Time to mow the long grass on the media field

COMMENT

With a scarcely noticed flick of the bat, the issue of cross-media ownership is being played off into the long grass. The best that can be hoped by those who have lobbied long and hard for a change in the rules preventing newspaper and broadcast groups from owning eachother is a little tinkering at the edges.

The limit on ownership may be raised from 20 per cent to 30 per cent but the ability to bid for outright control will be denied - this side of the election at least. Ministers cite that time-honoured excuse, lack of space in the legislative timetable, for their failure to act. Paralysis in policy-making, particularly when it comes to media and communications, seems the more likely explanation. It is only possible to speculate on whether Rupert Murdoch, who is still held in awe in Government circles, played any role. Whatever the explanation, Stephen Dorrell, the National Heritage Secretary, is failing to move with the times by denying these industries the deregulation they need to stay competitive.

Most media companies have long wanted to get rid of broadcasting-specific restrictions, leaving the industry to be governed simplyby normal competition criteria administered by the Office of Fair Trading and the Monopolies and Mergers Commission. It is also plainly anomalous that Mr Murdoch is allowed to own controlling stakes in both Britain's largest newspaper group and its only sattelite TV service - but noone else is.

To be fair on the Government, and Mr Murdoch, there are counter-arguments. There is so much happening in the satellite and cable markets that the Government is having difficulty keeping up. It is by no means clear how far or fast deregulation should proceed. Mr Murdoch also took a risk with satellite at a time when few others were prepared to. Satellite provided a loophole in the rules and Mr Murdoch dashed through it. To some extent the lead it has given him is deserved. Nonetheless, it is plainly wrong that such privilege should persist in a fast-changing world.

The fundamental questions remain the same. Does Britain need national champions, big enough to take on Time Warner and the continental giants? In that case, the Government should be going full steam ahead with deregulation. Or should the Government be worried about domestic concentration, with too few companies controlling the entire range of media outlets, print and electronic? In that case, some hard-and-fast rules are needed on ownership levels, consistently and fairly applied.

At the very least, a level playing field needs to be established as a matter of urgency. By ducking the issue, the Government is preventing some exciting commercial developments as well as denying rival groups the same opportunity as Mr Murdoch.

The debate about what exactly constitutes public spending is a bit like the one about the number of angels on a pinhead; it goes round and round in circles and rarely gets anywhere, as the Commons Trade and Industry Committee found in its report on the Post Office.

After privatisation was blocked by backbench opposition, a well-researched proposal emerged from the consultants London Economics to turn the Post Office into a government-owned plc, increasing its spending and management freedom within the public sector. Not on, says the DTI in a memorandum to the committee. The question of whether the Post Office or any other public body is inside or outside government financial controls has nothing to do with its legal constitution but is a matter of policy. The policy is that if the Post Office is government-owned then its finances are part of the PSBR control apparatus.

But surely a policy decision is not a fixed matter of law but something reached by ministers, and can be changed? In this case, the policy amounts to saying the Post Office cannot have new commercial freedoms while it remains in the public sector simply because the Government says so. This is narrow-minded to the point of obtuseness when the reality is that the iron hand of public spending restraints is preventing the Post Office from investing to survive in a highly competitive world. There is no reason why policy cannot be changed, and there are perfectly good examples already of public organisations with considerable freedom.

British Nuclear Fuels was until recently excluded from the PSBR, with no noticeable effect on foreign confidence in Britain's ability to manage its foreign debt. When purists in Whitehall insisted that it be put inside the PSBR, BNFL's managers extracted a written assurance that this would not affect their ability to act commercially and make their own borrowing and spending decisions.

The committee cites a number of examples of Post Offices abroad which have had public controls on their purse strings loosened. Until privatisation can be put back on the agenda, this is the sensible way forward in Britain too.

When three British water companies spent months rubbishing each other in a fight for a big contract in Buenos Aires, it resulted in Lyonnaise des Eaux stepping in to win the deal, says Richard Needham, the trade minister. A lot of government effort is now going into stopping that kind of counterproductive fight.

Yesterday, Andrew Buxton, the chairman of Barclays, took over the job of beating heads together as new chairman of the Overseas Projects Board in succession to Sir Alan Cockshaw. He will be bringing a new financial dimension to the board's effort to win overseas capital goods contracts for British industry.

The basic task is an old fashioned mercantilist one of organising the assault on foreign markets like a war: deploy your best troops in the front line, give them full support, and keep the weak ones at the back.

Under the new regime, the Department of Trade and Industry shamelessly chooses which of competing British bidders it will back and says so, very publicly. Other bidders can continue to compete, and sometimes do, but the message to potential customers from the British government is unambiguous.

As with all these government ventures, the Overseas Projects Board's work is hard to value in pounds and pence. Mr Needham points out that annual exports of capital goods have soared from £9bn to £23bn in three years, though he is not claiming all that for the OPB. The coordination work does, however, sound almost Japanese, and shows we have learnt a few sensible things in recent years.