Skip to main content

News Corporation/BSkyB Merger

Volume 728: debated on Thursday 30 June 2011


My Lords, with the leave of the House, I will now repeat as a Statement the Answer to an Urgent Question given by my right honourable friend the Secretary of State for Culture, Media and Sport in the other place.

“Mr Speaker, earlier today I placed a Written Statement before the House outlining the next steps in my consideration of the potential merger between News Corporation and BSkyB. In this 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 OFT.

As I outlined, the consultation did not produce any information which caused Ofcom or the OFT to change its earlier advice to me. I could have decided to accept the original undertakings. However, a number of constructive changes have been 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 these changes strengthen further the arrangements for editorial independence and business viability of the new spun-off Sky News. In my view, they provide a further layer of very important safeguards. As amended, I believe that these undertakings will remedy, mitigate or prevent the threats to plurality which were identified at the start of this process. If, after this next consultation process, nothing arises which changes this view, I propose to accept the undertakings in lieu of a reference to the Competition Commission. Before coming to this view, though, I will of course seek once again the advice of the independent external regulators”.

I thank the Minister for repeating the Statement. I do not think that its content has come as a surprise to anyone in your Lordships' Chamber. What has come as a surprise is the fact that, knowing the degree of interest in this subject in both Houses and among the wider public, the Secretary of State has tried to slip this decision out rather than coming to the other place to make a proper Oral Statement.

This is the continuation of a rather sad state of affairs. The initial delay supposedly arose from the need for a consultation on the Secretary of State's in-principle decision. As the Minister made clear at the time:

“I am opening a consultation period, during which time all interested parties will be able to express their views on the undertakings. Once I have considered representations, I will reach a decision on whether I still believe that the undertakings should be accepted”.—[Official Report, Commons, 3/3/11; col. 519.]

I am curious to know what responses were received to that consultation. For example, did the Secretary of State take into account the views of the public, who, after all, have a keen interest in maintaining diverse news sources? If so, what is the Minister's response to the fact that a recent poll showed that 64 per cent of the public are opposed to the merger because they think that it will give News Corp too much power? Or did the Secretary of State take into account the submissions made from the Alliance of Media Organisations, representing most of the media household names, including BT, Guardian Media, Associated Newspapers, Trinity Mirror, Northcliffe Media and the Telegraph group, all of which wrote to oppose the merger? They argued, among other things, that Newco would not be independent but would be economically dependent on News Corporation; that there are insufficient safeguards for editorial independence; and that the proposals put too much power in the hands of the Culture Secretary rather than independent regulators. Can the Minister confirm whether these views have been taken into account? It appears, on the face of it, that the only organisation which remains enthusiastically in favour of the merger is News Corp itself.

There is a fault line at the very heart of the process which the Secretary of State has adopted for the consultation, because by narrowing down the debate to the content of the undertakings originally offered up by News Corp it neatly sidesteps the much wider concerns about plurality which still exist but which the Secretary of State chose to ignore when he made the decision not to refer the whole issue to the Competition Commission, which he could have done quite legitimately and which would have been the correct course of action pursued by these Benches in these circumstances.

This decision is taking place against a backdrop of outstanding legal cases arising from the phone-hacking scandal, and other noble Lords may wish to comment on that. Of course, the current police investigation must pursue its course to enable those responsible to be brought to justice. However, it undoubtedly brings into question whether this is the right time, when so many questions still hang over the ethical principles underlying News Corp, to give it so much additional media power in this country. I very much hope that the Minister will support our call for an independent inquiry into press standards once the investigations are complete.

I have a number of specific questions for the Minister. First, the new deadline for the latest consultation is 8 July. That is an eight-day consultation. In the previous consultation the media organisations in particular protested that there was insufficient time for them to formulate a detailed response. What chance have they got on this occasion, and how can the Minister be serious about conducting a proper consultation in such a short period?

Secondly, given the further consultation taking place, when does the Minister intend to bring the matter back to the House to enable a full debate to take place? Thirdly, to enable a full debate to take place, will the Government give a commitment to publish not only the latest undertakings but the full independent legal advice on all aspects of the acquisition which the Government have received? Fourthly, is the Minister now able to state categorically that the financial and editorial independence of Newco has been prescribed in such a way that there cannot be a seepage of influence or control back to the main News Corp board? Finally, can the Minister give an assurance that the shareholder register for Newco will be published so that there is full transparency regarding the ownership of that company?

