James Murdoch predictably employed the opportunity of his invitation to give the annual MacTaggart Lecture at the Edinburgh International Television Festival to attack the regulation of broadcasting and the role of the BBC in particular. The debate continued over dinner with what was described as “a vigorous exchange of views”.

His speech entitled “The Absence of Trust” echoed the withering attack on the British television industry delivered twenty years ago in the same room by his father, Rupert Murdoch, who described a duopoly protected by public subsidy and state privilege that was innately unsympathetic to markets and competition.

At the time Sky satellite television was losing money but he predicted a future in which televisions would be “linked by fibre-optic cable to a global cornucopia of programming and nearly infinite libraries of data, education and entertainment”.

Twenty years on, Sky is highly profitable and nearly half the country subscribes to pay-television services, but the BBC remains dominant.

The younger Murdoch, who is now non-executive chairman of BSkyB and chief executive of News Corporation for Europe and Asia, pointed out that most media is already digital. “Even if part of the consumption of media remains in the analogue world — opening a newspaper or a book, going to see a film in a cinema — the production of those creative works is already wholly digital, and the proportion that is consumed by digital means is growing all the time.” Yet he said “we have analogue attitudes in a digital age,” with “business models and a policy framework based on spectrum scarcity.”

The velocity of the transformation has radically increased, he observed, and the boundaries between media have broken down, while what we mean by media is expanding, resulting in “an all-media market”.

150 years after the publication of Charles Darwin’s The Origin of Species, he said there were still those that believed in creationism rather than natural evolution, which he compared to industrial planning which failed and went out of fashion in other sectors in the 1970s.

“The consensus appears to be that creationism — the belief in a managed process with an omniscient authority — is the only way to achieve successful outcomes. There is general agreement that the natural operation of the market is inadequate, and that a better outcome can be achieved through the wisdom and activity of governments and regulators.”

This “penalises the poorest in our society with regressive taxes and policies,” like the licence fee and digital switchover, “promotes inefficient infrastructure in the shape of digital terrestrial television” and “creates unaccountable institutions like the BBC Trust, Channel Four and Ofcom”.

He was critical of the approach of the authorities in intervening and regulating the media industries “with relish”. Ofcom alone has launched nearly 450 consultations in the last five years, nearly two a week. He said “the repeated assertion by Ofcom of its bias against intervention is becoming impossible to believe in the face of so much evidence of the exact opposite.”

The unforeseen consequence of decades of ever-increasing planning and intervention has, he submitted, resulted in a dominant BBC while other terrestrial networks are struggling.

“The problems of the terrestrial broadcasters are not about the economic downturn, although it has thrown the issue into sharp relief.” He said was no coincidence that Google has a higher percentage of advertising spending in the United Kingdom than anywhere else in the world but a this was a consequence of a tightly restricted commercial television sector.

“That money will not come back,” he added. “It is not that ad-funded television is dead: it is just a permanently smaller fish in a bigger pond.”

Quoting Tolstoy, who said that every unhappy family is unhappy in its own way, he said: “The problem with the UK is that it is unhappy in every way: it’s the Addams family of world media.”

He suggested that “the defining characteristic of the UK broadcasting consensus is the absence of trust.”

Over half the homes in the country choose to pay for television, but the authorities consistently favour free-to-air broadcasting. “Yet, as you might expect, people who are used to paying for films, books, internet access and other quality content, do not see anything strange in paying for quality television too.”

The customer does not exist in the regulated world of public service broadcasting, he suggested. The viewer is a passive creature, in need of protection. Elsewhere, “the customer is just that: someone whose very freedom to choose makes them important”. Consequently “they are treated with great seriousness and respect, as people who are perfectly capable of making informed judgements about what to buy, what to read, and what to go and see.”

Such freedom should exist across the whole of media, he suggested, but the merging of media is instead being used to expand control.

“There is a land-grab, pure and simple, going on,” he said. “The land grab is spear-headed by the BBC. The scale and scope of its current activities and future ambitions is chilling.”

“The BBC feels empowered and obliged to try and offer something for everyone, even in areas well served by the market.” Citing radio as an example, he said: “Rather than concentrating on areas where the market is not delivering, the BBC seeks to compete head-on for audiences with commercial providers to try and shore up support — but more accurately dampen opposition — to a compulsory licence fee.”

He was particularly critical of what he described as “the abysmal record of the Trust” for failing to ask tough questions of its management. He said that any setback in expansion is only temporary “there will soon be another initiative requiring yet more management time to fight off.”

Arguing for a recognition of commercial incentive in the market means “accepting the simple truth that the ability to generate a profitable return is fundamental to the continuation of the quality, plurality and independence that we value so highly.” It means leaving behind “analogue attitudes”.

“Interventionist management of what is sometimes called the broadcasting ecology is not helping it — it is exhausting it.”

“To let the state enjoy a near-monopoly of information is to guarantee manipulation and distortion,” as George Orwell suggested sixty years ago in 1984. “Yet we have a system in which state-sponsored media — the BBC in particular — grow ever more dominant.”

James Murdoch concluded by saying that “The only reliable, durable, and perpetual guarantor of independence is profit.”