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26 March 2020

Culture Secretary Clears DMGT Acquisition Of The i

The Culture Secretary has cleared DMGT's acquisition of the i as Ofcom called for a broader assessment of plurality in newspapers in the current approach to mergers and acquisitions in the newspaper sector.

Yesterday, Oliver Dowden said that he would not be referring the acquisition by DMGT of the i for a phase two investigation by the Competition and Markets Authority.  

In a Ministerial statement, Oliver Dowden said: "I accept the CMA’s findings that whilst it is, or may be, the case that a relevant merger situation has been created, the merger does not give rise to a realistic prospect of a substantial lessening of competition in any market.

"I have also agreed with Ofcom that the merger does not raise concerns in relation to plurality of views in newspapers.

"In light of this, and having considered representations submitted by interested parties in response to the PIIN, DCMS has written to the parties today confirming my decision not to refer the merger for a Phase 2 investigation."

In its public interest report, published alongside the Ministerial statement, Ofcom said it had concerns that “an assessment of plurality on a narrow basis limited to one particular means of distribution” failed to take account of the reality of news consumption.  

Ofcom said: "The transaction should be considered in the context of the challenges faced by newspapers in a changing news market. Newspapers play a vital role in UK society, helping to ensure media plurality and contributing to a well-functioning democracy.

“Newspapers are adapting to the challenges brought by the growth of online news and decline in print circulation by diversifying revenue streams, cost cutting and consolidating. In this context we generally welcome investment to support the long-term viability of newspapers - something we have set out in previous assessments of the public interest in respect of newspaper mergers.

“This is the second time that Ofcom has been asked to assess plurality in relation to a newspaper transaction and our assessment takes into account the cross-media nature of news production and consumption. We have assessed the transaction in line with our media plurality measurement framework, which takes account of television, radio, print and online news media.

Ofcom said: “In our view, an assessment of plurality on a narrow basis limited to one particular means of distribution is unlikely to reflect the reality of how news is now consumed and produced.

“While we have concerns that a narrow assessment of plurality in newspapers may not reflect the reality of news consumption, the public interest concern referred to us is limited to plurality in newspapers. 

“As we have highlighted in our previous public interest tests of newspaper mergers, newspapers play a key role in the UK's democratic process, providing a range of voices that reflect views across society and encourage debate.

Referring to initiatives by the industry to tackle declines in ad revenues, Ofcom said: "While these strategies have increased the digital revenues of newspaper publishers from a total of £128m in 2011 to £300m in 2018, this growth is so far not offsetting declines in their print revenues. The dynamics of online advertising and the rise of large online players account for a significant part of the challenge. For example, Google and Facebook together are estimated to have captured 61 per cent of all UK digital advertising revenues in 2019."