This is not a great day for media plurality or British journalism. I foresee that in years to come there will be cause for many people who believe in open democratic debate to rue the day that we allowed so much power and influence to be centralised in one media organisation. I do not know what it would take to persuade the Secretary of State to carry out one of the Government’s infamous U-turns, but on this issue I can assure the Minister that it would be widely welcomed across both Houses and among the wider public.

In answer to the noble Baroness’s first question, I think it is a bit rough to say that there was surprise. There was no surprise as there has been ultimate transparency: at every stage of this discussion, debate and decision-taking the Secretary of State has published every single document relating to his meetings. The 2002 Act, which was passed by the noble Baroness’s Government, gave authority to the elected Secretary of State to take these decisions. Hacking, which is a very serious problem, will no doubt come up in further questions, so I will leave it for now and try—as the noble Baroness has asked so many questions—to answer her other points. As for coming back to the House, that, of course, is the responsibility of the usual channels.

On 3 March the Secretary of State informed the House that, based on advice he had received from the Office of Fair Trading and Ofcom, he was minded to accept the undertakings offered by News Corp in lieu of a reference to the Competition Commission. As the Enterprise Act 2002 requires, he published these undertakings for public consultation which ended on 21 March.

The noble Baroness asked about the representations. The Secretary of State received more than 40,000 representations to this consultation, including a very large number of near-identical responses as a result of internet campaigns. The summaries of the main responses are on the DCMS website. He met representatives from Trinity Mirror, Guardian Media Group, Telegraph Media Group, Associated News and Media and Slaughter and May on 24 March, and met Avaaz on 15 April. Notes of these meetings will be published at the end of the process. The substantive points have been carefully considered by the Secretary of State, advised by the independent regulators. Regarding the public values, Sky will have less power than it has at the moment and will be cross-promoting for stability in financial areas.

My Lords, this was intended as a Written Statement. It was only when two PNQs—one in this House and one in the Commons—were tabled that we had the Statement that we have just heard. Will my noble friend tell the Secretary of State that it would have been much better to have freely volunteered an Oral Statement in both Houses? That would have been much more convenient for Parliament. This is an important decision but, frankly, we are now being presented with a done deal. Therefore, I have two questions. First, would a British company be allowed to take full control of an American media company, or is it not the case that we are limited to a maximum stake of 20 or 25 per cent? What are the Government doing to break down that barrier? Secondly, is it not clear that we have a position today in which too much market power over the British media is being exercised by one company? I hope that the Government recognise that very many people in this country regard this concentration of power as unacceptable. I urge the Government, even at this very late stage, to review and strengthen the rules on media plurality.

I thank my noble friend Lord Fowler for his questions, and I will of course relay his concerns to the Secretary of State. As I said in reading out the Statement, this is still an ongoing situation. We have until midday on 8 July before any final decision is taken. This has been going on since last summer and there have rightly been many consultations. The Secretary of State has published all papers relating to every meeting on the subject. With regard to a British company taking control of a United States company, I will have to write to my noble friend on those details.

Does my noble friend the Minister recall that in 2002 the Labour Government denied that we needed a general plurality test on media ownership and that it was only because of the efforts of the noble Lord, Lord Puttnam, my noble friend Lord McNally and others, that the plurality test was eventually included in that Act? Given recent events and controversy surrounding the acquisition of BSkyB and the fact that in March the Secretary of State said that the existing check on media plurality “may not be as robust as it should be”, and ahead of the upcoming and very important communications Bill, is it not time that the Government set up an independent commission to look at the issue of plurality in order to ensure that, in future, we have a robust mechanism for dealing with threats to media plurality?

I thank my noble friend Lady Bonham-Carter for that question. She is absolutely right that plurality is one of the major concerns at the heart of this. During the consultation period a number of issues were raised that were not material to the issue of media plurality. A number of respondents raised competition issues, which were dealt with by the European Commission, but the Secretary of State said today in the other place that he would be looking further at various areas of plurality. I am grateful to the noble Baroness for raising that point. I add to my response to my noble friend Lord Fowler: the previous Administration removed foreign ownership restrictions, which is why foreign companies can buy UK media companies.

My Lords, does the noble Baroness really believe that the public will benefit from the proposed merger? How? Why? Is it not clear that the Secretary of State has been too easily influenced by the power of the Murdoch empire?

