News Corporation

News Corporation

¶Group history and context 2.1 News Corporation (News Corp) was founded in 1979 as a holding company for Mr Murdoch's Australian newspaper business, News Ltd, to manage News Ltd's growing portfolio of international assets particularly in the United Kingdom and the US.2 Mr Murdoch is both the Chairman and Chief Executive of News Corp3 which, as of 2009, is the world's second largest media conglomerate in terms of revenue, and the third largest in terms of entertainment. Although News Corp was initially incorporated in South Australia, reflecting the Australian origins of the business, in November 2004 the company was re-incorporated under Delaware Corporation Law. News Corp is now listed on the NASDAQ and has secondary listings on the Australian Securities Exchange.

¶2.2 News Corp now has global reach, and in addition to its holdings in its traditional British, American and Australian newspaper markets, it has substantial operations in India, Italy, Germany, Brazil and Hong Kong that span both traditional media as well as new media, telecommunications and the internet.4

¶Group governance 2.3 News Corp is headquartered in New York. The News Corp Board of Directors is made up 17 directors and includes those in executive and non-executive capacities.5 The Board sets the strategic direction for News Corp and its subsidiaries and is responsible for the corporate governance of the company. These processes are published on the News Corp website.6 In

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¶June 2012 News Corp announced that it intends to pursue the separation of its publishing and media and entertainment businesses into two distinct publicly traded companies. Rupert

¶Murdoch would remain Chairman of both companies.7

¶2.4 The Murdoch family owns a 29% stake in the company. As these shares are voting shares,

¶Mr Murdoch exercises effective control of the company. Prince Alwaleed bin Talal al-Saud of

¶Saudi Arabia owns 7% of News Corp's shares through his Kingdom Holding Company, making him the second largest shareholder in News Corp. C

¶The Management and Standards Committee 2.5 News Corp established the Management and Standards Committee (MSC) to take responsibility for all matters in relation to phone hacking at NoTW, payments to the police and all other related issues at NI.8

¶2.6 The MSC is autonomous from News Corp and NI.9 It works to ensure full co-operation with all investigations into these issues, including this Inquiry, the police inquiries, civil proceedings and Parliamentary hearings.

¶2.7 The MSC is authorised to conduct internal investigations to fulfil its responsibilities in relation to NI's papers: The Sun, The Times and The Sunday Times. It has power to direct NI staff to cooperate fully with all external and internal investigations, and to preserve, obtain and disclose appropriate documents.

¶2.8 An important part of the MSC role is to recommend and oversee the implementation of new policies and systems to ensure that editorial practices at NI's titles meet the highest standards.10 The MSC's role is to ensure that NI's titles are underpinned by a robust governance, compliance and legal structure.11

¶2.9 The MSC originally reported to Joel Klein, Executive Vice-President and a director of News

¶Corp,12 but at the time of writing, reports to Gerson Zweifach, Senior Executive Vice-President and Group General Counsel of News Corp, who in turn report to the independent directors on the News Corp Board through Professor Viet Dinh, an independent Director on the News

¶Corp Board of Directors.13 The role of the MSC is addressed in more detail later in the report.14

¶Financial results 2.10 News Corp estimates its global assets to be worth some $61.98bn.15 Its financial results reflect the global scale of the organisation. In 2010, it reported a turnover $32.78bn, an 8% increase on its turnover for 2009.16 In 2011, this had risen further to £33.41bn. News Corp posted profits of $2.54bn in 2010 and $2.99bn in 2011.17

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¶2.11 Although newspapers were once central to the News Corp business model this is no longer the case. In the 2009/2010 financial year, newspapers accounted for just 13% of News Corp's overall profit.18 By contrast, in 2001, newspapers had contributed to 30% of News Corp's total profits.19 In 2010 New Corp's television businesses provided around 56% percent of the company's total profit.

¶2.12 The closure of NoTW in July 2011 affected the profitability of the company's newspaper and publishing businesses. Profit fell 38%, to $110 million. The company reported a $91 million pre-tax charge related to its British newspaper business.

¶C Annual conference 2.13 In addition to its media interests, News Corp also plays a role in public policy discussion, organising and hosting an annual Management Conference, the aim of which is to provide a forum for the discussion of media issues and policy in relation to world events. The conference is not only for News Corp's senior executives and journalists but also for policy makers and other interested parties. The conference has been held in Cancun, Mexico, and Hayman Island, Australia, as well as Pebble Beach, California.

¶2.14 The News Corp Management Conference is a private event, and in so far as can be established, no records of the meetings are made available. However, details of the 2006 event in Pebble Beach were leaked together with an agenda to the Los Angeles Times.20 According to that newspaper, agenda items ranged from discussions on Europe, to broadcasting and new media and terrorism. Speakers have included Rupert Murdoch, the Governor of California, Arnold Schwarzenegger, Tony Blair, ex-President Bill Clinton, Al Gore, Senator John McCain and the Israeli President, Shimon Peres.21

¶News International 2.15 News Corporation's UK newspaper interests are held by its wholly-owned subsidiary, NI,22 which is the parent company both of Times Newspapers Holdings Ltd (TNHL) and of News Group Newspapers Limited (NGN). Times Newspapers Limited (TNL), the publisher of The Times and The Sunday Times, is a subsidiary of TNHL. NGN is the publisher of The Sun and The Sun on Sunday, and formerly published NoTW.23

¶2.16 In 1987, NI bought the Today newspaper, a mid-market tabloid that had launched in 1986 and pioneered the use of colour printing and computerised editing. However, the title struggled financially and did not make a profit. It was closed on 17 November 1995.

¶2.17 In September 2006, NI launched The London Paper. This was the first title to have been launched rather than bought by the UK subsidiary. The London Paper, an evening freesheet published fives times each week, was distributed at bus and railway stations across London. In September 2009 the paper closed in the face of intense competition from the other free titles distributed in London, including the Metro, the London Lite and the Evening Standard.

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¶2.18 The Sun considers itself a family newspaper. Mr Murdoch made clear his view in an interview with the title ahead of the launch of The Sun on Sunday that the new Sunday edition of the paper would be "family orientated" and "ethical".24 Indeed, in his evidence to the Inquiry, the current editor of The Sun, Dominic Mohan, expressed his firmly held belief that The Sun is a powerful "force for good,"25 and cited the work undertaken by the paper to enable its poorest readers to afford holidays as well as its recent work in schools promoting science learning. The

¶Sun also sees itself as a campaigning newspaper, championing causes it considers important to its readers26 such as the Help for Heroes campaign.27 C 2.19 Mr Murdoch described NoTW as:28

"a campaigning newspaper…. certainly it was interested in celebrities, just as the public is, and a much greater investment went into covering the weekend soccer….. Coverage of celebrities, yes. Salacious gossip? Meaning – I take gossip as meaning unfounded stories about celebrities: no. I certainly hope not."

¶James Murdoch described the brand of NoTW as:29

"an investigative newspaper with exposes and the like, wasn't only concerned with celebrities and salacious gossip, but also uncovering real wrongdoing, scandals, campaigning and so on and so forth."

¶2.20 NI has described The Times as "renowned for its ability to deliver accurate, intelligent and engaging information".30 Both The Times and The Sunday Times have a long and established a reputation for quality investigative journalism, particularly The Sunday Times' Insight Team, which has been responsible for stories such as the exposure of the spy scandal relating to the

¶MI6 agent Kim Philby, the scandal of Thalidomide, as well as more recent allegations of vote rigging at FIFA.

¶News International history: News Group 2.21 NoTW was purchased by Rupert Murdoch in January 1969. The Sun, which had been launched by the International Publishing Corporation (IPC) in 1964, was acquired by Mr Murdoch in

¶October 1969. The two newspapers were published as sister titles from that date until the closure of NoTW on 10 July 2011. At the time of its acquisition The Sun was almost bankrupt.

¶Changes to content, and in particular the introduction of a far more irreverent and informal style, as well as changes to editorial policy and production methods, led to a dramatic turnaround in the newspaper's fortunes.31 Within three years, The Sun newspaper was not only highly profitable, providing much of the necessary finance for further acquisitions elsewhere, but was successfully challenging the Daily Mirror as the UK's best selling newspaper.

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¶2.22 Mr Murdoch introduced a style and understanding of journalism that he had developed at the Adelaide News. In an otherwise staid newspaper market, the re-launched The Sun and NoTW were irreverent and anti-establishment. This new approach to tabloid journalism was well illustrated in the publication in NoTW of Christine Keeler's memoir of the 1963 Profumo affair. Indeed, some commentators have suggested this was a, if not the, defining moment in the development of a journalistic ethos at what was to become NI.32 The Keeler article certainly boosted sales, although Mr Murdoch received much criticism from his competitors of reporting 'old' news, especially of such a nature.33

¶2.23 The Sun under Mr Murdoch set out to appeal to a broader cross-section of society. Innovations

¶C in content intended to appeal to a mass market included the introduction of television coverage, and the advent of the first Page 3 girl in 1970. This marked the first anniversary of the re-launched tabloid and quickly became a controversial trademark of the paper, albeit copied by its competitors. During this period, the circulation of The Sun increased from 1 million in 1969 to over 3.8 million in 1980, peaking at 4 million in 1978 under Sir Larry Lamb's editorship.34

¶2.24 Mr Murdoch was not only responsible for the introduction of a new approach to tabloid journalism at both The Sun and NoTW, he also introduced important changes to methods of production to all his titles. Although these changes were criticised by some within the industry at the time and, indeed, led to a bitter and protracted dispute with both the print unions and the National Union of Journalists (NUJ), commentators have credited these changes, which have since been adopted by all newspapers, with ensuring the economic viability of the British newspaper industry.

¶2.25 NI's move to Wapping and decision to face down the print unions, had strong support in Government. Indeed, throughout the strike in the mid-1980s, NI was able to maintain almost full production and distribution capabilities as well as a complement of leading journalists. The company was therefore content to allow the dispute to run its course. With many thousands of workers having gone without pay for over a year, the strike eventually collapsed on 5 February 1987.

¶2.26 It has been suggested that the defeat of the unions would not have been possible without the support of the Conservative Government of the time.35 Irrespective of any political support, the changes implemented by Mr Murdoch set a precedent: within two years of the conclusion of the strike, most of the national papers had followed NI's lead, left Fleet Street, and changed their printing practices.

¶2.27 Although both The Sun and NI are conservative in outlook, the political loyalties of neither paper have been set in stone. Some commentators have argued that so influential has the tabloid become that it is able to decide the outcome of elections.36 Certainly, that was the clear inference of The Sun's front page headline following the Conservative election victory in April 1992, "It was The Sun wot won it".37

¶2.28 Although The Sun and NoTW backed the Labour Party in the 1997,^20012001 UKHL 67; 2002 2 AC 357, para 103 and 2005 general elections, the relationship between the New Labour Government and the NI titles had grown increasingly strained. It is reported that ahead of the 2005 election, Mr Murdoch had said that Tony Blair "deserved one last chance".38 In late September 2009, on the day of Gordon

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¶Brown's keynote speech to the Labour Party Conference, The Sun announced that it would support the Conservative Party in the 2010 election. The detail of the relationship between

¶Mr Murdoch and politicians, including how that influenced the editorial stance of his newspapers, is considered in detail in Part I

¶2.29 The Sun now has the largest circulation of any daily newspaper in the UK, selling approximately

¶2.7 million copies each day. The paper claims a readership of almost 9 million.39 NoTW, at its C time of closure in July 2011 had a circulation of just under 2.7 million and represented 28% of the Sunday tabloid market.40

¶2.30 The first edition of The Sun on Sunday achieved sales of 3.2 million but since has dropped to a level of sales similar to that of NoTW before its closure, at 2.6 million.41

¶News International history: Times Newspapers Holdings Limited 2.31 TNHL was established in 1967 when the Thomson Corporation purchased The Times from the

¶Astor family and merged it with The Sunday Times. The Times is the oldest of the major UK national newspapers and was first published in 1785. It has been published continuously ever since, save for a ten month period in the late 1970s.

¶2.32 Faced with escalating productions costs and a commercial model that was under increasing threat, the Thomson Organisation decided to put both titles up for sale at the end of 1980. NI reached an agreement with Thomson to acquire those papers. Under Section 58 of the Fair

¶Trading Act 1973 any newspaper merger at the time required the consent of the Secretary of

¶State for Trade. Further, and subject to two exceptions, the Secretary of State was prohibited from giving his consent to such a merger unless he had first received a report from the

¶Monopolies and Mergers Commission (MMC).

¶2.33 The Thomson Organisation imposed deadlines beyond which they said they would no longer support The Times (14 March 1981) or The Sunday Times (8 March 1981). The then Secretary of State, John Biffen, told Parliament that this factor, taken together with the financial figures for the two newspapers, convinced him that neither title was economic as a going concern and that to require an MMC reference would risk the closure of both titles, the loss of 4,000 jobs and the possibility of the permanent closure of The Times.42 He therefore gave his consent for the merger to go ahead, but he also imposed eight conditions:43

"First, the newspapers are to be published as separate newspapers. Second, future disposals are to be subject to the consent of a majority of the independent national directors of Times Newspapers Holdings Ltd.

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¶Third, the number of these independent directors is to be increased from four to six and the appointment of any independent national directors in the future is not to be made without the approval of the existing independent national directors.

¶Fourth, on editorial independence, the editors shall not be appointed or dismissed without the approval of the majority of the independent national directors.

¶Fifth, the editor of each newspaper shall retain control over any political comment published in his newspaper and, in particular, shall not be subject to any restraint or inhibition in expressing opinion or in reporting news that might directly or indirectly conflict with the opinions or interests of any of the newspaper proprietors.

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¶Sixth, instructions to journalists shall be given only by the editor or those to whom he has delegated authority.

¶Seventh, subject only to any annual budget for editorial space and expenditure the editor shall retain control over the appointment, disposition and dismissal of journalists on his newspaper and of all other content of his newspaper.

¶Eighth, disputes between the editors and directors of the companies are to be settled by the independent national directors."

¶2.34 Those conditions are included within the Articles of Association of Times Holdings Limited and still bind the company today.

¶2.35 The decision of the Secretary of State was controversial. The Labour MP, John Smith, called an emergency debate on the decision on the day that the Secretary of State's consent was announced. The Opposition, and indeed some Government backbenchers,44 argued that the threat of closure was a device concocted by Thomson and colluded in by NI designed to force the Government's hand. There were also allegations that the Prime Minister had influenced the Secretary of State's decision as a favour to Rupert Murdoch. For example, Geoffrey Robertson MP said:45

¶"In his first major decision the Right Hon. Gentleman has failed to stand up to the

¶Prime Minister. That is the reality. I shall examine the facts and show why later. This is a straightforward pay-off for services rendered by The Sun. If it is not, let us see the facts and figures to show that I am wrong."

¶2.36 Despite this opposition the deal had the support of the editorial staff and the unions, and went ahead. The purchase gave NI more than a 25% share of daily newspaper circulation and something over 30% of the Sunday market.

¶2.37 Although The Times has a reputation for taking a generally conservative approach to matters of public policy and social issues, its support for political parties at general elections has varied. Indeed, on occasion The Times and The Sunday Times have backed different parties. Most recently, The Times supported the Labour Party in 1997,^20012001 UKHL 67; 2002 2 AC 357, para 103 and 2005 and the Conservatives in 2010. By contrast, The Sunday Times supported the Conservative Party at each of those elections.46

¶2.38 In February 2012 The Times had a circulation of 397,549. Although this is the second highest broadsheet circulation, it is some way behind the Daily Telegraph, and accounted for only 4.3% of national daily newspaper circulation in that month. By contrast, its sister paper The Sunday

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¶Times had a circulation of 939,395 in February 2012, reflecting its different character. This is by some margin the highest national Sunday broadsheet circulation (the Sunday Telegraph has a circulation of just over 460,000), and gives The Sunday Times the fourth highest national

¶Sunday circulation, accounting for nearly 8.5% of the national Sunday market.47

¶2.39 Unlike The Sun, The Times and The Sunday Times have put their online content behind paywalls. This approach is not usual for UK newspapers, and The Times has the smallest online audience of any of the major UK newspapers: as of March 2012 it was reported to have only 119,000 subscribers.48 This compares poorly to the Guardian's website which attracts C upwards of three million unique users each day and the Daily Mail website which receives in excess of 70 million hits each day.

¶News International governance structures 2.40 The NI Board now meets monthly to address issues of significance. The Inquiry was told that in October 2010 the Board included a News Corp representative and that a second would shortly be appointed.49 Subsequently, the Inquiry was informed that both Mr Murdoch and

¶Janet Nova, Deputy Group General Counsel of News Corp, have stepped down from the NI board. Thomas Mockridge told the Inquiry that no NI executives sit on the News Corp Board:50

"I am satisfied that notwithstanding these changes to the board, the appropriate oversight of the News International business is being maintained both at the local division and group levels and the board of directors of NI Group Limited continues to play a key role in ensuring the appropriate corporate governance standards of the company and its subsidiaries."

¶2.41 Mr Mockridge told the Inquiry the NI Board has undertaken a review of compliance since July

2011. He said:51

"... what we have sought to do is to update/refresh the whole range of compliance policies and in particular improve the communications of the compliance policies. My observation has been that even where an existing policy is completely thorough and appropriate, if it's not well communicated, then it's much more difficult to expect people to comply with it."

¶2.42 The Inquiry has also been informed that the editors of The Times, The Sunday Times and The

¶Sun will be required to attend these monthly NI Board meetings and report on performance and compliance.52 No information has been provided on past corporate governance practice at NI or governance procedures at NoTW.

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¶2.43 The Corporate Audit Department of News Corp provides assurance on the effectiveness of operational and financial controls through audits carried out on the basis of an assessment of significant risks to News Corp. In 2012 such audits were planned at NI in relation to, inter alia, advertising revenue, circulation revenue, compliance with the UK Bribery Act and NI's digital media operations.53

¶2.44 There is a separate Board for TNHL, which is covered by the undertakings given to the Secretary of State for Trade following the acquisition of the titles in 1981. The TNHL Board must comprise no more than 20 directors of whom at least six must be 'Independent National Directors'. A majority of the Independent National Directors is required for the appointment

¶C and dismissal of the editors of either of the titles or the disposal by NI of the titles. The TNHL Board meets quarterly54 and the editors of The Times and The Sunday Times attend and are expected to account for editorial coverage to the Board.55 The Independent Directors meet regularly with the Editor of The Times both at board meetings of TNHL and separately to discuss any on-going issues at the paper,56 and with the Editor of The Sunday Times.57 There are separate boards for Times Newspapers, News Group Newspapers and NI Trading, which meet as required.58

¶News International's financial results 2.45 NI is now only a small but still important part of News Corp's global business.59 Although The Sun is highly profitable, the relative profitability of the group has been in decline for a number of years. News Group News posted pre-tax profits of £88.6m for the 2009/2010 financial year, as well as an increase in revenue from £639m to £654m.60

¶2.46 By contrast, The Times and The Sunday Times have run at a loss for a number of years and have not made a profit since 2001.61 However, the decline in revenues at TNHL appears to have been halted though not fully reversed. TNHL reported a pre-tax loss of £45m for the financial year 2009/2010 compared with a pre-tax loss of £87.7m for the 2008-2009 financial year.62

¶2.47 Despite the strong performance by NGN, NI recorded a pre-tax loss of £78.5m for 2009/2010, compared with a profit of £34.7m for the 2009/2009 financial year. Much of this loss was attributable to the costs of writing down a £45m loan made to its free title, The London Paper, after the closure of that title in September 2009.

¶2.48 Over the same period NI's salary bill has been reduced from £11.7m to £8.8m. However, overall staff costs at NI have increased from £16.7m to £19.4m as a consequence of increased share-based payments and a rise in pension costs.63

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¶News International editorial independence 2.49 The position on editorial independence differs across the NI titles. The Times and The Sunday

¶Times are guaranteed editorial independence pursuant to the 1981 undertakings. By contrast,

¶Mr Murdoch takes an active interest in the editorial direction of the NGN titles, though the position in relation to The Sun and NoTW was far from identical. He told the Inquiry that:64

¶"I never much interfere with the News of the World, I'm sorry to say,"

¶C but that he would exercise editorial control on major issues, such as the support for parties at a general election or policy on Europe.65 In contrast, he said of The Sun:66

"if any politician wanted my opinions on major matters, they only had to read the editorials in the Sun."

¶News International financial management 2.50 The News Corp Corporate Audit Department provides a check on operations, financial reporting and compliance.67 In particular this department's audits cover the Editorial Commissioning

¶System, Casual Management System (by which casual staff are paid), expenses system and

¶NewsPeople.68 The accounts of NI, NGN and TNHL are audited by Ernst & Young.69 On account of its US listing, NI is required to comply with the financial certification requirements of the

¶Sarbanes-Oxley Act 2002.70

¶2.51 The Editorial Finance Director is responsible for the accurate reporting of the editorial numbers.

¶A Corporate Reporting Team and a Financial Accounting Team ensure that NI complies with the relevant accounting standards. A Taxation Team ensures that tax compliance is followed.71

¶2.52 Day to day legal and policy compliance is a matter for editors, delegated to deputy editors and senior sub editors.72 Financial matters are dealt with by the managing editors.73 Payments to third parties for editorial content must be authorised by the relevant desk head and managing editor, apart from in the case of NoTW where a desk head could alone authorise payments up to £2,000.74 Payments or annual entitlements of over £50,000 require authorisation from the

¶Chief Financial Officer.75 Cash payments, without limit, can be made to third parties subject to prior approval by the managing editor and the editor or deputy editor.76 This has been strengthened since the introduction of the Bribery Act 2010, before which authorisation for cash payments was only required from the managing editor or deputy managing editor.77 In addition the journalist who requested the cash has to sign a book saying that they have had training in the Bribery Act and will comply with NI's bribery policy.78

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¶2.53 Expenses can be claimed through an online system, subject to authorisations from the Expense Administration Team and the Managing Editor's office. Expenses where a receipt is not provided can be paid at the authoriser's discretion.79

¶2.54 The Times rarely pays for stories, with the exception of book serialisation deals with publishers.80 The Sunday Times pays fees to external sources of information, including local C news agencies and freelance journalists.81 The Sun makes payments to a range of external sources of information, including press agencies, tipsters and regular informants.82

¶News International policies and procedures 2.55 News Corp has a number of relevant policies that apply to its (and hence all NI) staff: Standards of Business Conduct, Global Anti-Bribery and Anti-Corruption Policy and the Record Retention, Policy.83 In addition there are a number of NI policies that apply to all NI staff, including: the PCC Editor's Code, a Contracts Policy, an Approvals Authority Policy, an Expenses Policy, the Disciplinary and Dismissal Procedure, a Conflicts of Interest Policy and Data Protection Policies.84 Following the events at NoTW many of these policies are being or have been revised, leading to the addition of a Whistleblowing Policy and helpline,85 a Payment Policy86 which sets out the procedure which must be followed in order for journalists to pay sources for stories, a Workplace Conduct Policy87 and an NI Anti-Bribery policy which supplements the News Corp Global Anti-Bribery and Corruption policy.88

¶2.56 In addition NI has created a new role of Chief Compliance Officer, to be responsible for ensuring company-wide and title-wide compliance with the law and company policies89 and reporting directly to the CEO. The compliance officer has been tasked with reviewing and, where necessary updating, all NI policies, working closely with the in-house legal teams and the managing editors.90

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¶2.57 All new employment contracts will require compliance with company policies and, in the case of reporters or journalists, with the PCC Code, and existing contracts will be revised to include these provisions where they are not already there,91 although the Inquiry was told that for journalists with The Times, The Sunday Times and The Sun compliance with the PCC code is already a contractual requirement.92 The Sunday Times is also drawing up formal understandings with freelancers to require them to abide by the law and the PCC Code.93

¶2.58 Until recently NI had no procedures governing the employment of private investigators. New rules are being introduced which make the engagement of a private investigator subject to C approval by the Chief Executive.94 At The Sunday Times the rules on the use of subterfuge have been revised, with prior approval now required from the legal team, the editor and the managing editor,95 and discussions as well as any legal advice are to be documented.96

¶Historically, in the NoTW, private investigators were employed by the news desk to provide various services, including surveillance, supporting undercover investigations and provisions of data.97 Evidence has been provided that the news desk, rather than reporters, instructed these private investigators.98

¶News International management structures and processes 2.59 This section provides a brief overview of the management structures and day-to-day working practices at NI. The NI Executive Management Team (consisting of the heads of NI's various divisions, the three editors and the CEO) meets weekly to discuss day to day business issues and to draw the CEO's attention to issues of significance.99 At title level the three editors have ultimate responsibility for ensuring that their staff behave lawfully, professionally and ethically.100

¶2.60 At The Times, the heads of each section (e.g. business editor, head of news) report to the editor, who is assisted by the deputy editor, managing editor and executive editors. The vast majority of reporters are staff, and are on site daily, discussing news stories with their editors.

¶Journalists are expected to discuss and explain lines of enquiry and methods of obtaining a story. There is an emphasis on transparency and continuous debate and discussion.101

¶2.61 At The Sunday Times the managing editor (News) is in overall charge of news coverage, and the news editor and foreign editor report to him. Difficult ethical or legal questions are discussed with the editor and the in-house legal team. The system operates on trust but with stringent control by the news desk, managing editor (News) and other departmental heads.102

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¶2.62 At The Sun there is a daily news conference chaired by the editor at which proposed stories are discussed. The editor is responsible for ensuring that The Sun's corporate governance system works and is adhered to. Day to day issues of corporate governance are delegated to the managing editor.103

¶News International incentives 2.63 Staff on The Sun are paid bonuses depending on personal performance, including the stories that the individual has produced.104 NoTW ran a monthly 'merit' scheme with awards being C in the region of £500.105

¶News International oversight by readers 2.64 The Times has a 'feedback editor' who acts as an ombudsman, with a weekly column airing readers' concerns.106 "You, the editor" invites readers to give their views on the previous day's paper.107 At The Sunday Times the editor has appointed the associate editor as ombudsman to take an independent view of any complaint and recommend a correction and apology or defend the newspaper as appropriate.108

¶BSkyB: history and context 2.65 The detail of News Corp's ownership of satellite television broadcaster BSkyB is dealt with in detail in the context of its recent bid for full ownership of BSkyB.109 However, at this stage I examine the early involvement of News Corp in satellite broadcasting in the UK.

¶2.66 NI acquired 65% of the struggling Satellite Television Ltd in 1984 for a nominal £1 and re-launched the company as the Sky Channel. The company continued to be loss making, losing £10m in 1987. Problems with the satellite technology meant that it was primarily a cable channel in the UK until 1989, when it moved to the newly launched Astra Satellite, based in Luxembourg, which made reception in the UK much easier, and its four channels were marketed primarily to the UK. Until 1990 it was the only satellite serving the UK.

¶2.67 The Independent Broadcasting Authority (IBA) awarded a DBS (Direct Broadcasting via Satellite) service licence to British Satellite Broadcasting (BSB) in late 1988. BSB was required by its licence to use a different technology to that then successfully in use by Sky, and was bedevilled by technical problems, not being able to launch until March 1990. The BBC had also proposed its own satellite service, going as far as signing a 'heads of agreement' on the construction of two satellites in March 1986, but this service never launched.110 This meant that the two satellite services being marketed to the UK ran on different technical standards and needed different dishes (and different receivers) so that they were placed in direct competition with each other for customers who would only be able to receive one service or the other.

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¶2.68 In 1989 the Broadcasting Bill was introduced to Parliament, which contained provisions relating to the licensing of satellite services. The Bill placed a number of licence conditions

¶(impartiality and accuracy of news; not offending against good taste or decency; not inciting crime or disorder; and not offending against public feeling) on BSB, but not on Sky.

¶2.69 During debate on the Bill amendments were proposed to extend cross media ownership restrictions to the holders of a domestic or non domestic satellite service.111 In practical terms this would have required NI to divest the Sky Channel, but might also have had an implication for other publishers who held stakes in BSB. These amendments were defeated and the Act C became law without any cross media ownership provisions affecting the holders of satellite broadcast licences.

¶2.70 In November 1990, within days of the Broadcasting Act 1990 receiving Royal Assent but before the regulatory changes had taken effect, it was announced that BSB and Sky were going to merge. The Home Office was formally notified of the merger on 2 November 1990, with a formal public announcement being made by the two companies, and the merger taking place, on 3 November, resulting in the creation of BSkyB. At the time, the merger was covered by the Broadcasting Act 1981, under which BSB's direct broadcasting satellite service was provided under a contract with the International Broadcasting Authority (IBA), the regulator at the time. Under the 1981 Act an IBA contract for satellite broadcasting could be ended or suspended by the IBA or the Secretary of State if a newspaper proprietor had an interest in a contractor and "the existence of those shareholdings has led, or is leading to results which are contrary to the public interest." The IBA was not informed of the merger in advance of it taking place.112

¶2.71 Under the terms of BSB's contract with the IBA it was obliged to get the approval of the regulator for any merger. That approval was not sought in advance. In the event this proved immaterial as the merged company then broadcast solely from the Astra satellite, thus removing the need for an IBA licence.113 The merger also took the newly formed company out of the full licensing regime that the 1990 Act would have imposed on BSB as a domestic satellite service.

¶2.72 For over a decade BSkyB provided the only satellite broadcasting service directed primarily at

¶UK viewers. The service was available only with subscription, and with a combination of strong marketing and exclusive programming the proportion of households with Sky subscriptions grew from the extremely low levels in 1990 to nearly six million in 2002, and over ten million in 2011. The BBC moved to make its channels available free to air from satellite in 2003 but, as they were the only channels being broadcast from the satellite without encryption and therefore free to view, take up was limited. Over subsequent years ITV and Channel 5 joined the BBC in offering free to air satellite broadcasts, and Sky added a 'freesat from Sky' offer which allows consumers to take free to air satellite services from Sky. BSkyB now competes against both free to air digital terrestrial and satellite services and subscription based services via cable. Increasingly there is additional competition from on demand services provided over broadband.

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¶2.73 BSkyB is now a significant part of News Corp's direct satellite broadcasting business, which consists of the whole of SKY Italia, which now has 5 million subscribers, 39.14% of BSkyB, and significant holdings in Sky Deutschland; TATA SKY in Asia and FOXTEL in Australia and New Zealand. Direct Satellite broadcasting is a relatively small part of News Corp's activities, contributing only 11.5% of revenues in 2010. Financially BSkyB went from making a loss of over £700m in 1991 to delivering revenue of over £6.5 billion and profit of £1.073 billion in 2011.114 BSkyB is a Plc, traded on the London Stock Exchange, and News Corp owns 39.14% of the shares, which for practical purposes is a controlling shareholding. As of 30 September 2012, just over 10.5m subscribers held a subscription with BSkyB.115 C BSkyB governance 2.74 The BSkyB Board consists of 14 Directors. The Chief Executive and Chief Financial Officer are the only executive Directors on the Board. There are nine independent non-executives, including the Chairman, three non-execs from News Corp and the Chief Executive of NI.116

¶2.75 James Murdoch was CEO of BSkyB from 2003 to 2007, then becoming non-executive Chairman. He stepped down as Chairman on 3 April 2012, saying:

¶"As attention continues to be paid to past events at News International, I am determined that the interests of BSkyB should not be undermined by matters outside the scope of this company. I am aware that my role as Chairman could become a lightening rod for BSkyB and I believe that my resignation will help ensure that there is no false conflation with events at a separate organisation."117

¶He retains a non-executive Director seat on the BSkyB Board.

¶Sky News 2.76 Through its Sky News subsidiary, BskyB is both a broadcaster and provider of broadcast news content. Sky News broadcasts continuous rolling news, it is also a major provider of news services to commercial radio stations and has contracts to provide news content to Channel 4 and Channel 5.118 Like all other broadcast news providers, Sky News is bound by the terms of the Broadcasting Code.

¶2.77 According to Ofcom, Sky News had in October 2010 an average weekly reach of some 24% of the wholesale news market, equivalent to 11.7m people per week, and 9.9% of the retail news market, or some 5m people per week.119 Ofcom has estimated that Sky News' share of national and international news television viewing is around 6% of the news market.120 This is less than the 70% market share enjoyed by the BBC and the 18% by ITV.121 Sky News' share of the radio market is, in comparison, much larger. In October 2010 it had an average weekly reach of 33.4m people.122

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¶2.78 The Inquiry has heard some evidence on the corporate governance procedures operated at Sky News. This was provided by John Ryley, Head of News at Sky News. Mr Ryley was invited to give evidence to the Inquiry in relation to the unauthorised access of private email accounts by the journalist Gerard Tubbs in relation to two stories broadcast by Sky News in

¶2008 and 2010.123

¶2.79 Mr Ryley described in some detail the informal, but thorough processes in place at Sky News, and revealed that discussions around whether to pursue each story as well as decisions to authorise the unauthorised access of the email accounts in question were had and made, C together with the taking of appropriate legal advice, at senior editorial levels.¹²⁴¹²⁴ pp10-24, lines 14-9, John Ryley, ibid

¶2.80 Mr Ryley also said that as a consequence of the broadcast of the two stories in question, Sky

¶News would look to introduce a formal process requiring, should the situation arise, formal written authorisation to be sought either from the head of news or the appropriate editor designate.125

3. associated newspapers Ltd

¶History 3.1 The Daily Mail was launched in 1896 by Harold and Alfred Harmsworth. The company was incorporated as the Daily Mail & General Trust (DMGT) in 1922 and listed on the London stock exchange in 1933. Alfred Harmsworth (later Viscount Northcliffe) also founded the Daily

¶Mirror in 1903 and took over the Observer in 1905, and The Times and The Sunday Times in 1908. Alfred Harmsworth died in 1922 without an heir, and control of DMGT passed to

¶Harold Harmsworth, 1st Viscount Rothermere. The Times was sold to Viscount Astor in 1922.

¶Viscount Rothermere disposed of his interest in the Daily Mirror in 1939. The Harmsworth family have remained owners of a substantial part of DMGT, and have continuously held the post of Chairman since the company was founded.

¶3.2 Viscount Rothermere, the current owner of DMGT has given evidence to the Inquiry explaining the ethos and nature of the Mail Newspaper Group. Viscount Rothermere told the

¶Inquiry that he firmly believes in taking "pride in our products and services."126 He has said that DMGT has been built on his personal and family values, and that these values resonate and are replicated across the Mail group of newspapers.127 Viscount Rothermere also told the Inquiry that the popularity of the Daily Mail resides with the broad spectrum of news content that is offered by the title – it provides something for everyone. In their initial written submission to the Inquiry, Associated News further explained this appeal in their description of the Daily Mail:128

"…in touch with the hearts and minds of 'Middle England'. It reflects their concerns, hopes and lifestyle. Top of the agenda is reporting the news and asking the tough questions. With its campaigning stance, it is not afraid to expose the wrongs and shortcomings of people in power and with the vocal backing of its 5 million readers can be an effective force for change."

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¶3.3 The growth of the MailOnline, now the most popular newspaper website in the world, is also testament to the enduring appeal of the breadth of content, and in particular, celebrity news, offered by the Mail newspapers. Viscount Rothermere has described the MailOnline as having made a "global footprint."129

¶3.4 The Mail has traditionally been politically conservative, supporting the Conservative Party at every general election since 1945.130 When giving evidence to the Inquiry, the current editor-in-chief, Paul Dacre, has said that the Daily Mail propounds the virtues of family life, of traditional matrimony and traditional values.131

¶C The Mail Group today 3.5 DMGT today operates in over forty countries with a substantial portfolio of media and information companies providing content, information, analytics and events for businesses and consumers. In 2010 DMGT's revenue was nearly £2bn, with operating profit for the year running at £320m. DMGT employs 12,000 people and only just over a quarter of its profits come from its consumer facing businesses. DMGT comprises five divisions, only one of which, A&N Media, is involved with publishing newspapers. A&N Media includes Associated Newspapers, which publishes UK national newspapers.

¶3.6 Associated Newspapers is highly profitable and employs over 4,300 staff. In 2010, it showed a substantial increase in profits, despite a small percentage fall in revenues.132 In the 2010/2011 financial year, Associated Newspapers had revenues of £850m, with an operating profit of £95m. This makes Associated Newspapers by some way the most successful newspaper concern in the UK in purely cash terms, to say nothing of the global reach of its online content.

¶3.7 Northcliffe Media publishes ninety publications in the UK, including thirteen paid-for daily titles, two free daily titles, twenty-five paid-for weeklies, two weekly classified titles, eighteen monthly magazines and twenty-nine free weekly newspapers, in addition to a network of local websites that attracted five million unique users in September 2011. Northcliffe Media employs 2,531 people and through deduction from the Annual Report had in 2011 revenues of £248m and an operating loss of £2m.

¶3.8 Associated Newspapers publishes the Daily Mail, the Mail on Sunday, the Metro and MailOnline. The Daily Mail has a circulation of just over 2m, which is the second highest national title circulation (after The Sun at 2.7m), and accounted for some 21% of national daily newspaper circulation in February 2012.133 The Metro, launched in 1999, is a free daily newspaper distributed in all major urban centres in the UK. It has a circulation of 1.38m and readership of 3.4m.134 The Mail on Sunday had a circulation of 1.8m in February 2012.135 Following the demise of News of the World this was the highest Sunday circulation, but was topped by the Sun on Sunday at its launch in February 2012 with a circulation of just over 3.2m. The February 2012 circulation figures for the Mail on Sunday account for just under 17% of national Sunday circulation.

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¶3.9 The picture would be incomplete without some reference to the phenomenal growth of the

¶MailOnline. The MailOnline is the most popular UK newspaper website and the most visited newspaper site in the world. The website receives on average a daily viewing audience of 5.6m people, of which 2.2m are readers in the UK and 1.7m in the USA.136 The content produced for the MailOnline is edited separately to that of the Daily Mail and the Mail on Sunday. However, the MailOnline reproduces much of the content published in the printed titles, in addition to its own, often US focused content.137

¶C Governance structures 3.10 Associated News Limited publishes the Daily Mail, the Mail on Sunday, the Metro and

¶MailOnline. Associated News Limited is part of A&N Media, which is, itself, part of DMGT, a publicly listed company quoted on the UK Stock Exchange.138 Our focus here is on A&N Media, and within that on Associated Newspapers. A&N Media also includes Northcliffe Media.

¶Associated News Boards 3.11 The DMGT Board comprises nine executive directors and seven non-executives. The Chair and Chief Executive of A&N Media and the editor-in-chief of Associated Newspapers sit on the DMGT Board. The DMGT Risk Committee has responsibility for all group risk, including risk arising from editorial matters, including where appropriate recommending changes to existing practices.139 In addition the Information Security Committee includes within its remit responsibility for data protection in the company, including third party data held by the company.140

¶Associated News editorial independence 3.12 The DMGT Board are not involved in the editorial process, nor do they have any proprietorial influence on published content. The editors of Associated Newspapers have complete editorial independence over the content published in individual DMGT titles. The editors of Associated Newspapers report to the Chair of DMGT and the editor-in-chief, not to the commercial management of the organisation.141 The exception to this is the Editor of the

¶MailOnline, who, in addition to reporting to the editor-in-chief on editorial issues, reports also to the Managing Director of Associated Newspapers on business matters.142

¶3.13 Mr Dacre, has given evidence as to the extent of this editorial freedom, and stressed that:143

"…just as I am given the freedom to edit by our management, I leave the individual editors of the titles – it can't be any other way. You can't edit by remote control."

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¶3.14 Mr Dacre has also suggested that the editorial freedom that he is granted as editor-in-chief of the Mail Group of newspaper by the DMGT Board is not necessarily something extended to newspaper editors working for other concerns. He has told the Inquiry that:144

"…I have turned down editorships of The Times and The Telegraph. One reason I did so is that at the Mail I enjoy total freedom from proprietorial and managerial interference, a freedom that is not necessarily found in other newspaper groups."

