Local media: data and research

Ofcom has statutory duties to secure the availability throughout the United Kingdom of a wide range of television and radio services of high quality and wide appeal, and to maintain sufficient plurality of providers of different television and radio services.

In addition, Ofcom has a Memorandum of Understanding with the Office of Fair Trading (OFT) in relation to Local Media Assessments (LMAs), which have their origins in the Government’s 2009 Digital Britain Interim Report.

On 10 August 2011, the Office of Fair Trading (OFT) asked Ofcom to provide input to its decision on whether to refer the proposed acquisition by the Kent Messenger Group (KMG) of seven Kent newspaper titles from Northcliffe Media (Northcliffe) to the Competition Commission (CC) for further investigation.

Our input took the form of a Local Media Assessment (LMA). We observed that on the advertising side of the market, constraints appeared to be ever-growing from online advertising, where online national advertising is increasingly encroaching on what was previously local print advertising. We said this is likely to be mirrored for consumers, although it varies by consumer group. For example, consumer groups with lower broadband take-up are less likely to find online news and advertising to be an attractive substitute for hard-copy newspapers.

The evidence available to us suggested that the target business and the regional newspaper business of KMG would struggle to achieve profitability in their current form, which might lead them to respond by closing newspaper titles or reducing quality (or both).

In the light of this, we considered that a merger might provide the opportunity to rationalise costs, maintain quality and investment, and provide a sounder commercial base from which to address long-term structural change, for example by expanding the availability of online and other digital local services. We said that these potential benefits needed to be weighed against any potential customer harm resulting from reduced competition identified in the OFT's overall assessment.

We provided our LMA to the OFT on 2 September 2011. On 18 October 2011, the OFT announced its decision to refer the proposed merger to the Competition Commission. Today we are publishing a non-confidential version of our LMA, to coincide with the publication by the OFT of the full text of its merger decision.

Proposed acquisition by Kent Messenger Group of seven newspaper titles from Northcliffe Media (PDF, 740.6 KB) 02 Sep 2011

1. Local Media Assessments (LMAs) have their origins in the Governments Digital Britain Interim Report. That report referred to local media groups views that the transition to digital business models required consolidation but that the current media merger regime did not take account of potential cross-media competition. Prompted by this report, the Office of Fair Trading (OFT) conducted a Review of the Local and Regional Media Merger Regime.

2. The OFT subsequently concluded that the existing merger regime was flexible and evidence-based, and thus able to take into account the various considerations raised. Nonetheless, in recognition of the benefit available from Ofcom's knowledge of the media sector, the OFT proposed that in local media merger cases raising prima facie competition concerns, the OFT would ask Ofcom to provide them with an LMA. The OFTs revised Jurisdictional and Procedural Merger Guidance published in June 2009 confirmed this position.

3. LMAs are therefore a new element in the OFTs existing merger procedure. They are a more formalised way for Ofcom to assist the OFT in its assessment of mergers involving local media.

4. The Digital Britain Final Report, the OFTs Review of the Local and Regional Media Merger Regime and the OFTs new Jurisdictional and Procedural Merger Guidance each provide an indication of what issues future LMAs may cover. Ofcom has carried out further work in order to define in more detail the potential scope, the content and the process of conducting LMAs. In particular, Ofcom has asked economic consultants DotEcon to suggest how Ofcom might approach benefits to consumers in LMAs.

5. On 26 July 2010 Ofcom published its draft LMA Guidance for consultation. The consultation period ended on 20 September 2010. Having completed the consultation process, Ofcom is now publishing its final LMA Guidance, alongside a Memorandum of Understanding agreed between the Office of Fair Trading and Ofcom (the MOU) in respect of LMAs, and a policy statement.

The LMA Guidance sets out Ofcoms approach to preparing LMAs in merger cases involving local media firms, both in terms of the process to be followed and procedure and the issues likely to be covered;
The MOU sets out the agreed working arrangements between the OFT and Ofcom;
The LMA Statement summarises Ofcoms work to date in relation to LMAs and sets out our response to the issues raised in the consultation process

Local Media Assessment Guidance (PDF, 126.4 KB) : 01 Dec 2010

Local Media Assessments Statement (PDF, 100.6 KB) 01 Dec 2010

A framework to approach benefits to consumers in Local Media Assessments (PDF, 605.4 KB) Prepared for Ofcom August 2010

Memorandum of Understanding between the OFT and Ofcom in relation to LMAs (PDF, 44.7 KB) 01 Dec 2010