulators to be satisfied that the final package on the table addresses their concerns about plurality, not least because of the concerns raised earlier about the objectivity of politicians making the decision. I did not make the specific proposals; they arose from the public consultation and were what members of the public suggested as sensible changes. We then analysed them in the Department, and with Ofcom and the OFT, and arrived at the strengthened set of proposals that I have published today.

I do not doubt for a moment the Secretary of State’s integrity, but I do believe that he is wrong, morally and politically, on this issue. He is propping up a crumbling empire. Murdoch is the Gaddafi of News Corporation. How will Sky maintain independent news when most of its editorial content will come from News Corporation?

It is not the case that most of Sky News’s editorial content will come from News Corporation. Sky News, under today’s proposals, will be hived off as an independent company that will source its news from the multiplicity of sources that all good news organisations use. The big picture is that News Corp, in order to acquire full control of Sky, is relinquishing a degree of control over Sky News. There are things that happen today that will not be possible under the new undertakings. For example, it is possible today for James Murdoch, the non-executive chairman of Sky, to fire the person in charge of Sky News. Under the undertakings published today, if they proceed, that would not be possible. Adherence to the broadcasting code is mandated in the new company’s articles of association. That is not the case at present. Broadcasting impartiality, adherence to the highest editorial standards and independence of the editorial process will be much stronger under the new arrangements than it is at present. I hope that that will reassure at least those Members who are prepared to look at the matter objectively.

For the sake of clarity, will my right hon. Friend confirm that under the new, strengthened undertakings any future chairman of Sky News, and the current chairman, will be truly independent and impartial?

I can confirm that under these undertakings the board of the hived-off Sky News will have a majority of independent directors and that its chair will be fully independent. That is completely different from Sky News’s current situation.

The Secretary of State has announced a consultation this morning, albeit a very short one. Will he give us a commitment not to make the final decision during the recess and to bring the matter back to the House for a debate when we reconvene in the autumn?

I will certainly bring the decision back to the House when it is made. With regard to timing, I am trying to do this as quickly as possible, while ensuring that we have proper consultation processes and a proper amount of time to consider the responses to the consultation. The fact that I have today strengthened the undertakings that were published on 3 March reflects the fact that we are taking the consultation very seriously.

Will the Secretary of State address the concerns that have been raised on the publication of the shareholder register for the new company? Surely transparency in this respect is central to the confidence we can have that the arrangements meet our concerns about plurality, in substance as well as in form.

For the purposes of the decision I am making, I have assumed that Rupert Murdoch is fully in control of News Corp and the dominant controlling shareholder. Because this is a decision about media plurality, it is not necessary for me to consider other shareholders in News Corp in order to come to a decision.

The Secretary of State has correctly indicated that these new, legally binding and strengthened undertakings will be enshrined in the new company’s articles of association. He will of course be aware that a shareholder resolution can change the articles of association of any company, wherever it is registered, so what additional protections will be put in place to stop that happening?

My hon. Friend is right; that is the procedure for changing the articles of association. First, under the strengthened undertakings that we are publishing today, the Secretary of State must approve the articles of association before they go ahead. Secondly, under undertaking 3.1(i), News Corp is not allowed to increase its shareholding above its current level, which is well below the level that would be necessary to change the articles of association. Thirdly, under the strengthened undertakings it is not allowed to do anything that would cause the new company to breach its own articles of association. I think that we have as many protections in place as one could imagine to ensure that News Corp honours this deal and the public continue to get the benefit of what they value Sky News for.

May I note a paternal interest, Mr Speaker? As BSkyB has been de facto controlled by News Corp since it was founded, are not these arrangements making it more independent, and some might say more impartial, than the state broadcaster, and therefore is not this row somewhat synthetic?

My hon. Friend is right that, contrary to many people’s concern that this will give the Murdochs more control over Sky News, they are in fact relinquishing a significant degree of control over Sky News in order to purchase shares in the rest of Sky. My concern is not with competition law, which is being considered by the European Commission, but with media plurality and ensuring that no one person has too much control over any aspect of our media. I am confident that these strong undertakings will ensure that that is the case.

Given the disappointing comments of the hon. Member for Brent North (Barry Gardiner), will my right hon. Friend take the opportunity to pay tribute to News Corp for saving The Times, producing The Times Educational Supplement and providing an excellent broadcasting service in the form of Sky TV? Does he not agree that those who are so concerned about the alleged monopoly of BSkyB should also be concerned about the monopoly of the BBC, which controls more than a third of our television and which we are forced to pay for?

My hon. Friend branches out into media policy more generally, but I will resist the temptation to follow, except to say that the Government have always believed that what is good about the media in this country is that we have a strong BBC and strong competition to it. However, this decision is about media plurality and ensuring the diversity of voices in the media, and that is what I am seeking to protect with the undertakings we are publishing today.

Having watched Sky News in some fairly remote parts of the world, I wonder whether my right hon. Friend would agree with me that its broadcasting must not only be impartial, but have a considerable degree of morality and humanity?

I think it does. I agree with my hon. Friend that that is what the public value in Sky News and what we are seeking to protect. It is worth reminding the House that Sky News was the first 24-hour news broadcaster in this country and that it has contributed massively through the competition and choice that it has added to the news landscape, and we should value it for that.

May I take the Secretary of State back to financial viability? Is he satisfied that Sky News will be able not only to survive for 10 years, but to invest in high-quality news gathering for that time?

I am completely satisfied. My hon. Friend is right that the first time the undertakings were proposed to me, my concern was about financial viability. Sky News has a secure financial platform for a long period, which is the envy of all other broadcasters. That will allow it to do precisely what my hon. Friend says. I am sure that with an independent board led by an independent chairman, it will want to diversify its sources of funding, which would give it even more money to invest in news gathering, which is its core strength.

Did Ofcom or the Office of Fair Trading change their initial advice about whether the undertakings addressed their concerns about plurality?

No, they did not. I could have accepted the original undertakings published on 3 March. I have chosen not to, which is why there is now a further consultation to make the undertakings even more robust.

Will the Secretary of State confirm that under the Enterprise Act 2002, his decision is quasi-judicial and he can take into account only relevant considerations, not irrelevant considerations such as whether one thinks that Murdoch is brilliant or like Gaddafi, or one’s personal view on the organisation as a whole?

I can absolutely confirm that. To strengthen public confidence that that is the way in which I have approached the decision, I have taken independent advice at every stage and I have published it so that people can take their own view on how I have come to this conclusion.