¶3.15 To this extent, he has suggested that the personal views of Mr Murdoch have influenced editorial decision making at the NI titles. Mr Dacre cited that newspaper group's coverage C of the second Iraq conflict, which provided support for the Labour Government's decision to go to war in Iraq. He told the Inquiry his view that it would have been difficult, if not impossible, for the Labour Government to have proceeded with this decision, without the support received through Mr Murdoch's newspapers.145

¶Associated News financial management 3.16 New systems of approving and recording payments to third parties were established at Associated Newspapers following the introduction of the Bribery Act 2010. These require: prior approval from department heads; documentation of the payment; an explanation of why the payment is necessary, including any public interest issue where appropriate; and where it involves an employee acting against their employer, the information presented must be assessed as well as justified. This system applies to freelance journalists working at Associated Newspapers when they need to make payments to third parties in pursuit of a story for the company.146

¶3.17 In addition to normal relationships with news agencies, fees to third parties are sometimes paid. These could be fees to freelancers (either for information or for journalism), fees to the public for information, fees to the public for the right to tell their story, or fees to the public for pictures.147

¶3.18 Payments can be made in cash in a limited number of circumstances, and can be to anonymous sources. Each desk will have delegated authority to approve payments up to an agreed level. Above that level, the approval of the editor or deputy editor is required. Where larger sums are involved, for example in regard to 'buy-ups', there will normally be senior editorial discussion and the payments would be subject to contractual documentation.148

¶Associated News policies and procedures 3.19 Compliance with the Editors' Code of Practice is a contractual requirement for all journalists employed at Associated News.149 Additionally, it has been a contractual requirement for all ANL journalists, and any freelance journalists working for ANL, to comply with the Data Protection Act. Any complaints to the PCC, and guidance from them, is reflected in legal notices circulated to editorial staff and relevant legal advisors.150 The editor-in-chief's policy is that:151

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"…one of the most important things… a newspaper can do is to employ first rate reporters, writers and subs who are more concerned than anybody to ensure that their journalism is of the highest professional standards."

¶3.20 Mr Dacre explained to the Inquiry that clear lines of communication exist between staff, department heads and the managing editors. In this respect, the company ensures that presence of the managing editors on the newsroom floor is constant. Mr Dacre said that:152

¶"If, for example, a reporter was asked to do something he or she was unhappy about, C or a head of department was unhappy about signing off payment, there is no reason why they would not feel able to discuss this with the managing editors…"

¶ANL also has a Data Protection Policy,153 and a staff handbook which includes a whistleblowers' procedure and a 'speak up' policy.154

¶3.21 Compliance with the Editors' Code of Practice is a particular responsibility of managing editors, together with company's in-house lawyers, who are not involved in editorial decision making and who staff should approach with any concerns related to compliance with the Code.

¶managing editors ensure that all staff are kept aware of any changes to the Code and also have copies of the latest version. PCC training and refresher sessions are also used to ensure compliance with the Code.155 The Inquiry has been told that training is a key part of ANL's approach to embedding ethics and compliance with the code within the organisation across the range of responsibilities. Disciplinary action has been taken by ANL against journalists on occasion in respect of breaches of the code.156

¶3.22 It is made clear to all journalists working for ANL that failure to abide by the Editors' Code of

¶Practice will have serious consequences for them, the editor and the company.157 Examples of letters to staff and instructions from the managing editors, legal warnings from the legal department and disciplinary action have been disclosed to the Inquiry.158

¶3.23 Since April 2007 there has been an outright ban on ANL staff using private investigators and search agencies.159 As well as informing all ANL Journalists of the ban, the Inquiry has been told that ANL have also written to every agency previously used by ANL employees stating that any further use of their services was unauthorised and would not be paid for by the company. This has only been breached once, which resulted in the dismissal of the staff member responsible.160 ANL retains three commercial relationships with information search services in relation to genealogy, business information and tracing, each of which the company is satisfied complies with DPA requirements.161

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¶3.24 Any staff who believe they have access to, or want to access, material in breach of the DPA are required to contact the editor or deputy editor and where there are compelling public interest reasons to proceed, those reasons should be recorded in writing.162

¶3.25 Associated News has an Anti-Bribery and Corruption policy, a policy on Working with Third Parties and a policy on Gifts and Hospitality. Introduction of new procedures relating to these policies were undertaken in light of the introduction of the Bribery Act 2010. All staff must comply with these policies and promptly report any concerns or violations.163

¶C Associated News management structures and processes 3.26 Editorial departments at Associated Newspapers are hierarchical organisations.164 Reporters make the initial judgment on the quality and source of the information they are dealing with, and whether it is publishable with regard to issues of libel, privacy, data protection and taste. If they have doubts about the accuracy of the information or how it was obtained they have to discuss it with their head of department, who in turn must discuss it with senior editorial executives, who may make other investigations or consult the deputy editor or other senior executives.165 Sub-editors are encouraged to check facts where it is appropriate to do so.166 The editor will in turn scrutinise their decisions and may make his own enquiries if he has any reason to doubt the accuracy of the story or the methods used to obtain the story.167

¶3.27 The current editor of the MailOnline, Martin Clarke, told the Inquiry that he applies the same standards of reporting and appropriate checks involved in the publication of stories on the website as the company's print journalists would do.168

¶3.28 Editors are assisted in any such decision making by the managing editors. It is the role of the managing editors to investigate complaints and alleged breaches of the Editors' Code of Practice if, and when, they arise, while at the same time educating journalists about any new developments to or requirements of the Code, and must be proactive in ensuring that the Code is not breached.169 The Inquiry has been told that Managing Editors are a constant presence on the editorial floor, independent of other departments and not involved in editorial decision-making, save where they are seeking to ensure that a legal or PCC warning is noted.170 Paul Dacre has made clear that one of their core functions is to:171

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"…ensure that our journalists understand and comply with the highest professional standards."

¶Associated News incentives 3.29 The editor-in-chief and other ANL editors may receive share options as part of their remuneration but these are tied to DMGT's overall financial performance, and not editorial performance.172 Mr Dacre, told the Inquiry that he also received a "one-off lifetime bonus" C which was taken in 2010.173

4. northern and shell Media group Ltd 4.1 Northern and Shell is a privately owned company, founded and owned by Richard Desmond.

¶The Daily Express Group was acquired by Mr Desmond on 22 November 2000.174 In its formal submission to the Inquiry, Northern and Shell have described the Daily Express as "the world's greatest newspaper",175 and that it:176

"…covers world and domestic events in depth and with style, it leads opinions and tell the truth intelligently, fearlessly and with attitude. It engages the modern reader with a unique mix of news, features, sport, health, money matters, columnists and entertainment… [it] spearhead[s] the values of middle Britain."

¶4.2 Perhaps more prosaically, Mr Desmond has told the Inquiry that his only interest in acquiring the Express Group was the commercial opportunity that it offered.177 Echoing the importance of the commercial interests of the Express Group's owner, the current editor of the Daily

¶Express, Hugh Whittow, has told the Inquiry that his priority for the title is to keep it: "buoyant, popular and profitable, and hopefully keep and encourage more readers."178

¶4.3 The Daily Express has traditionally supported the Conservative Party. Although the paper backed the Labour Party in the 2001 general election under the editorship of Rosie Boycott, the paper returned its support to the Conservative Party ahead of the 2005 general election.179

¶The then editor, Peter Hill, explained the reason for that change in allegiance to the Inquiry:180

"…the entire history of the Daily Express had been that of a right-of-centre newspaper. It has an enormous constituency of readers who supported that view, and I felt that it had been a huge mistake to move the newspaper to support the Labour Party, which had been done by previous editors and administrations, and it had, in fact, cost the newspaper an enormous number of readers who had abandoned it in despair."

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¶History 4.4 The Daily Express was founded by Arthur Pearson in 1900. In 1916 the newspaper was purchased by Max Aitken, later Lord Beaverbrook. Beaverbrook was unashamed about the political use he made of his newspapers. In this respect the Beaverbrook Foundation said:181

"it will be for his role as a pioneer of newspapers and for his ability to form public opinion that Beaverbrook will be ultimately remembered."

¶4.5 Under Beaverbrook's ownership the Daily Express became one of the most popular daily C newspapers in the UK. Its circulation grew from 2.33m in 1938 to 4.3m in 1960.182 However, its circulation fell after Lord Beaverbrook's death in 1964 and in 1977 the Daily Express was bought by the construction company Trafalgar House. In 1978 Trafalgar House launched the Daily Star, initially circulated only in the North and the Midlands. In 1982 Trafalgar House incorporated its newspaper publishing interests into a new company, Fleet Holdings, which was purchased by United Newspapers in 1985. In 2000, Express Newspapers, which at the point included the Daily Express, the Daily Star and the Sunday Express, was purchased by Northern and Shell, a company owned by Richard Desmond.

¶4.6 The Northern & Shell Media Group was founded in December 1974 by Richard Desmond, who continues to own it.183 The group began publishing music magazines and expanded into a wider range of magazines as well as into advertising and insurance. The group acquired Express Newspapers in November 2000 and Channel 5 in July 2010.184 The Northern & Shell Media Group currently comprises newspapers (the Daily and Sunday Express and the Daily Star and Daily Star Sunday), printing and distribution, magazines (OK!, New! and Star), Television (Channel 5 and a number of subscription and pay per view channels) and digital media (a stake in the internet television service, YouView, on demand video, websites of its print publications and other web services).185

¶4.7 In 2010 Northern and Shell Media Group had a turnover of £496.3m, with operating profit of £36m.186 Group turnover in 2010 from publishing and printing (newspapers and magazines) was £347m, with operating profit of £43.7m. The circulation of the Daily Express in February 2012 stood at 577,543, the sixth highest circulation for a national newspaper. Although this is just below the circulation of the Daily Telegraph (on 578,774), the Express has a significantly smaller readership than The Sun, Daily Mail, and Daily Mirror and fractionally less than its sister title, the Daily Star, which has the fourth highest circulation at 617,082. This gives the Daily Express and the Daily Star 6.3% and 6.8% of national daily newspaper circulation respectively, giving N&S Group a 13.1% share of national daily newspaper circulation. In February 2012 the circulation of the Daily Star Sunday and the Sunday Express was 599,078 and 567,800 respectively, which equates to 5.4% and 5.1% of the national share, and accounts for some 10.5% of national Sunday newspaper circulation.187

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¶Governance structures

¶Northern and Shell boards 4.8 The Board consists of five Executive Directors including the Group Editorial Director, who assumes the role of Board Director, in charge of the creative functions of the organisation.188

¶The Board does not have any members who are the editors of the Northern and Shell titles.

¶4.9 The Board has the responsibility for the administration and business functions of Northern C and Shell. In January 2011, it took the decision to withdraw Express Newspapers from the

¶Press Complaints Commission (PCC).189

¶Northern and Shell editorial independence 4.10 The Inquiry has been told that the members of the Northern and Shell Board has no influence over the editorial content carried by the Express Newspaper titles. Mr Desmond has further told the Inquiry that individual editors are responsible for determining the tone of the newspapers they manage and have complete independence in terms of the content they publish.¹⁹⁰¹⁹⁰ pp31-32, lines 20-5, Paul Ashford, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript- of-Afternoon-Hearing-12-January-2012.pdf; p5, para 16, http://www.levesoninquiry.org.uk/wp-content/ uploads/2012/01/Witness-Statement-of-Richard-Desmond.pdf He has said that Editors:191

"…decide the stories that go in the papers and leave the directors and the administration side of the company to look after the business issues."

¶4.11 The decision made by the former Editor of the Daily Express, Peter Hill, to support the

¶Conservative Party ahead of the 2005 general election, was taken with the approval of the

¶Board, although Mr Hill emphasised in evidence that the decision was ultimately his. He has explained:192

"It had qualified support, because the chairman, Mr Desmond, was a strong supporter of Mr Blair, who was then the Prime Minister, and he was not really a -- he was not a supporter of the Conservative Party, but he accepted that this was the appropriate thing to do."

¶4.12 Mr Desmond also stressed the independence of the editor in reaching that decision, and mused as to whether Mr Hill's decision might have impacted adversely on his relationship with the then Prime Minister, Tony Blair. He noted that:193

"…at the end of the day Peter Hill runs the editorial of the paper and that was the decision that he made."

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¶Northern and Shell financial governance 4.13 Corporate Governance at the Northern and Shell is primarily achieved through financial control and, particularly, the imposition of strict budgeting and financial oversight. Following the purchase of Express Newspapers, Northern and Shell implemented new systems in November 2000 intended to effect more effective control of expenses and invoices. Any expenses which exceed £5,000 must be signed off by a director at the group.194 The Managing Director samples payments to ensure they are appropriate and approves all editorial expenses claims.195 Cash payments are rarely used but are handled as staff expenses, which require approval by the relevant editor and managing editor. C Northern and Shell policies and procedures 4.14 Express Newspapers has a staff handbook which before 2001 was given to all staff and which is still available to staff on request.196 That handbook included the Editors' Code of Practice and stated that editors and journalists must comply with it.197 Gareth Morgan, editor of the Star on Sunday, told the Inquiry that he has sought to ensure that hard copies of the Editors' Code of Practice are distributed throughout his newsroom, and that this is done each time the Code is revised.198 The Northern and Shell staff handbook also includes a requirement that employees should comply with any company policies in force in this regard. It also includes a requirement that staff should seek to minimise the risk of expensive and damaging legal action.199

¶4.15 Although Northern and Shell is not a member of the PCC, the legal team expect to work in accordance with the standards set down in the Editors' Code of Practice.200 Rather than responding to complaints made by members of the public or by affected parties through the PCC, instead Northern and Shell has established a Committee, comprising all the editors, the Group Editorial Director and the legal department, which sits on an ad hoc basis to look at any complaints received relating to the company's publications.201

¶4.16 At present, there are no specific documents setting out the policies around anti-bribery or information gathering. Northern and Shell are in the process of issuing an anti-bribery and corruption policy following the enactment of the Bribery Act 2010.202

¶4.17 There are no rules on the employment of private investigators and search agents.203 The absence of any internal system for monitoring the use of search agencies has allowed some journalists to maximise the use of these services, without oversight through the legal department of Express Newspapers, or the editors of the Express titles. In this regard, Nicole

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¶Patterson, Head of Legal at Express Newspapers informed the Inquiry that:204

"…I can't say as far as we were aware because until we started having a look at this, I didn't even know that we used these search agencies."

¶4.18 Dawn Neesom, the current editor of the Daily Star, told the Inquiry that it was the investigations of Express Newspaper's legal department into unusually large payments made in expenses claims, which revealed the extent of the Daily Star's use of external search agencies. Ms C Neesom said that as editor of the title she should have been made aware sooner that these practices had been taking place but was not.205 Ms Neesom explained that a specific policy in relation to the use of external providers of information did not exist at the Daily Star. The expectation now is that her newsroom operates within the limits of the Editors' Code of

¶Practice;206 the Northern and Shell staff handbook, and the financial systems set in place by the Board.207

¶4.19 Mr Whittow, also told the Inquiry that he was unaware of the use of search agencies by his journalists. He said that he received the same assurances as Ms Neesom. Similarly, he assumed that any use of the search agencies would have been conducted "within the confines of the law."208 In contrast, the use of search agencies at the Daily Star Sunday, was undertaken with the knowledge of the editor. Mr Morgan, told the Inquiry that payments to search agencies are authorised through the Assistant News Editor, Jonathan Corke. Mr

¶Morgan told the Inquiry that he:209

"…speak[s] to Mr Corke on a regular basis to make sure that if we are instructing a search agency, we are doing the right thing."

¶4.20 The Inquiry has not heard any evidence to suggest that the Express Newspaper titles have implemented a formal whistle-blowing policy. Instead, Ms Neesom told the Inquiry that she operates an 'open-door policy' for her staff at the Daily Star, but was unable to differentiate between that process and an official policy for her employees. She told that Inquiry that journalists:210

"…can go to human resources. We don't – I've never had a whistle-blowing experience, to be honest with you."

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¶Northern and Shell management structures and processes 4.21 The editor of each Northern and Shell title is responsible for the staff who work on that title.211 Journalists report to their head of department, who in turn reports to the deputy editor, who reports to the editor.212 The news and pictures' desk, and individual reporters, have responsibility for verifying sources of information for their stories.213 Ms Patterson told the Inquiry that:214

"…I expect that when I'm presented with a story or some copy for legalling that the journalist will have done their job and that those facts will be correct, and if there is C a legal problem with any of them, then I ask them, "where did it come from? How did it come about?"

¶4.22 Editors have a responsibility to ensure that the policies for lawful, professional and ethical conduct are adhered to in practice.215 The Inquiry has been told that editors at the group check throughout the day on all stories and pictures that are being printed.216 Sources for stories are discussed at editorial meetings which take place throughout the day, at which unusual articles and sources of information for those articles will be discussed.217

5. trinity Mirror plc 5.1 Trinity Mirror describes the Daily Mirror as:

"…a unique balance of real news, real entertainment and sport" and says that it's core values are "compassion, conviction and courage".218

¶Since the 1930s the Mirror has been a left-wing newspaper, and has supported the Labour party at every general election since 1945.219 Richard Wallace, editor of the Daily Mirror at the time he gave his evidence, said that the fact that he had met more often with Labour leaders than with the Conservative leader is a reflection of the paper's political stance.220

¶5.2 Lloyd Embley , then the editor of the Daily Mirror's sister title, the People, and now the editor of the Daily Mirror, described the People as providing:221

"…a combination of news, showbusiness and celebrities, football coverage and real-life stories."

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¶Mr Embley has said that the People, provides a unique focus on real-life stories. The title even publishes a supplementary magazine given over to such stories.222

¶5.3 Despite the historic support of the Mirror Group for the Labour party, Mr Embley has shifted the political allegiance of the People. It is now politically independent. Mr Embley has told the

¶Inquiry that this was a personal decision, linked to the wider re-launch of the title, following his promotion to the position of editor in May 2008.223 Mr Embley stressed the importance of the People's independent position, and explained to the Inquiry that:224 C "My move to political independence, I think, says quite a lot about where I stand on

– my view is that I represent and my paper represents the views of its readers, and my view on why I moved it to be politically independent is because I think politics has changed so much and the parties are so closely aligned on so many policy issues that it seems wrong to me just to follow one party. I felt it enable me to stand up for my readers best."

¶5.4 The Trinity Mirror titles are also campaigning newspapers, and routinely run campaigns on issues they understand to be of importance to the demographic of their readership.225 The

¶People has campaigned on the issue of fuel poverty, working with the industry to provide free energy saving devices and raising awareness to rising energy costs.226 The Sunday Mirror have led a number of military campaigns, raising money for former servicemen, highlighting the need for improved aftercare offered to troops returning from service.227 Other campaigns have included the Daily Mirror's "Honour the Brave" and the successful "Pride of Britain

¶Awards".228 Mr Wallace told the Inquiry that the Daily Mirror campaigns very much reflect the title's values and political stance, representing the interests of "ordinary people".229

¶History 5.5 The Daily Mirror was founded by Alfred Harmsworth, Viscount Northcliffe, in 1903 as a periodical for ladies. The paper left the Harmsworth stable when it was sold in 1922 to

¶Viscount Astor after Viscount Northcliffe's death. During the 1930s, the Mirror developed a strong focus on working class issues. By 1939 it sold 1.4m copies a day. Its popularity continued to grow and by the 1960s it was the most popular of the national dailies, selling over 6m copies a day. In June 1953 the Daily Mirror broke all records selling 7m copies on the day of the Coronation.

¶5.6 In 1963 the Mirror Group together with three magazine publishers formed the International

¶Publishing Corporation (IPC).230 In 1960 the Mirror Group acquired the failing Daily Herald, and re-launched it in 1964 as a mid-market paper called The Sun, which was then sold to NI in 1969. In 1970 the IPC was taken over by Reed International Limited. In 1984, Pergamon

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¶Holdings, a company owned by Robert Maxwell, acquired the Daily Mirror from Reed and it was re-listed as Mirror Group in 1991 following the death of Mr Maxwell that year. Trinity was formed in 1985 when the Liverpool Daily Echo separated from its holding company. Trinity grew rapidly through the acquisition of regional titles and in 1999 Trinity and the Mirror Group merged to form Trinity Mirror, the biggest newspaper publisher in the UK.231

¶5.7 Trinity Mirror is still one of the UK's largest newspaper publishers with a portfolio including five national newspapers, over 130 regional newspapers and more than 500 digital products. In 2010 Trinity Mirror had revenue of £761.5m and operating profit of £123.3m.232 The Group employs over 6,500 people in more than 60 locations across the UK, including nine print

¶C sites. The Group has two trading divisions: Regionals and Nationals. The Nationals contribute something over half of Trinity Mirror's revenues and profits, with revenue in 2010 of £430.3m and operating profits of £86.1m compared to 2010 revenue from the Regionals division of £331.2m, with an operating profit of £51.7m.

¶5.8 Trinity Mirror's national titles include two daily titles: the Daily Mirror and the Daily Record; and three Sunday titles: the Sunday Mirror, the People and the Sunday Mail (the sister paper to the Daily Record). In February 2012 the Daily Mirror had a circulation of 1.102m,233 or just under 12% of national daily circulation. The Daily Record had a circulation of 291,825, which puts it at just over 3% of national circulation, meaning that the Mirror Group titles together account for around 15% of national circulation. The Sunday Mirror, the People and the Sunday Mail in February 2011 had circulations of 1,594,293, 701,246 and 376,898 respectively, with 14.4%, 6.3% and 3.4% of national Sunday circulation respectively, with Mirror Group titles accounting for just over 24% of all national Sunday circulation, including the third and fifth most popular national Sunday titles.234

¶Governance structures 5.9 Trinity Mirror is a public company listed on the London Stock Exchange.

¶Trinity Mirror boards 5.10 The Board consists of eight members, of whom the Chair and four members are non-executives. The Executive Directors are the Chief Executive, the Finance Director and the Company Secretary.235 Risk management is handled through the Audit and Risk Committee and risk maps, with around 70 senior personnel required each year to certify that they are properly identifying and reporting risk.236 The Inquiry has been told that risks tracked by the Risk Committee include 'catastrophic editorial error'.237 Day to day corporate governance is managed through the Executive Committee, which includes the three executive directors and the Managing Directors of the Nationals and Regionals Divisions.238

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¶5.11 Within the Trinity Mirror's overall strategy for the management of risk, the editor is responsible for identifying risks and making the best judgments associated with that risk. Inhouse lawyers are also in place at titles, and are responsible for providing advice to the editor in relation to publishing articles in compliance with the Code.239 The editor will report to the

¶Managing Director (of either Nationals or Regionals), who in turn report to the Board, and the Chief Executive.240

¶Trinity Mirror editorial independence C 5.12 The editors of the Daily Mirror, the Sunday Mirror and the People are appointed by the

¶Board of Trinity Mirror, which has the power to remove them.241 The final decision on what is published in a title belongs to the editor of that title, and is without influence from the Board or shareholders of Trinity Mirror.242

¶Trinity Mirror financial governance 5.13 Financial authority is delegated within strict limits, dependent on seniority, and within budget categories.243 No one is authorised to approve payments that would breach any of

¶Trinity Mirror's policies. Trinity Mirror has a strict policy against all manifestations of fraud and dishonesty.244 The Fraud Policy states that Trinity Mirror will seek to recover all associated costs from the individual responsible for a fraud and makes clear that such action will lead to potential disciplinary processes, and might lead to the involvement of the police.245 Trinity

¶Mirror policies makes clear that the system used for paying expenses should not be used for payment for editorial content, which is instead registered as a payment for contributions.246

¶Expenses must be approved by someone other than the claimant with an appropriate authority level.247 If expenses relate to entertainment of a third party then only the editor can authorise the third party remaining anonymous on the record of the expenses.248

¶5.14 Each title has a budget for contributions, and MGN has 68,000 contribution accounts of which 19,000 have had at least one transaction processed since 2005.249 Payments under the contributions system are made direct to the bank accounts of the recipients. All payments must be appropriately authorised and new accounts cannot be set up by the authoriser.250

¶Cash payments can be made, but over a certain limit they must be approved by an editor or deputy editor and the approver must know to whom the payment is going. The request for the cash payment must be approved by a senior in-house legal advisor and the journalist must provide written receipts for the amounts claimed.251

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¶Trinity Mirror policies and procedures 5.15 Trinity Mirror has a policy on Standards of Business Conduct with which all staff must comply.252 There is also a Code of Conduct policy. Breach of either is grounds for disciplinary action.253 The PCC Editors' Code of Practice is incorporated into staff contracts.254 Trinity Mirror has a fraud policy and a whistle-blowers' charter in place,255 which covers fraud and any instance of malpractice.256 Trinity Mirror also has a Dignity at Work Policy which covers bullying and victimisation, as well as an equal opportunities policy.257

¶5.16 The Mirror Group has used private investigators but since 2011 have introduced a new policy C to halt such use.258 Trinity Mirror has also re-issued to staff the organisation's policies and procedures on relevant privacy issues, including the zero tolerance policy on breaches to the Data Protection Act.259

¶Management structures and processes 5.17 The Chief Executive of the Trinity Mirror Group is responsible for the propriety and reputation of the company. The editorial functions of the national and regional titles are the responsibility of the editors of the individual titles. The management of editorial staff are for the editors alone. However, the Board has the power to appoint and terminate the contracts of the editors at all of the titles.260 Managing editors are responsible for the business operation of the newspapers and have no role in editorial issues.

¶5.18 The editor is ultimately responsible for the content of their publication and is granted full editorial independence by the Trinity Mirror Board. The editor of a given title within the Group will chair editorial conferences with heads of departments on a daily basis.261 262 Journalists working on the Daily Mirror are expected to know and understand the Editors' Code of Practice.263 Mr Wallace has told the Inquiry that in his view ethics was not something that should require frequent reminding in the newsroom as, he argued, it was inherently embedded in the culture of the Daily Mirror.264 To this extent, appropriate measures with regard to the verification of sources for stories, are expected to be the responsibility of individual journalists.265 The editor is also responsible for 'certifying' that appropriate controls are in place.

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¶Trinity Mirror incentives 5.19 Editors at Trinity Mirror do not receive any financial benefit for printing exclusive stories.

¶Trinity Mirror operates an annual bonus scheme which is linked to the financial performance of the company and an editor's individual performance.266 C

¶Mirror Group Regionals 5.20 The Mirror Group regional titles also operate under the Mirror Group Standards of Business

¶Conduct.267 In addition, there is a Mirror Group Regional Editorial Policy, which incorporates the Editors' Code of Practice.268 Approaches may differ across the regional portfolio. The

¶Inquiry has seen evidence from the Manchester Evening News (MEN), which was purchased from the Guardian Media Group in 2010, indicating that it requires every article to be looked at by two experienced journalists to ensure that it is lawful, accurate and fair.269 The MEN also seeks to ensure that nothing is published which is legally problematic, with a policy 'if in doubt, don't publish'.270 Any breach of the law or any use of subterfuge would have to be approved by the editor.271

6. the telegraph Media group 6.1 The Daily Telegraph has the highest daily circulation of the national broadsheet titles.

¶The Chairman of the Telegraph Media Group, Aidan Barclay, has described the Telegraph as an 'iconic' company,272 which has successfully established itself as an "investigative and campaigning newspaper".273 in this regard, Mr Barclay has said that the publication of the

¶MPs' expenses story in 2009 was:274

"…probably the most important piece of investigative journalism across the British press in the last two decades."

¶6.2 The current editor of the Daily Telegraph, Tony Gallagher, told the Inquiry of the quality of the professional culture that exists at the Daily Telegraph. He, like others, emphasised that his newsroom operates in full compliance with the terms to the PCC Code, and is proud to produce quality news that is fair and accurate.275

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¶6.3 The Daily Telegraph has historically supported the Conservative party. With this in mind, Mr Barclay also told the Inquiry that:276

"We operate under an overarching principle that customers come first. That does not mean the papers do not criticise Conservative Governments and politicians: they regularly do."

¶History

¶C 6.4 The Daily Telegraph was launched by Colonel Arthur B Sleigh in 1855, allegedly to air a personal grievance, but was soon sold to Joses Moses Levy. Levy's son, Baron Burnham, eventually sold the Telegraph to Viscount Camrose in 1928 and both the Burnham and Camrose families remained involved in the management of the newspaper until it was bought by Conrad Black in 1986 (Lord Black of Cross Harbour). Under Lord Black's ownership, the Telegraph Group became part of Hollinger International, in which Lord Black's Hollinger Inc. held a 73% controlling stake in the company. In 2004 Sir Frederick and Sir David Barclay purchased Hollinger Inc, and with it the controlling stake in the Telegraph Group.

¶6.5 In February 2012, the Daily Telegraph had a circulation of 578,774, its nearest broadsheet competitor is The Times with a circulation of around 398,000. Even so, this amounts to only a small fraction (6.3%) of the UK's national daily newspaper circulation. In the same month, The Sunday Telegraph, had a circulation of 461,280, which is the second most popular of the Sunday broadsheets (well behind the Sunday Times on 939,395), and accounts for 4.2% of UK Sunday newspaper circulation.277

¶Governance structures 6.6 The Telegraph Media Group is a private company, ultimately controlled by Sir David and Sir Frederick Barclay's Family Settlements.278 In 2010, it recorded a profit after taxation of £50m on a turnover of £324m.279 It currently employs over a thousand members of staff.280 The Group publishes the Daily Telegraph and the Sunday Telegraph and also operates the Telegraph website, www.telegraph.co.uk.

¶Telegraph boards 6.7 The Board of the Telegraph Media Group consists of eight members: the Chief Executive and Finance Director, Howard and Aidan Barclay, three Directors of other Barclay family undertakings, Rigel Mowatt, Philip Peters and Michael Seal and Loraine Twohill, who is an independent non-executive Director.281

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¶Telegraph editorial independence 6.8 The commercial and editorial sides of the business are run separately, with the editors reporting directly to the Chief Executive.282 The editorial teams determine what appears in the publications at TMG, and decisions on editorial matters are left entirely to the editor, subject to operating within TMG budgetary constraints.283 Mr Gallagher, told the Inquiry that he speaks only once or twice a month to the Chairman of TMG and would otherwise be left to focus on editorial matters.284

¶C

¶Telegraph financial governance 6.9 The Board agrees the budget for the newspaper, and authority to commit expenditure is delegated by the Board to department heads and senior editorial staff. Approved budgets for each editorial department are reviewed on a monthly basis.285 Any expenditure above the delegated level must be approved by the managing editor, Executive Director Editorial or the

¶Finance Director.286 TMG has made clear to the Inquiry that it has systems in place to ensure that it acts in accordance with the requirements of the Companies Act 2006.287

¶6.10 TMG also operates clear procurement policies which state that any procurement must fully reflect all applicable laws and requires that any actual or potential unethical or illegal practices by a supplier should be reported to the Finance Director and Commercial Legal Director.288

¶Only five staff members at TMG are able to authorise payments to contributors of over £500 or payments to suppliers of over £1,000.289 Cash advances are generally only permitted for foreign travel expenses.290

¶Telegraph policies and procedures 6.11 All TMG editorial staff are required under the terms of their contracts of employment to comply with the terms of the Editors' Code of Practice.291 The company's staff handbook and standard employment contracts also require adherence to a wider set of standards, which include not bringing the company into disrepute.292 More recently, TMG have moved to synthesise their core principles of ethical and legal conduct into an Editorial Code of

¶Conduct.293

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¶6.12 TMG operates a whistle-blowing policy which allows staff to raise on an anonymous basis concerns they may have around potentially illegal or unlawful activity, or wrongdoing.294 TMG also introduced an Anti-Corruption and Bribery policy in 2010 following the introduction of the Bribery Act.295 At the time of writing, TMG did not have a policy on the employment of private investigators, but the company has made clear in evidence to the Inquiry that none have been employed within the tenure of the current editors.296

¶Telegraph management structures and processes

¶C 6.13 The Chief Executive Officer of the TMG, Murdoch MacLennan, is responsible for day to day leadership of the company. He holds weekly senior management meetings to discuss key strategic issues.297 Working to the editor of the Daily Telegraph are, the deputy editor, assistant editor and executive editor. Together they comprise the title's senior editorial team. Beneath them sit the Department Heads (or editors). They are also supported by deputy editors.298

¶6.14 There are two legal departments at TMG. They have distinct responsibilities; the Corporate Legal Department and Editorial Legal Department.299 When issues arise they are addressed jointly by the editorial and relevant legal teams. Where a complaint is made about a failure to adhere to terms of the Editors' Code of Practice, the Editorial Legal Department is responsible, together with the journalists involved and department head, for conducting an investigation and responding to the complaint – including drafting an apology where appropriate.300 Editorial Directives, for example requiring staff to bring specific types of issue to the legal department, are issued from time to time.301

¶6.15 Mr Gallagher told the Inquiry that the Daily Telegraph operates a system of peer-review for the majority of articles published on the Telegraph's website. This has replaced the traditional process of editorial checks found in most newsrooms, for online news stories, as it relies on the judgment of more experienced reporters, who are effectively allowed to "self-publish their stories".302 Mr Gallagher has noted, however, that this process is only applied to seemingly uncontroversial news stories, whereas any article which might attract attention would be edited through the normal process, including, where appropriate with legal involvement.303

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¶Telegraph incentives 6.16 TMG operates an annual bonus scheme for its senior commercial executives and senior editorial executives. These bonuses are not contingent on publishing particular stories or exclusives, but rather are determined by financial targets related to the operating profit of

¶TMG and the individual titles.304

7. the guardian Media group C 7.1 The Guardian is the only national broadsheet title that is owned by a Trust, rather than a traditional proprietor owner, or through shareholders in a public or private company. Dame

¶Elizabeth Forgan is the Chair of the Scott Trust which owns the Guardian. She has said that the central objective of the Trust is:305

"To secure the financial and editorial independence of The Guardian in perpetuity: as a quality national newspaper without party affiliation; remaining faithful to liberal tradition; as a profit-seeking enterprise managed in an efficient and cost-effective manner."

¶7.2 The Guardian is required by the Trust to support 'liberal journalism'. It has developed a reputation as a strongly liberal newspaper. Although this might be considered as a direct influence on the editorial decision-making at the Guardian, Alan Rusbridger, editor-in-chief of the title, explained to the Inquiry that:306

"…the only thing the Scott Trust tells you is to carry on the paper as heretofore, and it's left to you to interpret the traditions of the paper in the light of the current circumstances. I think it's a liberal small "L", …we discuss what the meaning of that is, but it's not liberal politically."

¶With this in mind, the Guardian has supported at different times the Labour Party, the Liberal

¶Party, the Social Democratic Party, and the Liberal Democratic Party at general elections since

¶1945.307

¶History 7.3 The Manchester Guardian (the Guardian) was founded in 1821 by John Edward Taylor to promote liberal interests in the aftermath of the Peterloo massacre. The journalist CP Scott was made editor of the Guardian in 1872 and remained in post until 1929. Scott bought the paper in 1907 and in 1936 the Scott Trust was established by the son of CP Scott and became the owner of the Guardian. The Trust Deed requires that the company must:

"... be carried on as nearly as may be upon the same principles as they have been heretofore conducted."

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¶7.4 The Trust was established as a limited company in 2008, with the core purpose of securing the financial and editorial independence of the Guardian in perpetuity.308 The Scott Trust is the owner of the Guardian Media Group. The Guardian Media Group has three wholly owned businesses: Guardian News & Media, GMG Radio and GMG Property services; and shares in Trader Media Group and Emap.

¶7.5 In 2010 GMG had a turnover of £280.2m excluding its joint ventures, but made an operating loss of £53.9million.309 Guardian News & Media publishes the Guardian and the Observer and guardian.co.uk. It also operates Guardian Business and Professional. GNM had turnover of £221m in 2010.310 In February 2010 The Guardian had circulation of 215,988, making it

¶C the second smallest circulation national broadsheet newspaper, with only 2.4% of UK daily national circulation. The Observer, in February 2010, had circulation of 253,022, which is again the second smallest of the Sunday broadsheets, accounting for 2.3% of national Sunday newspaper circulation.311

¶Governance structures 7.6 Guardian News and Media is wholly owned by GMG. GMG is wholly owned by the Scott Trust, who appoints, and can remove, the editor of the Guardian.312 The Scott Trust is not only responsible for the appointment of the editor-in-chief but is also responsible for the appointment of the readers' editor. Only the Trust has powers to rescind that appointment, and that is done by way of a vote of the Board of the Trust.313 This is to ensure the independence of the readers' editor from senior operational staff at the Guardian and the editor-in-chief.

¶Guardian boards 7.7 The Board of the Scott Trust comprises ten directors. It includes the editor-in-chief of the Guardian, Alan Rusbridger, and the Chief Executive of GMG.314 Directors are appointed by a Nominations Committee (comprising the Chair and five Independent Directors). The directors meet quarterly and also meet annually with the full Board of GMG.315

¶7.8 The GMG Board consists of ten members, and includes the editor-in-chief of the Guardian, the Chief Executive of GMG and the Company Secretary of GMG, with addition the Chief Financial Officer of GMG and the Chief Executive of GMG Radio. The Board also comprises five Independent Directors.316 The Chair of the Scott Trust leads the appointment process for the Chair of GMG.317 The structure is deliberately designed to keep separate the editorial and commercial parts of GNM's business in order to guarantee the editorial independence of all journalistic content.318

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¶7.9 The Chief Executive Officer of GMG is ultimately responsible for all non-editorial aspects of corporate governance. All board directors of GNM and GMG (with the exception of the editor-in-chief) are accountable to the Chief Executive.319

¶Guardian editorial independence C 7.10 Editorial governance is the responsibility of the editor-in chief, who is accountable to the board of the Scott Trust. The GMG Board is briefed on a monthly basis by the editor-in chief on editorial strategy and implementation, budgets, capital expenditure, industrial relations issues, significant stories and press coverage of the group. The editor-in chief also briefs the

¶Scott Trust on similar issues on a quarterly basis. Both Boards reviews past performance and strategy for the year ahead in November.320 Directors do not discuss the editorial or political line of the paper.321

¶Guardian financial governance 7.11 The Group Audit Committee assists the GMG board in its oversight, including the integrity of financial reporting procedures and the company's compliance with legal and regulatory requirements.322 GNM has policies on expenses, delegated authority thresholds, bribery and anti-corruption, corporate hospitality and gifts and travel and expenses.323 These policies are available to staff through the company intranet and are kept under review to ensure that they are up to date.324

¶7.12 Payments to freelance journalists are processed by administrators using a bespoke payments system. Any one-off payments are made through the Finance Department. Payments to regular suppliers are made through a procurement system which requires a unique purchase order number for that payment to be made.325 Staff are able claim expenses in accordance with the company's expenses policy. Expenses are approved by officials within delegated approval limits.326 If a claim exceeds the limits set by the relevant policies, claims are referred to the managing editor for further scrutiny.327

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¶Guardian policies and procedures 7.13 The Guardian operates its own editorial code of conduct which has been in place since 2002.328 This incorporates the Editors' Code of Practice, which Guardian staff are required to comply with in the terms of their employment contracts.329 The GNM Code includes a number of issues not covered by the Editors' Code of Practice (e.g. conflicts of interest and declarations) and also offers more comprehensive guidance than the Editors' Code of Practice on a number of matters including privacy. In addition, the GNM Code also sets out a series of questions, including engaging the "the Omand Principles", which should be considered by journalists whenever privacy issues are potentially engaged. These are:330 C

(a) There must be sufficient cause – the intrusion needs to be justified by the scale of the harm that might result from it; (b) There must be integrity of motive – the intrusion must be justified in terms of the public good that would follow from publication; (c) the methods used must be in proportion to the seriousness of the story and its public interest, using the minimum possible intrusion; (d) there must be proper authority – any intrusion must be authorised at a sufficiently senior level and with appropriate oversight; (e) there must be a reasonable prospect of success' fishing expeditions are not justified.

¶7.14 The Guardian also operates a whistle blowing policy, and encourages its use by reassuring staff that they should be able to raise issues without fear of "accusations of disloyalty, harassment or victimisation".331 An Anti-Bribery and Corruption Policy was introduced in June 2011, which was designed by the GMG and GNM's Anti-Bribery and Corruption Committee. This Committee reports on a regular basis to the GMG Board.332

¶Guardian management structures and processes 7.15 As previously stated, the editor-in-chief is responsible to the Scott Trust in terms of all editorial matters. In this regard, he reports directly to the Trust, rather than GMG's Chief Executive Officer. However, the editor-in-chief (who is also a director of both GMG and GNM) also has a responsibility to keep the GMG board informed about his areas of business, including the business of both the Guardian and the Observer.333 The remainder of the board directors of GNM and GMG are accountable to the CEO. He in turn reports to the Chair of GMG and directors of the Trust.334 335

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¶7.16 On an editorial level, the editor-in-chief of the Guardian and the editor of the Observer are responsible for their respective titles. They hold meetings to discuss issues affecting both titles, including budgets, staff issues and general strategy.336 The editorial process is the same for both the print and digital edition of the Guardian.337

¶7.17 Parallel to such processes, the Director of Editorial Legal Services, Gillian Phillips, reports directly to the managing editor of GNM, with whom meetings are held on a fortnightly basis. The Director of Editorial Legal Services is responsible for briefing the GNM Executive

¶Committee on a monthly basis. These briefings will cover the main legal issues which have C arisen, and the status of any complaints, or other on-going matters which the Committee should be made aware of.338

¶Guardian readers' editors 7.18 Both the Guardian and the Observer have readers' editors. The Guardian's readers' editor,

¶Chris Elliott, is, as noted, independently appointed by the Scott Trust, and is accountable only to the Chair of the Trust.339 The readers' editor at the Observer is not appointed in this way, but through the editor and with "an unwritten guarantee of independence".340 This position is currently held by Stephen Pritchard, who is also member of the Board and former President of the Organisation of News Ombudsman.341 The contact details of the readers' editor of both titles are published in each edition of the respective newspaper.

