Newspaper Prices

HC Deb 20 July 1994 vol 247 cc427-52 11.32 pm

Dr. Tony Wright (Cannock and Burntwood)

There is always a certain tension when politicians start talking about the press, and so there should be. As H. L. Mencken famously said, the proper relationship of journalists to politicians is that of dogs to lamp posts. The fact is, though, that there are some pretty savage dogs out there at the moment and they are getting more savage by the day. I think that it is up to the lamp post to take some interest in them and to try to suggest that some kind of response is required.

I wish to talk about the so-called price war—the phenomenon of predatory pricing—that is now rampant in what we used to call Fleet street, but which, post-Wapping, we have to find some other way to describe. I shall remind the House of what has been happening and give a short chronology of the background to tonight's debate.

Let us return to last year, and I shall take the House through the sequence. On 12 July 1993, The Sun dropped its cover price from 25p to 20p. Also on 12 July, the Daily Mirror responded by dropping its price to 10p for one day only. On 26 July, the Daily Mail increased its cover price from 30p to 32p. On 2 August, the Daily Express went up from 30p to 32p in line with the Daily Mail. On 16 August, Today experimented by reducing its price from 25p to 20p in the Liverpool area only. On 6 September, The Times dropped its price from 45p to 30p between Mondays and Fridays, and from 55p to 40p on Saturdays. On 10 October, the price of the Independent on Sunday rose from 90p to £1. On 12 October, The Independent increased its price from 45p to 50p between Mondays and Saturdays.

On 10 January 1994, The Sun dropped its price from 20p to 10p for one day to support its television game show promotion. On 24 January, Today dropped its cover price to 10p for one day only. On 23 June, The Daily Telegraph dropped the price of its Monday-to-Friday editions from 48p to 30p. Also on 23 June, The Independent dropped its price to 20p for one day only. On 24 June, The Times reduced its price further from 30p to 20p between Mondays and Fridays and from 40p to 30p on Saturdays. In the past few days, News International has sought to extend its predatory pricing to Scotland, with similar effects.

Mr. Tam Dalyell (Linlithgow)

Lowering the price of Today to 10p is a classic example of predatory pricing. In connection with Scotland, however, does my hon. Friend recall that the late Roy Thomson was made to choose between continuing to own newspapers such as The Scotsman and giving up his STV holdings, or keeping his television holdings and giving up his newspapers? Faced with the choice, he gave up his television holdings. That might be a good precedent for making Mr. Murdoch choose between his newspapers and his extremely lucrative BSkyB. It is one or t'other.

Dr. Wright

As always, my hon. Friend has made a pertinent point. I hope to deal with it shortly, in terms of similar choices that may have to be made now. It is an interesting precedent from an era that was far more mindful of such issues; the spirit is rather different now.

That, then, is what has been happening on the news stands in the past year. The question is, why has it been happening? What is behind it? The answer is quite simple: one dominant newspaper group and one media magnate —News International and Mr. Rupert Murdoch—have sought to drive out as much of the competition as possible. There is no doubt about the intention or the strategy; there has been a certain openness about it. There can be no excuse for not knowing what has been going on.

Let me give the developments a wider context. At a time when the overall sales of newspapers are falling, it is no longer possible to expand by increasing the total share of newspaper sales, because the trend is in the opposite direction. The only way in which to prosper and advance is to seek to take existing shares, and to do so in an aggressive and, if possible, predatory way.

How can that be done? In the case that we are discussing, the organisation concerned is sitting on a large sum—a treasure. It is possible to raid that treasure in an attempt to drive out those who are not sitting on treasures. We are talking of an organisation that made a profit of £439 million last year, and is quite happy to draw on those reserves to see off the competition and strengthen its own market position, although it is making enormous short-term losses by doing so. It is sitting on a pot of gold because it is sitting on an empire.

The empire involves a third of the press here, but it is a global empire, with a huge array of newspapers and magazines across this country, Australia and the United States, as well as Sky Television, Twentieth Century Fox films, Fox Television in the United States and a developing interest in satellite television in the far east. It is a global media empire and it is possible to draw on its resources to engage in predatory pricing here. There is no dispute about the fact that that is happening because the strategy is clear.

The intention has been described by a number of people. The Independent is one of the newspapers that has been in the firing line and it has seen its circulation drop from 334,000 a year ago to 277,000 now. For its main enemy that is no doubt seen as a great achievement, but I believe that it is an enormous loss in terms of pluralism and diversity in this country. It is hard to dissent from the view of Mr. Andreas Whittham Smith, the editor of The Independent, who wrote a signed editorial in the newspaper last month in which he said: Two right-wing ideologues, Rupert Murdoch and Conrad Black, have set about destroying the quality newspaper market. That is the intention and, from their point of view, it is succeeding.

I prefer the comment which was relayed by the editor of The Times, Mr. Peter Stothard, who said: I have had one letter of complaint from a vicar who did not think it"— the price cut— was right. As ever, a solitary vicar, if no one else, understands what is going on and a solitary vicar understands that there are ethical, moral and democratic issues surrounding this issue which need to be addressed.

There can be no doubt that it is News International's ability to draw on its reserves which is enabling it to sustain the strategy. Reliable reports suggest that The Times is losing at least 2p on every copy that it now sells, and some estimates are higher than that. Despite a 42 per cent. rise in circulation as a result of its pricing policy, its daily revenue is now £45,000 lower that it was last autumn, despite adding 230,000 copies to its circulation. It is taking huge losses in pursuit of the strategy upon which it has embarked.

The pricing policy of The Sun was the precursor of the strategy for The Times. Its circulation is 20 per cent. higher than the year before the predatory pricing started, but the 5p price cut means that it is earning £70,000 a day less than it was before it increased its sales.

The figures that I have given are rather modest. Some of the figures from the media analysts are more startling.

Mr. Dalyell

Perhaps my hon. Friend will allow me to give an even more immodest figure. Of the 20p for The Times, I am told that 17.5p goes to the wholesalers and retailers who distribute and sell the newspaper and the 2.5p that comes back to News International does not begin to cover the cost of printing and paper, which I am told is about 15p per copy. I believe that those are accurate figures.

Dr. Wright

They are accurate, and extraordinary, figures. Although the figures differ depending on the source that one uses, they all point in the same direction. It is not disputed, even by sources close to News International, that the figures are of that order. It is deliberately taking huge losses in pursuit of a certain objective, and it will take those losses over an exceedingly prolonged period because it can afford to do so. I shall say in a moment what I believe the outcome of that will be.

If we take seriously the Office of Fair Trading's obligations in relation to predatory pricing, and if we cast our eye over the cases that that body has looked into over the years, we must find that this is a classic illustration of predatory pricing. Predatory pricing occurs when a dominant player in the market deliberately sets out to cut prices in order to drive out competitors, using its market to do so.

I found it extraordinary that the Director General of Fair Trading said last September that he could not become involved in this case because it seemed to him to be merely "aggressive pricing" rather than predatory pricing. It is interesting that now, in the wake of the further decrease in the price of The Times, the position has changed and some sort of inquiry can be held. I shall deal with that point in a moment.

Let us consider the ground rules for competition policy, about which the Minister will doubtless have something to say. Section 2(1) of the Competition Act 1980 defines an anti-competitive practice as a course of conduct pursued by persons in the course of business, which has or is intended to have or is likely to have the effect of restricting, distorting or preventing competition in connection with the production, supply or acquisition of goods". Surely that is precisely what is happening now—it is a directly anti-competitive practice used by a monopoly player in the market to drive out competition.

The question is, what is the response? Let us look beyond what has been happening for the past year. Mr. Rupert Murdoch informed us that his vision of the future is an industry in which they may be only three newspapers —The Times, the Daily Mail, and The Sun. That is his vision of the plurality of British newspapers. Or course, he already owns two of the three.

We have to make up our minds—do we think that such behaviour and such ambition are consistent with what the House has always said, from Pilkington onwards, about the need to guarantee pluralism and the need for the state to prevent monopoly players from exercising excessive power? Do we still hold the same views, or do we want to be rolled over by Mr. Murdoch so that he can realise his vision of a future with only The Times, the Daily Mail and The Sun?

Mr. Dalyell

It is a matter of record that that is precisely what Mr. Murdoch said to Sir David English—it is not only a figment of Opposition Members' imagination. He is on record as saying that we would be left with those three newspapers.

