APPOINTED NEWS PROVIDERS FOR CHANNEL 3 (Hansard, 14 July 2003)

§ Tessa Jowell
I beg to move, That this House agrees with the Lords in the said amendment.

§ Mr. Deputy Speaker(Sir Alan Haselhurst)
With this it will be convenient to consider Lords amendments Nos. 57 to 68, 131, 148, 188, 190, 193, 203, 219, 263, 267 and 275.

§ Tessa Jowell
We have listened carefully to the arguments advanced in debates in both Houses about the subject of the Channel 3 news provider. The amendments are our response to that debate. They will lift most of the ownership restrictions on the Channel 3 nominated news provider and remove the Ofcom nomination process for that body. That will mean that ITV can own its own news provider, but must still function as a single body corporate in order to maintain the desirable level of independence.
The remaining ownership restrictions are intended to ensure that a body that could not hold the Channel 3 licence or have a substantial interest in the holder cannot provide the news service. So the main restrictions are as follows: any body banned from owning a Channel 3 licence under part II of schedule 2 of the Broadcasting Act 1990—for instance, that includes political bodies—will be similarly restricted from being or having an interest in the Channel 3 news provider; and any body, such as a major newspaper, that is prevented from owning a Channel 3 licence is also prevented from owning its news provider and restricted in the interests it can hold in the news provider.
The quality provisions remain in place and require that Channel 3 national news continues to be able to compete with other national news services. They also provide for Ofcom to approve the appointed news provider contract to ensure that it is adequately funded. In order for Ofcom to guarantee that the required arrangements are in place and work effectively, the amendments ensure that Ofcom can obtain the information it needs from ITV or the appointed news provider. If Channel 5's audience share becomes broadly equivalent to that of Channel 3, it will be possible to create a Channel 5 scheme comparable to the appointed news provider scheme for Channel 3. We will be able to modify by order the quality and ownership provisions of the Channel 3 system and any Channel 5 scheme.
I commend the amendment to the House.

§ Mr. Whittingdale
In debating the previous group of amendments, I suggested that we might have saved some time if the Government had listened in Committee, rather than resisted our ideas before going to the House of Lords and conceding those points. In reply, the Secretary of State said "Let's not have any more of that", but if ever there is going to be any more of that, it will be in relation to the group of amendments that we are now considering.
8.15 pm
The amendments introduce the most important change that the Opposition have managed to achieve in relation to the Bill, and it will undoubtedly benefit ITN and ITV. It is worth reflecting on the history of this matter. The nominated news provider system and the cap on ownership were established back in 1990. Such an arrangement was arguably right at that time, but over the past 14 years, it has become a handicap to ITN.

§ Brian White
Does the hon. Gentleman not accept that the arguments for nominated news providers came from ITN itself, which advocated the system as one or two people in the company thought that they could make some fast money?

§ Mr. Whittingdale
The hon. Gentleman is right: the arguments came from ITN and they were put forcefully to the then Prime Minister, Margaret Thatcher, who was persuaded by them. However, the world has now moved on. ITN certainly no longer believes that that system is good for it, and neither, indeed, does the Conservative party. I suppose that we have all seen the light.
The effect of the nominated news provider system has been to reduce the revenue for ITN by a very large amount. The ITV news contract price back in 1993 was about £70 million in today's prices. Some 10 years later, the price had halved. The result is obviously that the amount of resources available to ITN has been drastically reduced, which has meant that it has not been able to invest in its business to the extent that it needs to invest in order to provide a news service that is competitive with those offered by the other major news providers. It has been suggested that Sky News was the beneficiary, as it was able to bid against ITN for the ITV contract and was likely to benefit whatever the outcome, as it could either have beaten ITN and got the contract, or not beaten it, but, in bidding, forced down the price that ITN was able to charge and weakened it as a competitor.
In our view, it is terribly important that there should be three powerful television news providers. There is no question but that the BBC has always been such a provider. Sky News has now established itself very successfully as an extremely robust and reliable news provider. While continuing to do a good job, ITN has nevertheless suffered from lack of investment caused not only by the nominated news provider system, but by the ownership cap. Currently, there are five shareholders, each of which holds a 20 per cent. stake. Two of those shareholders will be likely to wish to increase their stake, especially if they come together. Under the Government's previous proposals, however, they would have been unable to do so.
95 In this House and the other place, it has been pointed out that ITV is the only broadcaster that is prevented from owning its own news provider. Indeed, it was Lord Bragg who said: BBC News is at the heart of the BBC and Sky News is at the heart of Sky. He also said: it should be repeated in Hansard as often as possible that ITV is the only broadcaster prevented from owning its own news provider."— [Official Report, House of Lords, 3 June 2003; Vol. 648, c. 1225.] I am happy to take up his invitation to repeat that statement once again. It is that issue that the amendments are now addressing.
It is not only the effect on the nominated news provider in terms of the necessity of cutting the price in order to beat the competition that is an issue, but the most extraordinary list of requirements regarding information that ITN has to supply to the ITC at the time of renewal. There is a list of about 40 pieces of information that the nominated news provider is required to provide to the ITC, including matters such as 24-hour capability to retrieve and transmit news and foreign external broadcasters' material not substituting for original production. It goes right into the detail of the management of the company. It is wholly unnecessary that a commercial operation should have to account to a regulator to that extent, particularly in a competitive environment. If ITN is to provide a competitive third force, it badly needs to be relieved from its current requirement and to have access to the investment that it needs.
ITN has suffered over the course of the past few years. There are many reasons for that. The uncertainty about when its nightly news bulletin is going to go out has not helped it to win an audience. Equally, the fact that the bulletin lost 10 minutes meant that it was not always able to provide as great a depth of coverage as its competitors. What ITN most needs now is long-term sustained investment. That is most likely to occur if the ownership cap is removed and if, in due course, the ITV company is able to take ITN in-house.
I welcome the fact that the Government have belatedly come round to seeing the force of those arguments, and I strongly support the amendments from the House of Lords.

§ Nick Harvey
I, too, welcome the amendments and the change of stance on the part of the Government. It is absolutely right that we need at least three strong news providers and that that requires ITN to be in a position to battle on equal terms with BBC News and Sky News. In recent years, the existing restrictions have handicapped ITN from fulfilling that competitive role. There are two reasons for that. First, it has suffered from a lack of investment as a result of a dispersal of shareholders, with nobody having a strategic grip on the situation or an incentive to put some serious money into it. Secondly, it has periodically to go through the auction process, whereby others can either take its service away or bid its price down; that is exactly what has happened. Although we do not know who will own ITV in future, at least if a 96 new owner from abroad takes control of the news service he will be subject to Ofcom regulation in the course of his daily business, whereas Ofcom has no such lean upon an investor from a completely different sector.
I am pleased that the Government have shifted ground and decided to go ahead with the provision now instead of relying on a sunset clause.

§ Tessa Jowell
There is broad agreement that this is the right decision. I shall underline why that is. The hon. Member for North Devon (Nick Harvey) mentioned the important point—namely, that news has a special place in public service broadcasting and that it is crucially important that news services across all public service broadcasters are of high quality and adequately resourced. In that context, I stress the protection that clause 276 affords on both counts of investment and quality. There was a remarkable degree of consensus in another place. However, having had many discussions about the matter I would say that the original decisions were taken on balance rather than being conclusive in terms of retaining ownership limits.
I pay tribute to the way in which ITN conducted the argument and to Lord Bragg and Lord Alli, both of whom contributed to the debate constructively and from their own experience. We have reached the right conclusion, and I commend the amendments to the House.