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    Monday, 30 April 2007

    BSkyB's ITV share acquisition sees referral to Competition Commission

    Both the Office of Fair Trading (OFT) and Ofcom have concluded that the acquisition of shares by BSkyB in ITV should be referred to the Competition Commission for further investigation. A referral to the Commission will now take place. The only query is whether it will be asked to look at the wider public interest issues alongside the competition questions.

    Under the Enterprise Act 2002, it is normally for the OFT alone to make an initial assessment of the ramifications of a proposed or completed merger situation on competition in relevant markets. After the Secretary of State (for trade and industry) intervenes in a media industry merger, however, the OFT must report to him. Ofcom must also advise him on whether wider public interest problems of quality, diversity or pluralism have arisen (Ofcom will often conduct a separate assessment of whether the licence of any party to the merger should be amended on a change of control). It is then for the Secretary of State to decide whether the merger should be referred to the Commission. The Secretary of State is obliged to follow the OFT's view on the competition question, but can reject Ofcom's perspective on the public interest issues (and refer or not refer contrary to the advice received). This is the first time that this mechanism, introduced by amendment to the Enterprise Act through the Communications Act 2003, has been deployed.

    The statement published by the OFT is thin on detail, and we must wait for publication of its advice (normally a few weeks after the decision is announced) before gaining an insight into the specific markets in which it believes problems have arisen. For the meantime, the OFT concluded that BSkyB had obtained a 'material influence' over ITV; that a substantial lessening of competition may be expected, and that a straightforward remedy had not been found.

    On the first question, it is worth noting that a 17.9% holding without board representation is a comparatively low figure for a finding of influence. On the second question, the OFT indicated that the partial ownership link raises significant competition concerns, especially as we approach digital switchover, as it means that ITV is no longer fully independent. It also suggested that the number of consumers potentially affected - tens of millions - supported the need for further consideration.

    Ofcom's published statement is equally lacking in detail. In a five sentence release, it indicated that "there are public interest issues, in relation to sufficient plurality of news provision for both cross media and television news in the UK". It has undertaken to publish its full advice by the time the Secretary of State announces his decision on referral. This is scheduled to happen on 26 May.

    I'm due to flesh out my intuitions on the utility of the public interest adjunct to the merger control regime in a seminar at Queens University, Belfast next week and will post a summary of those reflections on here. For the meantime, the title - 'An Affective Disorder?: Public Interest Intervention in Media Mergers' - should offer an inkling of my perspective.

    (Temporary) Stasis for Irish Defamation and Privacy Bills?

    Cearta.ie has an interesting note on one ramification of the calling of the Parliamentary election in the Republic of Ireland. This is the fact that the Defamation and Privacy Bills will now fall, unless rejuvenated by the incoming Parliament. A corollary point made concerns the impact that this development will have on the emergence of the self-regulatory Press Council and Ombudsman that were to be established in conjunction with the new law.

    Paps vs Celebs - the ultimate spectator sport

    Hugh Grant made the papers at least twice in the last week, first for an alleged attack on a paparazzo and then having won a libel action against the Daily Mail. On the back of this, Greenslade has an interesting post with comments, while both Stephen Glover in the Independent and Jim White in the Telegraph 'join the fray' with interesting takes.

    'National champions' ride again?

    Its reported in a number of newspapers this morning that Telecom Italia is to be taken over by a consortium of Italian and Spanish companies with the result that it will stay under 'Italian' control (1,2). The company had been subject to interest from US firms AT&T and America Movil, and its future has been at the centre of a political storm in Italy.

    So far, so what? Well the point of interest is that the move seems to have come on the back of ministerial intervention, and provides another example of European politicians' interference in corporate ownership in the attempt to defend perceived strategic interests. The Guardian article cites the chairman of Generali - an Italian insurer involved in the consortium - as saying that he had joined the consortium after a call from the finance minister (Tommaso Padoa-Schioppa): "I told him we do insurance, not telephones, but that if it was necessary to defend the Italian-ness of Telecom, we were ready... I hope that the government would behave in the same way if - God forbid - it was necessary to defend the Italian-ness of Generali".

    The creation of 'national champions' is sometimes seen as the only way for firms based in a particular country to compete in a global market populated by giant competitors. It is considered particularly important in respect of industry sectors that are deemed strategically important. Notably, the approach tends to benefit firms that are already large with well-established political connections. The social welfare implications of the decline or failure of such firms can leave it difficult for politicians to resist supportive intervention. Commissioner Kroes - the Competition Commissioner - has acknowledged that “in difficult times, it is sometimes appealing to launch ideas about champions and sectoral initiatives”.

    The problem is that this approach runs counter to the premises of European integration (albeit that here the perceived shark was non-EU). Its something I've written on previously in the context of energy industry mergers (see [2006] Journal of Business Law, 619-630). The countervailing view is that firms that operate in competitive national markets are more likely to be efficient and thus able to flourish on more competitive global markets than contemporaries that are insulated from competition on home markets.