Dr. Wright

Indeed, I think that Mr. Murdoch said not only with ambition but with a certain zestful pride that it would show that the strategy had worked and that there had been another gain for his media empire. The question is, where does it leave the rest of us? Where does it leave democracy, choice and diversity?

That is not to be seen as aberrant behaviour. It should not take us by surprise, because in a sense it is only what large businesses always do when they can get away with it. That is why the cases that the Office of Fair Trading has had to investigate over the years are exactly comparable with that case. For a major player, in its own terms that is rational market behaviour. If it is possible to do such things, it is rational to do them. If the law and the regulations are such that it is possible to engage in predatory pricing to drive out the competition, it is rational business behaviour to do so.

That is precisely what is happening now—because such developments have not been challenged or checked. Therefore, as in other business areas, the attempt is made to drive out a competitor that one does not like. If one can afford to take great losses in achieving that, one will do so.

The problem arises because we are talking not about baked beans but about newspapers. Traditionally we have thought that it was rather important to guarantee the integrity and plurality of newspapers, and to protect them from such business behaviour. There was something special about newspapers. There was something special, something vital to our democracy, about the ventilation and distribution of opinion. It was not a business like any other.

However, we now have people like Mr. Murdoch—

Mr. Chris Mullin (Sunderland, South)

Has my hon. Friend noticed that the Minister appears to be doing his correspondence? Even now I do not think that he is with us. Does my hon. Friend think that that bodes well for the quality of the reply that he is likely to receive to his excellent speech?

Dr. Wright

My hon. Friend makes the sort of impish point in which we all delight. However, having spent two or three months locked up with the Minister in the Committee that was discussing the Deregulation and Contracting Out Bill, I am used to his being otherwise engaged while I am making important points. Indeed, we had an exchange on that subject in Committee.

What I have described is rational market behaviour, but it is rational market behaviour that is simply not acceptable when applied to newspapers and to opinion. We see such behaviour elsewhere, too, of course. If we cast our eyes around at the operations, including those of Mr. Murdoch, of media moguls in other parts of the world, we see exactly what is going on, and how different regulatory systems require different responses.

In Australia, for example, the Government have traditionally been a wholly owned subsidiary of the Murdoch empire. But in the United States Mr. Murdoch ran into difficulties, because there was a much tighter regulatory regime there. When Senator Edward Kennedy sought to reactivate a rather ailing regulatory regime, Mr. Murdoch, according to the recent book about him by William Shawcross, described it as "liberal totalitarianism", and set out to get Kennedy through his tabloid newspapers in the United States. Fortunately, the regulatory regime got him instead. In New York and in Boston he had to back off, because there were rules there that made it impossible for him to proceed.

Unfortunately, the position here is different. It is well understood that one of the large anomalies or large holes in the Broadcasting Act 1990 is the fact that it does not prevent people with satellite television interests from moving into newspapers. That made possible, in a way that was most helpful to Mr. Murdoch, the kind of cross-media ownership that we have traditionally taken steps to prevent. At the time, he was thought to be extremely helpful to the Conservative party. There may be different views about that now, but at the time the view was that the hole had been nicely opened up so that Mr. Murdoch could walk through it.

We are having this discussion at a time when there is a tremendous push to sweep away the existing legislative inhibitions to cross-media ownership. We are being told almost daily by those who have power inside the industry that the time has come to move decisively in the direction of further deregulation and that the only way in which to become global players in the contemporary media business is to sweep away all the regulatory structures.

If we look around the world, we see exactly what such a change might mean. One does not have to look much further than Italy where Mr. Berlusconi is now happily bringing neo-fascists into his Government. He sits at the apex of a media-political empire. One can see there the potential consequences of our sweeping away regulatory regimes. Indeed, if we are serious about pluralism, we must be serious about enshrining pluralism in structures that have some chance of delivering it.

This is a matter of some urgency. The Office of Fair Trading has, I am afraid, not acted with sufficient urgency. It would be extremely serious and damaging if—the Office of Fair Trading having announced that it was finally to look at the matter, after having said initially that it would not —we now had a protracted period in which the OFT brooded on the matter for the best part of a year, after which it might—or might not—make a recommendation to the Monopolies and Mergers Commission. By that time, the fate of important and serious newspapers would have been irretrievably damaged and some of them might have disappeared. I press the need for urgency in relation to the issue now.

There is also a longer-term issue, which is that of media ownership. We must think afresh about the nature of pluralism in terms of developing media conglomerates. The European Union drew attention to the matter a few years ago in its Green Paper on pluralism in the media. The issue is there and there is a tremendous drive from those inside the industry to throw off the regulatory structures. We must start to ask what the public interest is; in relation to this issue, we must ask what the public interest is in ensuring that newspapers survive and that the plurality of newspapers survives.

Sometimes we have cause to be grateful for things that may seem disconcerting at the time. I believe that we shall come to be grateful to The Sunday Times for its actions a week or two ago in showing how certain actions in this place can seem extraordinarily reprehensible to people outside although they evidently seem perfectly normal to people inside. I hope that out of that intervention, some good will come. Similarly, I think and hope that this price war—this predatory pricing—in so far as it reveals the ability of a powerful player to seek to use his power simply to drive out competitors so that his market share can be increased, will be so offensive to the public interest that it will produce renewed attention to the question of how we can guarantee pluralism and diversity.

We have a price war raging at the moment which is profoundly damaging to diversity and profoundly damaging to democracy. The Government, in their deregulatory mode, seem to find it perfectly acceptable and nothing to worry about. I assure the Minister that many people in the country are profoundly worried by what is happening and would grieve enormously if serious titles were lost. It would be damaging to the people who work for them, it would be damaging to the people who read them and it would be damaging to our democracy.

11.58 pm

Mr. Peter Bottomley (Eltham)

If I am the only Back Bencher who wants to speak, I can assure the House that I do not intend to speak for all that long.

I declare various interests. I earned money by writing for various newspapers, and I have had lunch with various people in the media.

At the end of this debate, I intend to read the papers that have been sent to me by the public affairs people from News International. The only part that I have picked up so far, because I thought that I should come to this debate, is that I may be wrong in saying that the subsidies to The Times have come from outside this country. That may be accurate; I do not know, and I do not particularly care.

The hon. Member for Cannock and Burntwood (Dr. Wright) has done a service to politics in his book on politics, and he has done a service to the newspaper industry in introducing this debate today. He has clearly stated many of the issues.

I come to this debate with a history. When News International took over The Times and The Sunday Times, I did not support my party on the motion tabled by the Labour party. There were strong arguments that that takeover should have been referred to the Monopolies and Mergers Commission. The rules as I interpreted them, and as the Government should have interpreted them, were that The Sunday Times was clearly a profitable newspaper, and there was no ground on which the Government should rely in not referring The Sunday Times takeover, even though it was said that that was the only way to save The Times.

It is worth remembering that there is a spectrum of newspaper pricing. It would be possible for a proprietor or a company owning a newspaper to distribute it free. In many of our constituencies, newspapers are distributed free. The distinction which the hon. Gentleman would make is that those newspapers are not distributed free for long at a loss. They rely on getting sufficient advertising to make them a commercial justification.

It is worth noticing that we have one broadsheet daily newspaper, The Guardian, which has a structure that was set up especially so it could be produced at a loss. The Scott trust is designed to keep The Guardian going, even though at times it may look as though it is at risk of making a profit.

Perhaps the distinction between The Guardian and other newspapers is that it is not a threat to other newspapers. No one can claim that The Daily Telegraph loses a serious number of readers to The Guardian. It may not gain the young readers that go to or stay with The Guardian for as long as they can face the letters page.

The Observer was a loss-making newspaper for many of its 200 years of history. At one stage, it was bought by an oil company, Atlantic Richfield, and it was owned to greater or lesser degrees of distinction by Lonrho. There was a time when the Observer was losing about the same as its cover price on every issue sold, but no other newspaper seriously claimed that the Observer was making inroads into its market.

The reason why the Sunday Express was losing some of its share of the market from its previously phenomenally successful position was not because the Observer was being sold at a loss. I do not think that commercially successful editors of The Sunday Times would argue that the Observer being sold at a loss was serious competition to them. I think that the reason for that is partly ideology.

