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Executive Summary

1.1 The present guidance sets out Ofcom’s approach to determining whether a person “controls” a company holding a broadcasting licence or a company running a newspaper, under the statutory definition of “control” in the Broadcasting Act 1990 (as amended) (“the BA”) in circumstances where he neither holds nor is beneficially entitled to more than 50 percent of the equity share capital in the body nor possesses more than 50 per cent of the voting power in that body. A “person” can be an individual, or a company or other legal entity.

Ofcom’s duty

1.2 Under the Communications Act 2003 (“the CA”)^(-1-) , Ofcom has a duty to publish guidance setting out its intentions concerning the inclusion of particular matters that it will take into account when determining whether a person has “de facto” control of a body, within the meaning of paragraph 1(3)(b) of Part 1 of Schedule 2 to the BA.

The statutory definition of control

1.3 The statutory definition of control is contained in Part 1 of Schedule 2 of the BA ^(-2-) .

1.4 It should be noted that the statutory definition of control of media companies is different from the definition of control for mergers contained in Part 3 of the Enterprise Act 2002 (“the EA”). In particular the EA extends the concept of control to “material influence” over a company’s policy (Section 26 (3) and 26(4) EA) as a precursor to establishing whether there is an effect on competition in the market whereas the definition addresses whether a person is able to have the affairs of a body conducted in accordance with his wishes.

1.5 The BA definition of control is also used in different circumstances from the definition of control in the EA. Control in the EA is relevant to the OFT's consideration of whether a merger situation has arisen; whereas, control in the BA is a concept applied by Ofcom to ensure compliance with statutory media ownership rules, and to see whether the need for a statutory 'change of control' review has been triggered. The present guidance is limited to Ofcom’s approach to determining control for the purposes of paragraph 1(3) of Part 1 to Schedule 2 of the BA and should not be taken to reflect Ofcom’s view on the definition of control under the EA.

1.6 The definition of “control” set out in the BA is applied principally in three situations:-

• To ensure that applications from companies for BA licences comply with the relevant media (including cross-media) ownership rules.
• To ensure that existing licensee companies would not be in breach of media ownership rules after there has been a change in control.
• In the case of a Channel 3, Channel 5 or local analogue radio licence, to determine whether a “relevant change of control” has occurred to trigger the ‘change of control’ regime set out in sections 351 to 356 of the Communications Act 2003. A review may also be triggered on being notified of proposals that may give rise to a relevant change of control.

Footnotes:

1.- Section 357(2) of the CA

2.- Paragraph 1(3) of Part 1 of Schedule 2 of the Broadcasting Act 1990 as amended by section 357 of the CA

The full document is available below

• Ofcom guidance on the definition of control of media companies [pdf]
  Full Print Version
• Ofcom guidance on the definition of control of media companies [pdf]
  Consideration of responses to the second consultation paper issued on 27 October 2005

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