¶7.19 As noted above, the Guardian is one of very few newspapers to employ a readers' editor. The role of the readers' editor is to correct or clarify inaccuracies, discuss issues raised by readers and liaise with an external Ombudsman.342 The readers' editor at the Guardian writes a weekly column on the issues raised by readers. Reflecting the corporate and editorial independence of the role, this cannot be amended by the newspaper's editor.

¶7.20 On occasion, when the editor might disagree with the judgment of the readers' editor, the views of the former may be taken into account, but ultimately the editor has no power to change the outcome of the readers' editor's findings. To this extent, Mr Elliott has stressed to the Inquiry that:343

"...obviously you listen carefully to that [view of the Editor], but if, in the end, you think it's the right thing to do, you can fall back on the fact that you are employed by the Trust -- I'm employed by the Trust and I actually think they're wrong and we go ahead and I do what I see fit."

¶However, there is a consultation process with the editor, the managing editor and the journalist involved in the article, once the readers' editor has made his decision.

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¶7.21 The readers' editor may also refer any substantial grievances to the external Ombudsman. This is an externally appointed reviewer, who considers any complaints which bring into question the integrity of a Guardian journalist.344 The Ombudsman's role is to review the process of review conducted by the Readers' Editor in carrying out the initial investigation. The Ombudsman does not look at or reinvestigate the complaint itself:345

"…he will look at the processes, the way we've actually carried out, rather than try to reinvestigate it. What he's trying to assess is whether the readers' editor has done it C fairly and competently."

¶7.22 In his evidence to the Inquiry, Mr Elliott explained that the external Ombudsman is unlikely to deal with a large number of referrals in the space of a year, only "maybe one or two a year."346

8. the independent group 8.1 The Independent is the youngest of the major national daily newspapers. Independent Print Limited is jointly owned by the Russian business tycoon, Alexander Lebedev and his son, Evgeny. The Evening Standard Limited is also owned by the Lebedevs, having been purchased in January 2009. Evgeny Lebedev told the Inquiry that his focus for both newspaper titles is the provision of accurately informed journalism, which is ethically sound and delivered in the public interest. He said that although his papers might adopt different approaches and have different political leanings, the broader purpose of both titles remains dedicated to fair and accurate journalism.347

¶8.2 Mr Lebedev has expressed his pride at the successes of the London Evening Standard, a free newspaper title, which has reach of over one million readers a day in London, reporting on issues affecting the people of the capital.348 With regard to the philosophy of The Independent, Mr Lebedev has said that the title is:349

"…famed for its brilliant journalism, its foreign reporting, its comment, its -- it's a newspaper that people trust because traditionally it's been independent."

¶8.3 The current editor of The Independent, Christopher Blackhurst, echoed Mr Lebedev's evidence with regard to the reputation of The Independent. Mr Blackhurst told the Inquiry that the Independent prides itself on taking the highest ethical stance. He said that this ethical journalism is the core of The Independent brand, which Mr Blackhurst described as a "serious newspaper at the top end of the market".³⁵⁰³⁵⁰ pp2-3, paras 9-10, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of- Christopher-Blackhurst.pdf He has said further that this commitment to high quality journalism is reflected in the content published by the newspaper.

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¶8.4 The Independent did not adopt a party political position at the two general elections that followed its launch but supported Labour at the 1997 electon. In subsequent elections it has switched its support between the Labour and the Liberal Democrat parties.

¶History 8.5 The Independent was founded in 1986 by the journalists Andreas Whittam Smith, Stephen

¶Glover and Brett Straub, and was published by Newspaper Publishing plc. The creation of the C new paper took place against the background of the Wapping disputes. It launched with the advertising slogan, "It is. Are you?" making play of the independence of the newspaper from the influence of a powerful proprietor.

¶8.6 Although The Independent enjoyed initial success, and had achieved a circulation in excess of

¶400,000 by 1989, by the early 1990s its readership had declined and the paper was struggling financially. In 1994 both Independent News & Media (INM), a prominent Irish publishing company, and Mirror Group Newspapers took a stake in Newspaper Publishing and in 1996

¶INM purchased the whole company. By 1998 circulation had fallen to below 200,000, the smallest circulation of any of the national daily newspapers by some margin. By 2004, The

¶Independent was reporting losses of £5m per year, and in 1998, following staff cuts, and in order to make further cost savings, the title moved to Northcliffe House, the headquarters of

¶Associated Newspapers, where the two groups shared a number of services (though editorial, management and commercial operations remained separate).

¶8.7 In January 2009 a company set up by the Lebedevs, purchased the loss making Evening

¶Standard from Associated News for £1. The DMGT retain a 24.9% share of the Evening

¶Standard.351 In March 2010, it was announced that the Lebedevs' company would be buying

¶The Independent. Alexander Lebedev was quoted as saying:352

"I invest in institutions which contribute to democracy and transparency and, at the heart of that, are newspapers which report independently and campaign for the truth to be revealed. I am a supporter of in-depth investigative reporting and campaigns which promote transparency and seek to fight international corruption. These are things the Independent has always done well and will, I hope, continue to do."

¶8.8 A separate newspaper, the 'i' was launched in October 2010, aimed at 'readers and lapsed readers' of all ages and commuters with limited time. Priced at 20p it has quickly overtaken

¶The Independent in circulation.

¶8.9 In February 2012, the circulation of The Independent stood at 105,160. Its sister paper 'i' has more than twice the circulation, at 264,432. Altogether the two titles account for 4% of UK national daily newspaper circulation. The Independent on Sunday had a circulation in

¶February 2012 of 124,260, or 1.1% of UK national Sunday newspaper circulation.

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¶Governance structures 8.10 Independent Print Limited (IPL), wholly owned by the Lebedev Family, is a private company. The company is legally distinct from the Lebedev owned Evening Standard Limited,353

¶The Independent board 8.11 The Board of IPL consists of a Chairman, Deputy Chairman, the CEO of IPL and of Non Executive Directors. The Board is also attended by the Company Secretary and Finance Director.354 C 8.12 The IPL Board also exercises a number of financial functions, which are reviewed on a weekly basis, to monitor the budgeting within the company. Editorial staff, for example, are allocated set budgets and these are monitored on a weekly basis and scrutinised in more depth by the Board on a monthly basis.355 The Finance Director and Company Secretary of IPL has emphasized the importance of transparency of editorial payments to the Board's overall corporate and financial governance functions.356

¶8.13 The managing editor of IPL and Evening Standard Limited is responsible for the IPL's company strategy.357 This document is endorsed by the IPL Board, and is used to monitor the progress of IPL on a monthly basis through Board meetings.358

¶The Independent editorial independence 8.14 There is complete editorial independence from the Board.359 The governance of the Board is concerned primarily with the financial management of the business. managing editor, Andrew Mullins explains that:360

¶"…we separate commercial and editorial to create clear editorial independence."

¶8.15 However, there are instances where editorial issues might be raised at Board level and Mr Blackhurst has also told the Inquiry that as the editor he is fully aware of the company's overall business strategy.³⁶¹³⁶¹ p70, lines 16-19, Christopher Blackhurst, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/ Transcript-of-Morning-Hearing-10-January-2012.pdf Mr Mullins explained that there are occasionally scenarios where costs related to the editorial structure are impacted; or where sales would significantly fall. Mr Mullins explained that in these instances, discussion of editorial processes would be discussed at board level, although there would never be any discussion in relation to the editorial content.362

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¶8.16 Mr Blackhurst also told the Inquiry that The Independent has always sought to adopt a deliberately distinct approach to other national titles and continues to operate "free from proprietorial influence".363 In his evidence to the Inquiry, Mr Lebedev emphasised that although he might on occasion share his expectations and personal vision with his editors on a regular basis, he has no influence on the editorial content of his newspapers.364 He explained to the Inquiry that:365 C

"…we certainly discuss policies, and I certainly expect it to be taken into account, but to answer your question, there have been many instances when we've discussed particular issues, stories, policies and editors would have stuck with their original plan to write whatever they were planning to write."

¶The Independent financial governance 8.17 The Independent has in place clear procedures that govern all financial transactions made by staff at the company.366 Manish Malhotra, the IPL's current Finance Director and Company

¶Secretary of Evening Standard Limited told the Inquiry that these procedures reflect the:367

"…separation between editorial and commercial… …for that reason it's very important that editorial payments are going through the overall corporate and financial governance of the company so that we have clear sight of what's being paid and who's being paid."

¶8.18 Under this system, payments to casual staff are authorised by the relevant Department Head and have to be approved by the Financial Controller or the Senior Management Accountant.368

¶Contributions payments (made to freelancers, photographs etc) are made on the payments system and checked by the Finance Department with levels of authorisation required dependent on the amount concerned. The Financial Controller and Senior Management

¶Accountant authorise such payments. Expenses have to be authorised by department heads, and editorial expenses must be authorised by the Managing Editor. These payments are then authorised by the Finance Department in a similar way to contributions payments. No advances are made for UK based expenses.369

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¶8.19 Mr Malhotra told the Inquiry that there are no mechanisms in place which allow for journalists or other IPL members of staff to make cash payments.370 Internal controls are overseen by the office of the managing editor, who ensures that any payments which are made are:371

"…proper, are substantiated and, if appropriate, that there is a receipt to support them."

¶The Independent policies and procedures 8.20 IPL has recently introduced a Code of Conduct which brings together a number of policy

¶C matters in one document. Mr Blackhurst told the Inquiry that it would have been unlikely for The Independent to have introduced this revised Code, were it not for the exposure of phone hacking and other practices across the British National press. The purpose of the revised Code is to ensure clarity on a range of issues facing journalists.372 The IPL's Finance Director and Company Secretary has explained that the document goes further than the PCC Code, that:373

"…it's a wider document because it covers both commercial and editorial operations. It also goes into the use of hospitality and guidance and policies around that."

¶8.21 The creation of the Code was triggered by the enactment of the Bribery Act. However, as well as covering anti-bribery it also covers business relationships, social media and data protection.374 IPL has also restated its insistence on staff compliance with the Editors' Code of Practice.375 IPL's Code of Conduct details individual financial responsibility within IPL, and the policies on company expenses and hospitability.376 The IPL Code of Conduct also includes a policy on whistle-blowing, which encourages employees to report concerns without fear of reprisal.377

¶8.22 IPL also has a clear disciplinary policy which sets out that employees who are found to have committed acts of gross misconduct are liable for dismissal. Acts of gross misconduct includes 'theft, dishonesty or deliberate falsification of documents', 'unauthorised use or disclosure of confidential information' and 'a serious act which breaks mutual trust and confidence or which brings or is likely to bring IPL into disrepute'.378 This policy was explained to the Inquiry by Mr Blackhurst in the context of the disciplinary action that has been taken against Johann Hari, a former journalist at The Independent. Mr Hari was accused of plagiarism and producing derogatory comments about fellow journalists on the Wikipedia website.

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¶8.23 Staff and external contributors are required by contract379 to comply with both the law and with the PCC Code.380 Freelance contracts require that:381

"Anyone who supplies material to any of our publications must ensure that their conduct and the material they submit are ethical, legal and proper."

¶8.24 Other than these guidelines, there are no specific policies in place in relation to the payment for information. Mr Blackhurst has acknowledged that payments are sometimes made for

¶'tip-offs' for stories carried in The Independent's diary page but Mr Blackhurst also stated C that he exercises considerable caution with information received in this way. He told the

¶Inquiry that the Independent would:382

"…only pay, as a point of principle, if subsequently the story checked out. You wouldn't be agreeing and paying… That's not how it works."

¶The Independent management structures and processes 8.25 Mr Blackhurst described The Independent as a relatively small newsroom. The group employs just under 200 journalists across the three titles (the daily, Sunday, and 'i' publication) and a small number of foreign correspondents.383

¶8.26 Letters to the editor are handled between the editor and the managing editor, in the absence of a readers' editor. Mr Blackhurst said that The Independent does not have enough resources to merit the appointment of a readers' editor at the title.384

¶8.27 The editor is responsible for overseeing processes around the verification of sources in the newsroom. Checks are made by the original reporter, the news editor, the deputy editor and finally the editor, having been through legal scrutiny. Mr Blackhurst told the Inquiry that:385

"I'm with the news editor, the foreign editor, the deputy editor pretty much all day long, and they're around me, and it's not a case of formal up and down the line requests. If I want to ask a reporter: "Where's the story come from?" I'll ask them. I won't wait for the deputy editor to speak to the news editor to speak to the reporter. We haven't got all day. I mean, just get on with it."

¶8.28 Freelance writers are generally dealt with by the Heads of Department and very rarely deal directly with a newsroom editor, unless the freelancer is working on a substantive story.386

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9. the financial times 9.1 The Financial Times focuses on the detailed and impartial reporting of business and financial issues. Lionel Barber, current editor of the Financial Times, told the Inquiry that as a consequence of this focus, that paper avoids the more populist news items which might be given space in other parts of the UK press.

¶History C 9.2 The Financial Times (FT) was first published in 1888. In 1945 it merged with the Financial News. The FT was acquired by Pearson Plc in 1957 and is now a global newspaper, printed in 18 locations, in three international editions and with estimated global readership of 1.4m across more than 100 countries.387 Pearson is primarily an education publishing company, with publications of educational material accounting for 74% of its revenue. 19% of Pearson revenue is derived from its consumer book publishing arm, with the remaining 7% coming from the FT Group which provides business information both through publication of the FT and digital services.

¶9.3 The FT Group, including both FT print and digital services had sales in 2010 of £403m, with operating profit the same year of £60m. Digital revenues accounted for 40% of FT Group revenues. The FT Group employs 2,600 people, of whom 1,600 are based in the UK.388 In February 2012 the FT had a UK circulation of 316,493, making it the third largest selling broadsheet newspaper in the UK after the Daily Telegraph and The Times, giving the FT some 3.5% of the UK national daily newspaper market.389

¶Governance structures 9.4 FTL is wholly owned by Pearson Group and as such both the Chief Executive and the editor report to the Chief Executive of Pearson Group. Pearson is a public company and has dual listing on the US and UK stock exchanges.390 The editor of the Financial Times is appointed by the Chief Executive of Pearson Group, who is also the only person who can remove him or her. On financial matters the editor reports to the Chief Executive of the FT. The editor of the FT, Mr Barber,391 has made it clear in evidence to the Inquiry that there is no editorial involvement by Pearson. The Chief Executive of the FT has said that reporting to Pearson provides 'a further layer of governance',392 but no additional information has been provided on how that relationship works in practice.

¶9.5 The FT 'family' consists of a number of different news services. The FT itself and FT.com, where relevant, has according to the FT's own figures,393 a combined paid print and digital circulation of 591,390. This is made up of the FT newspaper's daily (global) circulation of 344,583 noted above394 and the 247,000 paying FT digital subscribers. The FT has said that it has a combined print and online average daily readership of 2.1m people worldwide. FT.com has over 4m registered users.

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¶Financial Times boards 9.6 The FT Board of Directors comprises the editor and Chief Executive of the FT and the managing editors of other parts of the FT family as well as senior Directors with responsibility for finance,

¶HR and communications. There are no independent Directors on the Board.395 The Board is not expected to have knowledge of the sources of stories that appear in FT publications.396

¶Financial Times financial governance C 9.7 The FT group is profitable and has shown growth in profits over the period 2005-2010.

¶Financial Times policies and procedures 9.8 Pearson PLC publishes a Code of Conduct which requires all Pearson employees (and therefore all FT employees) to conduct themselves in accordance with the law and with the ethical principles set out in that Code.397 All Pearson employees are reminded of the Code on an annual basis and required to confirm compliance or identify cases of non-compliance.398

¶Pearson employees can report breaches of the Code to their manager or in-house legal team.

¶9.9 The FT incorporates the Editors' Code of Practice into employee contracts and has further, additional requirements in relation to financial reporting and share ownership.399 FT employees are asked by management to sign up to the terms of the Editors' Code of Practice and are asked to declare any financial interests in a share register. Evidence has been submitted that demonstrates 75% of FT employees had done so.400 It is the intention of the FT to require all employees to sign up to compliance with the Editors' Code on an annual basis.401 The Inquiry was told that management are not aware of any breaches of the Editors' Code of Practice at the FT.402

¶9.10 Mr Barber said that journalists at the FT are expected to go beyond what is required in the

¶PCC Code and uphold the highest levels of ethical journalism at his title. To this effect he told the Inquiry that:403

"…the reason we set such a high bar is that our relationship with our readers -- and they are largely in business and finance, but not exclusively, and diplomacy and academia – is one of trust. People have to be able to rely on the Financial Times for accurate information which is set in context, multiple sourced and that they can rely on it because they're making decisions, important decisions in their respective professions."

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¶9.11 The news editor is responsible for ensuring that the relevant editorial checks are made in the FT newsroom. Mr Barber has described the position of the news editor at the FT as one the most "critical appointments that I can make as editor".404

¶9.12 Pearson also operates a whistle-blowing hotline called 'Ethicspoint' which allows employees to report breaches of the Pearson code on an anonymous basis.405 However, Mr Barber told the Inquiry that the FT does not offer a similar whistle blowing hotline for breaches of the Editors' Code of Practice. Of course, employees are entitled to use the Pearson hotline to raise any concerns they might have, but Mr Barber said that he would expect any issues in relation to such breaches to be brought to the attention of senior management directly.406 Mr

¶C Barber spoke about a "good culture" at the FT and said that he would expect problems to be shared at all levels. He also told the Inquiry that the managing editor operates an open-door policy for staff who may wish to raise any HR issues, and works together with the Financial Times union, to whom individuals can also bring grievances.407

¶9.13 In this regard Mr Barber told the Inquiry that:408

"I think the FT should be the gold standard in journalism, and that means that we need to uphold the highest practices, the highest standards of integrity, and that is why we have the Investment Register and why we want to have full compliance from our journalists."

¶9.14 The FT also has in place an anti Bribery and Corruption policy, introduced after the Bribery Act 2010.409 Where an employee might have a concern relating to bribery or corruption at the FT, they are required to raise it with their immediate manager or with the in-house legal or internal audit teams, or to use Ethicspoint to report their concerns, should they wish to do so anonymously.

¶9.15 The FT has policies in place regarding approval of payments to third parties and payment of expenses to employees.410 In both cases expenditure within agreed budgets and spending limits are approved by the individual incurring the expenditure and on the basis of appropriate evidence of the expenditure. Generally two individuals will review any expenses claim.411 These processes are checked regularly to ensure compliance.412 The FT states that it does not pay sources for stories, though sometimes reasonable expenses, such as travel, may be reimbursed, though no specific incidences are recalled.413

¶9.16 Whilst the editorial management team is responsible for ensuring editorial staff adhere to the PCC Code of Practice, other policies such as the company's anti-bribery policy are the responsibility of the Company Secretariat team.414

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¶Financial Times management structures and processes 9.17 The FT Management Board are responsible for the corporate and financial governance of the

¶FT. Its operation is entirely separate from all editorial responsibilities which lie with the editor.

¶The FT's finance team is responsible for overseeing the processes of expenses and invoice payments.415

¶9.18 It is the role of the managing editor to ensure the management of the editorial budget, staff management and the general departmental administration of the newsroom.416 The C managing editor is also responsible for administering the Investment Register, an internal procedure which ensures that the investment interests of editorial staff are appropriately disclosed.417

¶Financial Times incentives 9.19 Financial incentives for the Chief Executive are linked to circulation and profitability of the group.418 There are no financial incentives for the editor related to the production of exclusive stories.419

10. the regional press 10.1 There are 1,167 regional and local newspapers operating in the UK today, including 105 dailies,¹⁵¹⁵ Beat; Big Brother Watch; British Psychological Society; Carbon Brief; Carnegie Trust; Democratic Society; Disaster Action; Federation of Muslim Organisation; Federation of Poles in Great Britain; Full Fact; Howard League for Penal Reform; Inclusion London; Irish Traveller Movement; Joint Council for the Welfare of Immigrants; Joint Enterprise: Not Guilty by Association (JENGbA); London Muslim Centre and the East London Mosque; Make Justice Work; Migrant and Refugee Communities Forum Mind and Rethink Mental Illness; National Aids Trust; Neuroimmune Alliance; Professionals Against Child Abuse; Refugee Council; Royal College of Psychiatrists; Runnymede Trust; Samaritans Sense About Science; Support After Murder and Manslaughter (National); Transparency International UK; UK Drug Policy Commission; United Communications Ltd; Wellcome Trust, Cancer Research UK and Association of Media Research (Joint Submission); Wish; Youth Media AgencyShow full note Sundays,⁵⁰⁴⁵⁰⁴ It is suggested that "no evidence" in this context does not mean there were no lines of investigation or no suspicion of criminality but that they did not have available at that time sufficient evidence to charge other people. It might be that the officers intended to convey this to Mr Yates, but it would have been entirely reasonable for Mr Yates to interpret the reference to "no evidence" not as meaning "insufficient to prosecute" but that there was no evidence capable of being developedShow full note paid weeklies,⁵³³⁵³³ pp8-9, lines 21-9, Keir Starmer, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Transcript-of- Afternoon-Hearing-4-April-2012.pdf free weeklies and ten combined weekly titles.420

¶As of 1 January 2012 there were 87 regional press publishers, including 40 publishers who produce just one title each.421 The top 20 publishers account for 86% of all regional press titles and 97% of total weekly circulation.422 Table 5.1 (below) sets out the twenty most significant regional newspaper groups measured both by weekly circulation and by the number of titles published.

¶10.2 Regional newspapers in the UK are read by 32.9 million people (70.7% of all British adults), compared with the 56.8% who read a national newspaper. Significantly, 27% of those who read a regional newspaper do not read a national newspaper.423 In addition to the regional print titles there are also over 1,600 websites and hundreds of other print, digital and broadcast channels produced by local and regional media groups.424

¶10.3 The regional and local newspaper industry also has a significant economic footprint. Over

¶30,000 people, including 10,000 journalists, are employed by the regional and local press.425

¶The four largest regional newspaper groups had revenues in 2010 of £1,330m, with total sales and advertising revenue across the industry of £2,191m.426 However, the regional and local newspapers market has been in significant decline for a number of years. Some regional newspapers have seen their circulations halve since 2000 and others have been forced to close entirely. Annual regional newspaper circulation has fallen from just under 3.5bn in 1985 to below 2bn in 2009.427 The factors considered to contribute to this decline in circulation include: increasing access to, and adoption of, internet information sources: economic conditions; and lack of engagement with print media by young adults.428

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¶10.4 The decline in circulation has been matched by a decline in revenue. Print newspapers have two main sources of income – copy sales and advertising. Advertising is predominantly in two different forms, display advertising and classified advertising. The local and regional press tend to rely much more heavily on classified advertising than do the nationals, with

¶C classified advertising accounting for 41% of revenues among the regional press but only 6.5% of revenues in the national press.429 All three forms of revenue have been under significant pressure over recent years.

¶Table C2.1 rank – group name rank – titles Weekly weekly No. of titles Circulation circulation 1 Trinity Mirror plc 3 140 10,087,945 2 Johnston Press plc 1 243 6,428,426 3 Newsquest Media Group 2 187 6,247,326 4 Northcliffe Media Ltd 4 91 4,690,109 5 Associated Newspapers Ltd 17 1 3,817,120 6 Evening Standard Ltd 17 1 3,503,640 7 Archant 6 66 1,725083 8 D.C. Thomson & Co Ltd 15 6 1,588,395 9 The Midland News Association Ltd 9 17 1,557,750 10 Tindle Newspapers Ltd 5 73 1,122,997 11 Iliffe News & Media 7 39 973,897 12 KM Group 8 19 322,269 13 Independent News & Media 15 6 458,483 14 NWN Media Ltd 14 14 437,451 15 Bullivant Media Ltd 13 9 364,153 16 CN Group Ltd 13 10 361,695 17 Irish News Ltd 17 1 261,882 18 Dunfermline Press Group 10 14 241,609 19 Topper Newspapers Ltd 17 1 212,384 20 Clyde & Forth Press Ltd 12 13 206,728 – total top 20 publishers – 951 44,609,342 – total all publishers (87) – 1,101 46,034,273

¶Source: Newspaper Society, January 2012430

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¶10.5 Overall advertising revenues in the regional press have fallen steeply, from a high of £3,133m in 2004 to £1,599m in 2010. This is a much steeper decline in advertising revenues than has been seen in the national press or in consumer magazines.431 The decline in advertising revenue has been largely driven by competition from the internet. Classified advertising, in particular, has moved online, with the share of classified advertising online rising from 4% in 2002 to over 60% in 2010, and the printed press' share falling commensurately from 96% to under 40% in the same timeframe. That trend is predicted to continue, with the internet accounting for over 80% of classified advertising by 2015.432 Display advertising has also C moved online, but the trend is not as marked as is the case with classified advertising.433

¶10.6 The net result of these changes is that revenues in regional and local newspaper publishing have been very hard hit. Trinity Mirror's regional division saw revenues fall by 47% between

¶2005 and 2010, while Newquest has seen revenues fall by 56% over the same timeframe and

¶Northcliffe has seen its revenues fall by 50%. Johnston Press appears to have suffered less over the period, with revenues falling only by 23%, but it is clear that conditions for regional and local newsgroups are very difficult.

¶10.7 Despite this bleak picture, regional news provision remains essentially profitable, with the three of the top four regional newspaper groups for which figures are available posting profits of £154m between them in 2010.434 Sly Bailey, then Chief Executive of Trinity Mirror, told the

¶Inquiry that, in between her submission of written evidence to the Inquiry on 13 October

¶2011, and her appearance at the Inquiry on 16 January 2012, the company had reduced the number of regional titles it publishes from 160 to 140.435 Ms Bailey indicated that Trinity

¶Mirror's regional business was facing structural challenges, with the competition from the internet and the proliferation of new connected devices, as well as cyclical challenges from the state of the economy. She said that the cyclical challenges had hit the hardest.436 The effect of the economic downturn has meant, for instance that whereas at its peak Trinity

¶Mirror had seen £150m in revenue from recruitment advertising, this figure had reduced to

¶£20m last year.437 Ms Bailey said that Trinity Mirror's response to the current situation was to restructure and re-engineer the industry using technology, rather than trying to do the same things with fewer people.438

¶10.8 This picture was echoed by editors of regional newspaper in their evidence to the Inquiry.439

¶Maria McGeoghan, editor of the Trinity Mirror Regional title, the Manchester Evening News, told the Inquiry that:440

"…circulation on the Manchester Evening News and the paid for weekly titles is declining, but our website has got 1.5 million unique users every month and is growing, and I think the challenge for all of us is how we can make more money out of that."

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¶10.9 Over recent years the regional and national press has been concerned about, and lobbied on, a number of public policy issues that impact on them. These have included: changes in the rules governing statutory notices; local authorities publishing their own free newssheets, in particular where they are partially advertising funded; and the media merger rules as they apply to the transfer of ownership of newspaper at the regional and local level.441 This last issue is considered to be the most significant and was raised by Mr Bailey in her evidence to the Inquiry.442

¶10.10 The exigencies of the economic and structural problems faced by the regional newspaper industry have led to a substantial extent to groups looking to consolidate and rationalise

¶C their holdings. Savings can be achieved where titles that are geographically close can achieve synergies through working together. This has led to regional newspaper groups looking to consolidate their holdings, in particular with an eye to geographical rationalisation. The regional newspaper industry has been concerned that the Office of Fair Trading (OFT) is inclined to consider proposals for newspaper mergers in the context of the local newspaper market only, rather than taking account of the wider competition from, in particular, internet services. This, the industry argues, leads to potential regional newspaper transfers that could allow titles that would otherwise be uneconomic and may have to close to survive under different ownership. In 2009 the OFT conducted a review of the media merger regime as it applies to local and regional newspapers, and concluded that:443

"…the current merger regime, which is broadly the same for newspapers as for other industries, is well placed to take into account developments such as competition from the internet because it is evidence-based and capable of reflecting market realities. The regime is also flexible in that it can take account of valid 'failing firm' arguments, as well as efficiencies and any other benefits to customers brought about through a merger. The OFT has therefore recommended that no legislative changes are needed to the media merger regime. The OFT proposes that it will formally seek Ofcom's view in future newspaper merger cases, given its specific sector knowledge in the UK."

¶10.11 The first proposed regional newspaper transaction since this new process involving Ofcom was introduced was the proposal of the Kent Messenger Group to acquire seven local weekly titles from Northcliffe Media Limited. Ofcom conducted a Local Media Assessment which found that the 'merger may provide the opportunity to rationalise costs, maintain quality and investment, and provide a sounder commercial base from which to address long-term structural change'. The OFT noted that it was able only to consider consumer benefits and that Ofcom was not able to guarantee that in the longer term any benefits arising from the transaction would accrue to consumers rather than to shareholders. In the light of this the OFT said that it could not conclude that the evidence presented to it was sufficiently compelling to indicate that those benefits can and will only be achieved through the merger. The OFT also said that they had not been shown any compelling evidence that in the absence of the transaction the titles would all continue to exist as economic going concerns. The OFT therefore concluded on 18 October 2011 that the merger should be referred to the Competition Commission.444 Within a month of the OFT decision Northcliffe had announced the closure of two of the titles concerned, the Medway News and the East Kent Gazette.445

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¶10.12 In relation to regional and local newspapers, I do not make a specific recommendation but I suggest that the Government should look urgently as what action it might be able take to help safeguard the ongoing viability of this much valued and important part of the British press. It is clear to me that local, high-quality and trusted newspapers are good for our communities, our identity and our democracy and play an important social role. However, this issue has not been covered in any detail by the Inquiry and, although the extent and nature of the problem has been made clear, the Inquiry has heard no evidence as to how it might be addressed. I recognise that there is no simple solution to this issue. I also recognise that many efforts have C been made over the years to try to find a solution, and that many of the options for public support that have been canvassed are not appropriate. This does not make the need to find a solution any less urgent. I should also, perhaps, make it clear that the regulatory model proposed later in this Report should not provide an added burden to the regional and local press.

11. Magazines and periodicals 11.1 The UK magazine market is substantial. There are some 3,000 consumer titles in the UK (this is separate from the 4,765 business to business magazines). The magazine industry has a value of £4.1bn, with an estimated 1.4bn copies sold or distributed annually, and consumers spending some £1.9bn a year buying magazines.446 ABC monitors some 515 consumer magazines published by 161 publishers with a total circulation of 54,751,905.¹¹⁰¹¹⁰ http://www.bbceng.info/Eng_Inf/EngInf_12.pdf of those

¶161 publishers publish only one title, with a further 36 publishing two to four titles. The four most prolific publishers publish 181 titles between them. As is to be expected in such a broad and varied market, circulation varies enormously. Of the seven consumer magazines that have circulation of over a million, four are supermarket magazines, two are TV listings magazines and the other is the National Trust Magazine. Other magazines circulated to members of particular associations (for example, Saga or RSPB) have very high individual circulation. Beyond that there is no obvious pattern or rhythm to levels of circulation, with lifestyle, health and celebrity magazines varying considerably in popularity by title. Most of these consumer magazines are specialist interest titles of varying sorts and are not engaged in the sort of news and current affairs reporting, or reporting on individuals, with which the

¶Inquiry is primarily concerned.

¶11.2 The magazines classified by ABC as 'women's interest weeklies' include some of those best known for their coverage of celebrities and celebrity lifestyles. These 24 titles are published by 11 publishers and have a combined circulation of just over 7m.447

¶11.3 According to the Periodical Publishers Association (PPA) magazines are read by 87% of the population and, unlike newspapers, are particularly popular among the young, with at least

¶91% of 15-24 year olds reading a magazine. Whereas newspapers are essentially ephemeral, and understandably have developed a reputation as tomorrow's fish and chip wrappers, magazines are kept and referred to because they are considered to be a "trusted friend".448

¶11.4 Magazines have not been hit as hard by either structural or cyclical factors. Consumer magazine circulation has fallen, from around 1.5bn in 1985 to just over 1bn in 2009.449

¶Advertising revenues, having held steady at around £750m from 2000 to 2008, fell steeply in 2009 as the economic downturn hit, to just over £500m, and have not yet recovered.450 A PPA survey in 2010 found that magazine publishers in both the business to business and the consumer market were positive about the future – 78% of consumer magazine publishers were profitable, with turnover in 2011 projected to rise by over 5% and 97% of publishers expected profitability to remain steady or improve.451 This confidence was echoed by the editors of Heat, OK! and Hello! Magazines when they gave evidence to the Inquiry.452

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¶Editorial practices and ethics of the magazine titles C 11.5 The Inquiry has heard evidence from the editors of three of the most popular weekly magazine titles in Britain: Heat, OK! and Hello! Magazines. It has been evident that there are some similarities with newspapers in terms of practices of the magazine newsroom, awareness and application of the Editors' Code of Practice, as well as the impact of technological change and the phenomenal growth of the internet as a source of news and information.

¶11.6 Heat Magazine employs 32 members of staff. These include three news desk reporters, one features editor and a number of reviews editors. The rest of the team comprise the art and production team.453 Hello! Magazine has forty employees,¹⁹¹⁹ One of the issues that arose in the House of Commons concerned the allegation that Mr Hunt had breached the terms of the Ministerial Code. As I have made consistently clear, my approach has been focussed on the relationship between the press and politicians and the conduct of each as a matter of generality; it is no part of my intention or my function to pass judgment on anything else and, in particular, I have not addressed the political (still less the party political) questions that have been askedShow full note of whom are either journalists or subeditors.454 OK! Magazine use only in-house journalists and employ 25 members of staff.455

¶OK! Magazine 11.7 Northern and Shell owned OK! magazine is internationally one of best known and most read celebrity weekly magazines,456 and has a weekly UK circulation of 473,000, and an estimated readership of over 2m. The OK! Magazine website is managed and edited separately and has its own editor. Lisa Byrne, the current editor of OK! Magazine described her title as:457

"…basically an exclusive invitation into the rich and famous and celebrities in this country and the States with worldwide celebrities. So we invite our readers into people's homes, to their babies' christenings, first pictures of their children, amazing exclusive weddings, so -- even the parties are exclusive, so it's just a fantastic aspirational magazine for readers to have a look at celebrities and their lifestyles."

¶11.8 Ms Byrne told the Inquiry that the availability of news on the Internet has directly impacted the circulation celebrity magazines. She said that OK! Magazine now focuses less on celebrity news, and has shifted its emphasis on more exclusive features and stories which are less readily available online.458

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¶11.9 The majority of content that is published in OK! Magazine is sourced either directly from celebrities or through their agents. Consent is therefore freely offered in most cases for the publication of such content. Ms Byrne told the Inquiry that approximately 80% of content is produced with the direct consent of those celebrities involved.459 The remainder of content is either "…bought-in interviews, celebrity features, news round-ups and celebrity columns".460

¶Such material is subject to the same processes of verification that the Inquiry has been told is common to all newsrooms; checks are made by sub-editors, senior editors and the legal department. Ms Byrne said that she is "…aware of almost every story that goes in the C magazine".461

¶11.10 The conduct of staff working at OK! Magazine is not subject to a specific code of practice.

¶Nor does OK! Magazine subscribe to the PCC. However, Ms Byrne told the Inquiry that she expects her journalists to adhere to the terms of the Editors' Code of Practice. She argued that the efficacy of the reporting in OK! Magazine is dependent on a strict adherence to the

¶Editors' Code of Practice, as this is vital to maintaining the relationships that the title has built up with the celebrities on which they report.462 Ms Byrne also stressed the importance of ethics to the OK! Magazine newsroom, as well as her role in overseeing that ethical practices and standards are upheld on a day to day basis.

¶Heat Magazine 11.11 Heat Magazine is owned by Bauer Consumer Media Limited,463 which is a UK division of the

¶German owned Publishing House, Bauer Media Group.464 The magazine attracts approximately

¶320,000 readers a week. Heat Magazine also operates a website, which has been described by current editor, Lucie Cave, as an important feature of the Heat brand. The website attracts over 1m unique users each month. Ms Cave described the role of Heat Magazine:465

"…to cover the celebrities of the day in an entertaining fashion with an emphasis on interviews and amazing photo shoots that we do ourselves against a backdrop or a highly credible entertainment, TV and reviews section."

¶11.12 In addition to requiring staff to abide by the terms of the Editors' Code of Practice, Heat

¶Magazine also require staff to adhere to the Bauer Group's Best Practice Guidelines. Ms Cave stated to the Inquiry her expectations around journalistic standards and practice. Ms Cave fully expects all staff working for Heat Magazine to follow the Code and Practice and the

¶Bauer guidelines as well as fully obeying the criminal and civil law. The Bauer Group Best

¶Practice Guidelines are reviewed on a regular basis and circulated to the newsroom.

¶11.13 Ms Cave told the Inquiry that content is subject to routine checks by editors during the publication process, and external lawyers provide advice on an ad hoc basis as appropriate.

¶The magazine publishes some content that originates from PR material, although Ms Cave was not able to quantify exactly proportion of the magazine is derived from such material.

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¶Hello! Magazine 11.14 Hello! Magazine is owned by the Spanish Company HOLA, S.L., an independently owned family business.466 Between January and June 2011, Hello! Magazine recorded average total sales of 413,311 copies per week.467 The title also has an online website, which is independent from the magazine and is edited by a separate editor.

¶11.15 Rosie Nixon, joint editor of Hello! Magazine described the title as promoting the positive portrayal of celebrity personalities. Ms Nixon said that the unwritten philosophy of Hello! Magazine lies in the phrase "la spuma de la vida" (the froth of life), words attributed to C the founder of the company, Eduardo Perez's, grandfather.468 Ms Nixon has told the Inquiry that:469

"…the function of the magazine… is to entertain. It's to provide an insight into the lives of the rich and the famous. …we take a look at the lighter sides of the personalities that we feature."

¶11.16 Hello! Magazine publishes 'exclusive stories'. These are agreed in advance with the celebrities or public figures concerned. Additionally, the magazine also publishes some news-based stories obtained through a variety of PR agencies. She argued that as a weekly publication, Hello! Magazine is primarily focused on building "long-term relationships with personalities, rather than getting one-off 'scoops.'"470

¶11.17 Journalists at Hello! Magazine are expected to abide by the PCC Editors' Code of Practice. However, Ms Nixon told the Inquiry that "there are no formal internal documents relating to corporate of editorial governance beyond the PCC Code."471 The title also does not have a formal policy in relation to payments to external sources, but Ms Nixon told the Inquiry that as a rule it does not make cash payments for any information. The majority of the magazine's content is produced in-house by pay-roll staff; a smaller amount of material is generated by freelance journalists, whose work is invoiced and processed according to the company's procurement policies.472 Hello! Magazine makes payments for exclusive stories, and any fees are discussed and agreed with HOLA, S.L.'s CEO.

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¶aLterNatIVe NeWS prOVIDerS 1.1 For centuries the printed press was the only medium that brought news to the people. C The introduction of broadcasting in the 1920s brought a new voice, but one that had a very different relationship with the public than that of the newspapers with their readers.

¶Technological changes in the last few decades have completely revolutionised the market in which newspapers are working, leading to the fragmentation not only in readership and advertising but also the introduction of news providers that are not currently a part of the self-regulatory, or indeed any other regulatory, regime.

2. Broadcasters 2.1 The main source of news in the UK is broadcasting, with 59% of news consumption coming from the three main broadcasters (as opposed to 29% from the six main national newspaper groups).1 At the same time broadcasters reach a higher proportion of the public than any individual newspaper title, with 81% of those in the UK who consume news receiving some of their news from the BBC.2

¶2.2 96% of UK households have digital TV,3 offering 50 TV channels without subscription4 (and many more with subscription), including four free to view 24 hour news channels, with at least another six5 24 hour news channels in some subscription packages. With the significant exception of the BBC these broadcasters are either advertising or subscription funded. This means that broadcasters are competing with newspapers for sales, for audience time, and for advertising revenue. Broadcasters are regulated by Ofcom, operating under statutory powers, and are subject to the Ofcom's Broadcasting Code.

