Bowdler hints at mega-deals and relaxation of regional ownership rules

If we’re to take Tim Bowdler’s interview with the Sunday Times at face value, Britain’s regional newspaper owners might be about to receive a belated Christmas present from Peter Mandelson

In the interview, Bowdler hints that HM Government could soon relax competition rules in order to allow further consolidation of the regional press. According to the Sunday Times, he believes that the government is “sympathetic” to the industry’s case.

Specifically, Bowdler thinks the time is right for a bold merger announcement that would give regulators “something to sink their teeth into”.

Going down this route would involve a competition probe, and months of uncertainty. To make this worthwhile, Bowdler argues that the proposed merger would need to be a big one. And the outcome of a probe would need to be pre-ordained.

“It would be an unnecessary and unwelcome distraction but it depends on the size of the prize and the confidence that it could be achieved.”

If the outgoing boss of Johnston Press is talking like this, it seems likely that a deal is being cut. Something is afoot.

Of course, a big merger will open the door to reduced costs by unleashing a torrent of job losses. This would also bring concerns about editorial quality into even sharper focus.

In the Observer this weekend, Peter Preston nailed this concern eloquently. Continued cost cutting, he wrote, means that “too many papers. . . have abandoned their fundamental reason to exist”.

More will go the same way in the wake of a mega-deal (or two). In this respect, one of Bowdler’s comments strikes me as particularly interesting.

“There is a realisation today in government that the way in which our industry has been regulated hasn’t been that helpful and today it is less appropriate than it was.”

What, I wonder, does Bowdler mean by this? Is he repudiating the light-touch regulatory regime that allowed the City to hollow out the regional press from within?

Or is he hinting that Peter Mandelson’s blessing will come with strings attached?

This seems plausible. If you’re a press baron, relaxing competition law seems like an obvious remedy. But the view from Whitehall is more nuanced.

Last year, the government showed itself willing to relax competition law for bankers who will do the Treasury a favour.

But administering the same medicine in the wider economy would have big implications. If Johnston Press receives favourable treatment, what’s to stop Tesco, or BT, from lobbying for their own special measures? 

Governments aren’t in the habit of doling out competitive advantage to private companies at the commonweal’s expense. Quite possibly, the price of increased consolidation will be increased oversight.

This would make others think twice before special pleading. It should also allow the government to sidestep the charge that it is encouraging the continued disembowelling of the regional press.

Of course, the details would be nightmarish. And our regional newspapers aren’t likely to turn into European-style social enterprises overnight.

By the same token, the free market ecosystem that has sustained Britain’s newspaper industry for more than a century has never looked shakier.

UPDATE: 6th January 2009: Perhaps the gift isn’t Lord Mandelson’s to give. Judging by this story, Tim Bowdler may well be anticipating Lord Carter’s Digital Britain report. 

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