    Given this belief, the grant of support to national champions is perceived as pathological. For Professor Geroski (the late Chairman of the UK Competition Commission) “it is competitive markets that produce such champions, not national governments… national champions are more likely to become national basket cases than national breadwinners”. Ms Kroes concurs that “vigorous competition at home represents the best industrial policy... when industrial policy turns inwards, when protectionism leads to economic isolation, the consequence is diminished growth, stagnation and lost prosperity”. The consensus among other commentators confirms this attitude: “no industrial policy has been more comprehensively discredited than the notion that the best way to achieve competitiveness abroad is to suppress it at home”; “in the end, a possibly well meaning policy designed to nurture the sunrise sectors of the future ends up propping up the sunset sectors of the past, littering the industrial landscape with dinosaurs whose ability to compete for political patronage turns out to be far superior to their ability to compete in their own markets” (John Kay - Financial Times, 11 January 2005).

    We may hear more on this...

    Panorama at risk of suit for 'law-breaking' journalism

    It was reported in the Sunday Times on the weekend - and in the Sun this morning, but nowhere else - that the BBC Panorama team may be facing a defamation action at the hands of the fertility doctor whose questionable practices they sought to expose in an edition aired in January. I've noted previously that there is also a possibility that criminal prosecutions may be brought.

    The allegation seems to be that the BBC was unbalanced in its reporting, in that it focused on the experiences only of undercover reporters who arguably did not receive the most appropriate treatments and didn't present the wider, less prejudicial findings of its investigation. Lord Winston, who appeared on the programme, has expressed his concern that the focus of programme was on the purportedly errant behaviour at the individual clinic rather than on the laxity of the regulatory regime.

    Without having seen either the programme or the details of the legal complaint it is difficult to comment cogently, but it seems clear that the doctor's solicitors hope to preempt the use of the Reynolds qualified privilege defence to defamation (that allows media organisations to avoid liability even if they are later proven to be wrong and to have caused damage to reputation so long as the story was in the public interest and was the product of responsible journalism).

    It would seem to me that the subject matter of the report was clearly a matter of public concern, and so the focus will be on the satisfaction or otherwise of the responsible journalism test. The court will allow a significant degree of leeway for editorial judgment, and so the mere fact that Panorama adopted the slant it did is unlikely in itself to preclude use of the defence.

    On this the BBC might draw succour from the recent House of Lords decision in Jameel v Wall Street Journal Europe [2006] UKHL 44 (if I can be allowed a second self-serving reference for the day, I have a short paper coming out on this topic this month: (2007) Communications Law, 12(2), 52-59). That said, if it can be shown that the programme makers were not even-handed in terms of allowing the doctor to answer the case presented they may be at risk. Its worth noting that the BBC's lawyers seemed content with the programme content.

    'This is England' film classification overturned by council

    There was an interesting discussion on You and Yours on the radio last week, which was followed up in the Guardian over the weekend. It concerned the overturning by a local council of a classification given by the British Board of Film Classification to the new Shane Meadows movie, This is England. The film is geared in part towards confronting teenagers with the stupidity of racism, and so the award of an 18 certificate rather defeated the object.

    BBC wins High Court FoI case on Balen Report

    On Friday, the BBC learned that it has been successful - at least for the meantime - in its attempt to refuse publication of an internal report into its coverage of the Middle East (1,2). Quite apart from the specific issues under examination, the case was a milestone as it was the first time that the provisions of the Freedom of Information Act have been considered under appeal to the High Court.

    Before Easter, Mr Justice Davis had indicated (without at that point publishing reasons) that the BBC would be successful on the first of two issues in the case (on this, and the general background, see earlier post). This was the question as to whether the Information Tribunal has competence to reassess the view of the Information Commissioner on whether information held by public service broadcasters was retained for the purposes of 'journalism, art or literature'. Where information is so held it is not subject to disclosure under the FoIAct, as the PSB would not be considered to be a public authority in that context. The judge's ruling results in the curious position that the BBC could appeal a finding by the information Commissioner that material was not held for journalistic purposes, but that others cannot appeal the contrary finding. While an application for judicial review of the Commissioner's decision could still be made, this is inevitably a more costly and burdensome route.

    The second issue before the judge comprised an application for judicial review. Mr Justice Davis granted permission for review, but then proceeded to find against Steven Sugar - the solicitor who has brought the case for disclosure (see paras 48 et seq).

    While he has been refused leave to appeal the matter further, Mr Sugar has written to Sir Michael Lyons of the BBC Trust to encourage publication notwithstanding the court ruling. He is also hopeful that either the Information Commissioner or the Department for Constitutional Affairs will bring the case to the Court of Appeal on behalf of the public interest.

    The transcript of the judgment is available on Casetrack and BAILII: British Broadcasting Corporation (R on the application of) v The Information Tribunal [2007] EWHC 905 (Admin)

    Thursday, 26 April 2007

    No more Miss Behavin'!!