¶The BBC 2.3 The BBC is a national public service broadcaster which is established by a Royal Charter6 (this was last renewed in July 2006, and came into force on 1 January 2007)7 and a Framework

¶Agreement.8 The Royal Charter sets out the objectives and purpose of the BBC.9 There also exists a Framework Agreement between the BBC and the Secretary of State for Culture, Media and Sport, which sets out the provisions of the BBC's funding and regulatory duties.10

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¶2.4 The BBC Trust is the sovereign body, responsible for making overall strategic decisions for the BBC. It has full oversight of the BBC Executive Board.11 Lord Patten, the current Chair of the BBC Trust, has made a clear distinction between the responsibilities of the Trust and the BBC Executive. As a sovereign body, the Executive is required to act in accordance with the governance set out by the Trust; equally, the Trust must not exercise the functions that are the responsibility of the Executive.12

¶C 2.5 A number of individual Boards report into the Executive Board, including the Editorial Standards Board. This is the main editorial forum for the discussion of editorial standards issues facing the BBC by senior editors, and where responses to such issues are formulated and discussed.13 The function of the Editorial Standards Board is therefore to monitor and review the editorial compliance systems which are in place at the BBC, in tandem with the Complaints Management Board.14

¶2.6 The former Director General of the BBC, Mark Thompson, explained to the Inquiry that he also served as the Head of the BBC's Executive Board. As Editor-in-Chief he was directly responsible for the entirely of the BBC's editorial and creative output.15 Mr Thompson described the BBC in the following terms:16

"…the character of public service broadcasting and the character of the BBC's editorial mission is different in many respects from that of some newspapers. The kinds [sic] of stories we do are different. In matters of privacy, our focus, when there is a debate about intrusions of privacy, are, I think without exception, in a journalistic context, around investigations into matters which I think everyone would accept were of public interest. …we don't do any investigations into people's private lives for their own sake."

¶2.7 The BBC meets its public purpose obligations, set out in the Royal Charter, through the distribution of information, education and entertainment. These are delivered on multiple platforms and include television, radio and online services.17

¶Corporate Governance 2.8 The BBC's Editorial Guidelines set out the overarching principles underpinning editorial management at the corporation as well as defining the appropriate structure for that management. These Guidelines, most recently revised in 2010 following a public consultation process, are "founded on the BBC's stated editorial values".18 The Trust is responsible for commissioning these Guidelines from the Executive Board. In addition to the Guidelines, the

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¶BBC must also comply with sections of Ofcom's statutory Broadcasting Code,19 including the

¶Code on fairness and privacy. This safeguards the treatment of individuals and organisations in programmes broadcasted by the BBC. Compliance with the BBC's Editorial Guidelines is the responsibility of the individual editor and producer.20 In addition to the Editorial Guidelines, there are separate Producers' Guidelines. Certain programmes, particularly those which rely on investigative journalism, also have to abide by relevant individual handbooks. The BBC C has separate policies relating to complaints, data protection, and fraud management and ant-bribery.

¶2.9 Different units at the BBC have responsibility for the general oversight of specific regulatory areas. For example, Fraud Management is overseen by the Investigations Unit under the overall supervision of the Chief Operating Officer and the Chief Financial Officer. Data Protection is overseen by the Information and Compliance Unit. With effect from 1 October 2007, the

¶Controller, Fair Trading was appointed as BBC Compliance Officer. There is also a Central

¶Compliance Unit (also established in 2007) which is responsible for monitoring, improving and reporting on the BBC's compliance obligations. The Compliance Unit is "not responsible for delivering compliance but is responsible for ensuring that an appropriate framework is in place to minimise compliance failures."²¹²¹ p10 ibid Editorial policy compliance and financial compliance fall outside the remit of the Compliance Unit's functions.

¶Regulation of the BBC 2.10 The BBC is regulated by the BBC Trust. The Trust has a 'supervisory role' which is generally restricted to the regulation of broadcast content after it has been transmitted.22 Lord Patten told the Inquiry that:23

"I would never ever seek to interfere with one of [Mr Thompson's] editorial decisions. I wouldn't, for example, ever ask to see a BBC programme, at least not in conceivable circumstances, before it was broadcast, if the Director General had decided it was worth broadcasting".

¶2.11 However, Lord Patten also told us that there were occasions where the Trust would consider the principles of the Editorial Guidelines prior to transmission.24 The Trust exists to hold the

¶Executive to account, ensuring that the BBC's performance is in line with the public purpose set out in the Royal Charter. This includes: the BBC's compliance with general law; regulatory requirements; as well as the policies set by the Trust, including editorial guidelines and other codes, strategies and other priorities. To this effect, the duty of the Trust is to ensure that the BBC functions in the interest of licence fee payers.25

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¶2.12 Ofcom is responsible for the regulation of some aspects of the content produced by the BBC. This responsibility is defined in the Royal Charter and Framework Agreement, and the Communications Act 2003.26 Therefore, the regulatory jurisdiction of the Trust and Ofcom overlap in respect of this content. Ofcom exercises a regulatory function in relation to the BBC's commercial activities, notably where they impact on the wider media market. All BBC commercial services must comply with the Ofcom Statutory Code, and Article 29 of the C Framework Agreement requires the BBC Trust and Ofcom to create a Joint Steering Group in respect of market impact assessments.27 However, the BBC Trust assesses the market impact of "non-services" in-house (applying a Public Value Test). There is a clear delegation of function to Ofcom in relation to the assessment of the market impact of the BBC's commercial activities. This is accompanied by an express recognition that Ofcom could play a greater role and offer assistance and expertise to the BBC, including in relation to areas which currently fall within the remit of the BBC Trust (such as non services).

¶2.13 Ofcom also exercises a role of oversight in relation to the editorial content of BBC output, specifically in relation to privacy and fairness. Where Ofcom finds a breach of the privacy or fairness sections of its Code, it may require the BBC to broadcast a statement of its findings.28 Further, should Ofcom find that the Code has been breached "seriously, deliberately, repeatedly, or recklessly",29 it can impose sanctions which range from a requirement to broadcast a correction or statement of finding to a fine of up to £250,000.30 Guidance on right to reply expressly refers to the requirement under the Ofcom Broadcasting Code to afford the person a timely opportunity to respond.31

¶2.14 The Inquiry has heard evidence of situations where editorial incidents have taken place, which have led the BBC Trust to commission independent investigations into apparent breaches of the Editorial Guidelines, and the decision to impose relevant sanctions.32 The scandal around the misuse of premium rate phone lines by the BBC in 2007,33 in which it was revealed that viewers had been invited to call premium rate numbers in order to enter competitions on programmes that had, in fact, been pre-recorded, is an example. The BBC Executive proposed an action plan and the BBC Trust commissioned an independent report by Ronald Neil. Mr Neil was appointed an independent editorial adviser to the Trust in order to review the Executive's action plan. This resulted in the development of new training programmes, including the BBC

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¶Academy.34 In the interim, audience phone-ins were suspended and a new Interactive Advice and Compliance Unit was created to look at audience interaction with the BBC.

¶2.15 In October 2008, two radio presenters, Russell Brand and Jonathan Ross, made unacceptable phone calls to Andrew Sachs in the course of a radio programme aired in that month.35 In

¶December 2008, BBC Management announced an action plan to address the editorial failings which had led to the programme being broadcast.36 The progress made under this action plan was then subject to an independent review carried out by Tony Stoller (former Chief

¶Executive of the Radio Authority) and Tim Suter (former broadcasting partner and Board C member at Ofcom) for the BBC Trust.37 Both the BBC Executive and the BBC Trust reported on the findings of that independent review.

¶2.16 Speaking to the importance to the BBC of addressing these failings in editorial conduct, Mr

¶Thompson told the Inquiry about his role in informing the public of the necessary controls that have since been implemented, that:³⁸³⁸ ABC circulation figures February 2012, http://www.pressgazette.co.uk/story.asp?sectioncode=1&storycode=48913 &c=1

"…it's fundamental to my duty in this role. I think my job is to – to – not just to sit on top of a management machine and try and optimise it for editorial compliance – that's, you know, in a senses, part of what one has to do to try and get the right result – but also to take responsibility for what the BBC broadcast and also to take personal responsibility for occasions when we have fallen short of our high standards."

¶2.17 The recent revelations of sexual abuse by Jimmy Savile, and decisions around the Newsnight investigation into the matter, have raised questions in some quarters as to the effectiveness of broadcasting regulation and the internal governance systems within the BBC. None of this is a matter for this Inquiry, and there are separate inquiries into the specific issues. I merely note that, without in any way prejudging any of those investigations, the original

¶Newsnight investigations, the ITV documentary that ultimately revealed the allegations, and the subsequent Panorama programme that investigated the handling of the matter within the BBC, were produced within the constraints of broadcasting regulation, not by the print press. Any attempt, therefore, to suggest that broadcasting regulation has had any part in constraining reporting on the matter is simply not borne out by the facts.

¶Complaints system 2.18 The BBC is required to comply with the Royal Charter and the Framework Agreement.

¶Complaints to the BBC therefore have an important role to play:39

"The BBC's complaints handling framework (including appeals to the Trust) is intended to provide appropriate, proportionate and cost effective methods of securing that that BBC complies with its obligations and that remedies are provided which are proportionate and related to any alleged non-compliance."

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¶2.19 The Trust has the role of final arbiter in appropriate appeals, and has responsibility for setting the BBC's complaint framework.40 A Trust Protocol is established by the Trust, which oversees the procedures for specific areas of complaint, including editorial complaints.41 This is to ensure a clear division of responsibilities between the Trust and the Executive. The Trust does not have a role in handling or adjudicating upon individual complaints in the first instance, unless the complaint is concerning the act or omission of the Trust itself.42 In this regard, the responsibility as final arbiter is delegated to the Editorial Standards Committee.

¶2.20 Any BBC viewer who is dissatisfied with any of the content broadcasted by the BBC may submit their complaint directly to the Corporation. Complaints that relate to fairness or privacy can

¶C also be made to Ofcom, in line with their regulatory jurisdiction over this form of content. Although the complainant can submit complaints relating to impartiality or accuracy issues to Ofcom,43 it is unlikely that Ofcom would entertain these types of complaints. Lord Patten told the Inquiry that, in practice, Ofcom would inform the complainant that such a complaint could be dealt with by the BBC.44 Equally, the Editorial Standards Committee is unlikely to consider a fairness and privacy or standards matter which overlaps with the regulatory responsibilities of Ofcom, until Ofcom has completed its own processes.45

¶2.21 Lord Patten explained the nature of the complaints system, whereby viewer complaints are dealt with at the first stage by the executive's information department (possibly including the producers of the programme in question itself). Should no resolution result from this first stage of mediation, viewers can take complaints to a second stage process where they are handled by the complaints unit, governed by the Complaints Management Board (which reports directly to the BBC Direction Group).46 The last stage is the process of appeal to the Trust, should the complaint be unresolved to the satisfaction of the viewer.47

¶2.22 There is a recognition that the complaints system requires improvement, particularly in order to speed up the process of reply. Lord Patten's review of BBC Governance expressly acknowledged licence fee payers had expressed concerns that the current system was "too complicated and too slow". He told the Inquiry that he has recommended the appointment of a "chief of editorial complaints, of corrections",48 whose role would be to ensure that the system was improved and operated in a transparent manner. The Governance Report concluded that the BBC should publish a single page guide explaining where complainants should go to complain about BBC broadcast content or services. Lord Patten told the Inquiry that the BBC will work with Ofcom to ensure there is common language in the guide to explain in what circumstances complainants may complain to Ofcom. Other recommendations from the Governance Review include the streamlining of the appeals process and regular impartiality reviews. Concerns were also raised about the correction of mistakes made online on the BBC website.

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¶2.23 In 2007, the BBC Editorial Standards Committee recorded that 94% of complaints had been dealt with within ten working days. In this regard, Mr Thompson informed the Inquiry that:49

"The BBC receives well over a million contacts from the public every year, of which only a relatively small proportion are complaints, but that still adds up to something like 240,000 complaints a year, of which the overwhelming majority are responded

¶C to very quickly. We have a target of responding in ten days. I think we're currently at

93,94 per cent of that target, and in, again, the overwhelming majority of cases, the complaint is satisfactorily dealt with at that stage."

¶ITN 2.24 ITN is a news provider responsible for the production of the news programme for the broadcast channel, ITV. ITN also produce Channel 4 News, through a contractual agreement between

¶ITN and Channel 4.50 The Chair of ITN, Maggie Carver, is responsible for the organisation, but delegates editorial matters to the Chief Executive Officer, John Hardie, who is responsible for the management of editors of both ITV News and Channel 4 News.51 Ms Carver is responsible for ensuring that the corporate governance set out by the company is adhered to by staff. In part, this is done through the ITN's Compliance Manual, the ITN Health and Safety Manual and the Ofcom Code.52

¶2.25 Compliance at ITN is the responsibility of the Head of Compliance, John Battle.53 Mr Battle is author of the Compliance Manual, first published in July 2004. The Compliance Manual sets out "the industry regulations that affect news reporting, the main areas of laws affecting journalism such as libel, copyright, privacy and contempt of court and internal ITN standards and procedures."⁵⁴⁵⁴ p3, para 2.7, ibid This manual is the centrepiece guidance issued to staff at ITN and forms the basis of ITN staff training.

¶2.26 ITN recently reviewed its Compliance Manual in light of allegations of phone hacking, as well as allegations of payments to public officials by journalists and others working at the

¶NoTW. Although Jim Gray, Editor of Channel 4 News, told the Inquiry that the review of the

¶Compliance Manual was regular procedure, he explained that additionally "as part of the process triggered by this Inquiry, we have held an independent external Inquiry into ITN's journalistic practices and some the [sic] findings of that will feature in the new Compliance

¶Manual."⁵⁵⁵⁵ p2, para 8, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-John-Witherow.pdf Mr Battle also gave evidence to this effect, stating that:56

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"It's fair to say that as a grown-up and professional organisation, we'd have to have on board the Inquiry and what's been discussed here and within the news. There have been some tightening up procedures, tilting, as you said this morning, sir, towards better regulation. I don't think there's been substantive changes as a result of this Inquiry but it also includes a lot of updates on other issues, such as Twittering in court or online posting, so it's an update."

¶Channel 4 News C 2.27 Mr Gray is responsible for the entirety of editorial content of Channel 4 News, and for upholding relevant policies to ensure that journalists and individual editors at Channel 4 News are required to comply with the ITN Compliance Manual.57 Mr Gray reports directly to Mr Hardie, ITN's Chief Executive Officer. Mr Gray told the Inquiry that Channel 4 News applied similar principles to the Omand principles,58 which are "a whole series of tests about the proportionality of what is being proposed matches the level of gravity of what the story may be".59

¶2.28 Mr Gray describes Channel 4 News as a public service news broadcaster with an editorial focus on news that is in the public interest. He has said that consideration is given as a matter course to issues of privacy, consent, and public interest; all of which are built into the ITN Compliance Manual.60 He also told the Inquiry that there is a culture at Channel 4 News of behaving ethically and acceptance of journalists being held to account for their reporting. Mr Gray said in this regard that:61

"We don't want to cause any problems, and we certainly don't want so [sic] have any incoming attack on our reputation or integrity which would then go forward to possibly damage Channel 4's repute, which we are contractually obliged to uphold and we must uphold and we want to."

¶Corporate governance at ITN and Channel 4 News 2.29 Mr Battle explained that although ITN is not a content broadcaster, the organisation is still obliged to operate in accordance with the Ofcom Broadcasting Code, as well as with the expectations and requirements of the individual broadcasters, ITV or Channel 4.

¶2.30 There are three levels of compliance within Channel 4 News: the ITN system and core Compliance Manual; the Channel 4 independent producers' handbook; and contractual obligations between ITN and Channel 4 which require consultation and notice in certain circumstances. Mr Gray told the Inquiry that the compliance manual "adds layers of practice, best practice and how to go around carrying out such investigations".62 Separately, under the Ofcom Broadcasting Code, Channel 4 News is obliged to offer timely and appropriate rights of reply to the subject of a story.63 Mr Gray also described how Channel 4 News would approach a story that might involve potential breach of privacy:64

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"…if it was a serious allegation of wrongdoing or criminality, we would normally expect to contact the subject of the story in writing, putting forward the claims and the allegations and the evidence we had for what was going to be proposed to be contained in the report, and then give sufficient amount of time for the subject to respond. That can vary, That's not set down but it could be a matter of days or it could be longer. In some cases, depending on the response from the subject, it can drag on.

¶C …That's part of the way it is and if you have a real good story, you will navigate your way through that."

¶2.31 Commenting on the role of Ofcom in relation to Channel 4, and Channel 4 News, Mr Gray told the Inquiry that the Ofcom Broadcasting Code helps to codify the principles and cultural standards that Channel 4 News seeks to uphold. He explained this thus:65

"…through the ITN guidelines, [we] turn [the Code] into practice, and that's helpful as well, because for the team at ITN, that makes it our guidelines. It's not an external imposition. This is our culture we're expressing in the guidelines. It makes it more of a collaborative venture rather than: we're only doing this because of – it's a series of hurdles we have to overcome to get there. It can feel like that but it makes the journalism better at the end result."

¶Complaints system 2.32 In relation to complaints handling, Mr Battle told the Inquiry that ITN does not receive many complaints through Ofcom. He noted that, on average, ten complaints might be received in the course of a given year, and not all of these would be of a substantial nature.66 Complaints in relation to Channel 4 News are handled by Mr Gray's Deputy Editor at Channel 4 News, who consults closely with the production team. The complaints are assessed in relation to the report in question with the Head of Compliance, documented as appropriate in consultation with Channel 4. Mr Gray explained that only in serious cases would a complaint be referred to him.67 However, should a complaint be submitted through Ofcom, then the complaint would be handled in accordance with the terms set down by the regulator. Mr Gray explained that

¶Channel 4 News had received remarkably few complaints and, specifically, over the course of five years, "we haven't actually had a finding against us from an Ofcom complaint except once… and that was a partial ruling against us on an investigation".68

3. the World Wide Web 3.1 The media landscape, particularly the provision of news, both globally and in the UK has been transformed by the invention and phenomenal development of the Internet. At its simplest the Internet is a system of interconnected computer networks which use a standardised address system to enable the identification of each of the electronic devices that make up the network. Now literally billions of machines are linked. This means that huge quantities of increasingly complex information can be stored and accessed at ever greater speeds. It also means that the services that media providers can offer through the Internet to consumers can be ever more sophisticated, personalised and immediate.

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¶3.2 In terms of access and reach, 74% of adults in the UK have access to broadband, with average actual speeds of 6.8Mbit/s.69 22% of all the time that adults spend engaging with media is spent on the internet, with this figure rising to 30% for those aged between 16 and 24.

¶3.3 The Internet also enables citizens to access news generated by sources across the world.70 All UK media organisations, whether newspapers, broadcasters or others now have an C internet presence. Most of that content is available for free, although some, including some UK publishers, have begun to charge for online content. This free content can be accessed directly where the user knows what they are looking for, or can be found through search engines.

¶3.4 In addition to the individual websites of the world's news providers there are news aggregation services. Where a site is acting as an aggregator, it directs users to material created by others. These sites tend to rely on automatic selection through algorithms and usually involve no active editorial involvement by the aggregator. In some circumstances this will involve simply directing the user to the website of the news provider. In others, it involves essentially importing the news report from the original provider to the site of the aggregator. In the latter case this will mean that any associated advertising revenues will go to the aggregator rather than to the news provider. These sites are characterised by the fact that those operating the sites have little or no editorial input to the content of the material that they provide to users, take no responsibility for the accuracy of articles to which their users are directed, and have no role in the newsgathering process.

¶3.5 Although some news sites are merely aggregators of news, linking to content hosted by other news websites, Google news is different. It is a function within Google that will search for material only through online news content.71 However, the content itself is not generated by Google, nor does Google operate any editorial control over the searched content beyond the algorithms that facilitate the search.72

¶3.6 In addition to the presence that traditional providers have on the internet, recent years have also seen the growth of completely new approaches to news generation and provision. One example is the rise of blogs and other web-based news, current affairs and celebrity commentary. Blogs and other commentary come in a number of different forms, but are essentially a personal commentary. They can include examples of 'citizen journalism' produced by individuals sharing their experience of, and views on, events that occur.

¶Regulation of the Internet 3.7 In evidence to the Inquiry, the Internet has been described as an unregulated space, in which businesses can avoid the regulation of a given jurisdiction by hosting the content they publish in a different legal jurisdiction. Witnesses to the Inquiry have said that this creates an imbalance with market consequences between what might be written by UK newspapers and what might be published by websites hosted abroad.73 Witnesses have pointed to the publication of photos of, in particular, Prince Harry and the Duchess of Cambridge, which though different in terms of the surrounding circumstances, highlight issues around the existence of different jurisdictions and regulatory regimes as applied to the press and the

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¶Internet. The Sun has argued that the ready availability of photographs of Prince Harry on the

¶Internet justified in part its decision to publish those same photographs.74

¶3.8 To some extent, this is an accurate if very cursory reflection of the regulatory picture with regard to the Internet. However, it is a simplification that ignores what is a more complex C picture. Certainly, the very nature of the Internet does not lend itself to regulation. It is a global network made up of a very large number of interconnected, largely autonomous networks, operating from many different legal jurisdictions without any obvious central governing body. Indeed, in many ways this loose and lightly regulated structure has been encouraged by governments and by users as a source of both innovation and growth.

¶3.9 This does not mean, however, that the Internet is without any governing principles. To ensure interoperability of the constituent networks, as well as consistent policy on addressing, addresses and standards are administered by the Internet Corporation for Assigned Names and Numbers (ICANN), based in California, at which the UK Government is represented.

¶3.10 Access to Internet services is also regulated in the UK and Europe through telecommunications legislation as regulated by Ofcom. Internet services have predominantly been provided through the national copper wire telecoms network. The transmission of content wirelessly through the national radio spectrum network is regulated through the Wireless Telegraphy

¶Act 2006 and has regulatory impacts for access to the Internet through wireless devices other than computers such as mobiles phones (especially smart phones like the iPhone), and other

¶Internet enabled devices such as tablets (like the iPad and Kindles).

¶3.11 In addition, just as the general law applies online as it does offline, some forms of online content are also regulated. Broadcast content, known as video on demand when it is made available online, through for example the BBC iPlayer service, or in the case of Channel

¶4, through 4oD, is regulated by the Audiovisual Media Services Regulations 2009 and the

¶Audiovisual Media Services Regulations 2010, by the Authority for Television on Demand

¶(ATVOD). The necessary powers for the regulation of these services are delegated to ATVOD by Ofcom through a formal designation. These ensure that protections similar to those applied to broadcast content are applied to that same or similar content when made available online.

¶3.12 In addition to regulation of broadcast and equivalent content through ATVOD, UK Internet

¶Service Providers have also taken a broadly self-regulatory approach to some of the content they host and have applied a limited number of standards to that content. In many circumstances,

¶ISPs and others have cooperated with law enforcement and other agencies to remove illegal content or block access to it. The Internet Watch Foundation (IWF) is an example of this selfregulatory approach. The IWF works closely with ISPs to ensure that webpages, including those hosted outside of the UK, which provide access to potentially criminal content and, specifically, images of child abuse, are reported and removed or blocked at source.

¶3.13 The current reliance on collaborative approaches and industry self-regulation does not mean that enforcement of UK law online is not possible. However, successful prosecution relies on considerable cooperation across a number of agencies, not least the ISPs and content providers, and is most effective where the alleged act is also clearly criminal in the host country.

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¶3.14 To this end, it is worth noting that Twitter and other social media have cooperated with UK law enforcement in cases of obvious criminality. During the rioting in the summer of 2011, both RIM Blackberry and Twitter worked closely with police and other enforcement agencies to identify those using social media and communications networks to perpetrate or help commit criminal acts. In 2011, Lancashire County Council also worked with Twitter to identify and bring prosecutions against individuals suspected of tax avoidance.

¶C 3.15 This relative lack of internet specific regulation is unlikely to change. The Government made clear that it sees the Internet as a key driver of future economic growth and innovation, and has made public its commitment to an open but responsible Internet.75 This should be understood as an internet in which all legal content is available and there is no blocking of sites or discriminatory practice (such as prioritising one very similar product over another), and where the industry works together with Government to deliver solutions to issues particularly in relation to:

¶
• e-Accessibility;
• harmful and inappropriate content; and
• copyright.

¶3.16 Where legislation has been brought forward in relation to the Internet, this has been in response to legislative changes decided at a European level, intended to protect the privacy of users. Changes to the law have extended the powers available to the Information Commissioner's Office to ensure that it has appropriate tools to do its job effectively in a digital age.76 These changes have extended the enforcement powers available to the ICO under the DPA into the Privacy and the Electronic Communications Regulations (PECR), and include powers to:

¶
• levy civil monetary penalties for PECR offences;
• compel Communication Providers to disclose the identity of third parties; and
• amend Assessment Notice powers which will enable the ICO to compel organisations to submit to an e-privacy audit.

¶3.17 The changes have been made in response to concerns at a number of high-profile data breaches, some as a consequence of criminal hacking, others by the apparent unwillingness of service providers to pay full heed of data protection legislation (as in the case of the unintentional interception of data from wifi-wireless and remote internet devices by Google in 2009).77

¶3.18 This has been alluded to in evidence given to the Inquiry. Google stated that privacy online was a matter of growing importance to the company. David John Collins, Vice President of Global Communications and Public affairs for Google, explained that the company's attitude towards privacy online and related matters has changed considerably with time reflecting both the growth in the use of online services and the changing legal landscape with regard to the internet.78 Mr Collins said:79

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"Google has always taken privacy seriously from a very strict compliance position; it's taken privacy seriously because ultimately the trust that we have with our users is incredibly important."

¶In this respect Google has worked hard to improve public awareness of privacy issues online, C and in January 2012 launched the "good to know campaign" which actively sought to raise public awareness of privacy tools in relation to email, social network accounts and other online functions that might help users to protect their privacy online.80

4. Blogs and other web-based commentary 4.1 The Inquiry heard evidence in regard to the operation of blogs, online news aggregators, publishers, social network sites and online hosts.

¶4.2 There are a number of news blogs – the Huffington Post is an early, high profile example of one, which has developed over the years into something much more like an online newspaper

¶– which specifically aim to bring a range of news stories and views on those stories to their readers. Other examples include the Guido Fawkes Blog, which focuses on 'tittle-tattle, gossip and rumours' about Parliament;81 the Jack of Kent Blog,82 which describes itself as 'liberal and critical'; and Popbitch, which is a celebrity newsletter and message-board. Camilla Wright, co-founder of Popbitch, told the Inquiry that her intention in founding Popbitch was to create a publication like Private Eye for the celebrity world that would:83

"... look at the hypocritical gap between how those in the public eye seek to be portrayed and how they really act."

¶4.3 There is no single format for these types of sites and individual sites can evolve, and have evolved, a great deal over time. Whereas Popbitch is clear in its ambition to entertain and understands itself to "poke fun" and comment on the "lighter" side of celebrity culture, Guido

¶Fawkes, though ostensibly and in many respects similar, is different in nature. Paul Staines, the founder of the Guido Fawkes website, stated that Guido Fawkes actively seeks to break stories and prides itself on doing so ahead of the main news providers.84

¶4.4 The type and size of audience attracted by such blogs varies hugely and depends unsurprisingly on the content they carry. For example, Mr Staines told the Inquiry that the Guido Fawkes site generally had between 50,000 and 100,000 readers daily. However, when very big stories are being broken this can rise to as many as 100,000 visitors per hour.85 Mr Staines estimated that between 25% and 30% of his readers reached the site through search engines.86 Popbitch, by contrast, has 350,000 subscribers, whilst Holy Moly, which also covers celebrity news and gossip, serves 6.5 million page impressions a month to 1.6 million people.87

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¶4.5 In addition to the stand-alone blogs and sites described above, many established news providers also use blogs – for example the Guardian has been running a live blog on the Leveson Inquiry since the first of the Inquiry seminars – either for specific events or issues, or just by way of communicating with readers in a different manner. At the other end of the spectrum, many individuals run blogs on matters which are of interest to them, some of which will, from time to time, cover issues of news or current affairs and some which may

¶C well break stories if the people writing them are well placed to do so.

¶4.6 These vastly different sites are all offered to the public in the same way; they all have the same theoretical reach to the entire internet-connected population at the touch of a button (particularly when facilitated by search engines). They are also, with the regulatory exceptions set out above, entirely unregulated, though subject to civil and criminal law in appropriate jurisdictions. However, it is noteworthy that although the blogs cited here are read by very large numbers of people, it should not detract from the fact that most blogs are read by very few people. Indeed, most blogs are rarely read as news or factual, but as opinion and must be considered as such.

¶Purpose and process 4.7 Ms Wright explained the nature and purpose of Popbitch as a gossip site. She said that she believed that the public had a right to know certain facts about certain celebrities, particularly given the ability of some to "shape and influence people's lives."88 Ms Wright argued that it is only right that publishers should bring material to the attention of the public if it brings to light what she described as the "gap between people's private life and public life."89 This she argues is not only very much in the public interest but is a reflection of everyday concerns that individuals may have, as well as the reality of celebrities and others putting potential personal or private information into the public domain through Facebook and other social media, that might sit uneasily or indeed at odds with their public persona.90

¶4.8 Ms Wright acknowledged that this may mean that the line between what is private and what might be made public is fluid and dependent on context:91

"We draw the line, I would say, we look at who is making themselves influential, and if so are they living up to it."

¶4.9 Understandably perhaps, for a relatively small operation, the standards of proof deployed by Ms Wright are lower, and the processes different from those that might be found on a print newspaper. Ms Wright said in relation to the corroboration of stories:92

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"If it is a contentious or controversial story , I would want to get someone else to back up what they're saying and try and find if possible, some evidence to support what they're both saying."

¶4.10 Ms Wright also explained that whilst Popbitch may not have formal processes for establishing whether content might be in the public interest or a breach of privacy, the company does consult with and take advice from media lawyers, who have at times provided extracts from the Editors' Code of Conduct which they perceive might be useful for Popbitch to consider.93 C 4.11 Much as Popbitch understand itself to provide information to the public that it determines to be in the public interest, Guido Fawkes also prides itself on its ability to deliver stories it understands to be in the public interest, that might otherwise remain unknown. Mr Staines said:⁹⁴⁹⁴ p8, para 6.1.6, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Thomas- Mockridge.pdf

"I particularly don't think people in public life, people who are, you know, paid for by the taxpayers, or subject to the voters, should expect the same degree of privacy as a private citizen who has no public life can expect. These people – their character speaks to what the voters need to know about them as politicians, so if they misbehave in their private life – it's quite common that somebody who will lie to their wife will lie to the voters. That's an old adage that has some truth to it."

¶4.12 Indeed, Mr Staines stated in evidence that he would publish information that he assessed to be in public interest even if that information was the subject of a legally enforceable injunction. He referred in evidence to material made available by his blog which a court had ordered should be removed from the internet.95 This is explored in more detail below.96

¶4.13 Mr Staines also gave evidence on the standards and editorial processes he deploys with regard to the content he publishes. He said that in many cases he is unable to corroborate stories through a second source:97

"Yeah, quite often there's only one source in the room who can provide us with information, so we have no choice. We don't rely on single sourcing from people we don't know. There has to be some authority to that person or we have to have a level of trust built up over time. If someone came in fresh and was a single source we couldn't verify in any way whatsoever, I'd be very reluctant to run with it."

¶4.14 Mr Staines also made clear that accuracy was as important to the credibility of a blog site like Guido Fawkes as it was for a print newspaper. It is for this reason that the majority of material sourced by Mr Staines was either verifiable or from a trusted source. Only some 10% of material might be from an unknown source.98

¶4.15 Additionally, Mr Staines told the Inquiry that journalists occasionally provided him with material that an editor may have decided not to publish (that had been spiked), or that might not fit with the overall agenda of the publication in question.99 As such Guido Fawkes provides a valuable vehicle for publication of such content. Guido Fawkes also receives material that journalists want to push further and establish whether the story in question has legs.100

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¶4.16 Mr Staines also stated, in a parallel that he himself has drawn with the former editor of The Sun, Kelvin Mackenzie, that he would run stories that are single sourced if the story was of little consequence, or in keeping with the overall tone of the Guido Fawkes site, namely, that it was gossipy or humorous in nature.101

¶4.17 Much as the Guido Fawkes site is used as a proxy by some newspapers and a means of running stories that might lead to a newspaper being challenged, Ms Wright said that Popbitch is C also occasionally used by journalists from print newspapers in this manner. However, Ms Wright made clear that is a practice that she generally seeks to avoid. She noted that such an approach has not happened for some time.102 Ms Wright was also keen to emphasise that she would only publish such information if it were in the public interest. This, she said, has not yet happened.103

¶4.18 The Inquiry also heard evidence from the Carla Buzasi, Editor in Chief of the Huffington Post UK. In contrast to either Popbitch or Guido Fawkes, the Huffington Post UK is not a blog built around the knowledge and gossip of a given area, it is an online newspaper employing trained journalists and abiding by journalistic standards as set out in the Editors' Code of Practice, as well as participating in the system of self-regulation for the press through the PCC.104 The Huffington Post UK also functions as a news aggregator and links to news content hosted on other websites, as well as hosting blogs for the discussion and dissemination of opinion.

¶4.19 Ms Buzasi gave evidence on the importance of trust to the Huffington Post UK, and particularly to its reputation as a news source. This has informed editorial and management decisions made around training and editorial guidelines.105 It is therefore expected that all stories are verifiable and are not single sourced. However, Ms Buzasi acknowledged that there may be a limited number of circumstances in which single sourcing was acceptable, but it was not the rule.106 A similar emphasis on trust is placed on those news sites that the Huffington Post UK will link to.

¶Regulation of blogs 4.20 Blogs and other such websites are entirely unregulated. The Huffington Post UK is unique in having opted to subscribe to the PCC. It is the only solely online news provider to have elected to this and did so in September 2011. Ms Buzasi suggested that membership of the PCC was a natural next step for the Huffington Post UK as it had long abided by the terms of the Editors' Code of Practice. However, she expressed some frustration at that organisation's lack of consideration for online publications and intimated that the process of joining revealed flaws inherent in the existing system.107 She noted that the Huffington Post UK was eventually categorised by the PCC as a regional newspaper although it is in reality a national online publication with a substantive readership.108

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¶4.21 By contrast, Ms Wright told the Inquiry that although she was aware of the PCC Code she saw no reason for Popbitch to be part of the system of self-regulation through the PCC. Instead, she said in response to questions from the Inquiry that she believed Popbitch's own system of internal or personal regulation was more effective and better suited to the needs of the organisation.109 With regard to a future system of regulation for the press, Ms Wright was equivocal as to whether such a system would be something that Popbitch would consider C voluntarily signing up to, the detail of that system depending. Ms Wright said that she would need to determine whether that system of regulation would be useful to Popbitch.110

¶4.22 With regard to the oversight and regulation of content published by third parties, views of the

¶Huffington Post UK to hosted and other user generated content on its site are broadly typical of other hosting sites. The Huffington Post UK does not pre-moderate or edit that content.

¶Indeed, Ms Buzasi has said that:111

"We want to have their personalities shine through on their blogs but there is a framework to ensure that we're – or our bloggers are complying with the law."

¶4.23 Mu Buzasi said that a small number of comments were routed through a filter which may pick up certain word combinations or profanities. These were then directed to a moderator for review.112 Comment that was flagged by users was also directed to a moderator for review.113

¶4.24 Ms Buzasi made clear that it was her firm belief that micro bloggers and small non-commercial bloggers should exist outside any formal system of regulation. She regards this freedom from regulation as a necessary condition for the nurture of creative talent and encouragement of new media enterprises, particularly if there are substantive costs associated with that system.114

¶4.25 Google is by some margin the largest publisher of third party content to have given evidence to the Inquiry. Specifically, Google hosts user generated content through its Blogger.com service. The service hosts blogging sites, and now hosts more than 1 trillion words. That total increases at rate of over 250,000 words every minute.115 Its attitude towards the content it hosts is markedly similar to that of the Huffington Post UK. All content hosted through the service must comply with the terms of use. Beyond this, Google does not exercise any editorial control over the content it hosts on its blogger service.116 It does, however, provide a notice and take down service. Google's legal Director, Daphne Keller, has said that while a blogger service is available only through the .com domain, Google will take steps to ensure that content originating from a given jurisdiction is compliant with local law, if it receives a complaint about the content in question.117

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¶Funding models 4.26 Many blogs sites now run on a commercial basis. The largest blog sites are increasingly funded either in their entirety or in part by advertising, as is the case with both Popbitch and Guido Fawkes. Although the approach to what appears on the website or blog will vary from site to site, the technical costs associated with running a site of this sort are relatively low, and C barriers to entry to the market for both new players, be they individuals or much larger firms, are similarly low. Effectively, anyone with access to the Internet can set up a blog and seek to reach readers.

5. Social networking sites 5.1 A social networking service is an online service, platform, or site that focuses on the building and reflecting of social networks or social relations among people who, for example, share interests and/or activities. A social network service essentially consists of a representation of each user (often a profile), his/her social links, and a variety of additional services. Most social network services are web-based, providing means for users to interact over the Internet, potentially through e-mail and instant messaging. Myspace, Facebook, Twitter, LinkedIn and Google+ are all social network sites.

¶5.2 Although there is limited news provision in the terms that are relevant to this Inquiry on pure social networking sites, all social networks provide opportunities for individuals to disseminate and discuss news, information and comment. Indeed, everyday use of the Internet is increasingly characterised by the use of social networking sites and other social media. Their growth has been little short of phenomenal. Ten years ago there were no social networks; now the largest social networking site, Facebook, has over 800m users worldwide (although Facebook has recently suggested that as many of 100m of these accounts may be either dormant, fake or used for questionable purposes). The rise of Twitter has been similarly rapid. Founded in 2006, it now counts over 100 million active users each month, sending a billion tweets every four days.118 Perhaps most astonishingly (and for this Inquiry of concern to those who may be the subject either of Tweets that breach privacy or indeed the criminal or civil law), is the speed with which a message might be propagated. Colin Crowell, Head of Global public Policy for Twitter Inc, noted that during the 2012 Superbowl, Twitter processed 12,000 tweets per second.119

¶5.3 Increasingly newspapers themselves not only use the pages of social networking sites to disseminate news, but also provide platform friendly applications, to enable the application to be accessed through the specific social media. However, it is worthy of note that despite their extraordinary growth, as with most blogs, in the main few tweets or social network pages are read by very large numbers of people. Although a very small number of tweeters are followed (though not necessarily read) by very large numbers of people, and such may at times have significant impact (the Inquiry has heard evidence from Stephen Abell of the PCC of the phenomenon of Fry-bombing),120 it should not detract from the fact that most tweets are read by very few people. The television personality and actor, Stephen Fry, one of the most prolific celebrity tweeters has over 5 million Twitter followers. 5.4 Although social networking sites are not obviously in competition with newspapers for audience, revenue or advertising, they may be used to publish information that would not be able to be published by a newspaper in conformity with the standards set by self-regulation.

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¶In a practical, though not a legal, sense they might also be used to publish information that a court has ruled should not be published with little likelihood of the publisher being identified C and held to account. Indeed, there are clear and very recent examples of this practice that do not need to be repeated here. 5.5 It is in this regard that Twitter has been the focus of some interest to the Inquiry because of the role played by users in identifying individuals who had been the subject of privacy injunctions. Twitter allows members to operate anonymously, or under a pseudonym,121 and it is also possible that the company itself may not know the real identity of any member.122

¶However, Twitter has told the Inquiry that its rules forbid members from using the service for any unlawful purpose,123 and any material that is found by the company to contravene that policy can be taken down or removed.124 5.6 In this respect Twitter is similar to other social media. Most social networking sites and publishers of user generated content operate acceptable use policies (AUPs) which set down guidelines for user behaviour on those sites and cover issues such as posting of offensive content and bullying. Where a policy is breached, material is removed and in some cases the user's profile is deleted. 5.7 Most recent trends in social network technology have been towards the concept of "realtime web" and "location based" services. The real time web service allows users to generate content, that is broadcast as it is being uploaded – the concept is potentially analogous to and may indeed come to challenge live radio and television broadcasts as well as traditional print media. 5.8 Indeed, the instant nature of social networking also differentiates it from more traditional media. Rebuttals and denials of allegations can take place instantly, helping if not to kill a story at least to provide the subject of the story with a voice and make users aware that the veracity of the allegation or story may be in doubt.

¶Consideration of the law 5.9 The major websites and providers of internet services, be they social networking sites or providers of other services or functionality, tend to operate under US law if that is where the company is based. However, as witnesses to the Inquiry representing Internet firms have sought to make clear, where services are targeted at a given jurisdiction, they will also seek to comply with local law. This can and does lead to conflicts of law, for example, where issues such as consideration of privacy and other related matters conflict with rights under the First

¶Amendment of the American Constitution.

