Clamp-down on burgeoning empires

Date: 25/07/1996

By Fiona McHugh

THE great game of media alliances is in full swing in Europe. And the pace is getting faster and faster.

Almost every week sees a new rash of friendships and betrayals, and the EU's media map being redrawn.

At the centre of match-making attention is the emerging market for digital pay-television, where some of the world's most powerful media barons are squaring up for battle.

In the biggest clash of the giants, media tycoon Rupert Murdoch has teamed up with the German mogul Leo Kirch to take on publishing giant Bertelsmann and Cie Luxembourgeoise de Télédiffusion (CLT).

These companies argue that if consumers are to get the benefit of new channels and services, they must be allowed to form alliances in order to reduce their risks.

But while such joint ventures give firms the fire-power needed to enter new markets, they can also cause problems.

For a start, they raise a large number of competition questions. After all, today's trend-setter could easily become tomorrow's monopolist.

But even more serious, perhaps, is the potential threat which mega-alliances might pose to democracy. Examples of businessmen using their excessive media might in an attempt to exercise control over the hearts and minds of citizens are legion.

Murdoch, for instance, rallied his tabloid newspapers in the UK to the British Conservative Party's cause and used his papers to help break the power of the labour unions there. Kirch, meanwhile, is known for employing his media strength to tip the German political balance in favour of the ruling Christian Democrats. During the 1994 election campaign, for example, he provided Chancellor Helmut Kohl with a one-hour spot each week on his popular SAT1 TV network.

Italian magnate Silvio Berlusconi also flagrantly used his media power to whip up support for himself when campaigning for the job of prime minister.

But such biased behaviour could soon become a thing of the past. With fears mounting that too much power and influence is being concentrated in too few hands, the European Commission has come under pressure to act.

MEPs, in particular, have been vociferous in their demands for controls to prevent too much media concentration.

Prompted by the outcry, the Commission has drafted EU-wide pluralism rules which aim to bar companies with too much power from expanding their media empires any further.

Under the draft directive drawn up by officials in Internal Market Commissioner Mario Monti's services, companies owning channels which command more than 30&percent; of a country's television or radio audience would be stopped by national authorities from making more acquisitions.

Owners of more than one media - a radio and a television station for example - would be allowed a total audience share of 10&percent;.

The Commission would leave it up to member state governments to monitor the situation in their own countries. Although they would not be in a position to order tycoons who exceeded the thresholds to shed part or parts of their business, they could refuse to grant fresh licences to their companies when they come up for renewal.

The proposed new rules seek to regulate media concentration on the basis of audience share rather than ownership, in a departure from the normal practice in most member states of limiting the number of media operations a company or an individual can own, but not the audiences they reach.

The directive sets out criteria for establishing who controls which media operation and also lays down rules for calculating audience share.

But the Commission's decision to exclude public television stations from the scope of the draft directive is already sparking an angry backlash from commercial broadcasters, who say their public sector counterparts are just as capable of influencing public opinion as they are.

The Commission has had a hard time trying to reconcile the need to safeguard media plurality with the need to foster the growth of television giants capable of competing with their mighty US rivals.

It is not the first time it has sought to resolve this dilemma by calling for the introduction of Union-wide media concentration rules.

But previous attempts to get agreement on harmonised laws were scuppered by the refusal of some member states to countenance such a move. The latest proposals are likely to face a similarly rough ride as they make their way through the EU institutions.

To stand any chance of getting his proposals adopted by the Council of Ministers, Monti will first have to overcome fierce opposition from member states such as Germany and the UK, which argue that

EU-wide regulation is unnecessary and breaches the principle of subsidiarity.

But those who have campaigned long and hard for such a directive insist that it is needed to complete the single market and encourage cross-border investment in Europe's growing media market.

The patchwork of national laws which exist at the moment make it difficult for firms to launch pan-European media services which would give them a real chance of taking on their American rivals.

As the media companies continue their search for yet more alliances, holy or otherwise, they will be keeping one eye firmly on the debate which the Commission's proposals are sure to ignite.