EC EYES U.K. OWNERSHIP PLAN

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LONDON-The British government has proposed new rules regarding cross-media ownership that could become a model for European regulations now being prepared.

If the new U.K. rules are adopted, British media companies would be regulated based on the total audience they reach regardless of the type of media. The government proposes restricting media companies to 10% of the total media market.

Britain is the first European country to propose regulating media conglomerates through the use of a single percentage number that encompasses all forms of media. The concept is being studied in Germany and by the European Commission.

Media cross-ownership in Europe is currently regulated differently in each country, resulting in a patchwork of laws that media companies say unfairly prevents them from expanding. The EC's propo-sals, which would replace national regulations, could be announced as soon as six months from now.

In Britain, adoption of the 10% rule isn't likely for at least a year, following consultations with media companies and legislative debate. Because the proposal requires that a company's radio, TV and newspaper holdings all be added together to arrive at an indication of total media influence, the plan raises questions about how media influence would be measured and what "exchange rate" might be used for different media sectors.

The idea of regulating media concentration through a single pan-media influence percentage appeals to regulators because the advent of online services and other new forms of media is making existing forms of regulation obsolete.

"The current regulations are structured for an era of very little technology change," said Andrew Sharp, consultant for Hydra Associates, a London-based media consulting firm. "The arrival of online media poses a lot of questions as to who can own what. Media are not necessarily dynamic, so any percentage based upon a specific form of media must become redundant after a while."

Current U.K. law prevents newspaper groups from owning more than 20% of TV, radio and cable companies. As an interim effort to change that law, the British government has proposed replacing it with a law that would make newspaper groups with less than 20% of nationwide circulation eligible to buy TV stations with up to a 15% share of the total TV market.

That interim proposal, if adopted, would restrict expansion into broadcasting by the U.K.'s two largest media conglomerates, News Corp. and Mirror Group, which have 37% and 26% shares, respectively, in the British newspaper market. News Corp. has been sharply critical of the proposal.

"News Corp. and Mirror Group see the proposal as holding them back while their competitors get a leg up on them," said one U.K. media expert who spoke on the condition she not be named. "They see it as unfair that the government is holding back the companies that have reached a critical mass and are able to take on people like Time Warner."

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