Now that the Observer is in new ownership, it tends to run its front page as though it was the Monday of The Guardian, where the story is not quite as reliable or as balanced as the stories on other days of the week. The Observer did not go in for predatory pricing. It tended to price itself at roughly the same level as The Sunday Times.

If people were to ask about the distinction between the price wars now and those loss-making newspapers, I think that it is the increasing of the loss of The Times. As to the pricing of The Sun, one can argue that the paper is still making a profit. I do not want to argue The Sun case too strongly. My view is that The Sun is in a declining market and its sales will fall faster that those of the News of the World. The reason for that is the combination of two issues.

The first issue is the change in the way in which people go to work. As more and more people drive to work, not only on days when there is a rail strike but as a general change in pattern and as a result of greater access to motoring, they do not pick up a newspaper at a news stand on the way to work as they did when they went by public transport, by foot or even by bike. That is a change.

The second issue is that, over the next two or three decades, or possibly in the next two or three years, more and more people will set the standards for what they take home and what they do and buy at work, which are higher than the ones that they had in the past. A significantly growing number of purchasers of The Sun will say that it is not the newspaper that they want their children to take once they start reading one. A general uplift will take place, which will be reflected in our politics and newspapers.

The suggestion from Rupert Murdoch that The Sun will not just continue to be a boobs and bottoms newspaper is correct. I must say, however, that no one should be worried about naked bodies, because, if we take our clothes off and look in the mirror, we will discover that we have one for ourselves. One often finds more naked flesh in The Guardian than in The Sun.

The change in the nature of the newspaper market applies just as much to the discrimination of readers in all part of our community.

As the hon. Member for Cannock and Burntwood has said, the interesting question relates to The Times. Why are we ignoring our normal monopoly and fair trading conventions, if not our rules, when a newspaper deliberately doubles its loss on a sustained basis? We are talking not about a one-off price reduction, but about a sustained campaign to reduce the price of the newspaper.

It is not for me to argue for Mr. Black, Hollinger Incorporated or the Telegraph Group, although I have friends who work for it. It is not for me to argue whether Mr. Black, or his directors, were wrong to get involved in the price war. It may have been wrong for the Telegraph Group to cut its price, but I do not want to second-guess it. A price war requires two to tango.

As a result of that price war, the number of broadsheet newspapers will fall significantly, and rather faster than the normal process of movement in the newspaper market. We are used to seeing people create newspapers in this country. My namesake, but no relation as far as I know, because I suspect that he was born without parents and died without children, Horatio Bottomley, showed how it was possible to build up newspapers, in part by pandering to people's prejudice and by being a great advertiser.

We have seen the creation of great newspaper families, in part by them backing good editors and by conducting vigorous, but often unsuccessful, campaigns. I cannot think of a single campaign run by the Beaverbrook papers Press between the wars that was successful, although I have not subjected them to detailed analysis. People quite enjoy campaigning, even it is not a success.

We have seen newspapers increase their circulation to 5 million copies, and then decline. That is part of the normal cycle, and it is certainly not for the House to argue that we should have a set number of broadsheet newspapers—so-called serious, quality newspapers.

In this country, we have the distinction of a greater diversity of newspapers and easier access to creating a newspaper than elsewhere. It is interesting to note that France has one Sunday newspaper, of no great account. We now have good weekend newspapers on Saturday and Sunday—in part due to the innovations of The Independent —which offer fine, detailed coverage.

The current problems have arisen because we have been setting the wrong rules for the media, and not applying the rules we have. I have already referred to the Sunday Times takeover, which was a open breach of the law. In the past five years, we have set laws about cross-media ownership, but we have focused on the wrong target. Technology has overtaken us, plus some people's clever wriggling around the regulations.

We said that major newspapers could not become satellite broadcasters. Maxwell BSB did not work, but Murdoch Sky did work. We now recognise that there will be no shortage of capacity in satellite broadcasting—once more Astra satellites are operational, as many channels as possible will offer the service. I suggest that we should accept what the major media groups, including Pearson, Associated Newspapers and Guardian Media, have said. They believe that we should drop the bar on those groups having more than a 20 per cent. stake in terrestrial broadcasting. It may be too late for some but it may open up the market in a better way.

We should try to treat newspapers as though they are ordinary industries, as far as possible. The same approach goes for rules that apply to journalists and for the ownership of newspapers. That would suggest that the Office of Fair Trading and the Monopolies and Mergers Commission should be asked to examine newspapers. I think that they should recommend that any group or individual should be required to divest if it or he has a national newspaper circulation that is 20 per cent. of the market or more, unless there is only one title. If the group or individual has one title that has 35 or 38 per cent. of the market, that is fine.

We. know, of course, that newspapers can cross subsidise on a loss-making basis, which is what The Times is doing. I suggest that it has increased its losses by 50 per cent., if not 100 per cent. Unless it can show that at that level of pricing it can, with a reasonable time scale, start making a profit because of extra advertising revenue or extra sales, it should be required to stop the loss-making subsidy or face a mandatory divestment order. That would wake people up to some extent. At the same time, it would be reasonable and fair.

Why did that approach not apply to the Observer? The answer is that, in terms of the market, it did not matter. We should be able to say what does matter in the market. We should have some discretion. If someone said of the magazine market, in which I think there are 5,000 titles, "Why is Naim Attallah able to subsidise The Oldie for as long as he chooses?"—I am sorry that he is choosing not to do it for longer, because I think it is a good magazine, or at least the writing is good—the answer is that it does not matter all that much.

If someone says, "What about the Literary Review and its subsidy?"—£25 comes to me every other month if Auberon Waugh accepts one of my articles—the answer again is that that does not matter too much to competitors.It does not threaten The Times Literary Supplement and the book review pages in serious newspapers.

There is a scale within which some things obviously matter while others do not. We can argue about where between those two points we should start paying attention. I would argue that the issue of The Times is way beyond any margin of debate.

Mr. Robin Cook (Livingston)

I would not dissent from any of the points that the hon. Gentleman has made, but I caution him on where he is taking the argument. I think that he will agree that, if we take as an example that delightful magazine, The Oldie, running at a loss, the test of whether it is guilty of predatory competitive behaviour is not that it is running at a loss but whether there is predatory pricing that is designed to force other magazines out of the market. None of the publications to which the hon. Gentleman has referred could possibly be accused of predatory pricing, albeit they were or are running at a loss.

Mr. Bottomley

Maybe so. I can only offer my thoughts, which may be inadequate because this is the second time today that I have bothered the House with a few reflections.

I think that we are in basic agreement. Some things matter, some things matter more and some things matter a great deal. I have a friendly disrespect for the press. I am happy to condemn it. I think that it should face the same controls as we do as Back-Bench Members in Parliament, where there are few rules that really restrict us.

It boils down to what people think we can get away with or what they are willing to tolerate from us. Those are the considerations that matter most. As I said during the debate on referring issues to the Committee of Privileges, we should set standards for ourselves. At the same time, the press should set standards for itself. Our standards should be the higher. That would seem to be reasonable.

It is more elegant if the press criticises politicians rather than politicians criticising the press. In this instance, we are not criticising it. Instead, we are considering the business side of newspapers, and that matters more.

Mr. Dalyell

The hon. Gentleman is making a thoughtful speech. On the business side, can The Times, at a price of 20p, be seriously expected to make money without at first killing off at least one other broadsheet newspaper? If the answer to that question is no, is the Murdoch policy of The Times at 20p not a clear example of predatory pricing, which makes the hon. Gentleman's worries all too real?

Mr. Bottomley

The hon. Gentleman may be right. That is a matter now for the OFT. I agree that it does not have to spend so very long looking into the matter, at least on a preliminary basis. There is a time constraint, because of the market conditions.

If News International, the publishers of The Times, can show that, even if other newspapers came out of the market, it has the prospect of making money at 20p—it does not have to guarantee it—I would not want to stand in the way of such a large donation to readers. Clearly, it is good that people can buy a newspaper at a lower price. At times, newspapers have acted like a cartel in pushing prices up. We are now getting at them for cut-throat competition. Life is like the tide—a sort of sine curve. At the moment, we are concerned about cut-throat competition.

The Independent started to lose its way before price cutting began. To depersonalise the matter, its proprietors made a mistake in saying that they wanted to knock out The Sunday Correspondent, and their greatest mistake was to launch The Independent on Sunday. They came into the market before securing their base, and they have been unable to keep both going effectively. I reserve my comments on one or two of the editorial judgments until after the editorship has changed.