    Yesterday saw the delivery of a judgment by the House of Lords which - for Baroness Hale - took 'the prize for the most entertaining name of any that have come before us in recent years' (Belfast City Council v. Miss Behavin' Limited [2007] UKHL 19). While some people are easily amused, to my mind the case is interesting for the explicit assumption made by at least three of their Lordships that the right to sell pornography from a given location invoked the Article 10 right to freedom of expression.

    That said, Baroness Hale did place such forms fairly low down the list of protected speech: "there are far more important human rights in this world than the right to sell pornographic literature and images in the backstreets of Belfast City Centre. Pornography comes well below celebrity gossip in the hierarchy of speech which deserves the protection of the law. Far too often it entails the sexual exploitation and degradation of women for the titillation of men. But there is always room for debate about what constitutes pornography. We can all think of wonderful works of literature which once were banned for their supposed immorality".

    The sex shop owners lost the case. The fact that the city council had not explicitly considered the owners' Convention rights when originally denying them an operating licence did not amount to a procedural failing warranting the overturning of its decision. The abridgment of the expression right was proportionate and legitimated by statute.

    More on undercover filming in schools

    Earlier this week I commented on the case of Angela Mason who was facing charges of bringing the teaching profession into disrepute having filmed pupils' behaviour surreptitiously. Quite coincidentally, while working on another project today I've happened across another similar case from July 2005. That instance resulted in an application for a preemptive injunction the day before the Dispatches programme was due to be aired. The injunction was refused (see Leeds Council & ors v Channel 4 Television Corp [2005] EWHC 3522 (Fam)).

    GoogleNews: aggregation, copyright and online advertising

    The Greenslade blog has an interesting article and comments on an incipient dispute between the Telegraph and GoogleNews (with background and comparisons). The immediate problem for some is the potential impact that such aggregation services may/will have on advertising revenues and the knock-on impact on the funding of journalism. The deeper issue concerns how the new media environment requires old media players to reassess their economic models on an almost continual basis.

    Wednesday, 25 April 2007

    Ofcom's Public Service Publisher: Portal or Pot?

    The PSP road show continues at a seminar series organised by the BBC’s David Levy at Oxford’s Said Business School Tuesday.

    Ofcom – represented here by William Garrood, have proposed that a digital public service provider should be set up to meet the shortfall in Public Service Broadcasting brought about by the switch to digital. But why there is a need to intervene, and what exactly this PSP beast should do, remain vague following Ofcom's recent consultation.

    Reading between the lines of the discussion in Oxford, it is clear that the regulator has been clever in using the PSP to stimulate debate. They have made little or no attempt to say exactly what the PSP should do but have so far offered a blank canvas: which to rampant wonks is like a red rag to a bull. The PSP can be anything we want it to be, so there is no reason we should not all get very excited about it, albeit for very different reasons. Ofcom has outsourced the task of visualising the PSP to consultants and media companies, and to Robin Foster, roving Uberwonk formerly of Ofcom, who outlines the proposal at this seminar. The next crucial step will be an Ofcom summary of the responses to the consultation, but there is only so much that Ofcom can do. At some point the question of just what the PSP should do has to be answered. Not by Ofcom, but by Government.

    There are serious reasons why Ofcom has not been explicit about what the PSP is. As we often hear, Ofcom is a creature of statute. Whilst the margin for discretion and independent action is wide given the several hundred duties listed in the Communications Act, the regulator could be criticised if there is no identifiable power or remit behind ad hoc initiatives like promoting the PSP. Given its duty to ‘protect and strengthen public service broadcasting’ it could be accused of mission creep if it takes the PSP proposal too far.

    In determining where the ‘market shortfall’ as Robin Foster described it at this seminar, actually is, you first have to decide what the objectives and externalities to be achieved are. Because there is no agreement about what public service digital media can achieve, there remains huge uncertainty about whether the market will provide, how long we should wait for it to do so, and therefore what objectives a PSP should have. Should the PSP’s objectives be lifted from Ofcom’s general purposes for PSB as described in the Communications Act? Surely not: there should be a broader debate about public intervention in interactive digital media that goes beyond broadcasting. If the point of the PSP, as recently proposed, is to create links between user generated initiatives and with public sector arts and culture organisations this seems to suggest the need for a common portal. But most proposals for the PSP seem to view it as a pot of money for funding content production. If it is a pot, rather than a portal, as the BBC fear, is it simply a Trojan Horse for contestable funding: the old idea that broadcasters should compete for subsidy from an ‘Arts Council of the airwaves?’

    These – huge – questions for the PSP are nowhere near to being answered, and the Ofcom's programme of work on the PSP is likely to remain vague for the reasons outlined. So let us pose a question: is it likely on the basis of current proposals that Ofcom will be able to open the wallet of the Treasury to pay for this? And what kind of a ‘market failure analysis’ – if any - should be carried out whilst the objectives are unclear? We need a Green Paper to flush out the Government steer on all this.

    Tuesday, 24 April 2007

    Research on journalists' use of the FoI Act

    The Press Gazette has a summary of research conducted by the Constitution Unit at UCL regarding the use of the FoI Act by journalists. It seems that there is a mixed bag of perspectives depending on the use to which information sought is to be put. Perhaps unsurprisingly, those facing deadlines were frustrated by delay in the application and appeals processes. Investigative journalists with more time on their hands were happier to suffer such obstacles. See here for full details on the research.

