It's been a good week for British democracy and a bad one for bullies. Seldom if ever could a well-known surname have so quickly become an epithet of scorn.

For a number of years, I've felt that the debate around "media plurality" has remarkable echoes of that surrounding climate change. Both concern our capacity to find a sustainable balance within a complex and delicate ecosystem, one in which the true scale of the problem only becomes apparent when you sift through the evidence and consider the frightening ramifications of getting it wrong.

In the case of the media, we've managed to get it progressively ever-more wrong for the last 30 years. So why does this issue of "media plurality" matter?

In the words of a Conservative party report in 1995: "A free and diverse media are an indispensable part of the democratic process. They provide the multiplicity of voices and opinions that informs the public, influences opinion and engenders political debate. They promote the culture of dissent which any healthy democracy must have. However, if one voice becomes too powerful, this process is placed in jeopardy and democracy is damaged."

One voice did become too powerful and we are only now beginning to grasp the degree to which our democracy was being damaged by a dominant newspaper group which, almost inexplicably, adopted the tactics of the Stasi and all of its equally disreputable forerunners.

So where do we go from here?

One clue may lie in a parliamentary debate on the issue of the predatory pricing of newspapers, which occurred in 1998. Lord McNally, now the justice minister, said at the time: "Concentration of power, married with the advance in technologies, offers a challenge to democratic governments and free societies which we have scarcely begun to address."

It was true then and it is even more true today; should we fail to seize this moment to address the problem the chance may never come again.

In 2003, when Parliament passed the public interest plurality test into law, it was in recognition of a belief that the diversity and ownership of our media could not be reducible to a set of arguable facts regarding the relativity of market share, that the issue was far too important to be expressed simply in the dry language of competition policy.

As that earlier quote from the Conservative party report makes clear, in reality what's at stake is the overriding interest of the citizen. Once all the hubbub over phone hacking has died down there will still be two massive issues at stake. The first is the attempted purchase by News Corporation of the 61% of BSkyB it does not own. The second is to put in place a robust and well-regulated system of ownership constraints that look right across the media, indeed the communications landscape as a whole. The present, and dangerous, "sector by sector" approach must now be scrapped for good and all.

Turning to the first and more immediate of these issues, it's important to look at and thoroughly understand exactly what is being proposed in respect of the BSkyB "takeover" – and what are its likely outcomes.

In 1997, BSkyB had revenues of £1.27bn, or 63% of the then BBC licence fee income. In the most recent year for which accurate figures are available, Sky's turnover was £5.9bn or 163% that of the BBC. Assuming a modest 5% growth to 2016, when the BBC's present charter expires, BSkyB will have reached a turnover of a little over £8bn or around 220% of the projected income of the BBC.

James Murdoch once described the scale and reach of the BBC as "chilling". If he is right, then the disparity of income his own company will have achieved over all of its competitors by 2016 will surely freeze to death the very idea of a competitive marketplace in the acquisition of sports rights, drama and high-value popular programming of just about every imaginable type. We will have in effect "waved through" the creation of a licensed monopoly.

Where once it was his newspapers that subsidised Mr Murdoch's foray into television, it will now be the other way around, with subscription television comfortably underwriting the political influence of his newspapers.

Assuming the government does the right thing and not only disapproves the "takeover" on plurality and competition grounds, but requires News Corporation to reduce its holding to a non-controlling 29.9%, we can then start the real "heavy lifting" of putting a balanced and sustainable cross media ownership framework in place.

This will unquestionably require all-party support and, having enjoyed a very good war last week, it's my hope that Ed Miliband and his colleagues go the extra mile in working with the government to tackle an issue on which might well depend the future shape and success of our informed plural parliamentary system.

Less than two years ago, at the Edinburgh festival, James Murdoch concluded a wide-ranging lecture by quoting George Orwell in praise of the state resisting a role in the provision of information.

He finished the speech by saying: "On the contrary, independence is characterised by the absence of the apparatus of supervision and dependency..." The events of the past week should surely have established to everyone's satisfaction that not only does the state have a role to play in ensuring the diversity, honestly and responsibility of the media – it also has a fundamental duty.

Lord Puttnam is a Labour peer and chairman of the Joint Parliamentary Scrutiny Committee for the 2003 Communications Act

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