Not surprisingly, the slide in The Daily Telegraph's circulation began before predatory pricing started. The Evening Standard has also seen a reduction in its circulation. If I were discussing the matter outside the House, I would say that, if both The Daily Telegraph and the Evening Standard spend their time attacking my wife, they cannot expect their sales to stay up, because she is one of the more popular people around. If they tell people that she is unpopular, they will lose interest.

A new newspaper will be launched the next parliamentary day—today, in normal terms. People will stand at 40 spots around London and give away 100,000 copies of the newspaper. Presumably it will begin as a loss-making newspaper, but it will not keep going for long at a loss because there is no big pot of gold to keep it going. It must become a commercial success.

What the House is saying to the Office of Fair Trading, the Monopolies and Mergers Commission and the proprietors of News International is that we are not interested in their driving other newspapers out of business and then putting up their price, having driven part of the competition out of the market. They must demonstrate that they will keep the price low, whatever happens in the competitive marketplace.

If they then say that it is a challenging business and ask why we are so jealous about them making money out of Sky after it nearly went bust, we must answer that that is the past. We are concerned about the future, and what provides the best opportunities in the medium term for media consumers. We are on the side of the readership and, in the context of television and radio, those who watch and listen.

If News International is interested in my views on this matter, it should start to pay more attention to the price at which it makes its encryption service available to satellite television. That, too, will be a matter of interest.

Where, for some reason, there is an effective monopoly, it will require people taking a legislative interest which, in time, will become stronger and more effective than some of the other controls that we thought we had brought in—not against News International but to create a media system that allows competition, entry, adventure and entrepreneurs but avoids unfair competition.

There is not much more for me to say, except that the best thing is for News International to say at what price The Times could be sold profitably. If it then says that The Times is not a commercial proposition, it should try to find a solution for it that does not require sustained, unfair price competition for its competitors.

In the next five or 10 years, some newspapers will go out of business. A battle is going on between Today and the Daily Mirror, and I do not know who will win. It does not matter to me whether both survive, but I doubt whether both will.

I do not wish to pick on a particular Sunday newspaper, but if I were talking to a friend in a pub, I would say that I am not sure that we gain a great deal from the Sunday People. It does not add much that does not already exist in the Sunday Mirror and the News of the World—or perhaps vice versa.

In the daily market, I am not sure what the long-term place of the Daily Star is. However, if we looked 20 years or more into the past—I forget the precise timing—we would remember that The Sun would probably have gone out of business if Rupert Murdoch had not come along and turned it into a successful newspaper with his editors. The saving of newspapers can therefore be as important as their destruction.

We should have a reasonably fair playing field. The only level playing field that I ever encountered was in a water polo swimming pool, which is rather easier as it has less unlevel ground than most. If we speak clearly about what we think the principles should be, we can let the outcome be uncertain. One pays for it, but one avoids the unfairness that was wisely mentioned by the hon. Member for Cannock and Burntwood.

12.19 am

Mr. Denis MacShane (Rotherham)

I want to make a short contribution on the impact of the price war on the regional press. I have to tell the hon. Member for Eltham (Mr. Bottomley), who gave a most interesting discourse, that The Sunday People is widely read in Rotherham.

When I was a boy at school, there seemed to be many more newspapers than there are now. When any newspaper drops out of existence, for whatever reason, I think that democracy is diminished. The loss of former Ministers or their replacement today is a headline; the loss of a newspaper is extremely bad news. I agree with Benjamin Franklin, who said: If I had to choose between a government without newspapers or newspapers without government I would have no hesitation in opting for the latter. We have had price wars, or circulation wars, before in this country—notably in the 1930s, when giant circulation wars were conducted by giving away encyclopaedias, not by cutting prices. It would be a nice treat today if The Times were competing by offering "Encyclopaedia Britannica" instead of chopping its price by more than 50 per cent.

Although I want to enter some words of reservation about The Times, I think that, in the past year or so, its coverage has improved immensely. Its features are strong. Its sense of news—I speak as a former president of the National Union of Journalists—is extremely positive and interesting. Today it led on Mr. Santer's repudiation of the Prime Minister's views on Europe—a tough, no-nonsense news story, which I think other newspapers should be running with. Perhaps, instead of conducting the price war, it could have stuck to its new, rather more virile, news feature and comments service, and handled the other competition on fair terms.

I am very worried about the fact that The Independent is under threat. The Independent has been a positive contribution to the British press and, were it to go out of existence, it would emphasise once more the fact that we are living in a country in which, in recent years, we know the price of everything and the value of nothing. I hold The Independent in high esteem. It is a paper of great value, which has contributed much to debate in our society.

It is not for the House—not for politicians or Ministers —to say which paper lives and which dies, but, inasmuch as we have regulation of anything, we are entitled to hold a view about pricing that will place that newspaper under severe threat.

In addition, the pricing war that is now under way places the existence of some of our regional papers under potential pressure, according to research that I have undertaken with the regional press. Statistics from the Audit Bureau of Circulation are not yet available for the first half of this year, during which The Times and The Daily Telegraph jumped over the precipice on the price front, but the signs are that sales are down, and that advertising is under threat. The fact that newspapers such as the Yorkshire Post in my part of the country and the Northern Echo continue to maintain a strong existence should be important to Parliament.

We live in a centralised society. We live in the only country in Europe—I speak now about what is read in England although it also affects Scotland, Wales and Ireland—where the press is entirely focused in one city. The French press is more regional. I think that the strength of the German economy and German society is that there is no one city that, as it were, controls the free flow of information in the way that London does in the United Kingdom.

Mr. Dalyell

Does my hon. Friend recognise that, if there were any serious threat to either the Glasgow Herald or The Scotsman, many Scots would think that the quality of life in Scotland was thereby diminished? It is a serious matter, as my hon. Friend says, not only for the regional press, but for the Scottish press—certainly in relation to advertising. When the threat last arose and Roy Thomson faced problems, he was made to choose. His editor, Alistair Dunnett, said that at that time the score was laid firmly on the line that it was one or the other, and people could not use television to harm competitors.

Mr: MacShane

My mother, who lives in Glasgow, and many of my aunts worry each morning about which paper they will buy, the Glasgow Herald or The Scotsman—both are distinguished in their own way, and both contribute much to the different climate of political culture and debate in Scotland. Were those papers to be faced with any serious challenge to their existence by a pricing war determined in London but okayed in the United States, that would be a serious threat to democratic debate in our country.

In recent years, there has been an increasing tendency for households to buy only one newspaper. The hon. Member for Eltham mentioned the changing pattern of newspaper purchase and reading habits. Recently, when I have found myself jingling the coins in my pocket on a railway station, I have opted for The Times simply because it is half the price of my favourite reads, the Financial Times and The Guardian. As a materialist, I have to count my pennies.

A variety of press is expressed through our healthy and positive regional daily papers. I am referring not to the free advertising sheets, but those papers which employ a substantial number of journalists. The Western Morning News has 63 reporters covering its region, compared with The Times and The Daily Telegraph, which have none covering that region. Those regional daily papers make a great contribution to our regional culture.

I hope that the Government are prepared to accept such concerns and to support the reference to the Office of Fair Trading and the Monopolies and Mergers Commission if it is relevant. I also hope that the Government are prepared to join in the cross-party desire to discover what measures can be taken. The moment one regulates, introduces laws or sets up a commission that can determine pricing or advertising, one interferes in the pure logic of the market. Most people in this country want a free, varied, pluralistic and decentralised press.

I fully support the speech of my hon. Friend the Member for Cannock and Burntwood (Dr. Wright), and I am delighted to see hon. Friends present who, like me, are concerned about the plurality of the press in this country. The House will have to return to this subject.

12.28 am

Mr. Chris Mullin (Sunderland, South)

I congratulate my hon. Friend the Member for Cannock and Burntwood (Dr. Wright) on an excellent speech and on his good fortune in winning this debate.

The price war is a symptom of a much larger problem. Gradually and remorselessly, control of most of what we see and read is slipping into the hands of a handful of ruthless megalomaniacs. As other hon. Members have said, it is perhaps the most serious threat to democracy in this country.

