Tuesday 16 June 2009

OFT report on regional press mergers says 'no legislative changes are needed'

The OFT has today published its report on the local and regional media merger regime and says no legislative changes are needed.
The Review of the local and regional media merger regime - final report notes advertising revenues are in steady decline as advertisers who would traditionally use the local press increasingly use the internet to place adverts for houses, jobs and cars.
However, the review says that the current merger regime - "which is broadly the same for newspapers as for other industries" - is well placed to take into account developments such as competition from the internet because it is evidence-based and capable of reflecting market realities.
The report says the regime is also flexible in that it can take account of valid 'failing firm' arguments, as well as efficiencies and any other benefits to customers brought about through a merger.
The OFT has therefore recommended that no legislative changes are needed to the media merger regime. The OFT proposes that it will formally seek Ofcom's view in future newspaper merger cases, given its specific sector knowledge in the UK.
The OFT review also notes concerns about the potential impact on local press from local authority publications, and recommends the Government review this area further and consider whether intervention, regulation or guidance would be appropriate.
John Fingleton, OFT chief executive, said: "The current merger regime came into force in 2003, and we are confident that it is fit for the needs of the media sector in the twenty first century. If there are significant transactions that publishers or others are keen to pursue, we will review them on their merits, taking into account the impact on customers and the realities of the marketplace."
The Local Media Alliance and the Newspaper Society have lobbied hard for a relaxation of the merger regime. Some claimed this would lead to even more consolidation of the regional newspaper industry, perhaps leaving just two dominant players.
The OFT report, released to coincide with the Digital Britain Report, still leaves the door open for regional newspaper groups to argue that takeovers should be allowed to ensure the survival of the regional press.

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