New focus in bid to fight media concentration as age of the mogul ends

Date: 19/10/00

By Tim Jones

ONE of Frits Bolkestein's deep-seated characteristics is an unwillingness to fight lost causes.

The man who took over from Mario Monti last year as the Commissioner responsible for the EU's single market has been slow to come forward with pensions reform and quick to adapt exceptionally controversial proposals on sales and savings taxes out of all recognition. So no one is holding his or her breath for the Dutch Commissioner to blow the dust off Monti's four-year-old plan to set limits on individual media companies' television and publishing interests.

Even back in the 20th century, when television moguls carved up national markets and Rupert Murdoch was parodied as a crazed world dominator in the James Bond film Tomorrow Never Dies, this proposal faced opposition from within the European Commission itself. Today, as information and entertainment are delivered through digital television, the Internet and even mobile phones, the draft legislation is seen as hopelessly outdated.

'Convergence' of traditional media companies with new forms of delivery - the record-breaking 150-billion euro merger of internet access company America Online with world media giant Time Warner is the perfect example - has lowered the barriers for entry into the information market.

Admittedly, some concentrations of broadcasting power are still classically single- platform; the merger of publisher Pearson's television business with CLT-Ufa to create a 20-billion euro-plus pan-European TV giant is a case in point.

But the vast majority are now cross-platform. Apart from AOL/Time Warner, French diversified utilities group Vivendi is close to a 39-billion euro three-way merger with Canadian group Seagram and French pay-TV operator Canal Plus. With this poised for regulatory approval, Vivendi is now sniffing around for a deal with Murdoch's News Corporation to build on the 25% stake it already owns in the latter's satellite-TV company, British Sky Broadcasting. Vivendi is also expected to fold some of its interests into Murdoch's new 40-billion euro TV-internet giant Sky Global Networks.

This is a far cry from the formulae contained in Monti's original plan. Under his proposed directive, a firm owning channels which captured more than 30% of a country's television or radio audience would be prevented by national authorities from growing any bigger. Owners of more than one media channel would be allowed a total audience share of 10%.

An updated text proposed a flexibility clause, granting governments discretion in certain circum-stances for a limited period of time to allow their media companies to exceed the proposed thresholds.

Publishers, for example, argued that a 30% share of the press market was not equivalent to 30% share of the TV market in terms of either capital costs or revenues.

Had the proposals been agreed, many companies - including most famously that of Italian media magnate Silvio Berlusconi - would have been forced to sell off parts of their business to meet the thresholds. Worse still, as far as arch-opponent and then Trade Commissioner Leon Brittan argued at the time, public-service broadcasters would have been exempt from the proposals - even though many of these companies are now aggressively expanding into the digital TV and Internet markets.

The decision to abandon the legislation was criticised by Carole Tongue, former British Socialist MEP who was then the Socialist Group's spokesperson on media policy, but it was never revived. Instead, ironically, it looks as though the work of preventing excessive media concentration is going to fall back into Monti's lap now that he heads the Commission's competition department. Together with the US Federal Trade

Commission (FTC), the EU executive has used the AOL/Time Warner merger inquiries as a test case for regulating new cross-platform media ownership.

In return for clearing the merger, the FTC is seeking open access to the companies' cable systems for high-speed Internet service lines. Regulators fear the link-up would shut out service providers other than AOL from offering high-speed Internet access over Time Warner cables.

It looks as though Bolkestein will be able to leave this particular hot potato with Monti.

Article forms part of a survey 'EU and the media'.