Mr. Murdoch is only the most obvious of the megalomaniacs with a grasp on our national newspaper and television industries. He owns five national newspapers and 50 per cent. of BSkyB. He appears to enjoy special arrangements that apply only to him. I understand that a regulation is enforced against all other ITV companies stating that at least 50 per cent.—or perhaps 60 per cent.—of what they broadcast must be produced domestically. That does not apply to satellite television, with the result that Mr. Murdoch is able to buy off-the-peg junk television from Australia and America. He is gradually dragging down standards in ITV, which has to move down market to compete with him. He is also able to accumulate the sort of profits that have allowed him to engage in the present ruthless price-cutting war.

The Murdoch press has polluted our culture during the past 20 years. The effect of Mr. Murdoch has not been just on those newspapers that he happens to own; it has been on competitors who have felt obliged to go down market to compete with him. Nowhere has the effect of The Sun been greater than on the quality of the Daily Mirror, which has deteriorated badly in recent years.

Now there is the spectacle of ITV going down market to compete with BSkyB. Gradually, documentaries such as "First Tuesday" and "This Week" have disappeared. "World in Action" is under pressure to move to a slot at 11 o'clock at night, when it will have an audience of 2 million instead of 8 million. Murdoch's effect on ITV will be similar to his effect on the Daily Mirror. Everyone will go down market to compete.

Of course, it is not only Murdoch who is involved. During the past two years there has been the rise, for example, of Mr. Michael Green of Carlton Television. He now owns a great swathe of ITV and he was donating money to the Conservative party even as he bid for the franchise. He also controls 36 per cent. of Independent Television News and 36 per cent. of Independent Radio News by virtue of the fact that he controls two of the major ITV companies.

Mr. Gerry Robinson, who came from the catering division of Granada Television, now has a similar hold on two other commercial television companies and a large stake in the ownership of ITN. I believe that that is already being reflected in ITN, which increasingly consists of one anchor man talking to another anchor man, usually about a mile from ITN headquarters. There is pressure, too, to move "News at Ten" out of the way to make room for junk television—to 6.30 pm or 11.30 pm when the audiences will be similarly diminished.

All that is having an effect on our national culture. It is not a left or right-wing bias that worries me; it is trivialisation. It is becoming increasingly hard for the average citizen to discover from the daily newspapers or the television that he or she is likely to be watching what is going on in the world. Already one sees the catastrophe in Rwanda having difficulty in outbidding Prince Charles or whatever the story of the night happens to be on ITV news. That is a large problem. It will become increasingly difficult to have a diverse political culture if we do not have a diverse source of news and information.

There are some obvious solutions. The most obvious is a little bit of liberal anti-monopoly legislation—a thought that I am sure will appeal to easily the majority of British citizens. It would not cost any Government any money, and would require only a little bit of political will. The proposition that there should be only one daily and one Sunday newspaper per proprietor would not prove politically controversial. It would make a big difference to the diversity of newspaper ownership in Britain.

If we wanted to go a step further we could lay down one or two rules about the kind of proprietors or corporations that would be entitled to bid for the assets that come on the market. We could go down the American road—I do not necessarily argue that we should—and say that only corporations owned by British citizens or at least EC citizens could compete. Mr. Murdoch has already changed his nationality once from Australian to American in order to come within the American regulations. It is a stunt that I do not think that he would find it easy to pull twice.

There is great pressure to reduce the limits on cross-media ownership. They should be maintained. The regulations about the percentage of domestic production that already apply to independent television should be extended to Sky television. The fact that they have not been is an anomaly which I assume is a pay-off to Mr. Murdoch for his support over the years for the ruling party. It is an anomaly that cannot be justified and should be removed.

The hon. Member for Eltham (Mr. Bottomley) said that something must be done about Murdoch's monopoly of the encryption system. Unless something is done about it, he will maintain his grip on satellite television and there will be no question of competition there. Something must be done to deprive him of that monopoly.

With regard to independent television, the Broadcasting Act 1990, as everyone knows—

Madam Deputy Speaker (Dame Janet Fookes)

Order. I am sorry to interrupt the hon. Gentleman. Obviously, on occasions such as this, the subject matter is fairly broad, but I remind the hon. Gentleman that the subject is newspaper prices.

Mr. Mullin

One of the questions that we must ask ourselves is from where Mr. Murdoch has obtained the enormous amount of loot that enables him to cut the price of his newspapers and to sustain losses of the sort that he is sustaining. The answer is that it comes from other parts of his empire, one of which is satellite television. That is why television is relevant. I am also describing the overall effect that the price war has on our political culture, of which television is an aspect. Mr. Murdoch has other television assets as well. He is also getting his hands on a slice of our publishing industry.

I shall not dwell on it, Madam Deputy Speaker, but I return for a moment to where I was. Before the Broadcasting Act 1990, ITV was not broke and did not need fixing. I fail to see why the drift towards a monopoly that is beginning to occur there should be allowed to continue. In fact, it should be reversed.

We should not be afraid of regulation. Of course the state must be careful how it regulates the media. The only excuse is that one is regulating in the name of greater diversity, plurality and a greater flow of argument and information than already exists. Regulation has worked extremely well in the BBC over the years. It is one reason why the corporation remains the envy of the world and why even the Government decided the other day to keep the BBC more or less as it is. We should not be afraid to create by way of regulation a newspaper industry that is as free and high quality as the BBC is in broadcasting.

12.40 am

Mr. Robin Cook (Livingston)

I congratulate my hon. Friend the Member for Cannock and Burntwood (Dr. Wright) on securing this Adjournment debate on an important issue, which has attracted thoughtful and knowledgeable speeches from hon. Members representing both major parties. Perhaps it is a pity that no representative of any minority part is present to participate in a debate on an issue that affects the health of our democracy. Nothing comes nearer to touching that than the variety of our newspapers and the diversity of views that they contain. The newspaper industry has played an important part in our debates and it is right that, before the House rises for a prolonged period, we should have found time to debate a development that is likely to precipitate a crisis for a number of newspapers.

I have twice written to the Director General of Fair Trading about the price cuts at The Times. Price cutting and competition at an unrealistically low price is becoming a feature of the Murdoch press generally. Leaving aside the references to The Sun already made tonight, there is the interesting example of Today launching a Scottish edition at 10p. There is no way that one could justify such a price in calculating the commercial cost of producing that newspaper and the profit one could hope to make. That pricing is clearly a decision to obtain a market share by undercutting, at a loss, existing newspapers in that market.

Last September, I wrote to the Director General of Fair Trading drawing his attention to the reduction in the price of The Times to 30p. I will quote part of Sir Bryan Carsberg's reply, in declining to undertake an inquiry. I apologise to the House for wearying it with a quotation at this time, but it is a short one. He said: At times there is a fine line between aggressive price competition and predatory pricing. I am satisfied on the basis of information available"— last September— that the reduction in the cover price of The Times reflects a calculated commercial decision by News International. If there was only a fine line between aggressive price competition and predatory pricing last September, when The Times reduced its price to 30p, the subsequent reduction in the past month to 20p marches right across that fine line.

As the Minister is aware, I wrote again to Sir Bryan, suggesting that there is an even more compelling case for an inquiry into whether The Times is guilty of predatory pricing. Sir Bryan has agreed to an informal inquiry, to establish whether there are grounds for a formal reference. I argue that there is an overwhelming case for such a formal reference. It is hard in logic to avoid the conclusion that there is a case for a formal inquiry.

The grounds for an inquiry into predatory pricing were set out by the Director General of Fair Trading last year following his report on Thamesway. In that report, Sir Bryan set out three tests by which he would assess whether a company was guilty of predatory pricing. The first test was whether the new price was bound to incur losses for the company that had set it. I have to say that it is beyond contention that the reduction in the price of The Times to 20p will incur losses. It is not, as Sir Bryan expressed it last September, a "calculated commercial decision". There is plainly no commercial justification for a reduction in price to 20p. It is clearly a decision driven by only one consideration—to undercut the rest of the market at a loss and thereby behave in a predatory fashion.

Before The Times had its first price cut, it was selling at 45p. All the figures are highly confidential, and therefore it is possible, as some of my hon. Friends have done, to produce different figures, but they all point broadly to the same conclusion. We understand that, at that stage, the margin on every copy of The Times was 30p. That is the amount left over after meeting the direct printing and distribution costs.

