Hunt hints at new legislation for local newspaper mergers

Culture Secretary Jeremy Hunt has hinted that new legislation could be introduced to make it easier for local newspaper mergers to go ahead following KM Group’s failed bid to buy seven newspapers from Northcliffe.

The deal fell through after the Office of Fair Trading referred the decision to the Competition Commission – a process that could have cost both companies more than £500,000.

It has resulted in the loss of up to 10 jobs at KM Group and up to 40 at Northcliffe, which announced plans to close the Medway News and East Kent Gazette last week.

Hunt acknowledged that concerns had been expressed about the OFT’s decision and that the issue was ‘primarily one of cost”.

He denied that the OFT’s referral to the Competition Commission was ‘unreasonable”, but accepted that it was ‘impossible’for a small company like KM group to bear the cost of going through a full Competition Commission inqury.

He told a joint committee on investigative journalism yesterday that he has asked officials to look at what can be done in those processes and ‘whether there’s any legislative changes to be made”.

If that was the case, said Hunt, they could be introduced in the new Communications Bill, which is set to be put in place by 2015.

He ruled out the prospect of taking direct responsibility for such mergers, preferring for it instead to remain within the remit of an arms-length body like the OFT.

‘I think what we have to do is look at the process of media merger approvals when it comes to small organisations in the new technological environment that we’re all facing and see where that can be improved,’he said.

Hunt also said it was clear that the local newspaper industry needed to consolidate and develop new business models and that his plans to introduce a new local TV network could help.

‘Huge opportunity for local newspapers’

Twenty local TV licences are to be awarded next summer, and Hunt has identified 65 towns and cities across the UK which could host new local TV stations from 2014.

‘It would of course be competition [for local newspapers]’he said, ‘but we’ve changed the cross-media ownership rules to allow local newspapers to bid for local TV stations in their area.

‘I think this is a huge opportunity for local newspapers because – like all newspapers – they know that they need to change their model from being a newspaper to a news provider.

‘A rapidly increasing proportion of people are accessing news on their mobiles, their iPads, and this is an opportunity for local newspapers to develop models that are actually for for the digital age.

‘I’d like us to be the first country in the world where we have a class of local media businesses which are offering their news across a whole number of platforms. I think there’s a huge opportunity there for the local newspaper industry.”

The rise of local TV will also strengthen investigative journalism in the regions, according to Hunt.

‘The 20 local TV licences that we will be awarding next summer will have to meet full Ofcom impartiality requirements and I’m very keen that, for example, the way that the TV debates electrified the last general election in this country nationally is replicated at the local level.

‘I think that in terms of local democracy it could really transform people’s interest in local democracy if people could see the two people or three people hoping to become the next leader of Norwich City Council, so I think there’s a big opportunity there.’

A ‘revolution’ in the newspaper industry

The biggest threat to investigative journalism in the UK, claimed Hunt, was the ‘potential lack of profitability in the newspaper sector as a whole”.

‘I think the newspaper industry is in the middle of a revolution,’he said.

‘I think that it is incredibly challenging for all players in the newspaper industry to work out how they’re going to get that model to pay, and if they’re not able to pay then obviously that means less resources are being committed.

‘But also I’m very hesitant for the state to be funding add people to do invest journalism because one of the main people we want them to invest journalism on is the state.”

He added: ‘I’m a big champion of local media, which is why I’ve been advocating local TV, but it’s not just local TV – I want all local media to thrive and to be able to develop new business models.

‘I think it would be a great loss to local communities and local democracies if it didn’t.”

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