Bloomberg News

U.K. Press Probe Urges Voluntary Code, $1.6 Million Fine

November 29, 2012

U.K. Press Inquiry Calls for Voluntary Code, $1.6 Million Fines

Copies of the last issue of the News of the World, published by Rupert Murdoch's News Corp., are carried in bundles at a supermarket in Slough, U.K. Photographer: Simon Dawson/Bloomberg

Britain should set up an independent media regulator in response to wrongdoing including News Corp. (NWSA)’s phone-hacking scandal, a judge said after a press-ethics probe, assuaging publishers’ concerns over mandatory oversight.

The watchdog should have power to issue fines of as much as 1 million pounds ($1.6 million) for serious infractions, Justice Brian Leveson said in a report published in London yesterday. U.K. Prime Minister David Cameron, who ordered the inquiry, said legislation wasn’t necessary to give the new regulator power.

“What is needed is a genuinely independent and effective system of self-regulation,” Leveson said in a summary of the 1,987-page report. “The ball is now in the court of politicians.” Neither “the victims or the public would accept the outcome if the industry did not grasp this opportunity.”

Though the judge didn’t propose forcing news organizations to join the regulator -- a step publishers and some lawmakers said this week would violate press freedom -- he did say legislation would be needed to underpin the watchdog and give it formal recognition. Cameron said while he accepts the principles of Leveson’s report, it didn’t need legislation to achieve the objectives. He said cross-party talks on media oversight would begin immediately.

Power Decision

“Once you start writing a piece of legislation that backs up an independent regulator, you have to write into that what are its powers, what is its makeup,” Cameron told the House of Commons in London, after Leveson published his findings. “That’s the concern, and that’s the Rubicon you’ve got to think very carefully before you cross.”

That put him at odds both with Liberal Democrat Deputy Prime Minister Nick Clegg and the opposition Labour Party, which both supported Leveson’s request for legislation, which he called “essential.” to underpin the self-regulatory system.

Brian Cathcart, the founder of Hacked Off, an advocacy group for phone-hacking victims, said Cameron “has not done his job” and his failure to accept the report in full “is unfortunate and regrettable.”

Publishers may fear such a legal “underpinning” is an early step toward possible regulations in the future that would be more intrusive, said Niri Shan, a media lawyer at Taylor Wessing LLP in London.

Big Steps

“It’s a very big step to accept that there needs to be some sort of interference by Parliament in the regulation of the press, albeit a relatively small bit of legislation,” Shan said. “My prediction will be the media won’t like it.”

George Brock, the head of journalism at City University London, said the proposed legal underpinning “lays down risks for the future” and some publishers may complain of statutory regulation “by the back door.”

Clegg said he hoped an agreement could be reached.

“The absolute worst outcome in all of this would be for nothing to happen at all,” he said.

U.K. opposition Labour Party leader Ed Miliband said his party would support adoption of Leveson’s recommendations.

News Corp. (NWSA:US) Chairman Rupert Murdoch, who testified before Leveson about the failures at his now-defunct News of the World tabloid, and other managers at the company showed a lack of curiosity and urgency in sharing information about phone hacking, including the hacking of a murdered schoolgirl’s phone, Leveson said.

London’s Metropolitan Police said in a statement that Leveson’s report showed its “decision to discontinue the original 2006 phone-hacking investigation was justified.” The department was criticized during the inquiry for not reviewing thousands of pages of evidence after an earlier probe failed to uncover the extent of privacy violations.

Fresh Submission

The judge said that even as the report was being printed this week, he was given a fresh submission by newspaper groups saying “most of the industry” was now ready to support a new regulatory model proposed by Guy Black, a director of the Telegraph Media Group, and David Hunt, the chairman of the Press Complaints Commission, the existing self-regulator.

“Although this model is an improvement on the PCC, in my view, it does not come close to delivering,” Leveson said. “It is still the industry marking its own homework.”

The report was issued after Leveson held 102 days of hearings on press behavior and the media’s ties to police and politicians.

“There is a clear recognition of wide-scale failings in the culture, standards and ethics of the press,” David Sherborne, a lawyer for phone-hacking victims, said in a statement.

‘Exemplary’ Damages

Leveson said an industry-supported regulator would be able to look into public complaints using retired judges and senior lawyers with specialist media knowledge. Newspapers that declined to join the regulator may set themselves up for higher “exemplary” damages in civil cases brought by victims.

“It really does all start to fall apart without the underpinning,” said Jacqui Hames, a phone-hacking victim and a former police detective who was a presenter on the British Broadcasting Corp.’s Crimewatch program from 1990 to 2006. “In a few years’ time we’ll just be back where we started.”

News Corp. has spent more than $315 million on civil settlements, legal fees and costs of closing the News of the World. More than 80 people have been arrested for intercepting voice mail and bribing public employees, including reporters at its daily Sun newspaper, and a civil trial of claims by more than 150 hacking victims is scheduled for June.

Daisy Dunlop, spokeswoman for News Corp.’s News International U.K. publishing unit, said the company had no immediate comment on the report. Reuters news service and Bloomberg News also declined to comment. Bloomberg competes with News Corp. in providing financial news and information.

“There will not be another opportunity for this kind of reform in a very long time, and it would be a terrible waste if it became lost in a deluge of knee-jerk reactions and partisan sound bites,” Andrew Terry, a media lawyer at Eversheds LLP in London, said in an e-mail.

To contact the reporters on this story: Erik Larson in London at elarson4@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net; Thomas Penny in London at tpenny@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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