If that is the case and 45p produced a 35p margin, when one reduces the price to 20p, one is left with a margin of only 5p, because the printing and distribution costs have remained constant throughout that process. Those figures might be out by a penny or two here or there. It may indeed be 2½p, as one of my hon. Friends suggested. It might be only 3p, as I have seen suggested by one of the rivals to The Times. But even a margin of 5p comes nowhere near meeting the publishing costs involved in running the journalist enterprise with its overheads, not to mention its indirect advertising costs.

It is probable that The Times is now running at an annual loss in excess of between £20 million and £25 million a year. In other words, the decision to reduce its price to 20p was taken in the full knowledge that it would incur substantial and continuing losses, which have no prospect of being turned around by any increase in sales, because the margin on the increased copies sold comes nowhere near making a contribution to the overheads. In short, the losses are possible only because The Times is part of an immense empire and is now being cross-subsidised by the profits of other parts of that empire.

The problem is that, if The Times behaves in that way, it is setting a price that cannot be matched by independent newspapers, such as The Independent or The Guardian, which do not belong to large conglomerates and cannot hope to obtain large, continuing subsidies to cope with the losses that they would incur were they to try to compete with The Times at its present price. I believe that it is incontestable that the first test has been met and that the price reduction is increasing the losses for a paper that was already making a loss before the cut.

The second test was whether predatory pricing was a feasible business strategy in the particular market—in this case the newspaper market. I say with some regret that I fear that it is only too likely to be so. Indeed, the hon. Member for Eltham (Mr. Bottomley) made the perfectly reasonable point that Rupert Murdoch's conduct is rational market behaviour whether or not we like it. The objective of predatory pricing is to put out of business rivals in the market. That objective could be achieved.

Indeed, there is already evidence that predatory pricing is working towards that objective. Sales of The Independent are now down by 20 per cent. on a year ago, and that loss occurred even before the latest cut in the price of The Times. Since that cut to 20p, the major regional and the Scottish and Welsh newspapers have between them lost some 30,000 daily sales.

I echo the point made by my hon. Friend the Member for Rotherham (Mr. MacShane). We in Britain already have a much more centralised and homogenised national newspaper industry than any other country in Europe: all the others have much more diverse, regionally based media industries. We already have dominant national newspapers that produce broadly similar editions, from Kent to Caithness. If we were to lose our existing regional press and the Scottish and Welsh newspapers, we would lose one of the last remaining elements of pluralism in our printed media.

The Scotsman, The Glasgow Herald and—this is a studiously politically neutral observation—even The Birmingham Post are part of the richness of their local politics; they contribute to regional political life, and therefore to the pluralism and diversity of British political life. All those newspapers have made losses since the introduction of price cuts by The Times. The problem is that, even if only a relatively modest number of readers desert them—attracted by the new price of The Times—that minority will destablise their finances for all their readers. A 25 per cent. loss of readers might be sufficient to put one or more papers out of business: that would mean the loss of the paper to the 75 per cent. of readers who wanted to continue to read them.

Sir Bryan's third test in regard to predatory pricing related to the intentions of the alleged predator. In this case, the predator's intentions are only too clear. As one of my hon. Friends pointed out—I think that it was my hon. Friend the Member for Linlithgow (Mr. Dalyell)—Rupert Murdoch is on record as saying that he expects only the Daily Mail, The Sun and The Times to be in existence at the turn of the century. I fear that that was not simply a neutral, passive observation; I suspect that it is part of a strategy, and that Mr. Murdoch intends to play an active part in achieving the position to which he referred.

Paradoxically, a newspaper proprietor who insists that his editors preach competition is currently practising unfair competition. A proprietor who, through his newspapers, preaches the supreme virtue and value of consumer choice is now acting in a way that is calculated to restrict consumer choice in the newspaper industry.

That brings me to the wider points beyond the narrow issue of whether predatory pricing now takes place in the printed media. They were mentioned by my hon. Friend the Member for Sunderland, South (Mr. Mullin), who said earlier this evening that he might not speak in the debate; I am very grateful to him for changing his mind, and making some interesting observations based on long study and a deep knowledge of the issue.

Even before the recent cut in the price of the Murdoch papers, Rupert Murdoch controlled newspapers representing one third of both the daily and Sunday circulations in Britain. He also has the controlling interest in the sole satellite service, which is increasingly penetrating our television viewing figures. In terms of markets generally, the threshold that conventionally triggers an inquiry into whether a monopoly is being established is 25 per cent. Rupert Murdoch is already well over that threshold in terms of the printed media industry, and may soon achieve it in terms of an aggregate of the printed media circulation and television viewing figures.

This, however, is not just any market; the media constitute a particularly sensitive market. A free and open society requires free and open media which permit the expression of a diversity of opinion.

That brings me to another problem that acts as a backdrop to this exchange. I mentioned earlier that there are two requirements from our media if we are to have a healthy democracy. First, we should have a variety of newspapers and, secondly, those papers should contain a diversity of views. There is no diversity of editorial view in the Murdoch press.

It is the same standard line—right-wing and Conservative in political views, intolerant and judgmental in social views—and it is united in a third factor which is a wild enthusiasm for Sky Television. That enthusiasm for Sky is so common and so deeply ingrained in the Murdoch newspapers that the day after he relaunched Sky Television last year produced 12 sq ft in the Murdoch press reporting the relaunch, with no fewer than five separate articles in The Times. I suspect that not all that was entirely the result of the free play of editorial judgment as to the news value of the event.

The question we have to ask is whether we want the market share of that single news corporation to get bigger. That is what is happening. I said earlier that, before the price cuts began, the Murdoch newspapers had one third of the circulation of the dailies and the Sundays. I have to report to the House that, as near as one can identify the figures, before the last cut to 20p in the price of The Times, that figure had increased to 36 per cent.

It is likely, given the momentum of the latest price cuts, that we shall shortly see the circulation of the Murdoch press rise from a third of total circulation to something approaching two fifths. Do we want that expansion and, in particular, do we want that expansion at the expense of other newspapers folding? My answer is an unequivocal no. That answer is also informed by a broad view of the need for a diverse media and of the importance of a diverse media for a healthy democracy.

It is not necessary for the Minister to embrace my prejudice for pluralism within the media as an important ingredient in our democracy. He could agree with my conclusion on the much narrower premise about what is important for fair competition. The Minister has a robust view of the importance of fair competition. He has founded an entire ideological career on the principle that fair competition gives the optimum results in terms of economic performance and consumer choice.

Very well: at this hour of the night, for the purpose of the debate, I shall accept the premise from which the Minister sets out. If that is the basis on which he has founded his ideology, he must be troubled by the behaviour of Rupert Murdoch, particularly in relation to the pricing of The Times, because that is unfair competition and predatory pricing, which is intended to distort the market and to force out of business other newspapers that are seeking to provide a price that genuinely reflects the cost of producing a newspaper.

If the Minister and his colleagues fail to respond to the challenge for free and fair competition, they will be making a mockery of their own free market ideology.

12.57 am

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton)

It is customary on these occasions for the Minister to begin by saying that he is glad to be here to have this opportunity to answer the debate. On today of all days I say that with special feeling.

I listened with interest to the speeches by hon. Members on both sides of the House, even that of the hon. Member for Cannock and Burntwood (Dr. Wright), who singled me out to chide me for displaying a lack of attention to what he was saying. I have to admit—he knows this from sitting for many months on the Committee considering the Deregulation and Contracting Out Bill—that on occasions when he was speaking my attention did wander.

Fortunately, his speech wandered rather more, so it was possible for me to cut in at a later stage and still pick up the same point. I do not think that I missed anything of importance in what he said. I discovered that, like Wagner's operas, his speeches had sublime moments but somewhat turbid half-hours. Nevertheless, hon. Members of both parties have made important points on what I fully accept is a matter of some importance and general interest.

To begin, it is worth pointing out that Britain has a strong national press. We have 21 national newspapers, including dailies and Sundays and, as the hon. Member for Livingston (Mr. Cook) said, we also have a strong regional press. We therefore have a very lively printed medium. There is, of course, intense competition for sales and advertising revenue.

A feature of recent years has been the increase not only in competition but in diversity. I am a great believer in diversity—I wish that there were more newspapers that were kind to the Government, but I suppose that is rather too much to hope for. In the second half of the 1980s, national newspaper publishers improved their profit and loss accounts through two windfalls.