    'Shooting the messenger': teacher-journalist on misconduct charge

    I remember with shame and regret the torture that I, together with my classmates, occasioned on our hapless French language teacher in the second year (at what was reputedly a 'good' school). The inanity of our behaviour was brought home to us during the weeks of detention imposed when another teacher - happening down the corridor as we were in mid-Punchlines mode with some guys even bringing their desks with them as they moved to other parts of the classroom - walked in on our shennanigans and hit the roof. While our goings-on might (please?!) be excused as hijinx and tomfoolery, a documentary aired on Channel 5 in April 2005 suggested that such riotous behaviour - and much worse - have become endemic in schools across the country.

    Now, the supply-teacher who went undercover in eighteen different schools to get the footage on which the Classroom Chaos programme was based is facing charges of professional misconduct before a disciplinary committee of the General Teaching Council (1,2,3). She is accused of bringing the profession into disrepute on the bases that children were filmed without their parents' permission and that by engaging in a dual enterprise (teaching and filming) her attention was diverted from promoting the education and welfare of the pupils in her charge. Teachers' unions accused her of being underhand and of sensationalising the issue. At the time, rightly, the programme gave rise to much public debate. After all, its hard to sensationalise attack by rubber truncheon...

    To my mind the proceedings are misdirected. No doubt the teacher in question has a case to answer; probably the children's privacy rights were certainly infringed and welfare undervalued. But - as has been linked / noted on here before - there must be a defence to such actions for journalists and public-spirited others based on the performance of the watchdog function in a democratic polity. The teacher in question should be thanked and not castigated. The proceedings smack of punishing someone who - presumably diligently and conscientiously - exposed, perhaps dramatised, an important issue that needed airing. The collective embarassment of the teaching profession at some perceived implication of incompetence shouldn't be focused through the profession's leaders onto an individual whistleblower.

    Monday, 23 April 2007

    Shiver me timbers

    Ofcom estimates in its new report on illegal radio that there are 150 pirate radion stations broadcasting in the UK, more than half of which are in London. But whilst community radio enthusiasts argue strongly that such stations can provide a valid service to unserved communities, Ofcom is involved in over 1000 separate operations investigating the stations per year, and in 2006 there were 63 convictions. Ofcom's response is robust: pirate radio stations must be closed because they interfere with safety of life radio services such as air traffic control.
    http://http://www.ofcom.org.uk/research/radio/reports/illegal_broadcasting/
    In the long history of pirate radio in the UK, spectrum scarcity has excluded non-establishment voices (think of Radio Caroline in the 1960s) many of which later became mainstream. A paper shortly to be published by Dr Bart Cammaerts of the Media Department here at LSE takes a broader view looking at the battle for community Radio internationally, and what he sees as the success of Ofcom's access radio licences issued under the Communications Act 2003. He argues that there is a need for more recognition of community radio. But surely the game has shifted with more widespread diffusion of broadband and on-demand channels. When dealing with the claims of the local television lobby, Ofcom and others are likely to say that they dont need spectrum but should develop broadband services. Are they right? and is community radio so different?

    Parliament avoids 'own-goal' on freedom of information

    Filibustering opponents of the bid by MPs to exempt Parliament from the Freedom of Information Act have effectively killed off the proposal (1,2). It had been argued that the amendment was necessary to avoid MPs' constituency correspondence from being subject to disclosure. The sceptical perspective was that in fact MPs would rather that their expenses claims were not open to public scrutiny - constituents' details are already exempted from disclosure (1,2,3). The unedifying episode stands as further evidence that most politicians think FoI is a great idea... so long as its applied only to other people. This cynicism, if given effect, could only have energised the image of politicians as worthy of paltry public trust.

    'A kind of touchy-feely D-notice': Lawson on the desire not to offend

    MediaGuardian has an article by Mark Lawson on recent decisions to postpone the airing of the drama Mark of Cain and a reading of the short story Weddings and Beheadings by Hanif Kureishi. It an excellent discussion, and one better read than paraphrased.

    That said, Lawson offers some insightful comments that are worth pulling out: he describes the desire not to offend as "sentimental rather than punitive censorship, but [notes that] it has the same effect of silencing writers"; argues that "surely fiction has as much right to explore such terrible contemporary phenomena as journalism has to report them", and that "fiction should not be penalised for understanding fact". Its powerful stuff. There's also some interesting comment following the article (including a thesis based on the work of Robert Pirsig).

    Wednesday, 18 April 2007

    Useful articles on journalism, advertising and privacy

    I've recently come across a couple of interesting / useful websites which offer a number of relevant articles: spiked and The End of Journalism?

    From the former, see (at least) the following from the section on free speech: Harrassing the Paparazzi (on privacy and harassment) and More news from the world, please (on journalism and law-breaking), both by Tessa Mayes, and Advertising is a free speech issue (on the junk-food advertising ban) by Brendan O'Neill.