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¶Blogs and the consideration of the law 5.10 The Inquiry has heard much evidence in this regard. Ms Wright said that as Popbitch is published in the UK it abides by general law. This includes making efforts to ensure that content is not defamatory.125 Ms Wright was keen to emphasise, echoing points made by other witnesses representing online publishers and Internet businesses, that Popbitch sought to obey the local law in each of the jurisdictions in which it operated.126 Asked by Counsel to the Inquiry whether she considered the privacy of individuals about whom she writes, Ms Wright said:127

C "In era where injunctions have been such a much-talked about thing, that obviously has to be a consideration. I think if I could put it this way, Popbitch is an entertainment product, therefore we are trying to do no more than poke fun in the world of celebrity….. We get a lot of stories in [sic] which we don't print, which are things like somebody's gone to rehab, somebody has cancer, or it's about their children."

¶5.11 Ms Wright also said that consideration of privacy issues was more important to Popbitch than it once was. In evidence she referred to the example of Victoria Beckham's pregnancy, noting that at the time the pregnancy was widely discussed, and that although Popbitch were the first publishers to write about the story, the fact of that pregnancy was no secret. However, Ms Wright has said further:128

"I would be I think since then much more careful about making sure that a pregnancy was beyond twelve weeks before – in this case, this was that as well, but I would be very careful about doing that."

¶5.12 Mr Staines provided different and interesting evidence in relation to legal accountability and enforcement, particularly in relation to legal jurisdictions, that illustrates well the problems in respect of the application of national law by online publishers. Mr Staines was candid about this. He said that the servers used by the Guido Fawkes site are located in the USA. The site was previously hosted by Google on the Google free blogger system but, as Mr Staines explained, was moved when Google "became more willing to give in to legal threats."129 Mr Staines said by way of further explanation:130

"I thought it be a good moment to switch from them to a hosting provider who was robust and would stand up for my First Amendment protections."

¶5.13 This switch from Google to another blog host was made in order to make it more difficult for content Mr Staines had published to be challenged through the UK courts; he cited the experience of Wikileaks as a sufficient justification for this course of action.131 Further, Mr Staines stated that although he had been threatened with legal action on a number of occasions, no such action had been successfully prosecuted. Mr Staines also made clear that he has ignored UK Court decisions without adverse consequences.132

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¶5.14 He gave the specific example of a memorandum prepared by Merrill Lynch setting out concerns at the future prospects of Northern Rock which suggested that the eventual cost to the taxpayer might be as much as £50bn.133 Mr Staines said that he uploaded the memo in question onto a number of overseas servers to circumvent injunctions issued by the law firm

¶Carter Ruck.134

¶5.15 The attitude of Mr Staines revealed in evidence with regard to compliance with national law was unique among witnesses from online businesses who have given evidence to the

¶Inquiry. More typical were those of the Huffington Post UK, which have already been partly C addressed. Ms Buzasi was clear that the Huffington Post UK abides by UK law. Under the terms of use, users of the Huffington Post UK comment boards and blogs must undertake not to post anything that might be illegal. Users must also provide personal details, which means that legal orders or proceedings can be enforced should either legal action be brought or an injunction be imposed.135 However, she also explained that the Huffington Post UK was not able to review and "pre-moderate" potentially libellous or defamatory comment, a theme that was taken up by other witnesses to the Inquiry.136 Ms Buzasi suggested that the inability of the Huffington Post UK to make adjudications in such matters is, to some extents, mitigated by provisions made for the correction of inaccurate or potentially actionable material through the prominent provision of "send a correction button"; the site also operates what Ms Buzasi has referred to as a "robust" notice and take down process.137

6. Other providers 6.1 Mr Crowell made clear that it would be both technologically and physically impossible for

¶Twitter to pre-moderate the user-generated content hosted by Twitter, in this case tweets, and adjudicate on their potential illegality.138 In this respect, the position of Twitter is markedly similar to that of both Google and Microsoft in relation to user-generated content. Articulating the position of Google with regard to compliance in this area, Ms Keller explained that given the volume of material generated by third parties that Google either indexes, searches or hosts depending on the relevant Google service or function, it is impossible for Google to pre-moderate that content in any way or, to make adjudications as to whether content is legal or not.139 Ms Keller has made clear that both the volume and nature of the content make such decision making practically impossible. She told the Inquiry that such filtering is also technically impossible and would also run the risk of legal challenge if content that had been posted entirely legally were removed inadvertently as a consequence of such filtering.140

¶6.2 However, Mr Crowell was keen to stress that recent technological changes since the start of

¶2012 have enabled Twitter to withhold tweets within a given jurisdiction. This will enable

¶Twitter to comply more effectively with differences in local law in different jurisdictions.141 Mr

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¶Collins also provided further evidence of Google's evolving policies with regard to compliance with national law. He said that Google services targeted at a particular country comply with local law and that this applies as much to privacy and other related matters as it does to other areas of law.142 By way of example, Mr Collins explained that Google policy on privacy in the UK was shaped through an ongoing dialogue with the ICO, which had provided relevant advice.143 Ms Keller explained that the use of the .co.uk domain name underpinned the provision of services to the UK as well as compliance with the local law.144

¶6.3 Ms Keller also explained the number of routes through which an individual might seek to remove material made available through Google services. It is notable, and indeed unfortunate

¶C – although given the technological constraints understandable – that in each example the burden of effort lies with the injured party. Ms Keller explained that webmasters (those who author and maintain websites) are able to request that their site is not indexed and will therefore not appear in searches.145 Ms Keller also said that this particular approach is in the view of Google the most effective means of getting content removed. Google also provides a "remove content from Google" service, which users may use to alert staff to potentially illegal content which will be taken down if it is understood not to comply with UK law.146 Google has adopted a similar, expedited approach in relation to content that is in breach of copyright.147

7. enforcement 7.1 Despite the efforts made to comply with national law, it is clear that the enforcement of law and regulation online is problematic. Although the law with regard to online content is clear, and UK hosted content is by and large compliant, the ability of the UK to exercise legal jurisdiction over content on Internet services is extremely limited and dependent on many things (explored below) which are rarely aligned. These include: the location of the service provider; the location of the servers on which material is held; and international agreements and treaties.

¶7.2 Internet Service Providers offering services to UK customers will block content that has been declared illegal. They are, however, understandably unwilling to make decisions on whether content may or may not be illegal or to take decisions where there are grey areas in law. This has been particularly apparent in cases of alleged defamation, where ISPs and content providers have historically been unwilling to remove content without a court decision. Whilst the position of the ISPs and content providers may be understandable – issues clearly arise as to their ability to decide on the veracity of an allegation – in some cases considerable damage may have been done to the subject of those allegations before a judgment has been reached and the defamatory content consequently removed.

¶7.3 Most successful attempts to induce service providers of any sort to take enforcement action in relation to content are either through agreement, or dependant on case-specific court orders. In his evidence to the Inquiry, Mr Crowell (as well as representatives from Microsoft and Google) said that Twitter would enforce orders made by UK courts, in so far as they might apply to UK users, on a case by case basis.148 In practice, this means that for Twitter to remove a defamatory tweet that was re-tweeted, a court order would be needed in relation to every relevant tweet by every individual unique user who repeated that defamatory content.149

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¶7.4 Ms Keller has also made clear that, in cases of alleged defamation, it is Google policy in most cases only to remove material from a given service if the complainant was able to provide a legal judgment in support of their claim. However, Ms Keller acknowledged that while such material would be removed from a UK search, it might still be found through Google.com if the material in question was not in breach of American law.150 This means in practice that, C in order to have material removed from searches in multiple jurisdictions, a legal application would have to be made in each relevant jurisdiction. Ms Keller said in this respect that she hopes: "this would not be a difficult thing to do."151 It is notable that much as Twitter requires a court order in respect of each individual user, Google require such an order in relation to individual URLs.

¶7.5 Both examples are also in counterpoint to the number of instances where UK legislation and decisions by UK courts are simply ignored, as they are unenforceable. Content providers headquartered in the United States will also strenuously defend rights to free speech under

¶American law and indeed may themselves be at risk of prosecution if they remove allegedly defamatory or potentially illegal content ahead of a court decision. This position is not without legal underpinning under European Law. Under Article 15 of the European eCommerce

¶Directive which sets out the regulatory framework for trade through the Internet, ISPs are not legally responsible for the content they carry over their pipes.152 This defence is known as mere conduit. Mr Collins of Google described the apportionment of responsibilities between publishers and host thus:153

"Firstly, there is a very clear set of regulations which apply to technical intermediaries hosting platforms. It's called the E-commerce Directive and it does place a number of responsibilities on us around removal of content. I know that you're very aware of it. It's important to make the distinction between – in the system that you've outlined, it's important to make the decision between someone who provides a hosting platform for other people to create and post content, and a publisher. Blogger.com or other products that are – attempt to form a community around the product, YouTube, et cetera, they don't make us a publisher; we remain a hosting platform. So I think whatever system that you devise, it's important to retain that distinction, because not only is there already a very clear set of regulations around those principles placing responsibilities on us, but it retains a very essential balance online, which is: where does that responsibility lie? We have our responsibilities, which we fulfil; the person that produces and uploads that content has his or her responsibilities as well."

¶7.6 Mr Staines also described with some colour the difficulties that an individual or company might encounter in trying to have content removed from the internet:154

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¶"I think it is impossible for them to do anything, I would basically upload it to a free hosting service after the close of business hours, so if the law firm was contacting

¶Yahoo India, they would find that there would be no one at home and it would be up on that website until the next day at the very least."

8. press photographers 8.1 Press photographers are another source of news material. Their actions and conduct are C covered elsewhere in this Report as appropriate, so I will restrict myself to a very few comments in this regard. Based on figures provided by the British Press Photographers Association (BPPA), it is estimated that there are around 800 press photographers in the UK. Of these around a quarter are directly employed by newspapers or agencies, around 12% are employed on fixed term or rolling contracts, around 18% work through agencies as freelancers and the remaining 45% are entirely freelance.155 8.2 Those photographers who are directly employed, whether by newspapers or by agencies, might expect to be subject to the Editors' Code of Practice. Indeed, the Inquiry has been told by witnesses both from picture agencies and newspapers that the expectation is that press photographers would abide by the terms of the Editors' Code of Practice.156 Those who operate on a freelance basis are not subject to any regulation beyond the law, as it applies to everyone. 8.3 Much of the work undertaken by press photographers involves arranged photo shoots of one sort or another. However, press photographers obviously do also work by waiting for potential subjects and hoping to get pictures of them. This inevitably gives rise to the risk that photographs will be taken in situations where the subject might prefer not to be photographed and, as is made clear157 elsewhere in this report, may even be subject to harassment or distress. 8.4 The death of Diana, Princess of Wales,158 in an accident that occurred while the car in which she was travelling was being pursued at high speed by a number of press photographers in 1997 brought the role and behaviour of press photographers very much to public notice. Since then, UK newspaper editors have been committed by the Editors' Code of Practice not to publish images that are taken in contravention of the Code. The responsibility for checking whether the Code of Practice has been breached in relation to any specific image sits with the newspaper concerned. 8.5 The market for celebrity and news photographs is now a global one. A picture that might be turned down by a UK editor as not being consistent with the Code might well be accepted by non-UK newspapers, broadcasters or websites. Recent cases involving Prince Harry and the Duchess of Cambridge are instructive and are described elsewhere in this Report.159 The largely freelance nature of the press photography business means that there is a high level of competition among photographers to get the best picture.

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¶plurality

"I think sometimes – a lot of the time it isn't necessarily the size of the newspaper group, it's the strength of voice of the paper. I mean, actually, the Daily Mail is an incredibly sort of powerful voice in the nation's politics because it's a very strong product, it puts its voice very powerfully, and that's not related really to its market

¶C power, it's [related] to the way it pushes its agenda."¹¹ Setting up and preliminaries 10

1. What is plurality and why does it matter? 1.1 There is a generally held view that the media is of central importance for a healthy, wellinformed democracy and therefore control of the media should not be concentrated in too few hands. This is based on a concern that a small number of media owners could have too much influence in terms of content and, in particular, agenda setting. Policy and legislation have been designed overall to achieve a range of different media "voices", which enable consumers to have access to a range of views, which helps them to actively participate in the democratic process in the widest sense.

¶1.2 The Communications Act 2003 takes two different approaches to the nature of the plurality that is considered important. The first is the need for a "sufficient plurality of views in newspapers in each market for newspapers"2 and the second is the need for "there to be a sufficient plurality of persons with control of the media enterprises serving [every] audience

¶[in the UK]."3 The difference between a plurality of views and the plurality of persons with control of media enterprises is clear. The rationale as to why the first should apply in relation to newspapers and the second in relation to media enterprises is less clear. In any event, the media market has moved on considerably since the Communications Act 2003 was passed and the nature and number of media enterprises serving markets in the UK has changed.

¶Witnesses to the Inquiry took various approaches to what they understood by the need for plurality in the media.

¶1.3 Ofcom defines plurality with reference to the desired outcome of a plural market:4

(a) "ensuring there is a diversity of viewpoints available and consumed across and within media enterprises; (b) preventing any one media owner or voice having too much influence over public opinion and the political agenda." (emphasis added)

¶1.4 Professor Chris Megone, Professor of Inter Disciplinary Applied Ethics at the University of

¶Leeds, described both the benefits that a free press brings and the risks of a few voices dominating the public debate:5

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¶"freedom of individual expression may be served to some extent by a free press in that such a press provides a vehicle for the expression of opinion in leader and comment columns. Such free expression can contribute to informed citizens through its role in the cut and thrust of ideas. However clearly there are only a limited number whose ideas are expressed in this way, and even with letters pages, and invited contributions from politicians and the like, the number able to express themselves is very small."

¶and later:

¶"This argument could be taken further and it could be said that the public interest C in freedom of expression can even be adversely affected by a free press, if certain other conditions hold such that some voices get much more prominence than others.

¶In those conditions the power of the press as a medium of expression may lead to certain views dominating the public sphere and other views being squeezed out.

¶So the public interest in freedom of self-expression, or freedom of opinion, is served by a free press, but only to some extent, and only if the structure of the press allows for sufficient diversity."

¶1.5 This approach to both the diversity of views available and the influence wielded seems to be generally accepted. Robin Foster, an independent adviser on regulatory policy and strategic issues in the communications sector, described two aspects of plurality that he considered important: to make sure that there was a reasonable wide range and diversity of news and opinion available to the public, and to make sure that no single one of those news providers became so powerful that they had too much of an influence on opinion-forming and the political agenda.6 Professor Steven Barnett, University of Westminster, said that plurality must encompass both a sufficient number of competing media enterprises and (separately) the prevention of an unhealthy accretion of power by any single enterprise.7

¶1.6 The rationale for requiring plurality within the media and the different dimensions of it that are important seem uncontroversial. However, it is also necessary to say what the scope of media plurality should be. Ofcom notes that both they and other regulatory authorities have concentrated to date on news and current affairs, but that this is not required by the legislative framework.8 There are arguments for broadening the scope, which are considered later in this Report.9 Historically, regulators have not really looked beyond news and current affairs when considering plurality.

2. approaches to securing plurality 2.1 Attempts to secure plurality have tended to rely on four complementary approaches. First, where broadcast media are concerned, it can be argued that the existing rules around accuracy and impartiality should counter concerns about concentration of ownership. The Department of Culture, Media and Sport (DCMS) argues that this is true up to a point, but it is difficult to regulate the coverage and prominence of stories. Therefore, there is still considerable scope for influencing the agenda by the extent to which particular stories are covered or not.10 A wider range of media owners makes it harder for one or two large owners to distort the agenda in a way which suits their own purposes.

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¶2.2 Second, there have been specific rules constraining the ability of any one person or company to own too large a proportion of the broadcast market, and restrictions on the extent to which any one person or company can own both a national newspaper and a national terrestrial television channel or a local newspaper and a local television channel. These rules and how they have changed over time are outlined below. C 2.3 Third, there is general competition law. One of the key aims of competition law is to ensure that no company has such a position of power within a market that it can abuse that power, for example to force competitors out of the market to the detriment of consumers. Competition law is designed to reduce concentration of market power and, therefore, will generally produce outcomes which support plurality. However, competition rules are also designed to prevent abuse of market power; it is possible that an owner could have a dominant position which he did not abuse in competition terms (and which will therefore be allowed under the competition regime) but which was deemed undesirable in relation to plurality. It is also likely that competition rules are less able to prevent unacceptable levels of cross-media ownership where each market may be seen as distinct for competition purposes. Yet this form of ownership is sometimes seen as being of most concern because it could allow an owner to promote an agenda across a number of platforms which could be more influential than involvement in just one. This was the position originally taken by the Government in relation to media mergers when the 2003 Communications Bill was published.

¶2.4 The process by which that position changed and how the current provision in the 2003 Act relating to media mergers was introduced is fully documented later in the Report.11 The result was that the Communications Act 2003 includes provisions to allow the Secretary of State to take public interests considerations relating to plurality into account in proposed media mergers.

¶2.5 The media ownership regime takes as its starting point the position that a variety of owners will represent a variety of different viewpoints. This cannot be taken as axiomatic as owners could have a very similar set of views and values. It is nevertheless likely that the greater the number of owners, the greater number of views. Moreover, it is difficult to regulate for different points of view, so ownership restrictions act as an effective "proxy" for plurality.12

¶2.6 Media ownership rules act as a constraint on the normal workings of the market, so successive

¶Governments have thought it important to strike an appropriate balance between the needs of plurality and the needs of the wider economy, and to ensure that media ownership rules are no more burdensome than necessary. As more and more services become available on different platforms, concerns over ownership have diminished to some extent and greater liberalisation has been permitted. The DCMS "Consultation on Media Ownership Rules" in

¶November 2001 said:13

"The current ownership rules are being overtaken by a changing media landscape. In devising new, forward-looking legislation, we have two main aims. We want to

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encourage competition and economic growth, by being as deregulatory as possible. However, we must also allow the media to continue to perform its vital role in democratic society, as a forum for public debate and opinion."

3. the history of media ownership rules in the uK from the 1990s

¶C Legislative background 3.1 DCMS has very helpfully provided a detailed history of the Media Ownership Rules in the UK from the 1990s to the most recent developments; this can be viewed as part of the evidence submitted to this Inquiry.14 For the purposes of the Report I merely summarise the key points. 3.2 The constitutional framework for UK commercial terrestrial television and local radio sectors during the 1980s was provided by the Broadcasting Act 1980 and consolidated in the Broadcasting Act 1981.15 The Independent Broadcasting Authority (IBA) had the function of providing television and radio services additional to those of the BBC. It therefore acted as both broadcaster and regulator. It did this by entering into contractual arrangements with ITV and Independent Local Radio franchisees, whereby the contractors agreed to supply programmes for their regions and the IBA agreed to transmit them. The IBA had wide powers to preview programmes and approve schedules in advance of transmission. The issue of ownership restrictions did not therefore arise as providers of commercial TV and radio services were not owners of licences but contractors to the IBA.16 3.3 The Broadcasting Act 1990 made significant changes to this regime by abolishing the IBA and establishing the Independent Television Commission and the Radio Authority instead. The main effects of the Act were as follows:17 (a) The previous contract-based regulatory system was replaced by a licensing system, with each licence subject to certain conditions and penalties for non-compliance; (b) Licences for certain services were to be awarded by the ITC and RA through competitive

tender to the highest bidder after a quality threshold and sustainability test had been passed, except in exceptional circumstances;

¶(c) Cable and satellite programme licences were to be issued on compliance with the ITC codes' consumer protection requirements; (d) Channel 4 was to be provided by a new non-profit making body, the Channel Four

¶Corporation, under licence from the ITC; and (e) Provision was made for the licensing of a new terrestrial television service, Channel 5

¶(which came to air in 1997). 3.4 The Broadcasting Act 1990 introduced ownership restrictions that licences could be held and traded. It also introduced an upper limit on any person owning more than two Regional Channel 3 licences.18 The Broadcasting Act 1996 imposed a limit of one licence where the licence-holder's total audience share was over 15%, and provided that a national licence could only be held for either Channel 3 or Channel 5.19

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¶3.5 The Communications Act 2003 repealed the two rules which prevented the joint ownership of National Channel 3 and Channel 5, and removed stand-alone accumulation limits for all television licences. ITV plc (which resulted from the merger of Carlton and Granada in 2004) now holds all but three of the 15 Regional Channel 3 licences (those being UTV and Northern and Central Scotland).20 C

¶Provision of broadcast news 3.6 Specific controls were introduced to ensure plurality of the provision of broadcast news.

¶The Broadcasting Act 1990 allowed for the ITC to nominate news providers who would be eligible to provide news programmes for holders of Regional Channel 3 licences ('nominated news providers'). It was only possible to hold 20% of one nominated news provider, and each nominated news provider was only permitted to own up to 50% of a Regional Channel 3 licence (ie 50% of any company holding a Regional Channel 3 licence). The Broadcasting Act

¶1996 then made further provision for all holders of Regional Channel 3 licences to, as far as possible, appoint the same (single) news provider ('the appointed news provider').

¶3.7 The purpose of this provision was to ensure that high quality national and international news was carried across all Channel 3 regions at peak times by a single news provider. This was needed because Channel 3, unlike the BBC, was not a single network, but made up of a number of Channel 3 regions under different ownership. By requiring all Regional Channel 3 licence holders to select the same nominated news provider, from providers nominated for that purpose by the ITC, the rules guaranteed a nationwide competitor to the BBC's news services. In the Government's view, this competition served to underpin the impartiality of both services, guaranteeing plurality for viewers. Eventually the Communications Act 2003 lifted all restrictions on the ownership of nominated news providers, while retaining the requirement for all Regional Channel 3 licence-holders to appoint the same nominated news provider.21

¶Digital TV services 3.8 The Broadcasting Act 1996 introduced the licensing regime for digital TV and, at the same time, introduced certain ownership limits in relation to the number of digital licences that could be held. These rules were removed by the Communications Act 2003, consistent with its overall deregulatory approach, so there are now no explicit ownership rules in respect of digital TV services.22

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¶Satellite and cable TV services 3.9 The Broadcasting Act 1990 placed no restrictions on cable and satellite licences. This may well have been because these services were not subject to the same spectrum constraints as analogue services. The Act did place requirements on original programming in respect of direct satellite services (DBS) holding UK licenses for broadcasting on UK frequencies. No such requirement was placed on the holders of other satellite licenses (non-DBS).23 In practice, this meant that British Satellite Broadcasting was subject to this requirement, whilst Sky was not, giving a commercial advantage at the time to Sky in a market that proved not to be sufficient to support two satellite broadcasters. C 3.10 The Broadcasting Act 1990 also placed different ownership restrictions on DBS and non- DBS satellite services. National newspapers could not hold more than a 20% stake in a DBS broadcasting satellite channel. However, no such restriction was placed on newspapers owning non-DBS licences. The Government of the day explained that this was because the number of DBS licences was restricted by international agreement to five, whereas the number of non-DBS licences was not restricted and was likely to grow significantly. This made ownership of one or more such channels less of a significant issue in plurality terms.24

¶Radio Analogue local radio 3.11 The Broadcasting Act 1990 placed an upper limit on ownership of 20 analogue local radio licences. In addition there was a calculation based on coverage area designed to ensure a minimum of seven owners across the UK. The Communications Act 2003 introduced a new system that would ensure at least three local owners in any area in addition to the BBC. This was subsequently changed to secure at least two, rather than three, local owners in addition to the BBC. Where there were only one or two local radio stations in an area all ownership restrictions were removed (subject to the local cross media ownership rule designed to ensure that there were not total local monopolies). Following a report from Ofcom in 2009, all local radio ownership rules were repealed by the Media Ownership (Radio and Cross Media) Order 2011.25

¶Analogue national radio 3.12 The Broadcasting Act 1990 placed restrictions on one person holding more than one of the three national analogue commercial radio licences. This rule was removed in the Communications Act 2003.26

¶Digital radio 3.13 Under the Broadcasting Act 1996, a person was limited to one digital service licence or 15% of the total audience points (whichever was the higher) and was also disqualified from providing more than one non-simulcast local digital sound programme service on a single multiplex, unless there was another multiplex operating in the same geographical area. Following the Communications Act 2003, these rules were replaced by a new local points based regime; this mirrored the provisions of the analogue regime by placing a limit on digital radio licences of 55% of the points available in an area.27

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¶Specific prohibitions on licence holding 3.14 There are restrictions on the holding of broadcasting licences by certain types or classes of owners. Historically there have been prohibitions on religious bodies holding broadcasting licenses. Over recent decades those restrictions have been significantly reduced, although religious bodies still cannot hold licences for Channel 3, Channel 5 or any national analogue radio licence.28 The Broadcasting Act 1990 prevented local authorities from holding broadcasting licences. The Communications Act 2003 now allows local authorities to hold C broadcast licences for information purposes, and puts in place safeguards to prevent this from being exploited for political purposes.29 The Broadcasting Act 1990 also prevented political parties from holding broadcasting licences (as there were concerns that they could not run a broadcasting company with sufficient impartiality). This restriction remains in place.30 3.15 The Broadcasting Act 1990 additionally prevented advertising agencies from holding broadcasting licences and this restriction has continued.31 The Broadcasting Act 1990 also introduced some foreign ownership restrictions to non-European Economic Area (EEA) countries (it was not permitted to place restrictions on EEA companies and individuals), which were expanded upon by the Broadcasting Act 1996. Non-EEA companies could hold certain licences including for cable and satellite services. In 2002 the Government consulted on removing these restrictions and the matter was the subject of extensive debate. In the event, in circumstances fully described later in the Report,32 the Communications Act 2003 did remove the restrictions and there is now no restriction on foreign ownership of any broadcasting licence, subject, of course, to other ownership restrictions.33

¶Cross media ownership 3.16 The position under the Broadcasting Act 1990 was:34

¶(a) National newspaper owners were tightly limited in their holdings in terrestrial TV and

radio, and in domestic satellite broadcasters.35 Within each category they could hold up to 20% of one licence, and then up to 5% of any others. They were allowed full control of non-domestic satellite broadcasters "in order to encourage investment in an uncertain and high-risk enterprise". (By 1996 there were no domestic satellite broadcasters and the largest non-domestic satellite broadcaster was BSkyB);

¶(b) Local newspaper owners were less tightly controlled, in being allowed to own regional

TV or local radio broadcasters, provided there was no significant overlap between the licence area and the paper's circulation area;

¶(c) National TV and radio (and regional Channel 3) broadcasters were limited to a 20% stake in national newspapers and non-domestic satellite licences; and

¶(d) There were no cross-media restrictions on ownership cable services (other than that

satellite providers could not own more than 20% of a terrestrial TV or National Radio licence).

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¶3.17 The Communications Act 2003 revised these rules: (a) Retention of the national rule concerning cross-media ownership between newspapers

and ITV. This was expressed as follows: (i) no one controlling more than 20% of the national newspaper market may hold any licence for Channel 3; (ii) no one controlling more than 20% of the national newspaper market may hold more than a 20% stake in any Channel 3 service; and (iii) a company may not own more than a 20% share in such a service if more than C 20% of its stock is in turn owned by a national newspaper proprietor with more than 20% of the market.

¶(b) Retention of a parallel local rule: no one owning a regional Channel 3 licence may own more than 20% of the local/regional newspaper market in the same region; (c) Stricter application of the local radio ownership rules where potential owners had

other media interests. The effect was to ensure that, in these cases, there would be a minimum of three media owners in each area across TV, newspapers and radio;

¶(d) A local cross-media rule (the "local monopolies" rule) designed to ensure that there were no complete monopolies in areas with only one or two local radio stations;

¶All other cross-media ownership rules were repealed.

¶Review of ownership rules 3.18 The Communications Act 2003 requires Ofcom to review all media ownership rules at least every three years. Ofcom makes any recommendations for further reform to the Secretary of State, who can amend or remove rules by secondary legislation. The first review in 2006 recommended no change.36 In its second report in November 2009,37 Ofcom concluded that that national "20/20" rule should be retained and that the local cross media ownership rules should be liberalised so that the only restriction remaining would be on ownership of all three of: local newspapers (with 50% plus local market share); a local radio station; and a regional Channel 3 licence.38 According to Ofcom:39

"this liberalisation will increase the flexibility of local media to respond to market pressures. Consumers still rely on television, radio and press for news, so going further to complete removal of the rules could reduce protections for plurality."

¶3.19 On 8 July 2010, the Secretary of State asked Ofcom to revisit its advice on retaining the "local monopolies" rule. Ofcom replied on 29 July and published a fuller version of the reply in August.40 It recognised that there had been some changes in circumstances since the original report but that a decision on whether to remove this one remaining local rule "is a matter of judgement and one which is rightly made by Government and Parliament". Having considered the matter further, the Secretary of State concluded that the remaining rule should also be removed; this was given effect by the Media Ownership (Radio and Cross Media) Order 2011.41

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¶3.20 The Government's view was that local media ownership rules (for television, radio and newspapers) placed unnecessary limitations on ownership within commercial media; that the rules were no longer appropriate in a converging digital world; and that removing regulatory barriers would help established industries adapt to new environments. The deregulation of the local media ownership regulations now enables partnerships between local newspapers, radio and Channel 3 television stations to promote a strong and diverse local media industry.42 C

¶Media plurality public interest test 3.21 The process by which the media plurality public interest test was inserted into the

¶Communications Bill, and the rationale behind it, is also fully outlined later in the Report.43

¶These provisions mean that the Secretary of State can ask Ofcom and, if necessary, the

¶Competition Commission to investigate any merger which could have a damaging effect on plurality, diversity or standards.44

¶3.22 In applying the test the Secretary of State takes into account the need for:

¶(a) a sufficient plurality of persons with control of media enterprises serving any audience;

¶(b) a wide range of high quality broadcasting that appeals to different tastes and interests;

¶and

¶(c) a genuine commitment to Ofcom's standards code.

¶3.23 The Government produced further guidance on how the public interest test would be operated in practice. Partly due to Iobbying from industry, Ministers indicated that they were not minded to exercise these powers where media ownership rules continued to apply or where, before the passage of the Communications Act 2003, no media ownership restrictions applied.45

¶3.24 The request to Ofcom is triggered by an intervention notice issued by the Secretary of State which specifies a "media public interest consideration''.46 A media public interest consideration is any consideration which, at the time of the giving of the European intervention notice concerned, is specified in s58(2A) to (2C) of the Enterprise Act 2002 or, in the opinion of the

¶Secretary of State, is concerned with broadcasting or newspapers and ought to be specified in s58 of the Act (ie would need to be "finalised" by statutory instrument).

¶3.25 The currently recognised media public interest considerations are:47

¶(a) s58(2A): the need for accurate presentation of news and free expression of opinion in newspapers;

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¶(b) s58(2B): the need for, to the extent that it is reasonable and practicable, a sufficient

plurality of views in newspapers in each market for newspapers in the UK or a part of the UK;

¶(c) s58(2C)(a): the need, in relation to every different audience in the United Kingdom or in

a particular area or locality of the United Kingdom, for there to be a sufficient plurality of persons with control of the media enterprises serving that audience;

¶(d) s58(2C)(b): the need for the availability throughout the United Kingdom of a wide range

of broadcasting which (taken as a whole) is both of high quality and calculated to appeal to a wide variety of tastes and interests; and C

¶(e) s58(2C)(c): the need for persons carrying on media enterprises, and for those with

control of such enterprises, to have a genuine commitment to the attainment in relation to broadcasting of the standards objectives set out in s319 of the Communications Act 2003. These require, among other things, "that news included in television and radio services is reported with due impartiality and the impartiality requirements of s.320 are complied with" and that news is reported with "due accuracy".

¶Paragraph 7.24 of the guidance issued by the DTI identifies the following as relevant to this question: previous compliance with Ofcom standards, the behaviour of the media owner's other broadcasting enterprises, behaviour in other jurisdictions and compliance with other standards (including under self-regulatory regimes).48

¶3.26 An enterprise is a media enterprise if it consists of or involves broadcasting;49 but where the public interest concern is that as set out in s58(2C)(a) and a merger involves only one broadcasting company, a merger is still a media merger of media enterprises if the other company is a newspaper enterprise.50

¶3.27 Where there has been an intervention notice, Ofcom is required to report to the Secretary of State on whether, having regard only to the public interest consideration specified in the intervention notice, it is or may be the case that the merger may be expected to operate against the public interest. It is then for the Secretary of State to determine whether or not the merger should be referred to the Competition Commission for further review and, if necessary, consideration of remedies.51

¶3.28 There have only been two occasions on which the Secretary of State has issued an intervention notice in relation to a media merger. On both occasions, the public interest consideration was: "the need, in relation to every different audience in the United Kingdom or in a particular area or locality of the United Kingdom, for there to be a sufficient plurality of persons with control of the media enterprises serving that audience".52

¶3.29 The first of these occasions, the completed acquisition by British Sky Broadcasting Group plc (BSkyB) of a 17.9% stake in ITV, was a UK merger. Ofcom considered the plurality public interest considerations and recommended a reference to the Competition Commission.53

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¶At the same time, the OFT advised that the transaction was a merger and that it was or may be the case that the merger may be expected to result in a substantial lessening of competition.54 The Secretary of State referred the case to the Competition Commission.

¶The Competition Commission considered that the transaction raised competition issues, but not plurality issues, and on its recommendation the Secretary of State required BSkyB to sell shares so as to reduce its holding to below 7.5%. The decision was appealed to the

¶Competition Appeal Tribunal and to the Court of Appeal; the Court of Appeal upheld the

¶Competition Commission's decision.55 C 3.30 The second occasion, the proposed acquisition by News Corporation of the shares in BSkyB it did not already own, was an EC merger.56

4. history of the newspaper ownership regime

¶Before the Communications Act 2003 4.1 DCMS has also very helpfully provided a history of the newspaper ownership regime.57 I draw heavily on it and gratefully acknowledge the work that was put into it. 4.2 Since 1965 there has been a separate regime in place in respect of newspaper mergers. This was first introduced by then Monopolies and Mergers Act 1965, following the Report of the Royal Commission on the Press in 1962 ("the Shawcross report"). Shawcross concluded that control of the press was a matter of particular public sensitivity and that the increasing concentration of newspaper ownership in too few hands could stifle the expression of opinion and argument and distort the presentation of news. The Fair Trading Act 1973 (FTA) subjected most newspaper mergers to a stricter system of control than other mergers. The

¶FTA required the Competition Commission (CC) to look at whether the transfer in question might be expected to operate against the public interest, taking into account all matters which appeared in the circumstances to be relevant. Any such transfer would be automatically void without the written consent of the Secretary of State. 4.3 Proprietors had to obtain prior consent from the Secretary of State for Trade and Industry

¶(as was) before acquiring a newspaper (or newspaper assets) where the total paid-for daily circulation of the newspapers involved was 500,000 or more. The Secretary of State was required to refer newspaper applications to the CC for a detailed report before deciding whether or not to consent to the transfer. Exceptions to this rule meant that the Secretary of

¶State:

¶(a) could consent to a transfer without a CC reference if he was satisfied that the newspaper

was not economic as a going concern and that, if it was to continue as a separate newspaper, the case was urgent (s58(3)(a) of the FTA);

¶(b) had to consent to a transfer without a CC reference if he was satisfied that the newspaper

concerned was not economic as a going concern and that it was not intended to continue as a separate newspaper (s58(3)(b) of the FTA); and

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¶(c) could consent to a transfer without a reference to the CC if he was satisfied that the newspaper being taken over had average daily sales of 50,000 or less (s58(4) of the

¶FTA).

¶Communications Act 2003 4.4 The Communications Act 2003 was designed to replace the FTA regime with a streamlined and less burdensome process that focused regulatory action on those few newspaper transfers that appeared to raise competition or plurality concerns. Under the Communications Act 2003 there is no longer a requirement for the Secretary of State's prior consent to newspaper C transfers. The new regime applies to all transfers that satisfy the jurisdictional criteria for mergers in the Enterprise Act (broadly speaking, the turnover of the body being acquired exceeds £70m or the merger would result in market-share of 25% or more), meaning that the smallest local newspapers were removed from regulation altogether. 4.5 Where a takeover or merger does not meet the jurisdictional criteria it is still possible for the Secretary of State to intervene under the special public interest regime; this applies in any case where the newspaper to be acquired has a 25% share of a market in a substantial part of the United Kingdom.

¶4.6 The Secretary of State retains the power to refer those cases that involve the public interest in plurality for wider investigation by the CC. The plurality public interest considerations are set out in s58 (2A) and (2B) of the Enterprise Act 2002 and cover:

¶(a) accurate presentation of the news in newspapers; (b) free expression of opinion in newspapers; and (c) to the extent reasonable and practicable, a sufficient plurality of views in newspapers, in each market for newspapers in the UK or a part of the UK.

¶4.7 Where there has been a reference to the CC, it will make recommendations as to any remedies it deems appropriate to meet competition or plurality concerns. The final decision on any action to take with respect to plurality issues rests with the Secretary of State. However, the Secretary of State may seek the advice of Ofcom on the CC's recommendations on the plurality aspects of the transfer. He can disregard the competition authorities' proposed solutions to competition problems, but only where the plurality issues justify this course of action: the Secretary of State will decide overall on the basis of a public interest test that will take account of both plurality and competition.

¶Developments since 2003: local media assessment 4.8 The interim Digital Britain report included an invitation to the Office of Fair Trading to conduct a review of the local and regional media merger regime. The conclusions of this review were published in the final Digital Britain report. The OFT broadly considered that the existing merger framework was sufficiently robust and flexible, but recommended that a number of small changes would be advantageous. This included amending OFT guidance to ensure that, where a local media merger raised prima facie competition issues, the OFT would ask Ofcom to provide a Local Media Assessment (LMA) covering relevant factors arising from their understanding of media markets. The OFT subsequently revised their Jurisdictional and Procedural Merger Guidance accordingly.

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¶4.9 Ofcom has to date conducted one Local Media Assessment, concerning the proposed

acquisition by Kent Messenger Group (KMG) of seven newspaper titles owned by Northcliffe Media. Ofcom provided its Local Media Assessment to the OFT on 2 September 2011. Ofcom considered that a merger could provide the opportunity to rationalise costs, maintain quality and investment, and provide a sounder commercial base from which to address long-term structural change, for example by expanding the availability of online and other digital local services. It also said that these potential benefits needed to be weighed against any potential customer harm resulting from reduced competition identified in the OFT's overall assessment.

¶C Despite this, on 18 October 2011, the OFT referred the proposed merger to the Competition

Commission, and the CC cancelled its inquiry after KMG announced it was abandoning the proposed acquisition as a result of the referral and some of the titles concerned were closed. According to KMG "The costs and time required for a full Competition Commission review would be completely unreasonable for a business of our size and for a deal of this scale."⁵⁸⁵⁸ p3, para 2.7, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Thomas- Mockridge.pdf

¶parT D

¶D

¶STanDarDS

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¶The hiSToriCal BaCkgrounD 1.1 In order to understand the present position in relation to press regulation, it is necessary to examine what has happened in the past. This chapter of the Report examines the content and context of the three Royal Commissions into the British Press undertaken since the Second

¶World War, the Younger Report into Privacy of 1972, and the two reports of Sir David Calcutt

¶QC into privacy and the press published in 1990 and 1993. Taken together, these form the formal public policy response to concerns with the press, press standards and the behaviour of journalists and others acting on behalf of newspapers and their employees, in the post-war D period.

¶1.2 It can be argued that the findings of the three Royal Commissions as well as the reports of Sir David Calcutt not only help to elucidate a pattern of press behaviour that remains pertinent to the work of this Inquiry, but also set out a series of attempts to find a solution to problems that remain broadly unchanged and unaddressed. Indeed, it has been contended by some witnesses to the Inquiry that the six documents that form the backdrop to this chapter bear telling testament to a misplaced faith in the ability of the industry to develop and lead self-regulatory systems capable of offering appropriate real redress to those who have been wronged, and of constituting a sufficient solution to problems of unethical and unlawful behaviour in the newspaper industry. In this regard, the Media Standards Trust has said in its submission to the Inquiry:1

"The conclusion… that self-regulation on its own, without any greater independence or enhanced powers, does not provide adequate protection for the public or for journalists - is based in large part on an historical analysis of the continued failure of the various voluntary self-regulatory bodies that have existed since the first Royal Commission on the Press published its report in 1949."

¶Some context 1.3 As has been emphasised in this Report on more than one occasion, the British press has a long held reputation for the vitality and quality of its journalism as well as the diversity of voices with which it speaks. Certainly, it has been with something approaching envy that overseas commentators examining the British press both historically and today have been impressed by both its freedoms and the breadth and scope of its journalism. In this regard, it is worth highlighting the very large number of occasions that the Inquiry has been told with real pride by commentators, journalists, proprietors and politicians about the achievements of the British press and the valuable role it plays in the public life of the nation.

¶1.4 For my part, I do not doubt that, at its best, British journalism is and has historically been world-beating: it has uncovered scandal, reported on significant events, and campaigned on issues of importance with both decency and integrity. Furthermore, it has been made very clear during the course of this Inquiry that journalism of the highest quality is not restricted only to a certain section of the press but is to be found across its many distinct and different p13, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Media-Standards-Trust.pdf

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parts: not only in the broadsheets but also in the mid-market titles and the tabloids along with the regional and local press, both in print and now also in their online editions.