My Lords, the noble Lord, Lord Clinton-Davis, raises an important point, which covers the independence of News Corporation. The undertakings provided by News Corporation provide a stronger degree of independence for Sky than the original provisions for the Times. Those safeguards operate at a number of levels and, taken together, should make certain the editorial independence of Sky News. In particular, to cover concerns expressed by the noble Lord, News Corporation will remain a minority owner. The new company will have a majority of independent directors and be independently chaired. At least one independent director must have senior editorial or journalistic experience, and the company's articles of association explicitly contain the principle of editorial independence and integrity in news reporting. There will be a corporate governance and editorial committee to make certain that there is compliance with those requirements, which will also have a majority of independent directors and be independently chaired. The Secretary of State feels that, with those new, binding words, he is and the public should be totally satisfied.

The noble Lord suggests that this is a done deal. My noble friend’s remarks suggest that the Secretary of State will consider additional material in the week of consultation that remains. Can my noble friend explain what issues will need to be substantiated in such submissions to persuade the Secretary of State to change his mind?

Under the law, a minimum of seven days’ further consultation is required. The Secretary of State will be receiving suggestions or ideas for changes that people feel necessary to present to him; then he will take the decision. He is in a quasi-judicial situation, and he will take the decision wisely, I am sure.

My Lords, has the Secretary of State already taken into account the fact that, as we have already heard, 64 per cent of the population is opposed to the proposals? Has he already taken that into account and rejected it? That is what it looks like, which does not seem to be paying much attention to public opinion.

I am sure that he has taken the 64 per cent into account, the details of which I have not got in my brief, but I will write to the noble Baroness with the results of the poll—there are many different polls and I am not sure whether they all come out at 64 per cent.

My Lords, this is not simply an issue about the plurality of the media. It is about the credibility of the person who is purchasing BSkyB. First, I agree with the noble Lord, Lord Fowler, and say that it was terrible to hear on Radio 4 a report on what the Minister was putting out in a Written Statement today, when this House should have been given a proper Statement on what is clearly a very controversial issue.

My concern is about the company to which we are now considering that ownership should be given—whether it is a done deal or not, I shall wait to see, but I suspect that it is. That is an indication of the Government’s change since 3 March. They have listened to the consultation; they have made proposals; and, yes, there are some changes. That is not the only change that has taken place since 3 March, when a Statement was made to this House about the purchase of BSkyB. Many other things have changed, not least the admission now that it was not a single rogue operator. Other reporters have been arrested who were working for the Murdoch press who were committing these criminal acts. Also, we know that a chief executive has now admitted that she was paying—the Murdoch press was paying—the police for information. That is the company that we are now considering should have control of a major media organisation.

On top of that, Mr Murdoch himself, in settling a case with Sienna Miller, has now admitted—he has not only apologised for what they were doing—that they did not provide all the information. Withholding information is a criminal act under our laws as well. That is the man, Mr Murdoch himself, who said, “We were not robust enough in our inquiries in providing the information”. The provision of information was to the police in the early stages, and the police came to the wrong conclusions. In those circumstances, the man we are talking about who is bidding for this deal, for which we have had the Statement today—do you want to get in?

I respectfully advise the noble Lord that Oral Statements are the occasion for brief comments and questions.

I will be smacked on the hand if necessary, but I will say what I have to say. What I shall say is that the case of the apology is now an important issue. He is the man who is purchasing. He admits that they have committed criminal acts. In those circumstances, that is a consideration.

Plurality is a minor part. The credibility of the person who is purchasing is an essential issue for us. I cannot help but feel that this decision came shortly after the Prime Minister met Mr Murdoch. A few days later, we get the decision. Of course, I cannot say that anything happened there, but we have a decision, a change and a commitment.

Is the Minister aware that all those things have gone on? Are there not issues about due process to be considered in the company? Are the Government now prepared to have a public inquiry? Are they prepared, as I have constantly asked, not to do anything until the criminal inquiries have been completed?

My final point, just before I finish, is that what I found alarming in the settlement of the Sienna Miller case is that the agreement was not to say everything in court but to tell Miller after, in private. That is about what other criminal acts have gone on. There is no exposure in that. Our courts are not considering all that has gone on. This man, to my mind, is not a fit and proper person to be purchasing such an organisation, and I hope that we will come back to have a debate followed by a public inquiry.

