Parliament Finally Green Lights Communications Act

After months of debate and a string of eleventh hour amendments the Government’s long awaited Communications Bill has finally become law, signalling what could be the biggest shake-up of the media industry for decades.

The Bill’s eight month passage on to the statute books was far from straight forward and it was feared that disagreements between the Commons and the Lords could delay its journey through Parliament and cause royal ascent to be postponed until after the summer recess.

However, the Communications Act was yesterday cleared to become law in a move that will bring the new super-regulator, Ofcom (see Communications Bill Lays Down OFCOM Framework), into existence and open up the possibility of consolidation in television and radio through the relaxation of the media ownership laws (see Draft Communications Bill To Simplify UK Media).

The legislation has faced immense scrutiny in the House of Lords over the last few months, with peers, keen to limit Rupert Murdoch’s dominance in the newly deregulated landscape, threatening to vote down the Bill unless the Government amended its plans to allow large newspaper groups to buy Channel Five (see Puttnam Plan Could End Media Ownership Deadlock).

However, ministers have accepted Lord Puttnam’s proposal to give Ofcom the power to investigate major cross-media mergers and the foreign media ownership of UK television channels will now only be allowed if the Government is satisfied that any sale will not act against the public interest (see Government Ends Media Ownership Deadlock).

Peers in the Lords also managed to persuade the Government to change a key requirement of Ofcom. The new super-regulator, which will replace the five existing regulatory bodies when it comes into existence at the end of this year, will now focus on protecting the interests of the citizen as well as the interests of the consumer (see Carter Blasts Risky Amendments To Communications Bill).

Trade and Industry Secretary, Patricia Hewitt, said: “This Act delivers significant changes to the regulatory structure striking the right balance between protecting the interests of consumers and citizens and keeping burdens on the industry to a minimum. It will help keep Britain at the forefront of communications.”

Culture Secretary, Tessa Jowell, believes the new legislation will create “the most dynamic and competitive” communications industry in the world. However, she emphasised the Act is the first step in a far longer process, saying: “Ofcom must now deliver a new regulatory system that will be light touch and unobtrusive wherever possible, but decisive and robust where necessary.”

The Communications Act will allow Ofcom the option of introducing a self-regulatory system for broadcast advertising, a clause which has been introduced following extensive lobbying from advertising groups (see Ofcom Likely To Relax Broadcast Advertising Rules).

Ian Twinn, ISBA’s director of public affairs, said: “We welcome the Bill, which we believe sets in place a new regulator with the power and the understanding to oversee a fast-changing sector in the interests of citizens, consumers, broadcasters and advertisers.”

The new legislation also clears the way for the creation of single ITV company, meaning that Carlton and Granada now only need the approval of the Competition Commission before their planned £2.6 billion merger can become a reality (see Advertisers Strengthen Opposition To ITV Merger).

The radio ownership regulations have been relaxed to allow just two commercial radio groups to operate alongside the BBC in each local area, in that a move that opens the floodgates to a wave of consolidation within the sector. However, local television and newspaper companies will be prevented from having more than 45% of the local radio output if they already control more than half of the local press (see Government Confirms Relaxation Of Radio Ownership Rules).

Rules that required all newspaper mergers to be referred to the Competition Commission have also been cleared away, allowing undisputed deals to be agreed by ministers. However, it is understood that Ofcom will have an advisory role in this procedure and disputed issues will still be dealt with by the existing newspaper regulators.

Jowell added: “I hope the communications industry will take advantage of the considerable opportunities that the deregulation enshrined in this Act offers.”

• The Communications Bill Time-Line  
• The Communications Bill was introduced to the House of Commons on 19 November 2002. It had its second reading on 3 December and was subsequently scrutinised by a Standing Committee over twenty-six sittings from 10 December 2002 to 6 February 2003.
• The Bill then returned to the main floor of the House for two days of a report stage (25 February and 4 March) and for its third reading on 4 March. The Bill was then introduced to the House of Lords on 5 March.
• A number of Lords, notably Lord Puttnam, were fiercely opposed to proposals in the Bill which would allow Rupert Murdoch to acquire terrestrial television station Five. After much wrangling, the Government eventually agreed to Lord Puttnam’s suggestion that there be a plurality test before any large media group can buy Five.
• However, even that was not enough for Liberal Democrat peer, Lord McNally, who earlier this month called for an outright prohibition on Murdoch acquiring Five.
• The Liberal Democrat peers were hoping to force a late amendment to the Bill which would prevent the owner of a national newspaper with a market share of 20% or greater from acquiring a terrestrial TV channel. This would scupper any such deal by Murdoch, whose News International publishes the Sun and Times newspapers.
• Despite these late requests, the Lords failed to get their ‘Murdoch amendment’ agreed, in a vote that went 167 to 137 against the proposal .
• The Bill’s report stage in the Lords was then completed on 2 July and a third reading took place on 8 July. Finally, the House of Commons consideration of the Lords amendments happened on 14 July and the Bill returned to the Lords on 16 July.
• The Communications Act eventually received royal assent on 17 July 2003.

DCMS: 020 7211 6200 www.dcms.gov.uk

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