¶1.5 Before dealing with the analysis of historical responses to the culture and practices of the

press, it is worth restating that the press does not exist in a vacuum. It is subject to other forces. Technological and societal changes have increased the pressures on what is and has historically been an intensely competitive market. The share which the newspaper industry holds of the wider communications market has been steadily eroded, first by radio and then the advent and growth of television. Television has moved from one initial offering by the BBC to the explosion of channels available through the introduction of satellite television services and, further, with the continuation of this trend through the rollout of digital television. The loss of market share has been further exacerbated by the internet and the increasing availability of mixed media services through that medium. Overall, these forces have had an important role in shaping the culture, practices and ethics of the press over decades.

¶D 1.6 It should not be thought that the culture and practices that have given rise to the establishment

of this Inquiry are in any way new, even if much of the technology which underpins new developments is. Concerns as to the behaviour and practices of the press have been articulated by both private individuals and Governments throughout the twentieth century, and (in one form or another) very much earlier. Indeed, some of the practices and concerns that gave rise to the 1947 Royal Commission into the Press, and in particular those in relation to the breach of privacy of individuals, have been effectively repeated before this Inquiry. Thus, the historical review carried out in this chapter demonstrates a number of common themes; in particular, it reveals not merely consistent and similar complaints over the preceding decades, but also consistent and similar proposed solutions.

2. The royal Commission into the press 1947 2.1 Shortly after the election of the Labour Government in May 1945, the National Union of

Journalists (NUJ) passed a resolution which called for the new administration to establish an independent Commission to examine, among other things, structures of ownership and control of British newspapers. The NUJ resolution reflected growing concern about the influence of a small group of newspaper publishers who had substantively increased their share of the national newspaper market in the inter-war period. The NUJ resolution also gave voice to other concerns and called for a Commission to investigate:2

"...with the object of furthering the free expression of opinion through the Press and the greatest practicable accuracy in the presentation of news, to inquire into the control, management and ownership of the newspaper and periodical Press and the news agencies, including the financial structure and the monopolistic tendencies in control, and to make recommendations thereon."

¶2.2 The resolution led to the tabling of a motion in the House of Commons that repeated its

central concerns. Advanced by members of Parliament who had either worked as journalists or were still employed as such, the motion also made an explicit connection between the growing concentration in newspaper ownership by a small number of proprietors as well as the substantial increases in the profitability of some newspapers since the conclusion

¶Moore, M, The Origins of Modern Spin: Democratic government and the media in Britain, 1945-51, p106 of hostilities, and a supposed decline in the quality of British journalism.3 The motion was passed by MPs on the 29 October 1946. It read:4

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"That, having regard to the increasing public concern at the growth of monopolistic tendencies in the control of the Press and with the object of furthering the free expression of opinion through the Press and the greatest practicable accuracy in the presentation of news this House considers that a Royal Commission should be appointed to inquire into the finance, control, management and ownership of the Press."

¶2.3 In part, the concerns articulated in the resolution of the NUJ and the Parliamentary motion reflected understandable public disquiet at a return to business as usual by the newspaper industry after the war years (which had entailed strict Government control of all content, print as well as the means of distribution). The reversion to a peacetime modus operandi also heralded the return, after the quiescence of the war years, of a number of sharper D journalistic practices increasingly unpalatable to the public at large. These were manifest to differing degrees in accusations of inaccuracy and political bias on the one hand and alarm at the intrusion of journalists into the private lives of individuals on the other.5

¶2.4 However, public indignation at such behaviour was not new; the culture and practices of some parts of the press had been noted as a matter of concern by the immediate pre-war Government-appointed Political and Economic Planning (PEP) group which, in 1938, had formulated the first significant proposal for formal self-regulation of the press.6 Among other things, the PEP group's final report argued for the establishment of a voluntary Press Tribunal led by an independent Chairman and supported by a panel of experts drawn from the newspaper industry. This, the report suggested, should consider and mediate complaints made by members of the public about the press. The outbreak of war drew an end to any further work to achieve this end.

¶2.5 The Commission was granted a broad remit by the Government of Clement Atlee and was charged with seeking answers to a number of questions that went further than the concerns that have been outlined above. The Government asked that the Commission investigate:7,⁸⁸ http://www.levesoninquiry.org.uk/people/assessors/george-jones/

¶
• "Whether the degree of concentration of ownership of newspapers, periodicals, and news agencies at present exists;
• Whether there is a tendency towards further concentration;
• Whether such concentration as exists is on balance disadvantageous to the free expression of opinion or the accurate presentation of news;
• Whether any other factors in the control, management or ownership of the Press or of the news agencies, or any external influences operating on those concerned in control, management or ownership, militate against this freedom and accuracy; and

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¶
• How this freedom and accuracy may best be promoted."

¶2.6 When the Royal Commission reported in 1949, it made a number of damning findings. It found that there had been "a progressive decline in the calibre of editors and in the quality of

¶British journalism" which, it argued, if not addressed would undermine not only the freedom of the press itself, but also the welfare of the country at large. The Commission recommended that a system of self-regulation should be established, built around a "General Council of the

¶Press". The Commission was unambiguous in its consideration of statutory controls which, it argued, would unacceptably restrict the freedoms of the press. It said that it was necessary:9

"to safeguard the freedom of the press; to encourage the growth of a sense of public responsibility and public service amongst all engaged in the profession of journalism [...]; and to further the efficiency of the profession and the well being of those who practiced it."

¶D 2.7 The Royal Commission hoped that the proposed General Press Council would function both as a guarantor of the "freedom and prestige of the Press", by representing the interests of the newspaper industry through a single, unified voice as well as a brake on poor and unethical journalistic practices. In so doing the Royal Commission made a fundamental statement on the nature of the relationship between the state of the press and the health of the nation as a whole, suggesting a correlation between the ownership structures of the newspaper industry and the incidence of inaccurate reporting and poor journalism. Significantly too, the Royal

¶Commission's report recognised that, as a consequence of technological and commercial changes, the ability of newspapers to disseminate "to the public a mass of information on subjects as complicated as they are important" had increased, but there had been no commensurate increase in journalism fitting or appropriate to such purpose.10

¶2.8 The Report of the Royal Commission made a number of recommendations, some of which added important detail to the central proposal of the formation of this 'General Council'. For instance, the Commission recommended that the Press Council be made up of 25 members, a proportion of whom (some 20%) would be appointed from outside the industry and would ensure that lay interests were adequately represented. The Commission's Report also set out what Sir William David Ross and his fellow commissioners regarded as the necessary and non-negotiable elements of an effective regulatory regime for the British press. These were: a code of conduct; powers to adjudicate and rule on complaints, including those received from third parties as much as from individuals directly affected, and powers to impose sanctions where appropriate. It was intended by the Commission that the Press Council should have sufficient powers to maintain press standards and where appropriate to impose sanctions for poor conduct:11

"It should have the right to consider any complaints which it may receive about the conduct of the Press or of any persons towards the Press, to deal with these complaints in whatever manner may seem to it practicable and appropriate, and to include in an annual report a statement of any action taken."

¶2.9 It is clear from the recommendations made by the Royal Commission that it intended that the

¶Press Council should have a broad remit, encompassing a number of potentially problematic and conflicting functions; this would include being a champion of press freedom as well as a defender of the rights of members of the public who might have been mistreated by the press. In addition the Royal Commission proposed that the General Council of the Press should have appropriate powers to monitor and rule on the terms and conditions of the employment of journalists and other newspaper workers, whilst also promoting the interests of consumers and conducting research into the long-term social and economic impacts of the print industry. The Commission was clear; its proposals were not intended "to safeguard its own liberty" but to "save the press from itself."¹²¹² Complaints handling 709 Chapter 7: Conclusion 717 1 Introduction 717 2 Possible causes 719 3 The relevance of the internet 736 4 The press response to this Inquiry 737 PArT G: The PreSS And The POlICe: The relATIOnShIP 741 Chapter 1: Policing with Consent: the role of the press 743 1 Introduction 743 2 The purpose of the relationship and public confidence 745 3 Tensions in the relationship between the media and the police 748 Chapter 2: The history of the relationship: different Approaches 751 1 Metropolitan Police Service: the Commissioners 751 2 Other police forces 756 3 Press departments 763 Chapter 3: Press and the Police: the harm and the response 780 1 Introduction 780 2 The use and abuse of information 780 3 Entertainment: an overview 830 4 The perception of influence 851 5 The problems of friendship 898 6 Calibrating the harm: the views of Commissioners 928 vShow full note

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¶2.10 Although Parliament unconditionally accepted the recommendations of the Commission, the industry response to them was slow and much wrangling and negotiation followed. Indeed, it has been convincingly argued by some commentators that such progress was only made as a consequence of the real threat of statutory regulation.13

¶2.11 That came about in this way. The initial industry response of the press to the Report of the Royal Commission found little favour with the then Government. That response was seen as concentrating too much power in the hands of already powerful newspaper proprietors, D and paying too little heed to many of the recommendations contained in the report. The NUJ also declared the newspaper industry's proposals to be unacceptable to the Union and its members.14

¶2.12 To deal with what appeared to be a palpable lack of progress and refusal on the part of the newspaper industry to grapple with the fundamental criticisms and concerns at the heart of the Royal Commission's report, in November 1952 the Labour backbench MP, CJ Simmons, with the backing of a number of members of the Shadow Cabinet, introduced a Private Member's Bill. This Bill was intended to establish a Press Council in statute. The threat of statutory regulation quickly persuaded newspaper publishers to come to an agreement that was deemed satisfactory to the Conservative Government, which then took action to prevent a second reading of the Bill.15

¶2.13 When it was eventually established in 1953, the General Council of the Press, as had been fashioned by the industry and endorsed by the Conservative Government, was substantially different from the proposals that had been recommended by the Royal Commission. In many respects, the changes which had been made to the structures and functions of the nascent Press Council were to the benefit of the industry and not to those who complained of having been the victims of press mistreatment. Significantly, proposals for lay representation on the Press Council, including the appointment of Chairman from outside the industry, had been dropped. Further, the recommendation that the Press Council be able to investigate and make findings on complaints brought by members of the public was changed so that, in most circumstances, only complaints by persons affected by stories would be accepted; third party complaints would be entertained on a discretionary basis and exceptionally. Other recommendations relating to the promotion of standards and the employment conditions of journalists and other newspaper employees were also omitted from the final proposals brought forward by the industry.16

¶2.14 The Media Standards Trust has noted in its submission to the Inquiry the 'prescience' of the final contribution made by CJ Simmons to the Parliamentary debates on the establishment the Press Council, in which he said:17

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"[To] give the voluntary Press Council a chance to prove its worth, efficiency and competence to do the job to which it has set its hand, I give warning here and now that if it fails some of us will again have to come forward with a measure similar to this Bill."

3. The royal Commission of 1962 and the Younger Committee into privacy 3.1 The General Council of the Press was neither the body nor the panacea that the Royal

¶Commission had intended. From the outset it was the subject of criticism, particularly from those who thought themselves the victims of press mistreatment. It was seen as self-serving D and concerned more with defending the interests of journalists and newspaper editors than in addressing the many issues identified by the first Royal Commission on the press. In 1961 a second Royal Commission was established:

"...to examine the economic and financial factors affecting the production and sale of newspapers, magazines and other periodicals in the United Kingdom."

¶3.2 Lord Shawcross, a former Labour Attorney General and then President of the Board of Trade, later becoming a cross-bench peer, was appointed Chairman of the second Royal Commission.

¶Lord Shawcross was a passionate defender of press freedoms and had spoken publicly on the subject on a number of occasions. He brought a formidable intellect to the task as well as a reputation for gravitas and forensic analysis achieved as Chief UK Counsel for the Prosecution in the post-war Nuremberg trials. 3.3 The establishment of a second Royal Commission on the press was prompted in part by the closure of a number of national and provincial newspapers which had led to a further, and to some, worrying concentration in the ownership of newspaper titles. Its primary purpose was to look at the costs of production, printing and distribution as well as at the nascent impact of television on readership and advertising revenues, and to consider whether these factors had affected the diversity of ownership and control. The terms of reference to the Commission explained it thus:18

"...to examine the economic and financial factors affecting the production and sale of newspapers, magazines and other periodicals in the United Kingdom."

¶3.4 The Commission was not primarily concerned with the performance of the press or with questions of ethical behaviour, and indeed its terms of reference made no express reference to either of these matters. But its very establishment reflected political and public concern at the steady build up of complaint, as well as public disapproval, at press behaviour. Some contemporary commentators sought to explain this further decline in standards through the prism of increased competition for circulation. Others called into question the effectiveness of the overall system of self-regulation through the General Council of the Press, decrying its inability to put an end to press intrusion into the private lives of individuals.19 It is a matter of some significance that Lord Shawcross commented on the failure to heed the lessons of the first Royal Commission:20

¶"[h]ad they been carried out much of our own inquiry might have been unnecessary".

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¶3.5 The Shawcross Commission published its findings in September 1962. The Commission levelled substantial criticism at the General Council of the Press for, in particular, its failure to implement many of the recommendations made by the first Royal Commission on the press. These specifically included those recommendations relating to the monitoring and enforcement of standards, the involvement of lay representatives on the Council and its failure to heed recommendations relating to the monitoring of levels of newspaper ownership.

¶3.6 The Shawcross Commission clearly identified those issues that it deemed had led to a decline in press standards, and it called for an improvement in the performance of the General Council of the Press. However, the solutions it proposed were little different from those articulated by the first Royal Commission in 1949. It recognised the desirability of a voluntary system of self-regulation for the press, but made clear that any such system of regulation would need to be built around an effective and credible body rather than the General Council of the Press as it was then constituted. It recommended that the industry should be given two years to bring forward, develop and implement appropriate plans but, should these not be forthcoming,

¶D recommended that the Government should introduce the legislation necessary to establish a Press Council in statute, with powers equivalent to those recommended originally by the first Royal Commission in 1949. Lord Shawcross said at the time:21

"If... the Press is not willing to invest the Council with the necessary authority and to contribute the necessary finance the case for a statutory body with definite powers and the right to levy the industry is a clear one".

¶3.7 Anxious at the potential threat of statutory legislation, the industry response to the recommendations of the second Royal Commission was rather swifter than had been the case following the first Royal Commission. The General Council of the Press was reformed as the Press Council. For the first time it included lay representation on its board. The newly formed Press Council also made amendments to its constitution to reflect the wider recommendations made by the Commission. Clauses that were no longer regarded as relevant to its role and remit were removed and, in particular, a new clause was introduced in relation to the consideration of complaints about the press.22 This empowered the Press Council to deal with them "in whatever manner might seem practical and appropriate".23 The reformed Press Council also took a more proactive approach to the consideration of some of the most significant challenges facing the press and published guidance on contempt of court, privacy and defamation.

¶3.8 These reforms, however, were not universally well-received. Questions were asked almost immediately about the ability of the Press Council to regulate the actions and conduct of newspapers. These had altered little over time, and the press continued to push at the boundaries of what was considered acceptable journalism. Coverage of the Profumo scandal and, in particular, the Sun's exclusive interview with Christine Keeler, as well as the vilification of the child-killer Mary Bell, by turns titivated, entranced and horrified the public. Further, allegations of payments for stories relating to the Profumo affair, as well as to witnesses in the case of the Moors Murders, undermined confidence in the efficacy of the Press Council as the regulatory body for the press.24 Perhaps unsurprisingly, by the end of the decade there were calls for a further Royal Commission on the press as well as an inquiry into the workings of the Press Council which had struggled to be seen as anything more than "a champion of the press [rather] than as a watchdog for the public".25

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¶3.9 The introduction of a Private Members Bill on privacy forced the hand of the Wilson

¶Government, and in 1970 a new Committee looking, once again, at the behaviour of the press was constituted.

¶The Younger Committee 3.10 The Committee on Privacy, chaired by Sir Kenneth Younger, was established to examine a number of issues relating to the personal privacy, including the responses of the Press

¶Council to alleged breaches of privacy in the press. Sir Kenneth Younger was a barrister by training and former Labour Party politician who had served as a junior Home Office Minister D in the Government of Clement Atlee. After leaving Parliament in 1957, Sir Kenneth had campaigned for progressive political reform with regard to a number of social issues including the legalisation of homosexuality and reform of prison conditions.

¶3.11 Published in July 1972, the report of the Younger Committee on privacy was highly critical of the Press Council and its seeming inability to command the confidence of the British public.

¶The Committee suggested a causal link between the level of lay representation on the Press

¶Council and the overall credibility of that organisation in the public mind. The Commission duly recommended that the Press Council increase the representation of lay members; it also recommended that steps be taken to ensure the independence of lay appointments because, in its view, the process of appointment was both opaque and too readily open to influence from the industry.26 Of the recommendations made by the Younger Committee, perhaps the most significant related to the publication of Press Council adjudications by newspapers. The Younger Committee suggested that where an adverse adjudication had been issued by the Council, it should be given similar prominence to that given to the original article.27 The Younger Committee also recommended that the Council make efforts to codify its adjudications on privacy and build up a body of case law understood by the industry.28

¶3.12 It is perhaps indicative of the prevailing mood that the Committee did not unanimously agree the recommendations made in the final report. However, a minority of the commissioners who worked together with Sir Kenneth, did not believe the recommendations to be sufficiently far-reaching, and a minority report was published which recommended among other things a general law of privacy to provide individuals with proper protection from unjustified press intrusion.29

¶3.13 The reforms of the Press Council, which were finally implemented in July 1973, did not encompass the most significant of the recommendations made in the Younger Report. In particular, recommendations on the prominence of adjudications and the codification of rulings had been dropped. Lay membership on the Press Council was increased by four to ten, which was exactly half the number of industry representatives. Begrudgingly accepting the

¶Committee's recommendation, the Chairman of the Press Council, Lord Pearce, noted that the

¶Younger Report had provided 'no evidence' to support the conclusions it made linking public confidence in the Press Council to the proportion of lay representatives but, nonetheless, further minor changes were made to increase the number of lay representatives serving on the Complaints Committee.30

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¶3.14 Following the publication of the Younger Report, public criticism of the Press Council, characterised by Lord Pearce as 'assaults on the principle of self-regulation,' became more commonplace.31 Certainly, the tensions between the regulator, the regulated and the public were made more acute by the political and social tensions between the Government, the trade unions and the industry more broadly, and did little to address the failings, both perceived and actual, of the Press Council. Indeed, the performance of the Press Council was regarded by the Government of the day as so inadequate that, within a year of publication of Sir Kenneth Younger's report, not only was a third Royal Commission on the Press established, but it was given an express remit to examine in detail "the responsibilities, constitution and functioning of the Press Council."³²³² s12 of the HRA 1998; s32 of the Data Protection Act 1998

¶D 4. The royal Commission of 1974 4.1 The Third Royal Commission on the Press was established on 7 March 1974 under the Chairmanship of Professor Oliver (later Lord) MacGregor, then a leading academic in the field of socio-legal studies and medical sociology and, immediately before his appointment, a fellow of Wolfson College, Oxford. Much later, he was appointed first Chairman of the Press Complaints Commission.

¶4.2 The MacGregor Commission was constituted not only in the context of ongoing discussions on the recommendations of the Younger Report on privacy but also against a continuing backdrop of concern at the behaviour of journalists and the press more widely. Public and political frustration was also growing at the apparent inability of the Press Council to curb the worst excess of such behaviour or to provide sufficient redress to those who had been wronged by the press. The MacGregor Commission was granted a broad remit and was invited to:33

"...inquire into the factors affecting the maintenance of the independence, diversity and editorial standards of newspapers and periodicals and the public freedom of choice of newspapers and periodicals, nationally, regionally and locally."

¶4.3 When it reported in 1977, the McGregor Commission sought to explain the real difficulties it had faced in reaching its recommendations. The Commission expressed concern that there was no real public or political consensus on the role of press in British society. It recognised that the press should not be subject to state control but it refused to advocate a press that was subject only to the unregulated forces of the market and the pursuit of profit.34 Although undecided on the most suitable form of regulation for the press, the Commission was unequivocal in its criticism of the Press Council both as a regulator of press standards and as able to provide appropriate means of redress. It recommended wholesale changes to both the structure and functions of the Press Council.

¶4.4 The Commission's proposals for reform of the Press Council included a reiteration of the dormant recommendations of the first and second Royal Commissions as to the prominence and location of adjudications. Lord MacGregor's Commission, in line with the previous Royal

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¶Commissions and the Younger Commission, also proposed that the question of confidence in the Press Council should be addressed through an increase in the number of lay representatives and the appointment of a lay Chairman. It also recommended that the Press Council should seek to curb the worst excesses of the press through the development and implementation of a written code of conduct. The Commission's report noted:35

"...it is unhappily certain that the Council has so far failed to persuade the knowledgeable public that it deals satisfactorily with complaints against newspapers".

¶4.5 The MacGregor Commission also made recommendations intended to effect a fundamental shift in the treatment and handling by the Press Council of complaints made by members of the public. It proposed that the Press Council should not only act as mediator and arbitrator of complaints but should also actively seek, where appropriate, to secure the swift publication of D adjudications, where necessary on the front page. The MacGregor Commission also entered new terrain, as its recommendations included:36

"The creation of a Conciliator, drawn from the staff of the Council, to propose remedies between complainants and newspapers: • The extension of the Council's doctrine of right of reply, and to uphold a newspaper's making space available to those it has criticised inaccurately (although the Commission rejected the introduction of a legal right of reply on the principle that the press should not be subject to different laws than ordinary citizens); • The power to investigate the conduct of the press without waiting for a formal complaint; to introduce the practice of undertaking wider reviews of publications and journalists involved in disputes; • The amendment of the Council's existing position on accuracy and bias, so that inaccuracy should be prima facie evidence for upholding a complaint; • The Chairman's role to be extended to chairmanship of the Appointments Commission; and • That the Council should accept recommendations for lay appointments from any source."

¶4.6 In line with the approach of the Second Royal Commission, the final report of the MacGregor

¶Commission suggested that if the response of the industry and Press Council was insufficient to address ongoing concerns as to press conduct and restore confidence in the Press Council, then a statutory solution might need to be sought.37 That said, Professor MacGregor remained hopeful that such measures would not be necessary. The conclusion to its report set out its aspiration and belief that:38

"...these recommendations will be accepted and acted on by the Press Council, and that it will fulfil the hopes that were held for it in 1949."

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¶4.7 In a yet further parallel to the Younger Review, the MacGregor Commission published a minority report, its adherents taking the line that more was needed to modify the culture, practices and ethics of the press.39

¶4.8 Much as the publication of the MacGregor Report in 1977 had mirrored the publication of the Shawcross report in 1962, there were many similarities between the reactions of the Press Council and the industry to the two sets of recommendations. The Press Council rejected the most significant recommendations of the MacGregor Commission, arguing that they amounted to an unnecessary restraint on the press and muzzled freedom of expression, despite widespread and very public calls for meaningful reform. In all, five out of twelve of the MacGregor Commission's recommendations for reform of the Press Council were explicitly rejected, including the recommendation for a written Code of Conduct, and a number of others were de facto ignored.40 Furthermore, where the call for reform was heeded and changes implemented, that implementation was partial and incomplete. As the Media Standards Trust has fairly pointed out, this repeated the:41 D

"...previous outcomes of 1953, 1963 and 1973 (when the recommendations of the first two Royal Commissions and the Younger Report were implemented)."

¶4.9 Of the recommendations made by the MacGregor Commission in relation to the Press Council, only those relating to lay representation, the appointment of a Conciliator and to the seeking of nominations 'from any source' were adopted in full.

¶4.10 Yet although the reaction of the industry was predictably obstructive, the reaction of the public was different. Whereas the newspaper industry had criticised the recommendations made by Professor MacGregor because of the restrictions they believed the proposals would, if implemented, have placed not only on freedom of speech but also on the ability of journalists to hold the rich and powerful to account, public criticism of the report focused on the perceived weakness of its proposals, particularly in relation to the Press Council. In a curious twist of fate, contemporary commentators also suggested that there were unintended consequences to the publication of the MacGregor report, namely that the extent of the criticism of the Council in the report weakened it still further and "did little to improve the long-term credibility of that body."⁴²⁴² p13, Dr Neil Manson,http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Witness-Statement-of-Dr- Neil-Manson.pdf

5. The first report of Sir David Calcutt QC 5.1 It is clear that neither the MacGregor Commission nor the limited and begrudging response of the industry to its recommendations did much to stem the increasingly growing sense that self-regulation of the press through the offices of the Press Council was not an effective means of limiting harmful press behaviour. Rather, they fostered a polarisation of the debate on the role of the press in British society and the most effective means of regulating what many believed to be the most harmful aspects of press behaviour. Indeed, the period between the publication of the report of the third Royal Commission and the formation of the Press Complaints Committee in 1990 (following the publication of the first of the reviews of the press by Sir David Calcutt) witnessed some of the most egregious examples of press misconduct. These included allegations of cheque book journalism in relation to the Yorkshire

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¶Ripper, Peter Sutcliffe, defamatory allegations made in The Sun about the singer, Elton John

¶(which led to the award of record damages for libel in 1987), the coverage of the television presenter Russell Harty's illness and subsequent death in 1988, and the coverage of the alleged behaviour of Liverpool football fans during the Hillsborough disaster in 1989. Some of these examples of breaches of privacy and defamatory reporting became stories in their own right. The growing list of high-profile incidents involving harmful press behaviour tested public and Parliamentary support for the Press Council and led to a 'crescendo' of criticism.43

¶5.2 The corollary to this was the continued erosion of public support for voluntary self-regulation.

¶It should not be doubted that contemporaneous arguments about journalistic freedoms and the most effective means of regulating the British press were amplified through the wider travails and industrial disputes that afflicted the industry during this period. These paralleled a growing ideological divide in British politics. Back in 1974, the Labour Party had published D a report entitled The People and the Media which set out its thinking on the British media and communications markets. It proposed that a joint regulatory code should be developed for both broadcasting and the press, and that public confidence in the regulator should be fostered through greater transparency, regular public review of that body and a legally enforceable right of reply.44 The report also considered the state of the press market and, perhaps unsurprisingly for a document produced by a political party which was not always favourably characterised in press reporting, bemoaned a lack of accountability and bias in the press. More significantly, The People and the Media was also strongly critical of the existing system of self-regulation through the Press Council; whilst the Governments of Harold Wilson and James Callaghan did little to change the system of self-regulation for the press, the report marked an fundamental shift in political support for the Press Council, which had previously benefited from the tacit support of both the Labour and the Conservative Parties.

¶5.3 The Labour Party was certainly not alone in its criticism of the Press Council. The Campaign for Press Freedom (which would later be re-constituted as the Campaign for Press and

¶Broadcasting Freedom (CPF)) also advocated a complete overhaul of regulation of the press.

¶Perhaps unsurprisingly for an organisation that had its roots in the wider Labour movement, the CPF pointed to what it regarded as unnecessary and destructive hostility directed at the trade unions by newspaper proprietors. The CPF also sought to lay the blame for the lack of real and meaningful reform at the door of the Press Council and the system of self-regulation itself.

¶5.4 So concerned was the CPF at the perceived injustices of the existing system that it established its own Inquiry into the Press Council and matters relating to it. When it was finally published in

¶1983, the CPF report (known as the Robertson Report on the Press Council after its Chairman

¶Geoffrey Robertson). The Robertson Report was unsurprisingly critical of the performance of the Press Council, but recommended nevertheless that the organisation be granted one final opportunity to reform itself and demonstrate its efficacy as a regulator.

¶5.5 The conclusions of the report were unambiguous about what such reforms should entail.

¶It recommended substantive changes to the Press Council and indeed to the existing law.

¶Recommendations for reform of the Press Council included the further and oft repeated call for the development of a published code of conduct, auditing powers to ensure the maintenance of high standards, as well as powers, backed by contract, to direct prominent publication of corrections.45 The Robertson Report also recommended that the Press Council be given responsibility for the training and professional development of journalists. However, this report also went much further in its recommendations than just proposals for the reform of the Press Council. It also recommended substantive legislative change. Proposals put forward by the CPF included legislation to establish a statutory press ombudsman, to provide a defence in law for investigative journalism, a Freedom of Information Act and changes to the laws on libel and contempt.46

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¶5.6 Reference has already been made to examples of press misconduct in the 1980s, but it would be incorrect to suggest that the Press Council was always silent in these circumstances. Indeed, under the leadership of its final Chairman Sir Louis Blom-Cooper QC, the Press Council made significant efforts better to represent ordinary people and the victims of press mistreatment.47 However, there is little evidence to suggest that such rulings were respected or observed by the industry. Indeed, in material submitted by Sir Louis to the Inquiry, he has made clear his belief that the Press Council ultimately failed because its rulings were routinely, though not always, traduced and undermined in the pages of newspapers, thereby only serving to undermine public confidence in that body.48 D 5.7 The perceived inability of the Press Council to take credible and effective action in these cases of press mistreatment further damaged its reputation. Increasingly, it was regarded as ineffective both as a regulator of press conduct and as a means of redress for those who had suffered harm. Consequent opprobrium at the Press Council was not restricted to those who were the victims of press misconduct, but also extended to policy makers and to some of those involved in the industry. Already in 1980, the NUJ had withdrawn its membership from the Press Council on the grounds that it was not only incapable of internal reform but also was not able effectively to improve the behaviour of the press.

¶5.8 Parliamentary concern at the behaviour of some parts of the press was such that in 1989 two Private Members' Bills were put before Parliament. These were intended to address the intrusive practices conducted by some journalists and the lack of redress available to those who had been the victims of them. The first of the two Bills was laid before the House of Commons by a Conservative MP, John Browne. His Bill proposed the introduction of a privacy tort, envisaged as a means of helping to protect individuals from unwarranted intrusion by the press. The second such Bill was introduced by Tony Worthington, a Labour MP. This proposed the creation of a statutory Press Commission Appeal Tribunal with legally enforceable sanctions. Introducing his Bill to Parliament, Mr Worthington expressed the hope that it would improve access to redress for those who had been the victims of press mistreatment and speed up the process of dealing with complaints.

¶5.9 These Private Members' Bills were not the only attempts by Parliamentarians to tackle perceived press wrong-doing and the seeming inability of the Press Council to police press excesses effectively, although they were the last before the eventual appointment of Sir David Calcutt in 1989. For example:49

¶
• In June 1981 the Labour MP, Frank Allaun, presented a Bill 'to give members of the public the right to reply to allegations made against them in the press, or on radio or television'. In December 1982, Allaun introduced a second right of reply Bill to the House of Commons.

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¶
• In January 1982, the Conservative MP, Teddy Taylor, asked the Attorney General to review the remedies available 'to individuals, groups and organisations in the event of newspapers or the broadcasting media publicising inaccurate or misleading reports, and legal remedies available to newspapers and broadcasters in the event of industrial action looking to influence their content.'
• In June 1984, Alfred Dubs MP (Labour) pressed unsuccessfully for a Bill to make newspapers declare payments to non-regular contributors. The Labour MP Austin Mitchell also introduced a Bill requiring a right of reply.
• In 1987 a number of yet further attempts were made to introduce legislation to curb the worst excesses of press misbehaviour. These included the movement of a debate in the House of Lords by the Labour Peer, Lord Longford, on 'Tabloid press: moral standards',

¶D the introduction of an Unfair Reporting and Right of Reply Bill by the Labour MP,

¶Ann Clywd, and the introduction of a Right of Privacy Bill by the Conservative MP, Bill Cash.

¶5.10 The Government responded to this continual build-up of pressure for both the reform of the

¶Press Council and the introduction of effective curbs on the worst excesses of press practice by appointing a Departmental Committee, chaired by Sir David Calcutt QC, to investigate the matter. Sir David was asked:50

"...to consider what measures (whether legislative or otherwise) are needed to give further protection to individual privacy from the activities of the press and improve recourse against the press for the individual citizen."

¶5.11 Sir David published his report on Privacy and Related Matters in June 1990. It is clear from the content of the report that the members of the Committee considered its remit to go beyond a limited discussion of privacy and encompass the existing system of press regulation.51 The final report was highly critical of the Press Council and set out in clear terms the failings of that organisation. These included: its ineffectiveness as an adjudicator; the lack of confidence in its independence from the newspaper industry; its tendency to reject large numbers of complaints; the lack of clarity in its selection and categorisation of complaints; the time taken to resolve contested cases; and the lack of effective sanctions in instances of proven breach.52

¶5.12 However, contrary to the expectations of a number of contemporary commentators, Sir David

¶Calcutt's first report did not advocate the introduction of statutory controls for the press.

¶Rather, it recommended that the Press Council should be abolished and replaced with a new self-regulatory organisation; the Press Complaints Commission (PCC). The report argued that the press be given:53

"...one final chance to prove that voluntary self-regulation can be made to work. However, we do not consider that the Press Council, even if reformed as proposed in its internal review, should be kept as part of the system. We therefore recommend that the Press Council should be disbanded and replaced by a new body, specifically charged with adjudicating on complaints of press malpractice. This body must be seen to be authoritative, independent and impartial. It must also have jurisdiction over the press as a whole, must be adequately funded and must provide a means of seeking to prevent publication of intrusive material. We consider it particularly

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important to emphasise the break from the past. The new body should, therefore, be called the Press Complaints Commission."

¶5.13 The report recommended that this new body should deal with the numerous and substantial concerns that had been raised around the behaviour of some parts of the press. In contrast to the three Royal Commissions, the Calcutt Committee did not make a large number of recommendations for specific reforms. Rather, it set out a framework of measures that the Committee regarded as the necessary elements of an effective self-regulatory regime. The new PCC would have 18 months to demonstrate "that non-statutory self-regulation can be made to work effectively" by implementing appropriate reforms.54 In this report, Sir David recognised that such change would pose a significant challenge for the press but was adamant that if the challenge should not be met, namely 'a less than overwhelming rate of compliance with the Commission's adjudications...[or]...large-scale and deliberate flouting of the code of practice by the press or a total collapse in standards,55 then "a statutory system for handling complaints should be introduced."⁵⁶⁵⁶ pp1-3, para 2, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-James- Harding.pdf D 5.14 Sir David's report made clear that the primary function of the PCC should be to provide effective redress for complaints made by members of the public against the press, including the ability to consider allegations of unfair treatment and unwarranted infringements of privacy. In addition, the Commission was to "publish, monitor and implement" a comprehensive code of practice for the guidance of both the press and the public, as well as to operate a 24 hour hotline for complainants.

¶5.15 Sir David also made clear that the adjudication of complaints should be a clear and fast process and that, where a newspaper was demonstrated to be in breach of the code, an apology should be given to the complainant. Sir David also recommended that the PCC should be able to advise on the form and placing of replies or corrections. It is noteworthy that Sir David's report made no mention of sanctions and instead placed emphasis on the preparedness of the press to adhere to the adjudications of the PCC.

¶5.16 In addition, Sir David's report made a small number of specific recommendations about the structure and function of the PCC, intended to address concerns expressed by the three Royal Commissions as to the independence of the organisation. The report recommended that the PCC should have an independent Chairman supported by a Commission made up of no more the twelve Commissioners. These would be appointed by a separate independent appointments commission which would select and appoint on the basis of merit alone.

¶5.17 As had been the case after the second Royal Commission (but not other reviews less favourable to the press), the response of the industry was swift. The Press Council was duly disbanded, and in the spring of 1990 the five publishing associations in the UK (the Newspaper Publishers Association, the Newspaper Society, the Periodical Publishers Association, Scottish Newspapers Publishers Association and the Scottish Daily Newspaper Society) worked together to establish the Press Standards Board of Finance (PressBoF) for the specific purpose of funding the PCC. The PCC was itself incorporated on 1 January 1991 and, in a nod to the history of the self-regulation of the press as well as in recognition of his very real qualifications for the post, Lord McGregor was appointed as its first Chairman.57 However, the full Commission was appointed directly by Lord McGregor, in direct contravention of the Calcutt Report's specific recommendation that there should be a fully independent appointments process.58

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6. The second report of Sir David Calcutt QC 6.1 Although the PCC had been established speedily, standards of press behaviour remained a concern to politicians and members of the public alike because no immediate improvement in press behaviour was discerned. Indeed it has been suggested that despite the speed and promise of its establishment, the PCC quickly followed the modus operandi demonstrated by the Press Council in its responses to the Royal Commissions and Sir Kenneth Younger's report on privacy in 1972.59 Many of the recommendations made by Sir David Calcutt were either quietly shelved or ignored by the PCC. Others were modified or implemented in a D manner that benefitted the industry. For instance, the Code of Conduct was promulgated by the industry rather than the PCC itself and, as indicated above, the appointments process was not independent.

¶6.2 The Commission also struggled to impose its authority on the industry; it has been argued that, in failing to commit to dealing with complaints from third parties, or indeed establish any investigatory arm, the regulatory function and capacity of the newly formed Commission was

¶'gravely weakened' from the outset.60 In 1992 the Labour MP, Clive Soley, introduced a Private

¶Member's Bill on Freedom and Responsibility of the Press. The Bill proposed the creation of a statutory Independent Press Authority, with powers to enforce its rulings through the courts. Clive (now Lord) Soley has suggested that his Private Member's Bill was intended to complement thinking around Sir David's forthcoming follow-up review.61 6.3 Following the publication in The Sun of the detail of intimate conversations between the

¶Princess of Wales and James Gilbey, and the Prince of Wales and the Duchess of Cornwall

¶(as she now is), the Secretary of State for National Heritage, David Mellor QC MP, gave a speech in July 1992 in which he reflected widespread public anger at the actions of The Sun.

¶He described the press as drinking in the "last chance saloon". Mr Mellor later complained that his stance on the need for reform of the press led to him being driven from office by a series of salacious stories about his private life although he acknowledges that the timing was coincidental.62 Perhaps with greater ambiguity, he has also suggested that some of that coverage was legitimate and a matter of public interest. 6.4 In July 1992, Sir David Calcutt was asked by the Secretary of State for National Heritage to conduct a second review, the report from which was published in January 1993. This was just before Mr Mellor had left office in the circumstances explained above. David Mellor's explanation to the Inquiry was that 18 months had elapsed since the press had been described by him as drinking in the "last chance saloon" in December 1989, and the matter needed to be re-assessed.63 There, Sir David analysed the record of self-regulation by the press since the formation of the PCC in January 1991. Sir David's assessment was forthright. He contended that self-regulation by the PCC had failed and called for the introduction of a statutory Press Complaints Tribunal. He summarised his conclusions as follows:64

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"The Press Complaints Commission is not, in my view, an effective regulator of the press. It has not been set up in a way, and is not operating a code of practice, which enables it to command not only press but also public confidence. It does not, in my view, hold the balance fairly between the press and the individual. It is not the truly independent body which it should be. As constituted it is, in essence, a body set up by the industry, financed by the industry, dominated by the industry, and operating a code of practice devised by the industry and which is over-favourable to the industry."

¶6.5 Sir David's second report made clear his view that the press was neither capable nor willing to initiate reforms that might constitute a credible alternative to statutory regulation. He therefore recommended that the proposals set out in his first report for a statutory "Press Complaints Tribunal" be enacted forthwith:65 D

"It has been argued that two years is too short a time in which to judge the Press Complaints Commission. But the way forward was clearly spelt out in the Privacy Committee's Report. In particular, the Committee stressed the need for the Commission to be seen as an independent body which would command the confidence of the public. Both the Committee, and subsequently the Government, gave a clear indication that this was the last chance for the industry to put its own house in order. It has to be assumed that the industry, in setting up the present Press Complaints Commission, has gone as far as it was prepared to go. But it has not gone far enough."