The first was the end of overmanning, which was associated with the move from Fleet street. Regrettably, I did not notice too much support for that move on the Opposition Benches. I think that that move was one of the major reasons that a newspaper such as The Independent was able to get going in the first place. The end of restrictive practices and the application of new technology meant that the cost of newspaper production was dramatically reduced. I welcome that, because it helps to promote diversity.

The second windfall was the emergence of colour in newspaper advertising. The hon. Member for Livingston neglected to mention the importance of advertising revenue to newspapers as a factor that will have to be taken into account in any attempt to analyse the motives of those who recently indulged in price cutting and the extent to which they seek to make up through advertising revenue the losses made on cover sales. I shall come to that issue a little later.

Mr. Dalyell

I do not doubt for a moment that the Minister's belief in diversity is absolutely sincere, because it fits in with in his other beliefs, but can The Times at 20p seriously be expected to make money without first killing at least one broadsheet and thereby reducing diversity? If the answer is no, is not the Murdoch policy of selling The Times at 20p a clear case of predatory pricing, which reduces diversity? If that is the case, and if the Minister wants diversity, why does he allow Murdoch to adopt that policy?

Mr. Hamilton

I shall not base my remarks on assumptions. Some of the hon. Gentleman's arguments and assertions might be regarded as strong, but they cover exactly the questions that the Director General of Fair Trading will consider before advising me on whether there is scope for using competition legislation to do anything about recent events. I shall deal with that point in some detail in due course, but first I revert to my introductory remarks for a moment.

In 1987, colour advertising in national newspapers was worth only £15.4 million, but in 1991 it was worth £155 million, so the increase has been substantial. Advertising now accounts for 50 per cent. of newspapers' revenue, but, in the face of competition from other media, printed medium publishers are experiencing a decline in advertising revenue, although that may be partly recession-related—it is very difficult to tell.

Copy sales—the other part of national newspapers' revenue—are also under increasing pressure. The circulation of popular dailies and Sundays is down, but the sales of quality titles—at least before the price war began —were up. Between 1980 and 1990, the combined circulation of popular dailies fell by just over 250,000, despite the appearance of the new title Today in 1986. Between 1990 and 1993, sales fell by a further 836,000.

We have witnessed among existing players an intensifying competition for advertising and circulation, and not many want to enter the market where ownership is concentrated. Major groups want to diversify into other areas; broadcasting has featured largely in the debate.

The greatest economic threat, but also in many ways the greatest opportunity, comes from electronic media. No doubt there will be rapid and significant changes in that respect in the years to come. Who knows whether the demand for printed newspapers will survive much longer in its present form, when people have access to news sources by electronic means?

I am no great expert on the subject. No doubt the hon. Member for Rotherham (Mr. MacShane) and others who have spent a long time working in the production of news and in the publishing world generally are better informed than I, but I have certainly been impressed by the rapidity with which technology has transformed the life of the industry.

Opportunities undreamed of a short time ago are now regarded as commonplace. At this stage, we cannot forecast the dramatic impact that that may have on the important questions of public interest that hon. Members have raised during the debate—especially the diversity of supply of factual and interpretive news. That, however, is a wider question.

Past newspaper competition cases have been mentioned, so it may be worth my while to spend a couple of minutes on some of those, and especially to talk about Mr. Murdoch, as he has been painted as the villain of the piece in the debate, not only in the House but more widely.

When Mr. Murdoch acquired the News of the World, his first newspaper, he did not require consent, because he was not an existing newspaper owner in the United Kingdom. He then acquired The Sun in 1969, having been given permission to do so, when a Labour Government were in charge of competition legislation. Then, as my hon. Friend the Member for Eltham (Mr. Bottomley) said, in 1981 he acquired The Times and the Sunday Times, and in 1987 he acquired Today.

In each of those cases, consent was given without a Monopolies and Mergers Commission inquiry, because the Secretaries of State at the time—that includes not only Conservatives but the Labour Secretary of State in 1969 —were satisfied that the newspaper being taken over was not economic, and that an MMC reference would have jeopardised its existence.

That is a factor that one must bear in mind when thinking about the development of ownership in the industry. Those newspapers were regarded as hopeless loss-makers that would have gone out of business but for intervention—in those cases, intervention by Mr. Murdoch, but no doubt there are other cases.

Mr. Peter Bottomley

Just for the record, may I say that there was no dispute about the assertion that the Sunday Times was highly profitable and had a circulation above the trigger level? I do not want to go back over the debate about what happened in 1981, but that is worth saying.

Mr. Hamilton

I am simply trying to sketch in a bit of the background, so that the historians of the future will have the full picture.

In December 1990, the Secretary of State for Trade and Industry decided, on the basis of the information then before him and in accordance with the recommendations of the Director General of Fair Trading, not to refer to the MMC under the merger provisions of the Fair Trading Act 1973 the acquisition by British Satellite Broadcasting of Sky Television, and the acquisition by News International of a 50 per cent. share in British Satellite Broadcasting Ltd.

In May 1993, after a period of public consultation, the Secretary of State gave his consent for the sale of the Observer to The Guardian and Manchester Evening News by Lonrho. In that case, the Secretary of State was satisfied that the Observer was not economic as a going concern and a separate newspaper, and that, if the paper was to continue, the sale should proceed without a reference to the MMC. The same considerations were applied in that case.

In March this year, the Secretary of State, again after public consultation, gave his consent without an MMC inquiry to two separate applications to acquire a controlling interest in Newspaper Publishing plc, the owner of The Independent and The Independent on Sunday. That is the background to the current position on ownership.

Mr. Dalyell

Before we leave the background, may I ask a one o'clock in the morning question? Is there any unease—I do not put it higher—among the Minister and his Cabinet colleagues that so much of the British press and media is now foreign-owned? There is not only Mr. Black, but Mr. Murdoch and Mr. O'Reilly. I am not pointing a finger at them, but just saying that there is considerable unease among some of my colleagues about the extent of foreign ownership by people who do not have a stake in this country.

Some of us think that the European press should be European-owned. It might be sensible to talk to our European partners and to lay down some regulations, as the Americans do de facto, that the press in Europe should be European-owned.

Mr. Hamilton

Not being a xenophobe, I do not generally consider the nationality of individuals as terribly relevant in competition cases, even for newspapers, for which especially stringent conditions have to be satisfied to preserve media diversity. As the hon. Member for Livingston pointed out, the existence of conditions on nationality in the United States was not a bar to Mr. Murdoch's acquiring significant interests there. I cannot say that I share—

Mr. Robin Cook

He had to become an American.

Mr. Hamilton

That is true, but it did not stop him acquiring the assets that he wanted. The mere change of his nationality would not, I should have thought, have satisfied the hon. Member for Linlithgow (Mr. Dalyell) in that case. It is not terribly relevant to the questions that have been the subject of this debate about media diversity. After all, one could have a British Mr. Murdoch, who could behave in exactly the same way. Presumably he would then be subject to exactly the same strictures form the hon. Member for Linlithgow.

Mr. Dalyell

My point is that, if Mr. Murdoch now applied for British nationality, the betting is that he would soon get into great difficulty with his American ownership. He cannot have the best of all worlds.

Mr. Hamilton

We are becoming increasingly Byzantine in the processes of reasoning that we are applying here. I shall content myself with saying that I do not think that nationality goes to the very heart of this debate. I should have thought that the hon. Member for Cannock and Burntwood was much more concerned about what is done with the assets, in whoever's hands they may be. That is what he wants us to address as a Government, particularly in the cases before us today.

The recent background to the current price war is that the Director General of Fair Trading held a preliminary investigation, following a complaint from The Independent that the reduction in the cover price of The Times to 30p constituted predatory pricing. On that occasion, as the hon. Member for Livingston pointed out at some length during his useful speech, the DOFF decided against taking formal action, because he believed, on the basis of the information then available, that the price cut reflected a commercial decision by News International rather than predation.

He commented at the time of his decision: I am all in favour of price competition, but at times there is a fine line between aggressive price competition and predatory pricing. That has been the subject of the correspondence that the hon. Member for Livingston has had, and of his arguments this evening.