My Lords, as I have said once or twice before from this Dispatch Box and to the noble Lord, Lord Prescott, we take hacking very seriously. It is a serious crime and no company is above the law. The Secretary of State has taken the view that News Corp has offered serious undertakings and has discussed them in good faith. Hacking, as I said, is a serious matter but it has been around for a very long time. That does not make it any better but this is not the first case of hacking, and perhaps they are not the only people hacking. We have had four Questions and several debates on this in your Lordships’ House, but the hacking aspect is not part of today’s Statement. As I said once before, it is a criminal case and one that the Home Office is looking at.

My Lords, the Written Ministerial Statement, which has been placed in the Public Paper Office, contains an interesting paragraph, which states:

“Some respondents also argued that News Corp could not be relied upon to abide by the requirements set out in the undertakings, citing previous guarantees and assurances given by News in the past”.

Would the Minister outline what those previous guarantees were, what assurances were given in the past in relation to other matters by News Corp and whether it is correct that those guarantees and assurances have not been abided by? I recall seeing in a publication—I cannot remember which—a suggestion that an independent chair was appointed for a period but that after a certain amount of time, perhaps some years, that position lapsed.

In that context, I ask the Minister to enlighten us with more detail on the passage in the Written Ministerial Statement on “Editorial Independence”, which refers to,

“the definition of independent directors”,

and to a requirement for meetings of the board about editorial or journalistic matters, or of corporate governance of editorial committees, to be quorate only if

“an Independent Director with senior editorial and/or journalistic expertise is present”.

Can the Minister tell us how many members would be on those boards and committees, to give an indication whether the independent director would be a lone voice among many or few? Above all, would it be possible for the company to change its articles of association, and if so, when? In other words, for how long would those undertakings be legally enforceable?

My Lords, the editorial independence is of paramount importance. A number of changes have now been made to the undertakings to strengthen further the arrangements for independence, which I will read out:

“Sky News’ Articles of Association set out the definition of independent directors; Meetings of the board of Sky News about editorial or journalistic matters will only be quorate if an Independent Director with senior editorial and/or journalistic expertise is present. Similar arrangements apply to the corporate governance and editorial committee. This is a response to representations that these arrangements could be undermined if this Director was often unavailable for meetings for whatever reason”—

the majority of directors are independent, so there is no voice in the wilderness.

“The change will ensure that Sky News organises its business so as to ensure that there is always appropriate senior editorial and/or journalistic expertise at relevant meetings. The appointment of a Monitoring Trustee whose main role is to ensure that News Corp complies with the undertakings and make sure that News Corp does not do anything ‘that would prevent Newco [i.e. the spun off Sky News] being placed in an overall position of editorial, governance, commercial and financial independence in which it will contribute to plurality as Sky News did prior to the Transaction’”.

I will write to the noble Lord about the number of directors.

My Lords, I wonder whether the Minister can give some assurances about the financial viability of Sky News following this proposed spin-off, if you like, as an independent. Without the backing of a large media organisation, one wonders how long it can possibly last. It does not make any money as an organisation as part of News Corp, so how long is it likely to survive? We need this as part of the news plurality in the UK. Perhaps the Minister can give us a little information on that one.

The noble Baroness brings up a very important point. The carriage and brand licensing agreements are an important part of this process. The Secretary of State will only accept the undertakings once he has approved these agreements. These documents have been reviewed in great detail by the Office of Fair Trading, Ofcom and external lawyers. We believe that their independent, expert advice provides confidence that undertakings in key agreements are robust. They have concluded that the drafts of the carriage agreement and the brand licensing agreement are now fully consistent with the proposed undertakings.

In addition, the OFT confirms that the terms of the carriage agreement and the brand licensing agreement mean that Sky News will be practicably and financially viable for the lifetime of the carriage agreement, which I believe is 10 years. There is a need for 80 per cent of votes to change the articles. News Corp must vote against changes for so long as they have less than 50 per cent of the shares. The Secretary of State has made it clear throughout that we are committed to maintaining the free and independent press for which this country is famous and proud. The Secretary of State has sought and published independent advice throughout this process. He has listened carefully to the points made in the consultation and amended the undertakings where appropriate. He is fully aware of the importance of the financial side of this. He has also gone for maximum transparency while taking reasonable account of commercial confidentiality considerations. He continues to believe that if he allows this deal to proceed, Sky News will be able to continue its high quality output and will have greater protections for its operational and editorial independence than those that exist today.