Concentration And Focus, Bread And Butter

Michael Hedges June 14, 2012 Follow on Twitter

Times are such when media companies are assessing their portfolios, shedding non-core assets and concentrating on the meat of their business. Shareholders like this. Big media companies, though, find themselves forced to discard the favorite parts.

Of the many and varied subjects touched upon by the ongoing Leveson Inquiry into media ethics at UK newspapers, media plurality and media concentration reach to the heart of the relationship between governments and the Fourth Estate. This week and last Lord Justice Brian Leveson has had the pleasure of hearing from top politicians, past and present. Past prime ministers, generally, complained about news coverage while current politicians, generally, claimed no fault for the sins of others.

Media concentration in hard numbers was raised by opposition Labour Party leader Ed Miliband, who offered (June 12) that there should be “an overall limit about how much control one organization has on the market.” Poking directly at the News International stable of UK newspapers, Mr. Miliband suggested there’d be “no worries of somebody owning up to 20% of the newspaper market” though “there is then a question of between 20% to 30% where you should set a limit.” Newspapers owned by News International, which is owned by News Corporation, have an estimated 37% newspaper market share.

Attempting to keep focus on the media ethics theme, Lord Justice Leveson bristled with concern “about the extent to which it is appropriate for me to start to opine about percentage market shares, because that involves all sorts of competition issues which would require quite detailed analysis.” UK media watchers jumped to debate which newspaper – the Sun or the Times – News Corporation might be forced to sell if rules are changed, only likely under a new government, to further limit media ownership.

Late last week the New York Times reported (June 8) that US cable giant Comcast, which owns NBC Universal, was “mulling” a bid for UK pay-TV company BSkyB. News Corporation owns a 39% stake in the highly successful broadcaster and offered to buy the shares it does not own only to have the deal tangled with certain ethical issues that inevitably led to the creation of the Leveson Inquiry. Spokespeople for Comcast called the story “rubbish” but the NYT continues to stand by insiders understanding that News Corporation now wants to sell its BSkyB stake sooner rather than later as they suspect the next UK government will impose more strict cross-media ownership rules. 

Proximity of News Corporation and its chairman Rupert Murdoch to UK politicians dating back to Margaret Thatcher have permeated the Leveson Inquiry and related parliamentary committee hearings. With the clear appearance that current Conservative Party ministers took a positive – even pro-active – role in supporting the BSkyB bid without regard to the obvious media concentration issue News Corporation may find itself in the unpleasant position of being between a rock and a hard place: selling off one or more newspapers or exiting BSkyB. Current Prime Minister David Cameron will appear Thursday (June 14).

And as if by coincidence, Guardian Media Group (GMG) has put its UK radio business up for bids, noted officially in the Guardian (June 12). Apparently the process is well underway as three bidders were noted: Global Radio, UTV and an unnamed venture group. GMG Radio owns the Real Radio and Smooth Radio networks, which have a combined national market share of 4.3%, according to the Q1 2012 RAJAR survey. Its Glasgow (Scotland) based Rock Radio was sold a year ago (July 2011) to local managers and a Manchester station operating as Rock Radio was folded into the Real Radio brand.

The main thrust for GMG, obviously, is its publishing business Guardian News & Media, publisher of the Guardian, the Observer and, not to be forgotten, web portal guardian.co.uk. GMG is wholly owned by the Scott Trust and has interests in Trader Media Group, a classified advertising publisher, and Top Right Group, the events producer formerly known as Emap, which produces the annual Cannes Lions ad fest. Radio has been a small, but not insignificant part of GMG; reported 2011 radio revenues (UK£47 million) slightly more than 10% of the company total including joint ventures.

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