Discovery CEO Asks U.K. to Keep ‘Light Touch’ Regulation Amid Hacking Woes

Discovery Communications Inc. (DISCA) Chief Executive Officer David Zaslav says the U.K., which has been rocked by News Corp.’s phone-hacking scandal, needs to keep its “light touch” media regulation to lure foreign investments.

“It’s our largest market outside of the U.S., we’ve been here since 1989, and we’re hoping that’s not going to change,” Zaslav said yesterday in an interview in Cambridge, England. Discovery Communications, the owner of cable television’s Animal Planet and Discovery Channel, is looking for purchases in Europe and the U.K. is “probably the most free market,” he said.

U.K. lawmakers have called for tougher media rules following the phone-hacking scandal at the local newspaper unit of Rupert Murdoch’s News Corp. Allegations that the News of the World hacked the phone of a murdered schoolgirl forced News Corp. (NWSA) to shutter the tabloid and drop a 7.8 billion-pound ($12.6 billion) bid for British Sky Broadcasting Group Plc.

The scandal “fundamentally redraws everything,” said Tony Ghee, a media lawyer at Taylor Wessing LLP in London. “If it had happened now, the bid would’ve been approved. It almost happened. They almost got away with it.”

The hacking scandal has led to the arrests of at least 16 people, including Rebekah Brooks, who was chief executive officer of the News International publishing unit. A separate parliamentary committee is questioning current and former executives about phone hacking at News Corp. and how those executives dealt with initial reports.

Market Evaluation

U.K. Culture Secretary Jeremy Hunt, who had been in charge of approving News Corp.’s offer to purchase BSkyB before the company abandoned its bid, has recommended that new laws result in competition decisions being made based on a company’s share of the total customer market, through a combination of TV, radio, newspaper and social media as opposed to a share of just one of those.

In a speech to delegates at the Royal Television Society this week, Hunt said politicians are under pressure to make it harder for a similar deal to get through. The hacking scandal will probably result in tougher competition rules for media companies under the new law, he said. A News Corp.-BSkyB tie up would’ve joined the largest broadcaster in the U.K. with the owner of the most popular tabloids in the country.

Zaslav, who took over Silver Spring, Maryland-based Discovery Communications in January 2007, said that while the U.K. should keep its “light touch” regulation, it also needs to make sure that there is a “level playing field.” Zaslav said Discovery could be affected by planned changes to regulations that help major competitors in the U.K.

‘Level Playing Field’

Hunt said this week that he may remove some regulatory requirements for so-called U.K. public service broadcasters such as ITV and Channel Four. So far, these channels got access to airwaves and other benefits in return for agreeing to air certain types of shows focusing on news, the arts, children’s and religious programming. ITV also had been calling for changes in the CRR mechanism, under which ITV can only raise ad pricing at its ITV1 station in line with audience ratings.

“We have to be realistic that the terms of the original PSB ‘deal’ -- broadcasting obligation in return for access to a spectrum oligopoly -- no longer hold,” Hunt said this week. “We need a strong commitment to PSB but ministers and regulators should not, and increasingly will not be able, to micro-manage program outcomes.”

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong kwong11@bloomberg.net

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