Shadow culture secretary Jeremy Hunt has criticised the government’s Digital Economy Bill, launched in the Queen’s Speech yesterday, saying it was a “colossal disappointment” because it applied “old economy solutions to new economy problems.”
Proposals to prop up commercial regional news with money top-sliced from the licence fee would simply “set in stone the current failed model” and encourage broadcasters to compete for subsidy rather than to innovate, according to Hunt.
The government will later this week detail its plan to run a series of independent news consortia pilot schemes across the country to test whether local media companies can successfully establish a series of video news services to replace the current ITV local news provision.
Conservatives will today set out plans for widespread deregulation of Britain’s ailing media businesses aimed at breathing new life into troubled local newspaper groups and encourage innovation in other sectors.
“Over-paternalistic” broadcasting and media regulations designed for the pre-internet era should replaced with a “light-touch” approach which can keep up with the pace of change in the media market, Hunt will say.
Hunt will tell his audience of media executives: “We need you to embrace the new business models of the future to ensure that you not just survive, but thrive as well.
“And you need a government with the courage to make the reforms necessary to allow you to get on with the job.”
Central to reforms would be a significant relaxation of cross-media ownership rules which currently prevent media groups from owning regional newspapers, radio stations and TV channels in the same area and stifle innovation.
Far from protecting the diversity of media in the regions, the “outdated” rules may be destroying it altogether by denying commercial companies the ability to operate profitably, Hunt will warn.
Previous concerns over local monopolies of news delivery were not as relevant as in the past, because the internet makes it so much easier and cheaper for new providers to get their voice heard, he is expected to say.
In a speech to the Manchester Media Festival, Hunt will say: “We need massive reform of our outdated regulatory framework.
“The start must be massive reform of the cross-media ownership rules for local media operators. We need to allow media operators more flexibility to own businesses operating on both the same and different platforms.”
With advertising revenues down by 12 per cent for TV and radio, 20 per cent for newspapers and 40 per cent for local newspapers, media businesses desperately need to develop new business models, but are prevented from doing so by “a level of micro-regulation that has stifled innovation and made it very difficult for independent commercial operators to make a profit”, Hunt will say.
He will point to the eight commercial radio licences which have been surrendered and 900 local and regional newspaper journalists’ jobs lost since 2008, warning that nearly all commercial local radio stations are likely to be loss-making by the end of the year.
While consumers are receiving entertainment and news through a growing array of platforms, British commercial media companies are hampered by the regulations from taking full advantage of the new opportunities presented by the internet, he will say.
And excessive regulation in the UK is discouraging potential investors from backing innovative ideas which could change the media world in the way that firms like Spotify, eBay and Amazon have done in recent years.
“Because our regulation is stuck in the pre-internet dark ages, we have left our media industries exposed and vulnerable to huge market shocks,” Hunt is expected to say.
“Media businesses desperately need to be able to adapt and find new business models. If they are allowed to. But because they are not, all our major advertiser-funded broadcasters are in serious difficulty.”
Under a more flexible regulatory regime, there would be scope for big cities to have their own local news channels – either on a dedicated station or as an opt-out from an existing broadcasting “multiplex” like ITV, Channel 4 or Five – he suggested.