    Tuesday, 17 April 2007

    Who needs freedom of (trivial) information?

    A noteworthy article by David Walker in the Guardian last week focused on the use and misuse of the Freedom of Information Act 2000 (it passed under my radar at the time, but was highlighted today by martinstabe). The piece offered a litany of trivial uses, and on the strength of this proceeded to pose a series of rhetorical questions about the wider utility of the mechanism. It was hung on the fact that the government seems to have reneged on its reform plans, and also on the ballyhoo regarding Gordon Brown's (perfectly legitimate) decision not to follow policy advice on pensions ten years ago (a fact revealed under the FoIA).

    I don't understand the point of this sort of piece. Of course, as was ably demonstrated, the FoI Act will be used by muckrakers to witless ends. But ultimately, so what!? Its a non sequitur to conclude that the mechanism is therefore useless or worse. For every asinine request, there have been others that have proved important to the business of democratic scrutiny (for plenty of examples, see holdthefrontpage, and for more general comment see the UK Freedom of Information blog).

    Walker does make a useful general point about the wisdom of releasing policy advice into the public domain. He suggests that: "only people who know little about how government works shout for publication of the 'analysis' on which decisions are made, as if the process were stepped and linear. The problem is intolerance of the business of government, which, like any business, depends on free and privileged exchanges between adults".

    The intolerance diagnosis is correct. But here again, I think there's a mistake. The immaturity of public sphere debate in the UK - the 'intolerance' of the fact that decisions will not satisfy everyone - has been caused in part by overweaned government secrecy. More openness on policy advice would allow the foundations of decisions to be set out, and considered by everyone interested. The question of disclosure should be focused on appropriate timing rather than on whether or not. In such a context, those attempting to stir up 'passing frenzies' by reference to partial information - self-interested cadres of opposition politicians and compliant hacks - would be more widely recognised as brigands and buffoons.

    Monday, 16 April 2007

    Thoughts on the ITV Contract Rights Renewal Remedy

    There's an interesting discussion by Simon Marquis in the MediaGuardian of the ITV Contract Rights Renewal remedy imposed by the Competition Commission on the fledgling ITV plc to limit its power in the advertising market. The remedy was devised by Charles Allen - latterly of ITV - as a quid pro quo for the clearance of the merger between Carlton and Granada in 2003. ITV wants the OFT to lift the burden of the remedy. Given the changed circumstances since its imposition, there has to be a strong case for doing so.

    Investigative journalism, public interest and the law

    A short article in the Sunday Telegraph on the weekend implicitly raised an interesting general question. It seems that reporters for the BBC's Panorama programme may have used faked doctors' referral letters in order to gain access to treatment at a fertility clinic. This may be contrary to the Forgery and Counterfeiting Act 1981. The programme's lawyers seem to have been aware and given the okay on the basis that the fakes were 'justified in the context of the undercover investigation'. So, quite when does the 'public interest' in the watchdog function of the Press justify lawbreaking during the investigative process?

    Friday, 13 April 2007

    Blogger = journalist? Economist on protection of sources

    The Economist has an interesting article on the case of Josh Wolf, a blogger cum journalist, who has just been released from jail in California having served 7 months for failing to cooperate with an investigation by revealing his sources (for more, see here).

    BSkyB response to Virgin case filing

    I couldn't find BSkyB's response to Virgin's suit online, and so requested it by email (see below). This largely reflects what has been reported in the papers and online.
    -------------------------------------------------------

    12 April 2007

    SKY RESPONSE TO VIRGIN MEDIA STATEMENT

    Commenting on today’s statement by Virgin Media, Mike Darcey, Sky’s Chief Operating Officer, said:

    "This action is without foundation and is an obstacle to bringing back Sky’s basic channels for Virgin Media customers. The best and quickest way to give customers what they want is to resume negotiations and we’ve invited Virgin Media to return to the table. For a cost of just 3p per customer per day, Virgin Media could offer a bigger and better choice of Sky channels than ever before.

    “Virgin Media is saving money as a result of this dispute but it hasn’t reduced prices. Millions of customers have lost access to the shows they enjoy and it is clear that many resent paying full prices for fewer channels. Virgin Media is also insisting on re-opening a previous deal for its channels on the Sky platform, even though this has absolutely no relevance for cable viewers.

    “Increasingly, customers will ask whether Virgin Media is putting its own financial interests before giving them the service they want.”

    END

    No fire without smoke? Virgin vs BSkyB

    Given the date and my relative ignorance of the details of Virgin's claim (news reports 1,2,3,4, and press releases - virgin, bskyb; see also earlier posts on mediapal) it may seem foolhardy to prognose on the likely success or otherwise of Virgin's action against BSkyB, but below are some thoughts. The starting point is to recognise that Virgin are complaining about two separate matters: the refusal to supply channels (at least at an acceptable fee), and underpayment for Virgin's channels for carriage on Sky's platform.

