MPs call for OFT review of council-run newspapers

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A cross-party committee of MPs has called for a review by the Office of Fair Trading (OFT) into the impact of local authority publications on local commercial newspapers.

In its Future for Local and Regional Media report published today , the Culture, Media and Sport Committee says guidance for local authorities producing publications should be changed.

Council newspapers and magazines should clearly state who they are published by on their front page, as part of rules set out by the Department for Communities and Local Government (DCLG), says the report, which is the result of a year-long inquiry by the committee into the UK's regional media landscape.

"There is a real problem with local authority newspapers and magazines that needs to be addressed. We have seen council newspapers that are effectively posing as, and competing with, local commercial newspapers. While it is important that local authorities communicate with their citizens, it is unacceptable that councils can set up publications in direct competition to local newspapers and that act as a vehicle for political propaganda," says committee chairman John Whittingdale.

"The current DCLG guidance in this area is currently being breached. The DCLG should set up a system to monitor this situation closely. However we believe these guidelines, even if adhered to, do not go far enough. There should be specific, detailed guidance for local authority newspapers and magazines which should state that it be mandatory that all publications of this type make clear, not only on the front page but throughout the publication, that they are a local authority publication," says the report.

Hammersmith and Fulham Council's h&f news comes in for particular criticism in the report. The title, which has become the subject of an anti-propaganda campaign by local Trinity Mirror title the Fulham & Hammersmith Chronicle , is an example of council publications that "effectively pose as, and compete with, local commercial newspapers and are misleading to the public". In November, Ed Richards, chief executive of Ofcom, told the committee inquiry that the government needed to take a stronger stance on the issue of council publications. "This is a lacuna. If this is a serious issue from the perspective of a) the use of taxpayers' money; and b) the consequences for independent journalism in any given locality, I think it is something that parliament has to decide what it wants to do about. Either the government needs to give some guidance, or give somebody else the responsibility to look at it, but at the moment, we [Ofcom] certainly do not, and nor do the OFT," he said. Stewart Purvis, content regulation partner for Ofcom, who was also giving evidence, said: "I just feel there is a missing area, which is the regulation, if that is the right word, of what local authorities do and do not do."

Existing investigations into the running of council publications, such as that led by the Audit Commission, have been criticised by industry representatives for failing to look into their impact on the local media.

State subsidies and competition rules

Despite the impact of the recession and the internet on local newspapers traditional business models, the committee does not recommend state subsidies for local media in its report. Local newspaper publishers "must innovate to survive" and continue to develop their online offerings and use of new technologies, it says.

"Local newspapers have recently suffered from an unprecedented downturn in revenues. Some local newspaper publishers have profited from diversifying their online presence with advertising websites such as Jobsite and Fish4, however, the industry is still in a precarious position. The state subsidy of national and local newspapers, as has been seen recently in France, is not the solution. Newspapers should remain independent of state funding and control and attempt to profit from diversifying their online presence as best as they can," it says.

But the report does recommend that the current merger regime, which local newspaper publishers feel prevents necessary consolidation , should be re-examined by government.

"The evidence we have heard from local media groups about the need to modify the merger regime and cross-media ownership rules is persuasive. We welcome the recommendations made by Ofcom in their report to the Secretary of State on media cross-ownership rules, and urge the government to implement them," it says.

"However we believe more far-reaching reform is needed. In order for local newspapers to survive in a changing economic and technological world, they need to be regarded as competitors in a multimedia landscape. Despite the evidence given by the Office of Fair Trading, we believe that the current media merger regime does not fully reflect this. We recommend that the government re-examine the arrangement by carrying out a consultation on a possible multimedia merger regime."