¶6.6 If the conclusions reached in Sir David Calcutt's second report were damning of the PCC, the recommendations for change were equally alarming for the supporters of self-regulation. The final report contained a detailed set of proposals for the wide-ranging powers that should be granted to that body. These included powers to establish and maintain a code of practice, prevent the publication of material in breach of the code, handle complaints in relation to alleged breaches of the code (including from third parties), investigate and adjudicate on breaches without a complaint, require the publication of adjudications, apologies and corrections, and, where appropriate, to hold full hearings.66 6.7 The PCC and the industry rejected the analysis of Sir David. They argued that he had failed to pay sufficient attention to the relevant facts. The PCC said that the criticism of it was excessive.67 Indeed, Sir David's proposals were seen as a step too far by even the most adamantine critics of the press.68 However, the PCC did accept that some reform was required and under the leadership of its second Chairman, Lord Wakeham, changes were made to aspects of policy and procedure, largely to improve and expedite the complaints handling procedures.69 6.8 Specifically, amendments were made to the Editors' Code of Practice. These included requirements to restrict the use of eavesdropping and phone bugging techniques.70 Other changes included new guidance on how journalists should identify themselves when seeking stories. In addition, the board of the PCC was reconstituted to include a majority of lay members (nine, including the Chair, alongside seven serving editors). Similar changes were also made to the independent Appointments Committee. 6.9 In further changes, the industry agreed that the PCC should be granted powers to ratify, if so advised, the changes to the Editors' Code of Practice recommended by the Editors' Code of Practice Committee. Funding to the Commission was also increased substantially. This enabled the development and introduction of a hotline for members of the public specifically to deal with incidents of harassment by members of the press, as had been recommended in

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¶Sir David's first report. 6.10 The weakness of the press response to the second Calcutt report, as part of an overall narrative, was demonstrated by an example provided by Lord Brooke, the Secretary of State for National Heritage between July 1992 and September 1994. He recalled that in 1993 the D Sunday Mirror published photographs of the Princess of Wales exercising in a private gym.71

¶Lord McGregor, then Chairman of the PCC, issued a public rebuke of the Sunday Mirror; but instead of showing contrition the paper's response was to leave the system of self-regulation through the PCC.72 Lord Brooke suggested that this incident was instructive at many levels, demonstrating not only the weaknesses existing within the system of regulation, but also the refusal of the press to begin to countenance change until compelled to do so as a consequence of public indignation at its behaviour.73 Lord Brooke described the matter thus:74

"In the same way, another instance which I would quote from my own time, the episode of the Mirror in the first week of November 1993, when the photographs were taken of Princess Diana working out in a gymnasium, had a very powerful effect on the behaviour of the press immediately, because they had been resisting anything that in any way related to – either to Calcutt or to ourselves and indeed others, and then suddenly changed their minds when they realised that an episode as absurd as the Mirror episode, where the chairman of the Press Complaints Commission rebuked the Mirror – the Sunday Mirror, in fact – rebuked the Sunday Mirror for their behaviour, first led the Sunday Mirror to walk out of the Press Complaints Commission, and then to come back, and it was clear that some of the things that were being said to them about the degree of control that they had were actually being proved by reality."

¶6.11 The Government did not immediately respond to Sir David's second report. Rather, it waited until 1995, when the Secretary of State for National Heritage, Virginia Bottomley MP, rejected his recommendation for statutory regulation and instead supported the package of reforms that had been proposed by Lord Wakeham. The Inquiry has heard from witnesses who have sought to explain the nature of the Government's response. Sir John Major has told the

¶Inquiry that, although a matter of concern to his Government, the conduct of the press could not be regarded as a priority, nor, he noted, was there any agreement within the Government on the most desirable way forward.75 He recounted that his Government had to contend with other more pressing and immediate demands, including the UK's exit from the European

¶Exchange Rate Mechanism on Wednesday 16 September 1992.76 Sir John also suggested that the strength of Parliamentary opinion in relation to freedom of the press, particularly in the context of the Government's diminishing Parliamentary majority, ruled out any more decisive action in this area.77

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¶6.12 Sir John's recollection of events has found a complementary echo in the evidence of Lord Brooke. He told the Inquiry that there was little appetite in Cabinet for the statutory solution proposed by Sir David in his second report.78 Lord Brooke also explained that a number of legislative proposals, through which press intrusion might be addressed,79 had been put forward by different Government departments. These included both a privacy tort and proposals to make some forms of intrusion a criminal offence. Lord Brooke noted that although there was some agreement in Cabinet on bringing forward legislation to introduce criminal offences, there was less accord in relation to the introduction of a tort of privacy.80

¶6.13 Stephen Dorrell, the Secretary of State for National Heritage from July 1994 to July 1995, was responsible for the formulation but not the publication of the response to the second Calcutt report. He has helped complete this picture. He said that such were the disagreements in D Cabinet around both the likelihood of the Government enacting legislation and the desirability of regulating the press, that the Government had "argued itself to a standstill".81 He also noted that the reforms to the PCC proposed and then implemented by Lord Wakeham increasingly appeared to meet the needs set out by Sir David Calcutt without the requirement for time-consuming and controversial legislation.82

¶6.14 Nonetheless, many have suggested that Lord Wakeham's appointment and tenure was very much in the interest of the press. Lord Smith summarised industry thinking behind his appointment in this way:83

"I think the newspaper industry did not want statutory control and that they accepted they needed someone to be the chairman with a bit of clout, who could stop statutory control by getting the standards up to an acceptable level, and this was my view of what I thought they probably wanted."

¶Sir John Major explained why Lord Wakeham's appointment might well have been valued by the industry itself:84

"I mean, those who were at all queasy about it would then say, "Look, here is one of our own, a very respected former Cabinet Minister who is actually chairing the PCC. Therefore, why don't we wait and see how well he gets on? Why rush ahead with legislation?" So his appointment did have a material effect upon views in the Parliamentary party."

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¶6.15 However, Lord Wakeham was not appointed simply for his political skills. In perhaps the most important respect, he shared the values which were most cherished to the industry which the PCC was regulating. Lord Wakeham explained that he was a strong supporter of both press freedom and self-regulation:85

"I don't think you could be a chairman of a body that was running a system of self-regulation unless you believed in self-regulation. I think that would be a bit difficult. And I can't imagine you being a very good chairman of a Press Council if you didn't believe in press freedom. I would have thought they were pretty self-evidently things that were required for the job."

¶6.16 Whilst it is clear that the PCC did introduce reform during the chairmanship of Lord Wakeham, including the appointment of a Privacy Commissioner tasked with the oversight of each and every complaint to do with privacy, these changes did not amount to the creation of the D organisation envisaged by Sir David Calcutt in his first report, but rather a PCC that met the minimum requirements of a Government increasingly disinclined to effect major reforms of the system of press regulation and fearful of the political ramifications of any such change.

¶6.17 The PCC won support in some quarters, including in Government, for the breadth of its proposed reforms and their speed of implementation. But the frank evidence of Sir John

¶Major is pertinent on this issue:86

"In retrospect, yes. I mean, there were some things done. It has to be said on behalf of the PCC that it did make some changes. They were relatively trivial changes, but they were changes. And they also, if I remember correctly, appointed a privacy commissioner from among their numbers, a Professor Pinker, at the time. So there were things that they had done, and the hope that Stephen Dorrell is expressing there is that John Wakeham would be able to persuade the media, the press, to go a good deal further than they already had done. It was, as you say, aspirational."

7. The death of Diana, princess of Wales 7.1 The death of Diana, Princess of Wales in 1997 was a wake-up call for the press. Although it did not generate a specific inquiry into press ethics, it did reignite a public demand for improvements in press behaviour.

¶7.2 Considered as a whole, the reforms introduced in response to the public outcry were the most comprehensive ever introduced by the PCC. It should not be doubted that the reforms, which concerned amendments to clauses 4 and 6 of the Editors' Code of Practice, did have an impact on the behaviour and actions of journalists, press photographers and paparazzi.

¶7.3 Nonetheless, it is apparent from the evidence that these changes were, as so many before, hard won from the industry and not freely given. Lord Smith provided a detailed description of the protracted negotiations between his Department and the industry through the offices of the PCC, in which despite the tragic background, the quite extraordinary levels of public concern, and the willingness of the PCC to act in the first instance as regulator and then mediator, the final outcome was "relatively modest".87

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¶7.4 Lord Smith told the Inquiry that it was Government policy to seek to strengthen the system of self regulation and, in particular, to bring about changes in relation to sanctions, the definition of the public interest, and the issue of PCC pro-activity.88 Lord Smith made clear that he thought that tackling these three issues would effect far-reaching and lasting change in the attitudes of the industry such that the press "should not slip back into old ways when the events of the past week have receded from recent memory".89

¶7.5 However, it is quite clear from the evidence both of Lord Smith and Lord Wakeham that the industry was unwilling to make concession in these respects. Rather the changes that were finally adopted were confined to those very few areas outlined above most closely associated with the direct circumstances surrounding the death of Princess Diana. Lord Smith testified that the industry demonstrated a disinclination to agree to any changes and did so only under D duress after considerable public and political pressure was brought to bear. In his evidence Lord Smith recalled a meeting with Lord Wakeham in which the latter said:90

"If the government can keep up some external pressure on me, pushing me all the time to go a bit further, then that will be very helpful, he said, in enabling me to make better progress with the editors and proprietors."

¶7.6 Even in the evidence of Lord Wakeham it is clear that his ability to broker a solution was severely circumscribed by the unwillingness of editors and proprietors to concede ground:91

"bear in mind the changes in the code were not a matter for me; they were a matter for the editors under the arrangements, and I therefore had to move carefully to make sure the editors went along with what I wanted."

¶7.7 Lord Smith recognised that one of the lessons from history was that the window of opportunity for reform was short. He said that over a period of months the attitude of the PCC shifted from operating as a regulator to championing the interests of the press. This was a metamorphosis which it may be argued was as inevitable and it was entirely understandable, as other 'real world' concerns impacted, in particular in relation to the possible ramifications for the press of the incorporation of the European Convention on Human Rights into UK domestic law.92

¶7.8 Further, the reforms to the Editors' Code of Practice that were introduced with effect from 1 January 1998 were neither welcomed by the press nor much observed in the longer term. Lord Smith described these as:93

"... carried through, sometimes, I suspect, with gritted teeth amongst the editors and proprietors, because there was a public wind at the back of change. But that moment did not last for terribly long, and the equilibrium returned more or less to normal, which makes it very difficult for government to take strident steps to restrain press activity."

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¶7.9 Lord Smith said that, following the death of Princess Diana, Lord Wakeham, and by extension the PCC, "were stepping up to the plate and being a regulator".94 But he, along with other witnesses to the Inquiry, stressed that the changes in press behaviour were of short duration:95

"I think it's probably fair to say that for the two or three years following the Wakeham changes immediately after the death of Diana, the conduct of the press did improve. Certainly in terms of the specifics of the changes, their approach to the coverage of the princes, handling of children and minors, some of the intrusive taking of photographs, there was a palpable change of behaviour. But after that two to three- year period, I think it began to slip, and as we know from all the evidence that you've been receiving, it slipped grievously in quite a number of ways."

¶7.10 Evidently, the same dynamics that played in the aftermath of the reporting of the Royal

¶Commissions and the reports of Sir David Calcutt were also apparent in the industry's response D at this point. The industry moved quickly to make a number of high profile but nevertheless limited changes which were in any event only begrudgingly accepted. In this case, they were ably guided by the dextrous political hand of Lord Wakeham who moved swiftly and adroitly to secure political backing for an industry-led response to these events.96

¶7.11 In 2003 Sir Christopher Meyer was appointed Chairman of the PCC, and the evolution of that organisation under his leadership is addressed elsewhere in this Report, in particular in Part J. The organisation which he inherited was hidebound by the structural and cultural constraints which this chapter has served to highlight. It would require a herculean task to break free from them.

8. Conclusions 8.1 At this juncture, it is opportune that I seek to draw out some brief lessons from the history of press self-regulation in the UK since the foundation of the General Council for the Press in 1953, as well as the public policy response to concerns at the conduct of some sections of the press.

¶8.2 It must be made clear that the story is not all bad, in the sense that there have been a number of reforms in press regulation since the Second World War. That said, whilst recognising some of the good work that has been done in response to criticism, to changing attitudes and the clear recommendations of the reports, it is evident that many of the lessons of the post-war period have been ignored. This chapter of the Report attempts to provide only a cursory glance at the recent history of the British press, but it is patent that many of the concerns and practices that led to the establishment of three Royal Commissions, a Committee on privacy and the two reviews led by Sir David Calcutt, are the same as those which have led to the establishment of this Inquiry. This has been a history of strongly recurring themes.

¶8.3 An equally strong recurrence has been concern about the inability of 'self-regulation' to address the underlying problem sufficiently, an inability which has been consistently pointed out by all of those who have examined the problem in depth. The history demonstrates a distinct and enduring resistance to change from within the press. This replication of pattern, of the wheels of history moving in concentric circles, has been demonstrated through the press response to the recommendations made and repeated over the years, the regulators'97 response to those recommendations and, it must be said, the response of successive Governments to the clear advice they have been receiving.

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¶8.4 My conclusion on the cyclical nature of press self-regulation is not a novel one. Indeed, it was shared by many of the witnesses to the Inquiry. Lord Brooke suggested that the history of press self-regulation has been one of a distinct reluctance on the part of the industry to implement meaningful change. He noted that such change that has been effected has only been implemented in the face of the very real threat of statutory intervention:98

"But in the period since 1945, I observe that quite extraneous events, like a Private Members' Bill, actually have had the effect of moving the story on quite a lot. In the case of the 1949 Royal Commission under Sir William Ross, there was a proposal that the press should have a general body of their own, and they showed no sign at all D of doing anything about that until a backbench MP called Mr Simmons in 1952/53 brought in a Private Members' Bill, whereupon effectively almost instantly the press came around to the original recommendation in the Royal Commission."

¶He continued:99

"In the same way, in 1989 – I noticed the text of Mr Dorrell's account of how the Calcutt 1 was set up, but its actual genesis was the report stage of Mr Worthington's bill entitled "Right of Reply" in 1989, and the government minister responding at the dispatch box on that bill basically foreshadowed Calcutt 1 in his response. So these things happen as a result of different, frequently unrelated episodes."

¶8.5 Lord Brooke perceived a causal link between the credible threat by policy makers of the introduction of statutory regulation for the press, and the introduction by the industry of limited measures to improve the existing system of self-regulation for the press, a system that has worked overall to the distinct advantage of the industry:100

"The other Royal Commissions and Lord Younger's Commission weren't quite so fruitful, but then there wasn't a Private Member around to help."

¶8.6 The same reasoning has been pursued more forthrightly in submissions to the Inquiry by Professor Brian Cathcart of Kingston University. He told the Inquiry that in his view the history of press reform is one of failure to introduce measures recommended in terms to improve public trust in both the press and the system of self–regulation.101 He said that the attitude of the press to change in this area has been one of foot-dragging and obfuscation, with progress only occurring under duress:102

"I think you go back to the first Royal Commission, 1946 to 1949, I think, which reports, recommends the setting-up of a Press Council and it takes three and a half years

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before the press – and an awful lot of leaning on and threats of legislation before the press will set something up. That, if you look through the history, and this is another thing that Hacked Off is doing, that sort of conduct is repeated and repeated."

¶8.7 Similar observations were made by the Media Standards Trust, which submitted to the

¶Inquiry a detailed analysis of the cycle of industry-led reform.103 Dr Martin Moore argued that in the face of considerable public concerns prompting the Royal Commission and other investigations into the behaviour of the press, the industry has been unmoved until

¶"threatened with the Damoclean sword of some form of statutory regulation."¹⁰⁴¹⁰⁴ p5, para 17, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Gordon-Smart.pdf Further,

¶Dr Moore has said the paucity of reforms implemented by the industry has led to a cycle of

¶"subsequent commissions, often within a decade" examining to all intents and purposes the same conduct that had originally generated those public concerns.105

¶8.8 The MediaWise Trust agreed, recalling with some concern that recommendations made by the D Ross Commission in 1949, repeated in the report of the Shawcross Commission of 1962 and again by Lord McGregor in 1974, have yet to be implemented, particularly with regard to the prominence of apologies and corrections. However, in a somewhat different vein from other commentators, the Mediawise Trust suggested that it is incorrect to describe the history as cyclical, as this tends to obscure the fact that the calls for reform became increasingly strident and more forthright with time, and the refusal of the press to implement the changes at the heart of those reports more obdurate.

¶8.9 The historical lessons are clear enough, but the challenge for today is whether any of them will be taken on board. Those who complain about the conduct of the press106 are entitled to ask "How many chances must the press be given before something is done about it?" The problem is to decide whether that complaint is justified and, if it is, what that "something" is.

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¶Self-regulation of the preSS 1. introduction 1.1 This Chapter of the Report will look at the Press Complaints Commission (PCC) as the system of self-regulation that has existed for the press since 1990. Having examined the establishment of the PCC in the context of the publication of the first report into the press by

¶Sir David Calcutt QC in June of that year, it will then look, in turn, at the powers, operation and standards of the PCC before considering both the role of Press Standards Board of Finance, which was established with the express purpose of providing sufficient funding for the PCC, and the Code Committee which is responsible for the promulgation, implementation and D amendment of the Editors' Code of Practice, the cornerstone of self-regulation through the

¶PCC.

¶1.2 This Chapter will also look at the operation of the Editors' Code of Practice, together with the services that it offers to the public; this includes the anti-harassment hotline and its role as a complaints handling body.

¶1.3 The purpose of this Part of the Report is to review the position of the PCC very much from the perspective of its own witnesses, rather than from that of those who are more critical of what it has done since January 1991. Some criticisms are reflected but are mentioned only. A more critical perspective requires a detailed analysis of the response of the PCC to allegations of systemic press misconduct (such as that which arose in relation to data protection following

¶Operation Motorman and then to phone hacking following Operation Caryatid). That exercise has therefore been deferred until these incidents (covering a number of years) have been fully ventilated: the Report therefore returns to the PCC below.1

2. the establishment of the pCC 2.1 As has already been explained above,2 the PCC was set up following the first report into privacy and the press by Sir David Calcutt QC, published in 1990.

¶2.2 The broad scope of Sir David's Departmental Committee had reflected a growing concern in

¶Parliament, as well as among the public more widely, about the behaviour of some parts of the press and the perceived failure of the Press Council, then the self-regulatory body for the press, to take effective action to deal with such behaviour.

¶2.3 Sir David's first report was published in June 1990. At that stage, he did not advocate the introduction of statutory controls. Rather, he recommended that the existing, and by this point largely discredited, Press Council should be abolished and replaced with a new selfregulatory organisation, the Press Complaints Commission, which should deal with the many and substantive concerns that had been raised around the behaviour of some parts of the press. The new PCC would have 18 months to demonstrate "that non-statutory self-regulation can be made to work effectively."¹¹ Rule 13 of the Inquiry Rules 2006: the approach 38 Part J, Chapter 3 Part D, Chapter 1

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¶2.4 As a result, in the spring of 1990, the five publishing associations in the UK (the Newspaper

Publishers Association, the Newspaper Society, the Periodical Publishers' Association, Scottish Newspaper Publishers Association and the Scottish Daily Newspaper Society) worked together to establish the Press Standards Board of Finance (PressBoF) for the specific purpose of funding the PCC. The PCC was itself incorporated on 1 January 1991.

¶2.5 The primary function of the newly incorporated PCC was to provide an effective means of

redress for complaints made by members of the public against the press, including the ability to consider accusations of unfair treatment and unwarranted infringements of privacy. In addition, the Commission was to "publish, monitor and implement a comprehensive code of practice for the guidance of both the press and the public", as well as to operate a 24-hour hotline for complainants. Sir David made clear that the adjudication of complaints should be a clear and fast process and that, where a newspaper was demonstrated to be in breach of the code, an apology should be given to the complainant. Sir David also recommended that

¶D the PCC should be able to advise on the form and placing of replies or corrections.

¶2.6 I now turn to the Editors' Code of Practice. This set out standards of behaviour that journalists

and editors should seek to uphold and also set down the rules by which the newspaper industry should adhere. The Editors' Code of Practice was formulated by a Code Committee, formally a sub-committee of PressBoF which was made up of serving editors of both newspapers and magazines. The Code is explored in more detail below. Further, in a determined break with the past, the newly formed PCC also took a more proactive approach to dealing with some of the more challenging issues facing the press, producing a range of guidance which is valued by editors, particularly in the regional press.

¶2.7 However, although the industry had moved quickly to set up the PCC, standards of press

behaviour remained a concern to both politicians and members of the public who did not discern any immediate improvement in that behaviour. Reflecting that widespread concern, the then Home Office Minister, David Mellor QC MP, made clear his view in a television interview in 1989, describing the press as drinking in the "last chance saloon". In July 1992, Sir David Calcutt was asked by Mr Mellor to prepare a second report analysing the record of self-regulation by the press since the formation of the PCC in January 1991. In that report, which was published in January 1993, Sir David argued that self-regulation by the PCC had failed and called for the introduction of a statutory Press Complaints Tribunal.

¶2.8 Reiterating the history set out above, the PCC and the industry more widely both rejected

the analysis of Sir David. However, the PCC did accept that some reform was required and changes were made to some of its policies and procedures in the light of the first 18 months of operational experience. Further changes were made in 1995, after the Government had published its eventual response to Sir David's second report and the PCC has continued to keep its practices under review since then.

¶Purpose of the PCC 2.9 The primary purpose of the PCC is set out in its Articles of Association.3 Article 53.1 of the

¶Articles states that:4

"The primary function of the Commission shall be to consider, and adjudicate, conciliate and resolve or settle by reference to the Press Code of Practice promulgated

¶3 http://www.pcc.org.uk/assets/111/PCC_Articles_of_Association.pdf p12, ibid

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by PressBoF for the time being in force complaints from the public of unjust or unfair treatment by newspapers, periodicals or magazines and unwarranted infringements of privacy through material published in newspapers, periodicals or magazines (in each case excluding advertising by third parties) or in connection with the obtaining of such material but shall not consider complaints of any other nature."

¶2.10 This is again set out in plain English on the PCC website in the form of a mission statement.5 In that statement, it is said that the PCC is:6

"an independent body which administers the system of self-regulation for the press. It does so primarily by dealing with complaints, framed within the terms of the Editors' Code of Practice, about the editorial content of newspapers and magazines … and the conduct of journalists."

¶2.11 It is clear from this that the PCC understood itself to be a de-facto regulator and presented itself publicly as such. This difference between this perception and the reality is explored below.7

3. Current powers, operations and standards 3.1 Since its foundation in January 1990, there has been five Chairs of the PCC. These were Lord MacGregor (1991–1994); Lord Wakeham (1995–2002); Sir Christopher Meyer (2003-2009); Baroness Buscombe (2009-2011); and Lord Hunt (since 17 October 2011). Professor Robert Pinker served as Acting Chair from July to October 2011.

¶Membership of the PCC 3.2 Membership of the PCC is voluntary and as such there is no system of sanctions or incentives in place to induce those newspapers and magazines who do not subscribe to the PCC to do so. Currently, the majority of national newspapers do subscribe to the PCC but there are important and significant omissions to that membership. In particular, the Northern and Shell group withdrew its membership in January 2011 and, as a consequence, the Star and Express titles have not been subject to any system of self-regulation since then (although Dawn Neesom, the editor of The Star, explained in her evidence that staff at both titles continued to abide by the terms of the Editors' Code of Practice during this period).

¶3.3 In addition to the majority of national newspapers, all regional titles and most magazine titles are currently members of the PCC.8 Subscription to the PCC is organised through the five print trade associations: the Newspaper Publishers Association, the Newspaper Society, the Periodical Publishers' Association and the Scottish Daily Newspaper Society.

¶The structure of the PCC 3.4 The framework for the membership of the PCC and appointments to the PCC are set out in Articles 5-9 of the Articles of Association. There are a number of classes of member of the

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¶PCC, as set out at Article 6 which also established the appointments process for each class.

¶The three classes of members of the Commission are as follows (see Article 6.1):

¶(a) the Chairman;9

¶(b) public members; and

¶(c) press (or editorial) members.

¶Article 5 provides that there shall at any time be between nine and 17 members of the PCC. It also makes clear that at all times a majority of the members shall be Public Members rather than Press Members. Commissioners also serve as Directors of the PCC. There are at present

¶17 members of the PCC.10

¶D Appointment of members 3.5 The Chair of the PCC is appointed by PressBoF. It is of critical importance to note that, under the Articles of Association, PressBoF has absolute discretion to appoint the Chair on whatever terms it sees fit, and to vary or revoke that appointment. The most significant of the Articles of Association in this regard is Article 6.2, which provides that "the Chairman shall not be engaged in or connected with or interested in the business of publishing newspapers, periodicals or magazines (other than through his appointment as Chairman)".

¶3.6 It is clear that candidates for the post of PCC Chair are expected to have knowledge and expertise of the working of the press and also of regulation. For example, Sir Christopher

¶Meyer was Press Secretary to Sir John Major from 1994 to 1997; during his tenure as Prime

¶Minister and, before his appointment, Lord Hunt had prepared a report on the future regulation of solicitors for the Law Society of England; prior to that, he had led the first review of the Financial Ombusdman Service.

¶3.7 In addition, the Inquiry has been told that a belief in the superiority of self-regulation above other forms of regulation is a requirement for all candidates applying for the post. The evidence submitted by Lord Hunt included a copy of the advertisement for the post of PCC

¶Chair as it was advertised in 2011. The advertisement stated that candidates for the post of

¶PCC Chair:11

¶"must be committed to the principles of self-regulation and freedom for the press."

¶3.8 The Inquiry was told candidates are also tested on this particular issue during the application process. For example, Lord Grade was asked at interview whether or not he supported statutory regulation, and Sir Christopher Meyer suggested that he regarded his tenure as PCC

¶Chair as a success as he warded off the threat of statutory regulation.

¶3.9 The Public Members and Press Members of the PCC are appointed differently. According to the Articles of Association, Public Members and Press Members are appointed by the

¶Appointments Commission (Article 6.3). This Commission also has absolute discretion to appoint Public and Press Members upon whatever terms and for whatever period it sees fit.

¶Similarly, it has the power to revoke or to vary any appointment of a Public or Press member.

¶Article 6.3 makes clear that no Public Member shall be engaged in, or otherwise connected with or interested, in the business of publishing newspapers, periodicals or magazines (other than through his appointment as a Commissioner).

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¶3.10 In practice, however, the Appointments Commission has been abolished and responsibility for the appointment of Public Members has been taken on by the Nominations Committee. This reform was introduced following the Governance Review in 2009 but, at this point, has not yet been formalised as an amendment to the Articles of Association.

¶3.11 The Nominations Committee is chaired by the PCC Chair and has two other members drawn from Public Members of the Commission. At present, Ian Nichol and Professor Ian Walden sit on the Nominations Committee along with the Chair. Vacancies for Public Members are advertised publicly. The Nominations Committee considers applications and then makes nominations for the whole of the Commission to vote upon. As part of the process of considering applications, the Nominations Committee consults with the Chair of PressBoF. The Nominations Committee is also responsible for appointing the Independent Reviewer and the Review Committee.

¶3.12 Press (or Editorial) Member appointments are made by the trade bodies through PressBoF.12

¶Functions of the PCC 3.13 The then Director of the PCC, Stephen Abell, provided detailed evidence to the Inquiry about the function and operation of the PCC. He briefly summarised the purpose of the Commission as:

¶(a) to investigate complaints, primarily from concerned individuals, that relate to the terms of the Editors' Code of Practice; (b) to deal with pre-publication concerns of individuals and advocate on their behalf

with news organisations, with a view to preventing the publication of non-compliant material; and

¶(c) to prevent harassment by journalists.

¶3.14 In addition to this, the PCC also seeks pro-actively to contact individuals who might need the assistance of the Commission in their dealings with the press; provides guidance to the industry on a range of ethical issues (such as reporting on mental health issues); and works with titles to help raise standards across the industry.

¶Investigating complaints that relate to the terms of the Editors' Code of Practice The complaints process – assessment 3.15 One of the core functions of the PCC is the investigation of complaints relating to the terms of the Editors' Code of Practice. Investigations are handled by the complaints officers in the PCC secretariat.13 Each new complaint is assessed by a complaints officer or the Head of Complaints; at this stage, any complaint which falls outside the remit of the PCC or the Code of Practice is sifted out.14 It may be the case that the PCC has to ask for further details before a decision can be taken about whether or not the complaint falls within its competence.15

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¶When the PCC does not investigate 3.16 The PCC does not investigate cases where no breach of the Code is raised in the complaint.

¶Examples of this might include where the complaint was about a broadcaster, or where the complaint raised questions of taste and decency.16 The PCC might also decide that, if sufficient remedial action had been taken by a newspaper, no further action was necessary.

¶3.17 When a complaint does not fall within the remit of the PCC, it will try to redirect the complainant to the relevant alternative regulator.17 Where the complaint does fall within the competence of the PCC, but there is no prima facie case to answer, the matter may be put before the Commission directly without investigation.18

¶Investigation 3.18 If a complaint does raise a prima facie breach of the PCC Code, it is assigned for investigation D to a Complaints Officer. Complaints Officers at the PCC play a dual role of both investigator and conciliator.19 Where a complaint is accepted for investigation, the PCC first writes to the editor of the relevant publication. That editor is sent a copy of the complaint and is asked to respond within seven days. There then follows three way correspondence, with the PCC

¶Complaints Officer acting as the conduit between the complainant (or his/her representative) and the publication complained about.

¶3.19 The PCC has a protocol for disclosure.20 This document does not place either party under any obligation to provide key documents to the other party or to the PCC itself. The protocol provides that any material submitted by a publication to the PCC in the course of a complaint will be seen by the complainant. It also provides that the PCC will 'consider on request providing to the complainant copies of our correspondence – conducted during an investigation – with editors'. The PCC has no power to subpoena documents, having argued in the past that a power of subpoena would contribute to delay in the system.21 There is no obligation on a complainant or a publication to disclose to the other party or to the PCC documents which might undermine a party's own case or strengthen that of the other party.

¶3.20 While the PCC does have the power to hold oral hearings, that power has never been exercised. According to the PCC's response to the 2010 Independent Governance Review, oral hearings would be undesirable because they might undermine two key virtues of the PCC system, namely that the system is free and fair.22

¶3.21 On some occasions, the PCC has found that, after the conclusion of investigations, it has insufficient information to reconcile the positions of the parties and, as a consequence, has declined to come to any conclusion as to the merits of the complaint. There are other instances of PCC decisions in which the PCC has not upheld a complaint on the basis that there was not enough evidence for it to be sustained; on its face, however, it seems that if key documents were disclosed, the matter might have been resolved.

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¶Action to prevent publication of material that does not comply with the PCC Code 3.22 On occasion, the PCC coordinates with publications and complainants who are at the centre of a specific news story.23 Where the police are involved, the PCC might seek to approach the subject or probable subject of stories through the police (such as contact with Cumbria police following the shootings by Derrick Bird);24 or through other representatives such as solicitors (as in the case of Christopher Jefferies).25 The PCC can send a private advisory note to editors, making it clear that an individual does not want to speak to the media.

¶Preventing harassment by journalists 3.23 Harassment by journalists is covered by Clause 4 of the PCC Code. Where an individual asks a publication to desist from questioning, telephoning, pursuing or photographing him, the Code makes clear that publications should not persist in their pursuit of the individual.26 The PCC has developed a system whereby it can communicate the request of a complainant to an individual newspaper or to the whole print and broadcast industry. Since 2003, the PCC has operated a 24-hour helpline,27 the number for which is advertised on the PCC website. The system, referred to by some as a desist order, has been widely praised by both members of the public and those who have benefited from the system. However, it is notable that this has been used only rarely, and only in circumstances in which individuals have been placed under sustained, intense and intrusive media speculation.

¶Limitations on the PCC's role 3.24 The Articles of Association also make express a number of explicit limitations on the PCC's competence to consider complaints. These are:

¶(a) the PCC can only consider complaints made by the person affected or by a person authorised by him to make a complaint (Article 53.3(a)); (b) the PCC cannot consider a complaint where the matter complained of is the subject of proceedings in a court of law or tribunal in the United Kingdom (Article 53.3(b)); and (c) where the person affected has a remedy by way of proceedings in a court of law in the

United Kingdom, the PCC may consider the complaint if in the particular circumstances of the case it appears to the Commission that it is appropriate for the Commission to consider a complaint about it.

¶The PCC only deals with complaints relating to an article in a newspaper, magazine or periodical, or on the website of a newspaper, magazine or periodical.

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¶Powers and sanctions 3.25 The PCC has only limited powers available to it. For instance, as already observed, the PCC has no power to subpoena documents. The PCC also has a range of sanctions available28 which, in brief, are:

¶(a) negotiation of an agreed remedy;

¶(b) publication of a critical adjudication;

¶(c) a letter of admonishment from the PCC Chairman to an editor;

¶(d) follow-up by the PCC to establish what steps have been taken to avoid a repeat of a breach and what steps have been taken against those responsible for breaches; and

¶(e) referral of an editor to his publisher. D 3.26 Although criticised by a number of witnesses (including Dr Martin Moore and Professor

¶Greenslade) as inadequate, Baroness Buscombe told the Inquiry that the current sanctions regime available to the PCC had been broadly effective.29 Indeed, in its response to the

¶Culture, Media and Sport Select Committee report, the PCC said "at present, the Commission believes that its powers are effective and can point to a culture in which its sanctions have real impact".30 The PCC has also pointed to the growing number of settled complaints as testament to the efficacy of the current sanctions regime.

¶3.27 Both Baroness Buscombe and Sir Christopher Meyer told the Inquiry that the possibility of an adverse adjudication on an editor of a newspaper was a real and effective sanction.

¶Sir Christopher said that editors would go to considerable lengths to avoid an adverse adjudication and that this was to the benefit of the complainant.31 Baroness Buscombe went further, observing that editors reacted with fury to the announcement of an adverse PCC adjudication and that the effect of such an adjudication on an editor was considerable.32 In so doing, Baroness Buscombe has implied that the deterrent and punitive effect of a PCC adjudication was real. However, elsewhere in her evidence, she appeared to concede that the deterrent impact of an adverse adjudication from the PCC was not as effective as might have been suggested. She accepted that the anger she had experienced from editors when providing notice of a forthcoming adjudication was at the fact of personal criticism rather than its content and impact.33

¶3.28 Baroness Buscombe also explained that both the Daily Mirror and the Financial Times had threatened to leave the PCC as a consequence of an adverse adjudication. She accepted the suggestion of the Inquiry that this reflected that the balance of power within the selfregulatory system for the press may be wrong.34 However, she was emphatic that, although an issue for the system of self-regulation through the PCC, adverse and indeed disdainful reactions from editors to PCC adjudications were rare and limited to a small minority.35

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¶3.29 In a further reflection on this point, Baroness Buscombe acknowledged that the current state of affairs impacted directly on levels of trust in the PCC and that, as a consequence, there was very real difficulty in persuading both policy makers and members of the public that an adverse adjudication was, in fact, an effective sanction.36 It is important to note in this context that the PCC has no power to enforce its adjudications or rulings if they are ignored by an editor or publisher. The lack of power in this respect has been the subject of some criticism and had already been identified as an issue to be reviewed by the PCC Reform Committee by February 2012.37

¶3.30 A further analysis of the punitive and deterrent impact of adjudications as a sanction is undertaken later in the Report.38

¶Options for appeal or review 3.31 There is no avenue within the self-regulation system through which complainants can appeal against the substance of a PCC decision. The Inquiry has been told that this was the source of some frustration to complainants, and indeed, had dissuaded some from taking complaints to the PCC in the first instance. On occasion, parties who have been informed of the substance of the outcome of adjudications in their cases have asked the PCC to reconsider its decision.39 However, when this happens, the PCC has only reviewed the process of the handling of the complaint and not the substance of the material decisions made.

¶Charter commissioner and independent reviewer 3.32 The position of Charter Commissioner was introduced in 2003, together with a Charter Compliance Panel, as part of the policy of 'permanent evolution' initiated by Sir Christopher Meyer. The function of the Charter Commissioner is defined under Articles 55 and 56 of Articles of Association as to:40

"consider complaints (other than complaints relating to the substance of an adjudication) from persons who have received a decision from the Commission and who are dissatisfied with the way in which the Commission has handled their matter."

¶3.33 The first Charter Commissioner was Sir Brian Cubbon, who served until 2009. He was replaced by Sir Michael Wilcocks (who became the first Independent Reviewer). The Independent Reviewer is now Professor Robert Pinker CBE: he served as a Public Member of the PCC between 1991 and 2004 and was Acting Chair in 2002-2003 and in 2011. The role of the Charter Commissioner was characterised in the 2003 PCC Annual Report as being to 'operate a sort of internal system of judicial review'. The Charter Commissioner is assisted in his work by the Charter Compliance Panel. Article 55.1 sets out the role of the Charter Compliance Panel as:41

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¶"to examine the handling of complaints by the Commission pursuant to Article 53."

¶3.34 In practice, the Charter Commissioner and the Charter Compliance Panel provide an avenue through which a complainant might refer his or her complaint if he or she believes that there had been some procedural defect in the way that the complaint had initially been handled.

¶However, the Charter Commissioner had no remit to look at the substance of a complaint.

¶This role has, since the independent governance review, been included unaltered in the position of Independent Reviewer.

¶Pro-active work by the PCC 3.35 The PCC produces Guidance Notes to assist the industry with particular issues where there is an apparent need.42 Such guidance has been produced on a range of subjects including: D the reporting of suicide (developed together with the Samaritans); the reporting of people accused of crimes; payments to parents for material about their children and the reporting of court cases involving sex offences.

¶3.36 The PCC also publishes Annual Reviews. Among other information, these contain statistics about the number and types of complaints received. In addition, the PCC has in the past organised public events such as talks and Question & Answer sessions.

4. pressBof 4.1 PressBoF, is responsible for the organisation and collection of the levy which funds the PCC from the newspapers and periodicals participating in it. PressBoF is a company limited by guarantee and was incorporated shortly before the inauguration of the PCC. The membership of the Board of PressBoF is set out under Article 5 of the Articles of Association.43 Currently, three members of the PressBoF Board are drawn from the Newspaper Association; three members from the Newspaper Society; two from the Periodical Publishers' Association and two from the Scottish Daily Newspaper Society.44 The Board members are appointed by their trade association and in turn appoint the Chair, currently Lord Black of Brentwood (who, between 1996 and 2003 was the Director of the PCC).

¶4.2 The structure of PressBoF is based loosely on the funding body for the Advertising Standards

¶Authority.45 However, whilst the funding structure underpinning that organisation has been made public, that is not the case with the PCC or PressBoF. As a consequence, there is little public understanding of how the PCC budget is financed. This has been the subject of both criticism and speculation. In addition to the oganisation of funding for the PCC, PressBoF also exercised full control over the appointment of the PCC Chair, as well as playing a prominent role in the appointment of new members to the Commission until changes were introduced as part of the 2010 Internal Governance Review.46

¶4.3 The Inquiry has heard detailed evidence from Lord Black, who has been Chair since September

¶2009, which has helped to explain the role of PressBoF as to the function of the PCC. He told the Inquiry that PressBoF not only funded the PCC through the collection and disbursement of the levy, it also had a fundamental role in relation to the exercise of its functions, as all decisions relating to the role and remit of the PCC must first be ratified by PressBoF. Lord Black explained that this was to ensure that no substantive changes were made to the role of the PCC without consultation with the industry.47 In part, this was enforced through an undertaking made by Commissioners, on their appointment to the PCC, not to agree any changes to the articles of association without the express permission of PressBoF. This was one of two such undertakings made by Commissioners to the PCC, the second being to contribute £1 to the winding up costs of the PCC should this ever prove necessary.48

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¶4.4 Lord Black also explained the generality of the PCC funding arrangements. Payments by national newspapers accounted for 54% of the levy, regional newspapers paid 39% of the levy and magazines paid the remaining 7%.49 Lord Black explained that, each year, PressBoF asked the national press through the National Newspaper Association to pay a specified amount towards the levy.50 The contribution from each member of the NPA was decided by a formula derived from the amount of news print consumed by each member and the number of publications owned by each member.51

¶4.5 This calculation was made through the NPA as some of the information needed to deduce the level of contributions to the levy was commercially sensitive.52 Although the membership of the NPA was in the public domain, the details of who paid for what were not public53 or, indeed, shared with PressBoF, as members of the Board or PressBoF staff may have links with the individual publishing houses.54 The monies collected through the levy were collected and passed on to PressBoF twice each year.55

¶Role of PressBoF in PCC appointments 4.6 PressBoF also plays an important role in the appointment of personnel to the PCC,⁵⁶⁵⁶ p60, lines 17-25, John Battle, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Afternoon-Hearing-23-January-2012.pdf including to the position of Chair. Lord Black made the point that the appointment process had not been static but had changed, becoming increasingly transparent,57 over time: he noted that the appointment of the first Chairman of the PCC, Lord Wakeham in 1991, was done effectively by a tap on the shoulder, with no outside scrutiny or independent influence.58

¶4.7 By comparison, Lord Black explained that the appointment of Sir Christopher Meyer in 2003 involved the use of specialist recruitment consultants. The process for the more recent appointment of Baroness Buscombe was more transparent, and was built around the public advertisement of the post in the national press.59 Further changes had since been made as a consequence of the independent review of the PCC governance processes; these were

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intended to make the appointment process more open and independent of the industry.60 However, it is important to note that, although lay members of the PCC were involved in the appointment of Lord Hunt in 2011, they owned no formal role in the process.