    The action is based on Article 82EC (EC competition law) and Chapter II (section 18) of the Competition Act 1998 (UK competition law). These two measures are equivalent to one another. They require not just that the impugned firm is 'dominant', but also that the firm has somehow 'abused' its dominant position. Therefore, being dominant is not unlawful in itself.

    A position of dominance is reached when a firm's market power 'enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers, and ultimately of consumers'. So the steps to be undertaken in any given case are (1) market definition and (2) an assessment of market power. The latter involves (a) an assessment of existing competition on the market, (b) a review of wider market characteristics and (c) an assessment of potential competition / barriers to market entry.

    In terms of market definition, both companies are vertically integrated across markets for channels/programmes (and to some extent programme production) and markets for delivering channels to consumers. Importantly, it is not clear how the downstream market should and will be defined. Virgin contends that it should be the market for pay-tv. However, it could conceivably be defined to include Freeview (either standalone or as part of BT Vision) and other emerging platforms. There are around 8.5 m consumers of free-to-air digital tv in the UK (DTT and free-to-view satellite).

    If the market is defined as that for pay-tv platforms then market shares may indicate that BSkyB is dominant, as it has a relatively high share of pay-tv subscriptions (putatively close to 70%). This is based on the fact that BSkyB has around 8m subscribers compared with Virgin's 3.3m. If the free-to-air platforms are part of the same market - which, from the consumer's perspective, they may or may not be - then the contention that Sky is dominant on the downstream market dissolves.

    There are other factors in play that may also affect the determination notwithstanding the high market share. These include on one hand the fact that the market for digital platform delivery is steadily growing in advance of digital switchover, but on the other hand the uncertainty as to the impact of on-demand services over the internet (note that CBS announced yesterday that it is following other content providers in offering its content free over the web, and that the introduction of BT Vision is in part predicated on a movement towards a new delivery model).

    Sky is clearly not dominant on the upstream market (ie that for channels), except as regards the premium content (notably sports) segment of the market (which is not at issue in this case, and in respect of which the position has changed of late).

    Let's assume for the meantime that Sky is dominant on the market for pay-tv. Virgin's real problem will be in proving that Sky's behaviour has been abusive. It wants Sky to be obliged to provide its channels; that is, it wants Sky's basic right to use its property as it thinks fit and its freedom to contract to be abridged. Competition law will sometimes do this, but only in extreme scenarios. (As an aside, Virgin's case is an unusual one. What is argues is that Sky has acted on the upstream market - where it isn't dominant - in such a way as to bolster its position of dominance on the downstream market - where it allegedly is dominant. This is curious, although not unheard of).

    The conditions for such intervention by competition law are:
    (i) that such provision of the good/product/service is 'indispensible' (no matter how much people want to watch Lost this is a tall order. Virgin may point to subscribers lost, but Sky could equally highlight those that have remained with the cable provider),
    (ii) there is 'no objective justification' for the refusal (here, the justification is obvious - Virgin wouldn't pay. This will boil down to a question of degree (see below), but notably Sky seems willing to negotiate on the price, and on its own account the increase it asked for (20%) originally was hardly exorbitant - of course, Virgin has interpreted the price tag inflation differently, at close to 100%),
    (iii) that failure to supply would result in the total elimination of all competition on the market (it clearly doesn't here), and
    (iv) (possibly - the law is a little unclear) that the refusal prevents the emergence of a 'new product' (again, if this is a requirement, it doesn't seem to be satisfied here).

    If Virgin is hoping to argue excessive overpricing (re the Sky channels) or underpricing (re its own channels), it will also have a difficult job proving an abuse. Competition authorities and courts have been very reticent to intervene in commercial deals because it is almost impossible to say what the benchmark of excess should be. Notably, Flextech (VirginMedia) seemed content to sign the contract when it signed it. It would now have to be able to show that it was somehow obliged by the structure of the market to enter the contract, and knew at the time that its additional revenues (advertising gains + carriage fees) would be outweighed by its costs. If these factors were the case then, why is it only crying now?

    Others have suggested that Virgin is taking a significant risk; its hard to disagree. For my money, Virgin can only be using the action as a gambit in the negotiating game, and hoping that the fear of the competition authorities will see Sky capitulate. Moreover, the existence of a pending suit may influence the Ofcom investigation into the pay-tv market - a sort of 'no fire (the action) without smoke (underlying problems with market structure)' effect. Perhaps they'll prove us all wrong.

    Media narcissism - or worse: two thoughts on the ongoing (!) sailors row

    Two interesting comments on the sailors' payments row, one from Libby Purves, the other from Polly Toynbee (and plenty of comment thereon - mostly critical). The former suggests that media navel-gazing has blown the story out of all proportion. The latter goes to town on the perceived hypocrisy of the tabloid press. It makes good, if not entirely surprising, reading for its lambast of cheque-book journalism:

    ... the Daily Mail emailed an offer of "a very substantial sum". The Mail on Sunday combined its bid with the Sunday Mirror and jointly offered £100,000 in another email. The News of the World offered to outbid all others. Sky made an offer but the BBC did not. The Daily Express offered £30,000. Throughout the sailors' captivity, the press laid siege to their desperately anxious parents and friends. Entry to front doors was gained by delivering huge bunches of flowers with envelopes attached offering fabulous sums...
    ... this episode is in a realm of its own for heart-stopping hypocrisy. Here is the Mail's thundering leader headlined, Selling Out Britain's National Honour: "It is clearly wrong that those who are in the forces should be able to sell their stories. And it is an insult to those who are fighting." The Mail called it "repugnant to see Faye Turney cashing in ... it sticks in the craw of all right-thinking people". Here is the same flabbergasting shamelessness in the Express: "How repulsive must be this spectacle for those who have suffered serious injuries and are now disabled. There will be no six-figure sums for any of them." Why not? Because the Mail, Express and the rest will not be offering them any. Why not? Because death and disability are boring.

