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June 27, 2008updated 28 Jun 2008 2:23am

Why Lord Fowler’s Journalism Quality Test won’t work

By Peter Kirwan MM blog

Those of you who recall Norman Fowler as one of Prime Minister Thatcher’s more right-on colleagues will have been startled by today’s coverage of the report from the House of Lords Communications Committee.

I need to read the report, but I’m not sure that making mergers more difficult will solve what ails journalism.

If anything, it’s the other way round. Arguably, the UK’s regional chains, for example, need more consolidation — and quickly.

The committee recommends that Ofcom should investigate whether specific mergers “will impact adversely on news gathering”. What’s being proposed is a Journalism Quality Test.

This sounds good — actually, really quite good. Until you start to think about it.

For example: would the test mean that merging media companies are forced to sack back-office staff first? (This feels distinctly illegal.)

And how would Ofcom go about measuring the quality of news gathering? Because other factors can influence the need for bodies (such as improved technology), a simple count of heads won’t be the answer. Apart from anything else, that would take us back to pre-Wapping days.

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But going down the route of counting sources-per-story or local stories-per-paper would be a nightmare. The spectre of barristers for Ofcom and Big Media brandishing rival studies in the High Court isn’t a pretty one.

And what about B2B and consumer magazine publishers? Why shouldn’t their mergers be subject to the same luxurious test?

Which raises another problem. If the government should regulate media mergers in this way, what will it do when a private equity firm snaps up a publishing company to restructure it behind closed doors?

If the government cannot apply the same test to private equity transactions, then it will end up tilting the M&A market away from trade mergers in favour of private deals. Quoted media companies would end up trading at a permanent discount to pretty much everything else on the market.

Oh, and one final thing. Can you imagine a British government of any complexion approving Lord Fowler’s test when Rupert Murdoch says what’s needed is less, rather than more, regulation? It’s not hard to imagine Andy Coulson’s response.

In an ideal world, the well-intentioned suggestion of a Journalism Quality Test wouldn’t be a problem. But given the industry’s current situation, it feels unworkable to the point of naivety.

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