¶4.8 The appointment of Lord Hunt incorporated these changes for the first time. Following the

resignation of Baroness Buscombe, the position of PCC Chair was advertised in the national press in August 2011. A firm of recruitment consultants, Korn, Ferry, Whitehead, Mann, were appointed to manage the process for the first time and an independent assessor was also appointed to oversee the process. The independent assessor provided an audit note of the complete application process.

¶4.9 Applications were made not to PressBoF but direct to the recruitment consultants. They

drew up an initial long-list which was discussed with both the independent assessor and the PressBoF Board. Those discussions resulted in the production of a shorter list and prospective

¶D candidates were interviewed by the consultants in the first instance. At that point, a final

shortlist of some 12 candidates was drawn up by PressBoF and formal interviews took place during September 2011. A subcommittee of five members was involved in the interview process. That committee made a final recommendation to the PressBoF Board.

¶4.10 The involvement of lay members was indirect. In the first instance, they were provided with

an opportunity to put names forward for the post.61 Later, members were offered a meeting with Lord Hunt at which they were provided with an opportunity to give their views on the type of Chair they thought appropriate to the position.62 In his evidence to the Inquiry, Lord Black said that he spoke with all lay members of the Commission, with one exception.63 Further, the Deputy Chair of the Commission, Ian Nichol, was appointed to liaise between the independent assessor and the recruitment consultants to monitor the process.64

¶4.11 Lord Black rejected the notion, put to him by Robert Jay QC, that, in practice, the position of

PCC Chair was a de facto political one, on the basis that the post did not deal with political matters. Lord Black also noted that Lord MacGregor of Durris, the first Chairman of the PCC, was a Liberal Democrat Peer.65 He also emphasised that the most recent recruitment process had been open to applicants from all political parties.66 Lord Black told the Inquiry that the politics of Lord Hunt, the fourth Conservative Party peer to have held the post of PCC Chair, had played no role in his appointment.67

¶The Editors' Code Committee 4.12 The Code Committee is responsible for the wording of the Editors' Code of Practice. The

Code Committee has also been responsible for producing the Editors' Codebook, which brings together the Code and the PCC case law. The Code Committee is made up of editors appointed by the relevant trade bodies of the newspaper and magazine industry.

¶4.13 The current Chair of the Code Committee is Paul Dacre, the editor-in-chief of Associated

¶Newspapers. The PCC is represented through its Chair or Director at every meeting of the

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¶Code Committee and the PCC Commissioners must ratify any changes to the Code before they become valid.68

¶4.14 Lord Black has said that representation of serving editors on the Committee of the Editors' Code of Practice is a basic requirement for the success of the system of self-regulation. In his view, serving editors brought necessary expertise and industry knowledge to the system and, in particular, an awareness of the dilemmas faced by staff in newsrooms.69 He suggested that majority industry representation was normal for systems of self-regulation, and was certainly the case with regard to systems of press self-regulation globally.70 However, Lord Black did concede that public or independent representation on the Code Committee or a successor body would need to be considered going forward, particularly as this would be central to any effort in rebuilding public trust and confidence.71

¶4.15 Having said that, Lord Black categorically rejected the notion that that the Code Committee was not suitably independent of either PressBoF or the industry more widely. He told the Inquiry that, whilst PressBoF provided funding to the PCC, and although PressBoF, through the Code Committee, determined the Code, the independence of the complaints process by the PCC was sacrosanct.72 He noted that his formal engagement with the Commission was rare, limited to one meeting each a year, the purpose of which was to update the Commission on the state of the industry. In his view, there was no capacity to exercise control over the function of the PCC.73

¶4.16 Importantly, Lord Black clarified that the Editors' Code of Practice Committee was a part of PressBoF and not the PCC. It was not, therefore, subject to the same level of lay scrutiny and influence as the PCC. Indeed, the only lay representation on the Editors' Code of Practice Committee was through the Chair and Director of the PCC, who were entitled to attend in an ex-officio capacity.74 As neither were entitled to participate in discussions or in any decision-making capacity, it is clear that the influence of lay members on the Committee was limited.75

¶4.17 Witnesses from the PCC pointed to the merit in allowing serving editors to sit on decision-making boards like the Code Committee, particularly in the light of the current knowledge and experience they brought of a fast moving industry. Similarly, a number of editors told the Inquiry that such input to the Code was crucial if the Code was to have sufficient credibility with the industry. The same point was also made by Lord Hunt, who stated that it was important that any rules for the press, particularly around standards, were written by professionals with an appropriate level of knowledge and experience.76

¶4.18 However, there was some recognition that this knowledge could be brought to bear by former editors or, indeed, other industry experts. Lord Grade accepted that the codes developed by the Communications regulator Ofcom did not suffer because input came from former rather than serving journalists.77 He also acknowledged that credibility with the industry could also be achieved through other means, such as consultation on the content of a code with serving industry editors, rather than their direct input through representation on the Code

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¶Committee.78

¶4.19 On one occasion at least, the Code Committee had been required to play a role as arbiter of the meaning of a given provision of the PCC Code where the PCC found that there was ambiguity.79 On 22 September 2010, Baroness Buscombe wrote to Ian Beales (Secretary to the Code Committee) asking for clarification of Clause 15 of the PCC Code (payments to witnesses).80 This was in the context of the Mail on Sunday having made payments to

¶Baroness Scotland's housekeeper. On that occasion, the Editors' Code Committee took legal advice from Mr Jonathan Caplan QC, and that advice was relayed to the PCC by Ian Beales.81

¶D The Editors' Code of Practice 4.20 The Editors' Code of Practice is the cornerstone of the system of self-regulation for the press,82 and it is the responsibility of the PCC to ensure that the Code is properly enforced. The PCC's website states that all members of the press have a duty to maintain the highest professional standards.83 It makes clear that these standards are set out in the Code of Practice, and that the Code acts as a benchmark for those ethical standards. According to the PCC, the Code protects both the rights of the individual and the public's right to know.

¶4.21 Although there was later comment about ways in which the Code could be improved, witnesses to the Inquiry have, in the main, spoken favourably about its content. It has been praised by witnesses for being both readily understandable and usable. Even those witnesses who have been otherwise critical of the PCC, have spoken in favourable terms about the

¶Code: for example, Alan Rusbridger, the editor of the Guardian, has described the Code as

¶"good".

¶4.22 The PCC makes clear just how the Code should be interpreted by editors: the PCC website states that the Code should be "honoured not only to the letter but in the full spirit".84 Issues around interpretation are elaborated further on the website, including the unambiguous statement that the Code should not be interpreted "so narrowly as to compromise its commitment to respect the rights of the individual, nor so broadly that it constitutes an unnecessary interference with freedom of expression or prevents publication in the public interest."85

¶4.23 Lastly, the PCC makes clear that "it is the responsibility of editors and publishers to apply the

¶Code to editorial material in both printed and online versions of publications". They should take care to ensure it is observed rigorously by all editorial staff and external contributors, including non-journalists, in printed and online versions of publications.

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¶Amendments to the Code 4.24 The Editors' Code of Practice has developed through a process of iteration over the last two decades, responding to challenges and concern at the behaviour and actions of the press.86 The Code has now been amended on at least 30 occasions, most notably following the death of Diana, Princess of Wales, in 1997.

¶4.25 The most substantial of the amendments made to the Code of Practice have related to privacy and, in particular, the privacy of minors. Specifically, new wording was introduced to clause 3 in relation to privacy. This was largely drawn from the European Convention on Human Rights which, at the time the amendments to the Code of Practice were made, was about to be incorporated into UK law.87 Significantly, these amendments also altered the definition of a 'private place', to include both public and private places 'where there is a reasonable expectation of privacy'. Changes were also made to Clause 1 on accuracy to cover photographic manipulation.88

¶4.26 Further amendments to the Code sought to address concerns around the alleged role and actions of the paparazzi in the death of Princess Diana and the manner in which some photographs were sought. To address these concerns, provisions on harassment were expanded and revised to include a ban in the use of information or pictures obtained through 'persistent pursuit'. This new Clause 489 also made explicit the responsibility of the editor not to publish material that had been obtained in breach of this clause, regardless of whether the material had been obtained by the newspaper's staff or by journalists or other staff employed on a freelance basis.90

¶4.27 A new clause 6 was also introduced, making explicit provision for the protection of the rights of children to privacy while they were at school (previously, this clause had referred only to children under the age of 16). The revised clause 6 also forbade payments to minors or the parents or guardians of children for information involving the welfare of a child (unless demonstrably in the child's interest), and introduced a requirement for a justification for the publication of information about the private life of a child other than the fame, notoriety or position of his or her parents or guardian.91

¶4.28 The final changes saw the phrase 'should not' replaced by 'must not' throughout the Code, and the amendment of the section on the public interest to ensure that, in cases involving children, an editor must demonstrate an exceptional public interest to over-ride the normally paramount interests of the child.92

¶4.29 Despite these attempts to keep the Code updated, the Inquiry has heard some criticism about the opaqueness of the drafting process, as well as the limited opportunity afforded to members of the public to influence the process of amendment. The Media Standards Trust, for example, said:93

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"It [the Code of Practice] has grown up outside of public scrutiny, framed by those responsible for putting it into practice."

¶4.30 This criticism has, however, been rejected by representatives of the PCC. Lord Black indicated that there were a number of means through which the public could contribute to the amendment of the code.94 He specifically pointed to the annual review of the Code, which is undertaken by the Code Committee, during which suggestions for amendments were invited from Committee members, interested parties and the public.95

¶4.31 In practice, the Inquiry heard that the opinions and views offered by members of the public or from individuals outside of the newspaper industry were rarely heard. Lord Black acknowledged, in response to questions about the influence of lay voices and views on the

¶Committee, that, as the Committee was "an Editors' Code Committee", the voice of the press was "bound to be predominant".96 However, he also suggested that this potential bias was D mitigated by the breadth of freely voiced opinion across the Code Committee.97

¶4.32 Lord Black was asked about criticisms that the Committee was slow to respond or adapt to criticism, that it had put the system of self-regulation ahead of the needs of individuals, particularly those who had been subject to abuse and mistreatment by the press, and had not looked critically or objectively at the efficacy of the system.98 He denied that any of these were sustainable criticisms, and suggested instead that the sustained level of funding by the industry for an independent system of self-regulation had brought about a number or real successes, including significant improvements to the behaviour of journalists and the press.99

¶4.33 In particular, Lord Black noted improvements in behaviour related to harassment and the treatment of children and hospital patients.100 He also suggested that a key, but hidden, success of the changes that stemmed from the Code of Practice was the increased tendency of editors to receive and deal with complaints themselves, particularly around accuracy, without referral to the PCC.101

¶4.34 Lord Black was particularly keen to make clear to the Inquiry that one of the primary functions of PressBoF, as a body that represented the industry, was forcefully to promote press freedom.102 However, he rejected the notion that this had the potential to affect the overall balance of the Editors' Code of Practice by the Code Committee, by giving greater weight to the issue of press freedom, noting that there was only one member of PressBoF who sat on the Code Committee. He did, however, concede that the 13 members of the Code

¶Committee (editors in their own right) would have clear and deeply held views of their own on press freedom.103

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5. Benefits of self-regulation 5.1 Witnesses from the PCC were clear about the benefits of a system of self-regulation for the press. They suggested that any form of statutory regulation for the press in the UK would also undermine the efficacy of the ex-ante interventions currently undertaken by the PCC, particularly work intended to stop the publication of particularly damaging or defamatory articles.104 If this function were passed to a statutory body open to political capture then the potential for abuse of that function would have worrying and significant implications for freedom of expression.105

¶5.2 To illustrate his point, Lord Grade provided the example of complaints to the BBC about Jonathan Ross and Russell Brand in October 2008. The BBC Trust was able to issue an apology and a correction within ten days, whereas Ofcom took almost three months to investigate the same complaint and reach broadly similar conclusions. Lord Grade also suggested that, given the nature of complaints directed to the PCC, speed of resolution is of primary importance to the complainant.

¶5.3 Lord Hunt said that he firmly believed in the value of self-regulation above formal statutory regulation, which he suggested was open to political interference.106 By contrast, he suggested that independent, voluntary, self regulation of the press, for the press and in the public interest was preferable and the optimal of the available approaches. Ideally, such a system of self regulation should be universal but he did not expand on his thinking as to how bodies outside that system might be induced to join.

¶5.4 Like other witnesses to the Inquiry, Lord Hunt has argued that it is the press who are in best position to correct the perceived failings with the current system of self-regulation and develop a solution that is more appropriate for dealing with the issues described to the Inquiry. Lord Hunt also suggested it is only by the press working together that a system of regulation such as that outlined by Sir David Calcutt in his second report can be achieved.107

¶5.5 A similar line of argument was advanced by Baroness Buscombe, who told the Inquiry that the speed and flexibility of the current system are advantageous when compared with attempts to find resolution through the courts.108 She noted the harm that could be done to individuals as a consequence of drawn out court processes.109

¶5.6 In her evidence to the Inquiry, Baroness Buscombe suggested that the collaborative structure of the PCC was a strength.110 She suggested that had the system of self-regulation been closer to a formal regulatory process, with potentially a system of fines for breaches, the efficacy of the PCC in dealing with complaints and pre-publication issues would have been compromised. She has argued that such a change would have made the system more adversarial and would have necessitated the involvement of lawyers in decision making, leading to drawn out processes which would have resulted in a lesser service to the public.111

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¶5.7 Lord Hunt also suggested to the Inquiry that a regulatory regime backed in statute would not be sufficiently flexible as an independent self-regulatory system. In particular he worried that a regime backed in statute would not be able to respond to new challenges as they emerged, as such a system would require changes to the law and would be beholden to the

¶Parliamentary timetable.112 By contrast, Lord Hunt argued, an independent regulator could make changes in a more timely fashion. Although Lord Hunt conceded that it was perfectly possible to base the new system on legislation that was not proscriptive, he suggested that his experiences as a Parliamentarian led him to believe that legislation could rarely account adequately for future circumstances.113

6. anti-harassment policy 6.1 The PCC operates an anti-harassment hotline for the general public through which an D individual might communicate a desire for press attention to cease to newspapers. Such a request may result in the Commission issuing a desist order to newspapers after which press attention in the person in question should cease.

¶6.2 In his evidence to the Inquiry, Stephen Abell said that the PCC anti-harassment service was one of the cornerstones of the "fast moving" part of the system of self-regulation for the press; something, that by implication may not be possible or practicable under a different system.114 The service was regarded by the PCC as an important complement to Clause 4

¶(harassment) of the Editors' Code of Practice. This states that journalists:

"must not persist in questioning, telephoning, pursuing or photographing individuals once asked to desist; nor remain on their property when asked to leave and must not follow them. If requested, they must identify themselves and whom they represent."

¶6.3 The anti-harassment service is intended, therefore, to provide members of the public and other individuals affected by the actions and behaviour of journalists with the means of making express the terms of the Clause 4 of the Editors' Code of Practice.

¶6.4 Although the PCC has no formal responsibility for broadcast journalists, as these are not covered by the terms of the Editors' Code, the PCC has, as a rule, forwarded desist notices to broadcasters, who have then taken appropriate action to ensure that their journalists abide by the will of the desist notice. Mr Abell's written evidence to the Inquiry noted that:115

"This helps to reduce the problem of "media scrums" that involve journalists from all forms of media."

¶6.5 The anti-harassment service is accessed through the 24-hour helpline operated by the PCC.

¶The PCC website provides comprehensive details of the service and the circumstances under which it might be used. The PCC has made clear that the initial telephone conversation with the affected party or, in some cases, their representatives is usually handled by a senior member of Commission staff. The PCC will also request an email setting out the concern or allegation from the individual in question. This email then becomes in effect the desist notice, which the PCC will then forward to a list of senior editorial and legal representatives. I note that Mr Abell has written that:

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¶"Almost invariably, it is followed and the attention ceases."116

¶6.6 In his written evidence, Mr Abell suggested that the service could be used "prophylactically". He provided the example of a grieving family who might contact the PCC ahead of an inquest or funeral, to make their wishes known. He noted that in such circumstance "the PCC will act to disseminate their position immediately." I note that in this regard, the PCC has produced specific guidance both for bereaved individuals and also for journalists in relation to grief and intrusion into grief. This guidance encourages the bereaved to use the anti-harassment service. This guidance has been disseminated to all UK police forces and coroners' courts.117

¶6.7 The PCC has said in evidence that the anti-harassment service also had an application for individuals in the public eye. It was explained that a desist order acted as a check on the publication of paparazzi photographs obtained through harassment. Mr Abell stated:118

"The starting premise is that as soon as an editor publishes a photograph, he or she is taking responsibility for the conduct of the person providing it."

¶6.8 He noted further that:119

"This places the onus on the editor to take care over the publication of photographs of the affected individual. This in turn means that non-compliant photographs are not bought by newspapers or magazines, and the market for them dwindles. This in turn affects the behaviour of the paparazzi in regard to the individual."

¶6.9 The PCC suggested that the use of the anti-harassment service was the most effective means currently available of influencing paparazzi. Mr Abell's written evidence explained that, as a class, the paparazzi were not regulated through any formal mechanism. Therefore, restricting the market for paparazzi photographs that may have been taken in breach of the code, or in contravention of a desist notice, helped to enforce standards of behaviour.120 table D2.1 total number of Desist notices

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¶Month number of Desist and private advisory notices*

¶

• Jan 2010 — 8

• Fen 2010 — 4

• Mar 2010 — 11

• Apr 2010 — 5

• May 2010 — 4

• Jun 2010 — 1

• Jul 2010 — 2

• Aug 2010 — 3

• D Sep 2010 — 8

• Oct 2010 — 7

• Nov 2010 — 4

• Dec 2010 — 2

• Jan 2011 — 10

• Feb 2011 — 9

• Mar 2011 — 13

• Apr 2011 — 12

• May 2011 — 12

• Jun 2011 — 11

• Jul 2011 — 16

• Aug 2011 — 10

• Sep 2011 — 7

• Oct 2011 — 5

• Nov 2011 — 11

• Dec 2011 — 14

• Jan 2012 — 13

• Feb 2012 — 12

• Mar 2012 — 11

• Apr 2012 — 17

• May 2012 — 7

Jun 2012 6 (up to 27 June 2012) th

¶
• total — 255

¶
• The PCC makes no distinction between a "desist notice" and a "private advisory notice". A desist notice is an internal PCC term for a notice in relation to Clause 4 of the Editors' Code of Practice (harassment).

¶6.10 At the time of writing, the PCC had issued 255 desist notices since January 2010 (as set out in

¶Table D2.1). I note that, whilst there is no significant variance in the recorded monthly figures, the trend is towards the more frequent issue of these notices.

¶6.11 I have heard little evidence that has been critical of the anti-harassment service operated by the PCC and it would be appropriate, therefore, to restrict myself to some general comments only. I note, first, that the service appears to be well regarded. The PCC has provided me with evidence of the efficacy of this service in helping those in often extraordinary circumstances to benefit either from a desist notice or in helping affected parties manage press and other media interest.

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¶6.12 This additional evidence was submitted in response to comments made in evidence by Gillian Shearer, the Communications Director for the Cumbrian Police Force, in relation to shootings in Whitehaven in Cumbria in July 2010. Ms Shearer described what she regarded as the aggressiveness of the press, the impact on the families concerned and the failure by the press to adhere to the police notice requesting that the media respect the families' wishes for privacy. She also criticised what she suggested was the failure of the PCC to respond meaningfully both to events but also the wishes of those individuals affected.121

¶6.13 In the evidence he has provided to the Inquiry, Michael McManus, the Transitional Director of the PCC, has sought to correct this perception of the actions of the PCC; he provided the Inquiry with a detailed description of the PCC's activities in response to events in Whitehaven. It is to be borne in mind that although the events Mr McManus has described were extraordinary, they illustrate well the services the PCC is able to offer those individuals who become the subject of intense press attention. Mr McManus has written that:122

"On the day of the shootings, a member of PCC staff spoke briefly to Cumbria Police and followed up immediately with an email providing our contact details and explaining how we could help deal with concerns about media scrums and prepublication issues. A similar email was also sent to local hospitals."

¶6.14 Mr McManus noted that during this difficult period members of PCC staff were in regular contact with police communicators. In addition, the PCC issued a private advisory notice on behalf of one individual who had become the subject of unwanted media attention and handled a number of formal complaints about published material. I note that the then Director of the PCC, Mr Abell, travelled on 9 July 2010 to Cumbria to meet with police communicators, local clergy and the editor of the Whitehaven News. The Whitehaven News subsequently published a letter from Mr Abell setting out the PCC's services, and encouraging people to make contact with the PCC if they wished to do so.

¶6.15 It is also clear that the PCC undertook a great deal of work in relation to events in Whitehaven. Mr McManus notes that:123

"The PCC stayed in touch with the police after the shootings, and also initiated contact with the local Coroner".

¶It is right to record that the PCC provided some assistance to Professor John Ashton, chair of the West Cumbria Shootings Recovery Group, in drafting a letter to the media requesting restraint ahead of the formal start of Inquest hearings in 2011. The PCC also worked with the police and Coroner to identify those individuals who had decided not to speak to the media; the Commission circulated a desist request on their behalf, requesting that they not be contacted.

¶6.16 It is clear that the work of the PCC was wide-ranging. In May 2011, the PCC organised a public meeting in Carlisle to enable local communities to speak to its representatives. The panel also included the then editor of the News and Star (Carlisle), Neil Hodgkinson. Mr McManus has also told the Inquiry that following these events, the PCC has amended the guidance it offers to families in dealing with the media following a death.

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¶6.17 This is not to say that there are still not concerns with the anti-harassment service that should not be elaborated. Although the PCC website provides clear advice on the services available to members of the public with regard to harassment by journalist and photographers, it also sets a number of steps that the affected parties should follow before contacting the PCC. In certain circumstances, these steps might prove to be unduly difficult or, indeed, impossible to fulfil. They depend both on the goodwill and cooperation of the journalists and press photographers involved, as well as on the substantive efforts of the affected party who, feasibly, might not be in a position to comply with the suggested steps.124 The PCC website states:125

¶"There are a number of practical steps that you can take to avoid unwanted or D repeated approaches:

1. Get the name of the journalist and the newspaper or news agency for which they work. Tell them politely that you do not wish to speak to them and that they should not contact you again. Say that you understand that under the Code of Practice journalists must not persist in contacting you having been asked to desist. It will help if you tell them that you are saying the same to every journalist. This applies however a journalist is approaching you – whether it is at home, in a public place or over the telephone. You should then be left alone. If you are not, see point 5, below. 2. If you are at home and too distressed to answer your door, pin a short note to it to say that you do not wish to speak to journalists and do not want to be disturbed. 3. Similarly, if you are being telephoned repeatedly and do not wish to speak to journalists, alter your answerphone message to say that only personal callers should leave a message as you are not speaking to the media. 4. Some people – particularly at times of grief or shock – find it helpful to ask a friend or neighbour who is not as closely associated with the story to deal with press enquiries. They can then answer your phone and door and either pass on a prepared statement (reflecting what is said in point 1) or turn down requests for interviews. 5. If these measures fail and you feel that you are still being harassed, contact the PCC immediately."

¶6.18 However, whilst the PCC guidance with regard to harassment is in most respects clear, there are significant caveats and exemptions to desist notices. In those cases where it has been impossible for the individuals concerned to establish the names of the journalists or newspapers in question, the PCC makes no claim to be able to take action. Even then, however, the website still encourages members of the public in such circumstances; it states thereafter that the PCC:126

"may then be able to communicate your concerns across the industry as a whole via a general "desist" message, which should alleviate the problem."

¶In so doing, the website makes no claim to the certainty of success of any action on the part of the PCC in this regard.

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¶6.19 Lastly, it is also important to underline that the website states that, in those cases in which there is a perceived public interest, there is no obligation on the part of the press to heed a desist notice. The website does not, however, elucidate what any public interest might be, and does not provide the public and more specifically the users of the service with any degree of certainty or clarity on this important issue. Perhaps of more importance, it leaves those individuals and their families who may already be in some distress open to continued and unwarranted press attention.127

7. Complaints 7.1 I will now look how complaints are dealt with by the PCC, considering in turn the different aspects of that system: who might make a complaint; the circumstances in which an individual might complain; the limitations on the ability of a complainant to make a complaint; the informal resolution of complaints; and complaints deemed inadmissible.

¶7.2 Before doing so, there is value is in setting into context the complaints handling process operated by the Commission. First, it is worth noting that the level of complaints received by the PCC is neither disproportionate nor excessive; the number received by the Irish Press Ombudsman is broadly similar, when adjusted for population, as is the number received by Ofcom, in relation to content. The number of complaints rejected by the PCC is also comparable to the numbers rejected by Ofcom. The majority of complaints to other regulators, however, are rejected because the complainant has not followed due process and has used the regulator in question, rather than the regulated company, as the starting point for the complaint. In such cases, the complaint is referred back to the company in question. However, this option is not available to the PCC as very few UK newspapers have formal complaints processes beyond the discretion of the editor.

¶7.3 It is also important that the Inquiry provides a context to any discussion of the complaint-handling process with the detail of the volume of complaints considered by the PCC. The figures for 2010, reported by the PCC in 2011, are the most recent full figures available, and are broadly similar to those received up to 2010. In that year, the PCC received a little over 7,000 complaints. Of these 1,687 resulted in a ruling128 and 44 in adjudications. Only two publications had more than one upheld adjudication against them.129

¶7.4 It is without doubt that the handling of complaints was the main and dominant part of the PCC's business, taking up most of the day to day function of the Secretariat. After salaries, administration and property costs, complaints handling accounted for the greatest part of the remaining budget. Exact figures have not been provided to the Inquiry, but it has been suggested by witnesses that the PCC budget was only just sufficient for its purposes and only just stretched to cover these costs, with no remainder for any other actual or proposed function. This raises serious questions about the ability of the model proposed by Lord Black to provide for an investigatory arm within the funding envelope suggested.

¶7.5 Evidence presented to the Inquiry by the PCC, and taken from the routine surveying of complainants, suggests that the level of satisfaction among complainants with the conduct of complaints handling by the PCC is genuinely high.130 Lord Hunt said in evidence that that the satisfaction rate among complainants to the PCC was very high. He suggested that 80% of complainants were satisfied at the outcome of their complaint. However, this figure has been called into question by other evidence submitted to the Inquiry. It has been suggested that such a figure can only be reached if all complaints are understood to have been resolved in a manner satisfactory to the complainant.

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¶7.6 Certainly, witnesses to the Inquiry have recognised that the secretariat and, in particular, the complaints handling staff at the PCC make considerable effort to be courteous and helpful.

¶The MediaWise Trust, an independent press watchdog that monitors the behaviour of the press, has noted that in the surveys of complainants that they have undertaken, respondents score the staff highly against these criteria.131 Complainants also appreciate the speed with which PCC staff deal with issues raised by complainants in the course of the complaints.132 D 7.7 PCC witnesses to the Inquiry have certainly drawn attention to the apparent satisfaction at the speed of the complaint-handling process and the value placed on this by complainants.

¶Sir Christopher Meyer gave evidence that, in most cases, resolutions were reached within a month of the complaint first being lodged.133 Given that most editors dislike the personal criticism inherent in any upheld adjudication, it is unsurprising that they will work hard to reach a resolution to the satisfaction of the complainant.

¶7.8 The PCC website makes clear that the Commission will deal with complaints as expeditiously as it is able. The website points to an average turnaround for the resolution of complaints of

¶34.8 days.134 However, in evidence presented to the Inquiry, the Media Standards Trust has suggested that this figure is misleading as it takes account of complaints which do not fall into the jurisdiction of the PCC and are therefore rejected. The Media Standards Trust notes that, although such complaints are passed on to the relevant body or organisation, they are regarded by the PCC as 'resolved'. The Media Standards Trust suggests that the inclusion of such cases therefore serves to distort both rates of satisfaction, as well as the record of the time taken to resolve a complaint. The Media Standards Trust deduced from available PCC data that the actual figure of turnaround was an average of 106 working days, three times greater than the PCC figure.135 That said, there are limits to the analysis of any of the PCC data, as the Commission publishes information which omits the date on which a complaint is received.

¶Who can complain 7.9 The website states that the PCC is an independent body, which has been set up to examine complaints about the editorial content of UK newspapers and magazines (and their websites).136 It makes clear that the PCC exists to help complainants and that its services are free. The PCC website explains that the Commission will deal with all editorially-controlled material in UK newspapers and magazines (and their websites). Examples are provided:137

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¶
• Articles and pictures;
• Words and pictures (including video) on newspaper and magazine websites;
• Audio material on newspaper and magazine websites;
• Readers' letters; and,
• Edited or moderated reader comments on newspaper and magazine websites.

¶7.10 The website also explains that the PCC will also consider complaints brought in relation to the behaviour of journalists. Again, examples are provided. These are:138

¶
• Persistent pursuit of individuals
• Refusing requests to stop taking photos or asking questions
• Using hidden cameras to obtain material
• Failing to be sensitive when dealing with cases involving grief and shock
• Failing to obtain the proper consent before speaking to children or people in hospital.

¶The website further explains that Complaints have to be judged against the terms of Editors' Code of Practice.

¶7.11 Most importantly, the website makes clear that the PCC will only "normally accept complaints only from those who are directly affected by the matters about which they are complaining."139 It explains that individuals who meet that criterion are able to make complaints to the PCC and may raise complaints through the Commission against any newspaper, magazine or publication which subscribed to PressBoF.140 The website also explains the limited circumstances in which third parties are able to make complaints. Such complaints will be considered by the Commission only in those circumstances where the third party has signed authorisation to act on behalf of the individual concerned.141

¶7.12 Lord Hunt has said that there is "misunderstanding" around the PCC's policy on complaints from third parties: they have always been able to bring complaints in relation to accuracy. However, it is clear from Chapter 1 above that, as a matter of history, it has proved difficult to bring third party complaints. Further, the evidence received from the PCC in this regard might be said to contradict this account. Thus, Mr Abell explained that it was not the policy of the PCC to take account of complaints from third parties.142 This evidence chimes with that received from a number of groups who drew attention to the difficulties they have encountered in the face of this policy.

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¶7.13 However, the policy of the PCC has not been entirely inflexible, in particular in the fairly limited number of cases where a single article has given rise to a very large number of complaints. In some instances, complaints received from third parties may cause the PCC to contact the subject named in the article in question, or someone directly affected by that article, to consider whether they would take forward a complaint.143

¶7.14 In this regard the case of Stephen Gately is instructive. An article published by the Mail on

¶Sunday about the singer's death, written by columnist Jan Moir in 2009, prompted a record number of complaints from members of the public to the PCC.144 In response, the PCC contacted Mr Gately's partner and asked if he would consider submitting a complaint.145 In the event, the PCC did not uphold the complaint, although it considered that the article had come close to breaching the Editors' Code of Practice.

¶D Time limits and delay 7.15 The PCC website clearly sets out a timetable for members of the public seeking to bring a complaint against a newspaper.146 Thus, in most circumstances, the PCC will not accept complaints made more than two months after the date of publication (or over two months after the end of direct correspondence between a given complainant and an editor, provided that correspondence was entered into straight away).147 The same section of the website also explains that complainants can formally submit a complaint to the PCC if the newspaper in question has failed to respond to the complaint within one week of the receipt of that complaint, but goes on to say that if the article in question remains available on the publication's website, this time limitation does not usually apply. Beyond the strict timeframe set down by the PCC for the initial submission of the complaint, however, the times for each subsequent element of the complaints-handling process are not specified and no guidance is provided as to the likely duration of that process. Rather it suggests only that the steps involved in reaching the stage of an adjudication are less formal and are likely to be determined on a case by case basis.148

¶7.16 There are a range of resolutions that may be offered by titles. However, the PCC has no powers to stipulate the form of resolution that might be offered by the newspaper in question. Resolution can take the form of published apologies, the correction of the content in question in a future edition, the removal of the offending article from the title's archives or online editions, or private letters of apology. In a limited number of circumstances, resolution might also include ex-gratia payments or donations to charities or other organisations.

¶7.17 Some witnesses to the Inquiry have complained about what they regarded as an unnecessary slow process that was prone to delay. Some have said that lengthy periods between correspondence and delay were not uncommon. According to an analysis undertaken by the

¶Inquiry of complaints to the PCC between January 2009 and May 2012, declared to have been resolved during that period, the time taken to resolve a case can vary significantly.

¶In the fastest example, the resolution of a complaint took one month; in the slowest case the process appeared to have lasted for three years.149 The value of an apology or other resolution after such a period of delay is questionable.

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¶7.18 Will Moy of Full Fact stated that whilst some complaints resulted in a prompt response from the newspaper in question, sometimes within a day of two, in other cases the process of reply was much slower, taking as many as 21 days.150 In a limited number of circumstances no reply had been received from the newspaper.151 In its evidence, Full Fact provided details of a number of complaints, including one about an article published in the Evening Standard, where that newspaper did not respond until two months after the initial submission to the PCC.152 Similar experiences have been documented in the evidence provided by ENGAGE.153

¶7.19 The majority of complaints submitted to the PCC and ruled admissible are settled through a process of informal mediation between the complainant and the title in question. Only a very small number of complaints are not resolved in this manner, and those which fall into this category go forward for adjudication by the PCC. Complainants have a period of one month to D appeal in writing to the Independent Reviewer should they wish to contest the PCC's decision (although, as already identified, the Independent Reviewer will only look at the way that the PCC handled the complaint and not its merits).154 The PCC website provides details of a total of 5,241 complaints that have been the subject of PCC rulings since 1996.155 It lists 257 such complaints in 2012, (as set out in Table D2.2) of which 96.1% were informally resolved, 1.6% were upheld at adjudication and similar a proportion were not upheld.156 In 0.8% of cases the PCC found that the newspaper question had taken sufficient remedial action to declare the complaint resolved.

¶table D2.2: Complaints to the pCC: 2009-2012

adjudicated Complaints total number Sufficient Year resolved of complaints upheld against remedy offered no. % % % % 2012 257 96.1 1.6 1.6 0.8 2011 588 93.5 3.2 1.4 1.9 2010 499 91.4 4.0 4.0 0.6 2009 400 86.5 7.0 5.0 1.5 total 1744 91.7 4.1 3.0 1.3

¶7.20 Data for 2011, 2010 and 2009 suggests a similarly high proportion of complaints were resolved through informal mediation processes (93.4%, 91.5% and 86.5% respectively), with only a correspondingly small percentage of case taken forward to formal adjudication. These figures show a trend towards the informal resolution of an ever larger number of cases, although this is from an already high base. Unfortunately, these figures do not relate to figures published in relation to complaints in the PCC Annual Reviews for 2009, 2010, and 2011.157 Those Reviews refer to complaints received in a given year, and break down the details into somewhat different categories.

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¶7.21 It has been suggested by the PCC that the very large number of cases resolved informally, and through no process of adjudication by the PCC or the sustained intervention of the

¶PCC through mediation, represented a 'substantial and hidden success of self-regulation'.158

¶Others have claimed that the odds are heavily stacked against the complainant, and that the

¶PCC does not always appear to be neutral. But Mr Abell suggested that the position of the complaints handler was one of neutrality:159

¶"So I don't think it's a neutral act by complaints people. I think their job is to grip D the issues and to try and bring them to a conclusion, and that will invariably be by assisting the complainant."

¶7.22 In particular, Mr Abell suggested that there was no validity in the assertion that the PCC's preferred outcome of a mediated resolution was in the better interest of editors and newspapers rather than the complainant.160 Sir Christopher Meyer also rejected the characterisation of the complaints-handling process as attritional, in which intense pressures were placed on the complainant to resolve issues through mediation rather than pursuing a decision through the PCC and that the effort in reaching that resolution wass made disproportionately by the complainant.161 parT E crossing lEgal E boundariEs: ThE criminal and civil law

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¶1.1 An Inquiry into the culture, practices and ethics of the press might not be thought to engage or require detailed consideration of the law but, as many witnesses have correctly identified, the starting point from which any assessment of the way in which the press goes about its business must be the general framework of the law. In that regard, there have been criticisms that the press is already far too over-regulated with particular reference to the complications of the ever-changing criminal and regulatory law, itself requiring training for journalists, as well as the equally ever-developing civil law. In this second category falls not only the jurisprudence in this country (in respect of which particular criticism has been made of the law of defamation) but also the effect of the Human Rights Act 1998, which gave further effect in domestic law to the rights and freedoms guaranteed under the European Convention on

¶Human Rights and Fundamental Freedoms 1950 (Cmd. 8969) (ECHR). That has led to litigation involving the press that has not infrequently been taken through the UK courts and has then been the subject of further argument before the European Court of Human Rights.

¶1.2 The purpose of this Inquiry is not to analyse the law in any depth but, in order to provide a E wider picture to anyone interested in the issues affecting the press, it is necessary to provide some background in relation to the criminal law, the civil law and the regulatory framework provided by the Data Protection Act 1998. Where the law touches upon specific issues which fall within the Terms of Reference, a degree of analysis will follow in the text. Otherwise, a general outline has been provided in Appendices to the Report. Nobody should rely on the

¶Appendices as a complete review of the nuances of the law: there are text books for that purpose. It is intended only to identify the broad landscape.

¶1.3 The criminal law can touch upon the work of journalists in many ways and inevitably prescribes the ways in which it is acceptable for stories to be obtained. A brief summary of aspects of the criminal law most likely to be engaged in the pursuit of journalism is at Appendix 4 but it is neither complete in detail nor is it comprehensive. By way of example, aspects of the behaviour of Neville Thurlbeck as he pursued a follow up to his scoop relating to Max Mosley were described by Mr Justice Eady in the ensuing civil litigation as containing "a clear threat to the women involved that unless they cooperated … (albeit in exchange for some money)" making the point that it was "elementary that blackmail can be committed by the threat to do something which would not, in itself, be unlawful."1 Blackmail is not, however, a crime that is covered in this Appendix. There is no doubt room for other potential offences to be engaged in the unprincipled pursuit of a story.

¶1.4 In addition to the substantive criminal law, it is also necessary to consider aspects of criminal procedure which recognise the important place that journalism plays in our society and accords to journalists special protection in relation to journalistic material. The restrictions and limitations on the powers of the police to search for or seize such material add to the privileges that society gives to those involved in this work: they are summarised in Appendix 4.

¶1.5 The same is so for the civil law. Developments have undeniably broadened the focus in defamation beyond meaning, justification and fair comment. In addition, new concerns surround the concept of privacy. This has developed with the increasing recognition of the significance of Article 8 of the ECHR which, subject to exceptions, provides for everyone the right to respect for his private and family life, his home and his correspondence. Running Mosley v. News Group Newspapers Ltd [2008] EWHC QB 1777 paras 82 and 87

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parallel to Article 8, however, is Article 10 which, similarly subject to exceptions, provides that everyone has the right to freedom of expression, including the freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. A brief summary of the most important aspects of the civil law insofar as it affects journalism or journalists is set out at Appendix 4. Again, it is not intended to be exhaustive.

¶1.6 A separate analysis has been completed in relation to the law of data protection (see Appendix

4). That is because it has criminal, civil and regulatory aspects and stands outside the areas of law so far outlined with the Information Commissioner being accorded, by statute, powers and responsibilities which go beyond the power to prosecute, or to commence civil proceedings. Given that the Terms of Reference specifically cover "the extent to which the current policy and regulatory framework has failed including in relation to data protection" the remit of the Information Commissioner will require detailed analysis beyond the brief synopsis of the legislative framework.2

¶1.7 Against the background of this framework, this Part of the Report will focus chronologically

on the criminal investigations that have been undertaken both in relation to data protection and interception of mobile telephones, the outcome of those investigations and the reaction

¶E not only at the time but as further material entered the public domain. In particular, the milestones that led to this Inquiry include:

(a) the publicity accorded to the investigations by the Information Commissioner through reports to Parliament and discussions with the PCC; (b) the outcome of each of the criminal prosecutions and, in particular in relation to Operation Caryatid, the police strategy adopted thereafter; (c) the reaction of the press (and, in particular, the News of the World) to the prosecutions along with the response of the PCC; (d) the impact of civil litigation; (e) the investigations undertaken by the Guardian and, subsequently, the New York Times along with the reactions of the police and Parliament to each of the articles; (f) the further civil litigation and the proceedings for judicial review of the strategy adopted by the police following the successful prosecutions of Clive Goodman and Glenn Mulcaire; (g) the re-opening of the criminal investigation and the reactions thereafter of News International, the PCC and Parliament.

¶1.8 The purpose of this Part of the Report is to provide what is a vital narrative to the background

against which the criticisms of the culture, practices and ethics of the press (or part of the press) can be considered. It starts with the police operations that led to Operation Motorman, which was an investigation that fell to the Information Commissioner. The narrative then passes to Operation Caryatid, the police investigation of interception of voicemail messages (phone hacking) and its consequences, which continue to be felt today.

¶Part H

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