    None of this, of course, should excuse the government / MoD for its crass attempt to use the sailors for propaganda ends, but at least it offers light relief - or another side of the story - from the clarion calls for resignations left, right and centre.

    Thursday, 12 April 2007

    A Bluff Called? Virgin files case against BSkyB

    BroadcastNow (subscription service) and MediaGuardian are reporting that Virgin has filed a case against BSkyB alleging abuse of dominance (contrary to Article 82EC and/or section 18 of the Competition Act 1998) by means of a refusal to supply and excessive pricing. Sky has previously considered that such a move would amount to no more than an 'extension of a PR campaign into the courtroom'. It will be interesting to see whether it gets that far... more on this anon.

    Open justice and empty chairs

    Two interesting comments from the MediaGuardian website this morning: the first is a comment from Greenslade on the surprising and concerning refusal of a court in Croydon to allow the publication of the name of a man convicted of child sex abuse offences on the basis that the publicity would upset his own children (for more on this, see here). The second is a short comment by Jonathan Freedland regarding the increasing (?) tendency of government ministers to refuse to appear on the more challenging broadcast programmes to discuss controversial issues.

    Press Under Surveillance

    The World Association of Newspapers (WAN) has launched a website in support of World Press Freedom Day (May 3). The focus of this year's campaign is 'press under surveillance'. It seeks to highlight the fact that many of the (often) well-intentioned security and surveillance measures introduced around the world in the wake of terrorist atrocities, can and have been 'used to stifle debate and the free flow of information about political decisions, or that they are being implemented with too little concern for the overriding necessity to protect individual liberties and, notably, freedom of the press'.

    The website offers a package of interviews, articles, essays, infographics and advertisements. These wide-ranging materials represent and discuss issues such as the impact of official secrets and anti-terrorism laws, criminalisation of speech, interception of communications, enforced disclosure of sources, and government secrecy. They are available in English, French, Spanish, German and Russian. Note: republication of these materials is embargoed until 3 May.

    On the site one can also find links to materials produced in support of Press Freedom Day in previous years.

    Wednesday, 11 April 2007

    CAP extends junk food rules to non-broadcast media

    The Committee of Advertising Practice (CAP) has issued a new rule 47 in its non-broadcast code covering the promotion of food and soft drink products to children (1,2). It has also published guidance on how the new rules should be interpreted.

    In short, the rules preclude condoning or encouraging poor nutritional habits or an unhealthy lifestyle in children; encouraging excessive consumption of food or drink products; using promotional offers in an irresponsible way; using “high pressure” or “hard sell” techniques; using licensed characters or celebrities popular with children if targeted directly at pre-school or primary school children, and giving a misleading impression of the nutritional health benefits of the product. Children are defined as persons under 16. The rules will come into force on 1 July 2007.

    Notably, the CAP has rejected as too inaccurate the controversial nutrient profiling system that will apply to broadcast advertising. This decision has been criticised by some on the basis that the supposed incentive for manufacturers to improve the nutritional content of products implicit in the profiling approach is foregone. Given the room for interpretation that is left by the rules to the Advertising Standards Authority, one might suggest that the proof of the pudding will be in the eating...

    Sauce for the goose? reporting restrictions in the family courts

    In the wake of the hoohah regarding sailors' sale of stories and the relaxation and reimposition of MoD restrictions (reflected here 1,2,3,4), a nice juxtaposition has been highlighted in the Guardian and picked up by Wordblog and Greenslade. It concerns the inability of a couple falsely accused by council services of injuring their baby son to tell their full story due to reporting restrictions.

    The rights and wrongs of open justice in the family courts has been a focus of long-running and ongoing debate. Most recently, Lord Falconer indicated that the arguments for greater openness, such as those put forward by the Newspaper Society:

    “the media should be allowed to attend ALL family courts as of right…The principle of a general presumption of openness must be established if public confidence and accountability is to be achieved. The role of the media as representative of the public particularly in relation to attendance at court proceedings is well established and understood”

    had to be set against the views of those representing children's interests to the effect that:

    “(there are) concerns about the assumption that the media will work on behalf, and for the benefit, of the public alone. Allowing the media access to family courts proceedings would give the public greater awareness of the complexities involved in making difficult decisions about a child’s care and welfare. However, the media also inevitably has a function to find news that will increase readership and sell newspapers and magazines. Any plans for opening up the courts must address this conflict of interest to ensure that the courts are open to scrutiny in a manner which keeps the child’s welfare and protection paramount.” (National Children's Bureau).

