Reform of Competition Act could give Minister more power to block takeovers

The advisory body on media mergers has said the minister's mandate should be beefed up, writes Siobhan O'Connell

LOOMING LARGE on the media horizon for 2009 is a possible takeover bid by Denis O'Brien of Independent News Media (INM), where the businessman has accumulated a 25 per cent stake.

So O'Brien is unlikely to have been cheered by the report of the Advisory Group on Media Mergers, which was published by Minister for Enterprise Mary Coughlan earlier this week.

At the moment, all media takeovers have to be sanctioned first by the Competition Authority and then by the Minister.

Since the 2002 Competition Act came into force, of the 89 media mergers which were notified to the authority, 86 were given the green light immediately while the other three were sanctioned with conditions attached.

All these decisions were then rubber-stamped by the minister.

Under current legislation, the Minister is mandated to consider media mergers having regard to "relevant criteria" which essentially relate to the diversity and plurality of views in the Irish public sphere; the strength and competitiveness of media businesses indigenous to the State; and the dispersion of media ownership among individuals and other undertakings.

During the public consultation process, O'Brien's company Communicorp argued that there was no need for a ministerial power to approve media mergers as the public interest is adequately protected by the Competition Authority and the Broadcasting Commission.

However, the advisory group has recommended that the minister's mandate should be beefed up, specifically with a statutory definition of what is meant by media plurality and a revised set of relevant criteria.

Included in the advisory group's recommended criteria is the following: "The undesirability of allowing one individual or undertaking to hold significant interests within a sector or across different sections of the media."

On its own, that proposed criterion would be sufficient for Coughlan to block any move by O'Brien for INM, if she was minded to.

The Minister says she plans to amend the Competition Act sometime this year.

In the meantime, the latest media deal up for Competition Authority approval is the sale of the Tuam Herald to Alpha Newspaper Group, which publishes weekly regional newspapers in Northern Ireland and the Midlands and is headed by Lord Kilclooney, otherwise known as John Taylor, the former Ulster Unionist politician.

If approved, the sale will bring to six the number of titles Alpha has bought in the Republic since 2003. The Tuam Herald transaction continues the trend of consolidation in the sector. Seventeen of the Republic's regional newspapers are owned outright by Independent News Media, while Thomas Crosbie Holdings and Johnston Press each own 16 local titles.

This concentration should not be a cause for public concern, according to Coughlan's advisory group.

"Given the relative ease of entry into this market, the spread of ownership does not appear to suggest any lack of plurality," says the group's report.

Whether the local newspaper market is easy to crack is a debatable. Before Christmas, the Tallaght Voice and Kilkenny Voice ceased publication. The titles were the last two surviving titles from a stable of 10 established by Voice Provincial Newspapers Group, which was set up in 2005 by former Sunday World managing editor John Shiels and backed by Niall Mellon.

In fact, one of the reasons local newspapers fetch fancy prices is the lock they have on their local markets. Cathal Friel of Raglan Capital, who organised the sale of the Tuam Herald, indicated that buyer interest in the 200-year-old Galway title, while good, wasn't as strong as it would have been a year ago. Despite this, the business is believed to have fetched in excess of €6 million for vendors David and Ian Burke.

In recent years there have been more buyers than sellers for provincial newspapers. As the credit crunch puts pressure on acquisitors with large borrowings on their balance sheet, this year Friel expects some recycling of assets which were bought for chunky prices at the peak of the boom.

In another sign of the changed times, Friel confirmed that he has not yet found a buyer for five local radio stations - KCLR, Tipp FM, Mid-West, KFM and Ocean FM - which were up for sale as a job lot.

siobhan@businessplus.ie