BRITAIN'S largest newspaper groups are on a collision course with the Government over press regulation, after signalling their anger at the imposition of "several deeply contentious" issues in a Royal Charter announced in Parliament by the Prime Minister.
After more than 100 hours of talks, David Cameron, Nick Clegg and Ed Miliband shook hands on an agreement after a marathon negotiating session completed in the small hours of this morning.
It means that for the first time the British press will be subject to an element of statute.
The situation is similar to the showdown looming in Australia
Under the plan, a press regulator would be established through the vehicle of a Royal Charter with the power to order errant newspapers to publish prominent apologies and to fine them up to £1m.
The charter is backed by a clause of statute inserted into the Enterprise and Regulatory Reform Bill.
The deal was reached after Mr Cameron made several late concessions to Labour and the Liberal Democrats, who had made common cause in their response to last year's Leveson report into media standards.
Britain's biggest newspaper groups were left furious by the developments, having been shut out of the negotiations even though representatives of the press reform group Hacked Off participated in discussions.
A newspaper industry source said: "The newspaper industry only saw this at 4.30pm. None of this has the agreement of the newspaper industry."
Five major publishing organisations - the Daily Mail Group, News International, Telegraph Media Group, the Newspaper Society (which represents the regional press) and the Professional Publishers Association (which represents the magazine sector) -released a joint statement expressing their dissatisfaction with the developments.
"We have only late this afternoon seen the Royal Charter that the political parties have agreed between themselves and, more pertinently, the recognition criteria, early drafts of which contained several deeply contentious issues which have not yet been resolved with the industry," it said.
"In the light of this we are not able to give any response on behalf of the industry to this afternoon's proposals until we have had time to study them."
A senior source told The Independent: "What we are making clear is that we have not agreed to any of this."
It is understood that the newspaper groups are concerned about the powers of the new regulator to order front-page apologies and the lack of opportunity for the press to challenge appointments to the board of the new watchdog.
There are concerns about the regulator's arbitration service for civil legal claims which will be free to complainants and offer the chance of financial recompense.
By contrast, Brian Cathcart, director of Hacked Off, said: "We are very pleased this draft of the Royal Charter has been accepted." He said that the supporting clause was "clearly a statutory protection".
Hacked Off said four of its members had attended the late-night discussions on the charter: Hugh Tomlinson QC, the former Liberal Democrat MP Evan Harris, the director of the Media Standards Trust Martin Moore and Brian Cathcart, a professor of journalism at Kingston University.
It emerged last night that the new provisions would cover news-based websites - including the online editions of national newspapers and sites such as the Huffington Post - but not broadcasters' websites.
It will also exclude bloggers, tweeters and social networking sites such as Facebook and Twitter and small publishers of special interest and trade titles.
Three newspapers - the Financial Times, The Independent and The Guardian - had previously said they would be prepared to accept an element of statutory underpinning in establishing a new self-regulatory system along the lines set out by Lord Justice Leveson.
Last night Chris Blackhurst, editor of The Independent, said: "Given that some newspapers and their journalists behaved very badly over a number of years leading to the creation of a judicial inquiry by David Cameron, today's outcome was always probable.
"Ideally we would not want any new regulatory system at all, but that was never going to happen. This isn't perfect but neither is it terrible. I don't see anything in it that will threaten the sort of journalism we produce at The Independent."
The agreement was widely welcomed in the House of Commons yesterday - although several Conservatives made clear their dismay that Mr Cameron had come close to breaching the Tories' promise not to allow any new press law.
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