    On publishing a full set of responses to its recent consultation on open justice in the family courts, the Government promised to bring forward further proposals in due course.

    Note: US brings media/IP case against China to WTO

    The US has brought two cases against China to the WTO. It alleges, first, that China has failed properly to enforce copyright and trademark protections with the result that piracy of US media products is rife, and secondly, that China has erected further barriers to market access for such products (for more, see MediaGuardian).

    BBC Trust receives complaint re BBC mobile services

    BroadcastNow (subscription service) is reporting that the Chief Executive of ITN has complained to the BBC Trust about the plans of the BBC to launch a free trial of its mobile television services.

    The BBC plans to allow subscribers to Orange, Vodafone and 3's TV packages to watch BBC One, BBC News 24 and BBC Three (with the exception of some sport and acquired programmes) streamed on their mobiles. They will also be able to listen to up to eight BBC radio stations. The BBC hopes to assess the utility of the platform, and also how users respond to the provision of linear services in this mode. It is not clear whether the BBC sees the post-trial service as an aspect of its public service remit, or whether the plan is to launch a full commercial service. Presumably, its the former. It is already possible to access BBC internet services by mobile.

    ITN operates its own service to mobile phones, ITV On, which it plans to expand. Indeed, last month it announced the launch of a new music division. Its concern is that the free trial would undermine commercial services, and distort trials of services funded by advertising.

    Meanwhile, the Trust has indicated that future link-ups between the BBC and other media organisations, such as that with YouTube announced in March, will probably be made subject to a public value test.

    Friday, 6 April 2007

    Update on Virgin vs Sky

    The self-imposed deadline by which Virgin threatened to initiate legal proceedings against BSkyB if the latter did not return its general channels to the cable platform has come and gone. It seems that Sky has forestalled the move by Virgin by means of an eleventh hour letter (1,2). Its not clear what BSkyB has offered, but it is said to have robustly rejected the foundations of Virgin's putative legal action. We'll have to wait on Virgin's response.

    Perhaps its entirely unrelated to this ongoing spat, but I did note that The Times was the only broadsheet to be reporting Branson's loss of an age discrimination case in Australia in which older air hostesses alleged that the Virgin Blue airline were only interesting in young and good-looking applicants for posts...

    Icstis launches new code

    Icstis, the premium rate calls regulator, has announced the introduction of a new set of rules for tv quiz call programmes in the form of a new Statement of Expectations (1,2,3). The new rules purport to be a response to concerns raised in a Parliamentary report in January (see also last week's joint Ofcom/Icstis reply), but are also clearly motivated by the recent splurge of investigations.

    The Statement requires transparency on callers' chances of getting on air (by way of an onscreen totaliser of the number of recent calls), the provision of pricing information (directly by the presenter or by means of a voice-over), and warnings to be given to individual callers who are spending substantial amounts. Icstis also hope to develop an enhanced prior permission regime - or kitemark - for all premium rate services that are broadcast.

    Ofcom's own investigation into the recent problems is ongoing.

    Thursday, 5 April 2007

    PCC off the hook? Middleton pulls complaint

    Kate Middleton has withdrawn her complaint to the PCC in which she alleged harassment at the hands of the Daily Mirror (1,2). This followed the publication of a full apology by Richard Wallace (the newspaper's editor). There has been an interesting debate on Greenslade, first lamenting the fact that the PCC won't now be asked to take a position on the acceptability of journalists and paparazzi continually trailing public figures, and more generally on the degree of protection that celebrities and other public figures warrant / deserve / need.

    I've begun to wonder, though, what might be the ramifications of a tighter regulatory regime. On one vision, we might see the development of what many might perceive to be a more 'grown-up' public culture in which celebrity tittle-tattle ultimately drew less of an audience and private matters were left in the private domain unless called up in support of some public interest story. Or at least, the only tittle-tattle in the papers would be that sanctioned by the celebrities themselves.

    More likely - and this is alluded to by Greenslade (sort of) when he mentions 'the continuing appetite for such pictures in foreign papers and magazines' - we might get the above in mainstream media, but then also see a shifting of the site of publication of non-consensual pap-shots. That is, we may have continuing intrusions on privacy, but with the publication driven 'underground' to (offshore) online start-ups (think popbitch / popdirt, or the proliferating online gossip sites re teachers / fellow students and so on). Plus ca change?

    Incidentally, I'll be attending a conference at the end of the month hosted by the Franco-British Lawyers Society in Belfast on the subject of the right to privacy in the UK and France. I'm expecting that my cosy illusion of there being a more 'refined' public culture in France will be shattered then, but more on that anon...

    Monday, 2 April 2007

    Note: House of Lords refuses to hear McKevitt v Ash

    The House of Lords has refused to hear an appeal from the ruling of the Court of Appeal on McKevitt v Ash. For comment, see Greenslade and the MediaGuardian.

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