Following the reduction in June of the cover price of The Daily Telegraph from 48p to 30p and the reduction in the price of The Times from 30p to 20p, the hon. Member for Livingston has argued that that fine line has now been crossed. However, that argument assumes that the actions of The Daily Telegraph and The Times are of predatory intent towards The Independent. That argument requires some investigation if it is to be proved. I do not think that these questions are ever clear-cut. Certainly, as such questions depend on defining the intentions of the parties, they are always made subject to interpretation.

After the reduction in The Times' cover price, daily circulation increased to more than 500,000 copies. Of course, the advertising revenue of The Times, or at least its potential for doing so, has increased as a consequence. It is widely believed that the fall in the daily circulation of The Daily Telegraph to below the critical 1 million mark prompted its price cut, in an effort to boost circulation and, of course, to protect the paper's extensive advertising revenue.

It is difficult to be as categoric as the hon. Member for Linlithgow and others have been about what is happening here. Rather than Governments prejudging these issues, the appropriate mechanism for deciding whether there is a case to take further action is for the Director General of Fair Trading to conduct the investigations that he has done once before and is now doing once again in what may be the different circumstances of the later price cuts.

We have seen a Scottish price war developing more recently. News International's launch of Scotland Today on 18 July prompted similar activity north of the border. Originally, the title was to sell at 20p, but the Daily Mirror reduced its cover price to 10p for launch day; that was immediately matched by Scotland Today. Yesterday, both papers announced that they would continue to maintain the 10p cover price in the meantime.

The biggest selling tabloid is the Scottish Daily Record, which is part of the Mirror Group. Apparently, that remains aloof and continues to sell at 27p. Its record circulation is about 750,000, which exceeds the sales of all the other Scottish tabloids combined.

We have perhaps slightly different conditions in Scotland than in England and Wales, but there are marked differences between different parts of this market, both geographically and in terms of quality or tabloid. The current developments in Scotland are not subject to the current inquiries of the Director General of Fair Trading into broadsheet price reductions, although undoubtedly he is aware of them. As he is statutorily obliged to do, he keeps all markets under review.

I do not know whether the hon. Member for Livingston has made representations to to the director general about the position in Scotland, but if he does so, I am sure that the director general will consider them. I am absolutely certain that the director general will read tonight's debate in Hansard when it is produced, and consider extending his inquiries to cover what is happening in Scotland as well. But that is a matter for him; it would be wrong for me to prejudge what he might do, as I am afraid that I do not know.

The Director General of Fair Trading keeps an eye on markets. He receives complaints, he examines the prima facie evidence, he conducts preliminary inquiries to determine whether further action is necessary, he refers cases under the monopolies provisions of the Fair Trading Act 1973 to the Monopolies and Mergers Commission where he believes that that is justified, and he advises the Secretary of State on remedies. At his behest, he monitors any undertakings which might be given or orders made.

The Murdoch press controls about 31 per cent. by sales volume of the newspapers in this country. That matter was investigated as part of the Commission's inquiry which took place last year. At that time, the Commission considered that that scale monopoly—any monopoly of more than 25 per cent. of the market can be investigated by the Commission—did not operate against the public interest. It may be that, in the current circumstances, the Commission would come to a different view, but that is a matter of speculation.

In answering the rather more subjective questions raised in this debate, my problem is that, as the competition Minister, I have legal responsibility, and I must be even-handed in my consideration of questions which might fall to me to decide. If I indicate that I have made my mind up in advance, or that I am partial to one party or another, any decision that I might ultimately make may be made subject to judicial review.

If, for the sake of argument, I were to decide against Murdoch's newspapers, without proper investigation and without giving all the interested parties the opportunity to participate in that investigatory process, any decision that I made may be overturned by the courts.

Dr. Wright

I understand what the Minister has said about the need not to prejudge and the legal position, but I am not clear whether he is willing to agree with every hon. Member who has spoken, and with almost everyone else outside, who argue that, if there was doubt about the intentions behind the first move by The Times last year, there can be no doubt about the intentions behinds its second move, this year. As the Minister has already said, that thin line has now been conspicuously crossed. Does the hon. Gentleman believe that there is now prima facie evidence of predatory pricing, which certainly warrants thorough investigation?

Mr. Hamilton

It certainly warrants investigation by the Director General of Fair Trading to find out whether that evidence exists. That is exactly what is happening now. The hon. Gentleman is stating as a matter of opinion what he thinks is the intention behind the Murdoch policy on the pricing of The Times. He does not have any facts on which base that assertion; he is interpreting what has happened and applying his judgment to the reasons for that.

There is bound to be an element of subjectivity in coming to a conclusion, but I would much prefer to wait until I am advised by the Director General of Fair Trading, who will have made preliminary inquiries in the normal way. He will take a view on perhaps a rather more informed basis than hon. Members are able to take, because they will not have had the opportunity to quiz those who should give an opinion if we are to decide on a fair and rational basis. We must remember that we owe even to Mr. Murdoch the same fairness that anyone else would expect under our competition legislation in the exercise of the discretionary powers of Ministers.

I will not prejudge the issues this evening. The hon. Member for Livingston said that I am known for having a robust view of competition, which is true. I believe that competitive markets are not only the means by which we produce wealth, but the healthiest way for democratic societies to be sustained. It is no accident that diversity of opinion vanished from those countries where the economy was placed under state control and subject to political direction. I have a prejudice in favour of diversity, which is sustained by competitive conditions in the market.

I will start a general discourse tonight on competition policy and the circumstances in which I might decide that a scale monopoly or a merger might be against the public interest. That could not be decided simply on grounds of market share, because there are sometimes other considerations that should also be taken into account—for example, the threat of competition from those who may not be in the market at the moment but who might be able to enter it. If it is easy to enter a market, even a single monopoly producer may not be secure in his monopoly. The more precarious his position, the less the threat to the public.

Things are different in the case of newspapers; that is why different provisions apply to newspaper mergers under the Fair Trading Act 1973. We do not want to encourage monopolies, but to encourage and sustain diversity of supply.

On 30 June, the Director General of Fair Trading announced that he would conduct inquiries into the recent cuts in the cover price of The Times and The Daily Telegraph. Once he has completed his inquiries, he will advise Ministers whether further action is warranted under the competition legislation. I cannot speculate on the outcome of those inquiries, nor can I announce to the House how quickly he will complete them.

I can only say that my experience of Bryan Carsberg, in the time that he has been in the Office of Fair Trading, tells me that he will conduct the inquiries as quickly as is consistent with the conscientious and fair carrying out of his responsibilities under the relevant legislation. The investigation that was held in the autumn of 1993 was carried expeditiously, and I have no reason to believe that the coming one will be carried out in any different way.

As for the points made, especially by the hon. Member for Sunderland, South (Mr. Mullin), about cross-media considerations, I am inhibited from making much of a substantive reply because, as the hon. Gentleman will know, my right hon. Friend the Secretary of State for National Heritage is conducting a review of the cross-media ownership rules.

An announcement of the outcome of that review, including any legislative implications that might flow, is likely to come about in the autumn. The hon. Gentleman will not have to wait for the Government's views to be made clear. Unless there is another reshuffle and I am luckier that I was today, it will not fall to me to answer the hon. Gentleman.

I think that we have had a useful debate, even though it has not been easy for me to respond in a meaningful way to the contributions of Opposition Members.

Mr. MacShane

We appreciate what the Minister has said about the inquiry. I would like him to tell the House whether he would personally regret in six or 12 months' time—this is not really a hypothetical question—the ending of the printing of The Independent as a result of the price war. Will the hon. Gentleman make a personal statement?

Mr. Hamilton

I am not sure that it would tell the hon. Gentleman very much, if I were to venture an opinion upon that. I would rather have more newspapers than fewer in an ideal world. That is not the question that I shall be asked if issues are raised under competition legislation. I shall have to make a decision in a particular case.

In the earlier takeovers that I mentioned at the beginning of my speech, the then Secretary of State had to come to a decision on whether what was proposed was desirable in the public interest. That would apply to the monopoly provisions of the Fair Trading Act as much as to the merger provisions. I cannot give a meaningful answer to the hon. Gentleman's question.

As I have said, I think that this has been a useful debate. I am sure that the Director General of Fair Trading will have his attention drawn to it and that he will take the views of Members, as expressed in the debate, into account in coming to a decision and advising me accordingly. I am sure that hon. Members will not have to wait very long for that to come about.