CINEMATOGRAPH FILMS (DISTRI-BUTION OF LEVY) (AMEND-MENT) REGULATIONS, 1964 (Hansard, 20 July 1964)

§ THE MINISTER OF STATE, BOARD OF TRADE (LORD DRUMALBYN)
My Lords, I beg to move, That the Cinematograph Films (Distribution of Levy) (Amendment) Regulations 1964, a draft of which was laid before this House on 30th June be approved. The purpose of these draft Regulations is so to adapt the levy scheme that it will not discourage the showing of British, as opposed to foreign, films on pay-television during the forth- 448 coming experiments. The intention of the levy is of course to help British film producers. During the experiments in pay-television announced by my right honourable friend the Postmaster General on December 11, the operators are likely to show cinema films, because the experiments will be on too small a scale to justify them in producing any great proportion of their own material. Film producers are not averse to cinema films being shown on pay-T.V., partly because the films shown will make a small but welcome addition to their returns, but mainly because film producers are keenly interested in the long-term prospects which pay-T.V., if the experiments prove successful, will offer in the future.
As the House knows, cinema exhibibitors pay a statutory levy the proceeds of which are distributed to the producers of British films. The levy supplements the commercial returns of British film producers by about £4 million a year. Under the existing Levy Regulations a film which is booked for television at the time when it comes to be registered at the Board of Trade for cinema showing loses its entitlement to a share in the levy. It is also disqualified if exhibited to the public on television earlier than twelve months after its registration. Thus it appears that any British film which was shown on one of the pay-T.V. experiments within twelve months of registration would be disqualified for levy. Unless, therefore, we adapt the Regulations, the probability will be that the only relatively recent films that will be shown on pay-T.V. during the experimental period will be foreign ones. Clearly that would be at variance with the purpose of the levy.
To get over the difficulty, the present disqualification is removed by these draft Regulations in respect of the pay-T.V. experiments, subject to one condition, namely, that the film in question has not been shown on pay-television during the six months before its registration. This stipulation has to be made so as to discourage any tendency that there might otherwise be for people to get round the Government's arrangements in respect of cinema films and pay-television as a whole. The change accords with the views of the Cinematograph Films Council, which has been 449 consulted in accordance with the requirements of the 1957 Act.
Arrangements are being made for a voluntary system for the collection of levy from the pay-T.V. operators on all cinema films. My right honourable friend has received an assurance from the pay-T.V. operators that they will pay a levy of 6 per cent. during the period of the pay-T.V. experiments. The rate of levy has been determined to take account of the fact that no cinema film which has been given a general London release may, without the consent of the local exhibitors, be shown on pay-T.V. in the trial areas for a period of six months from its first showing at a local cinema. I should emphasise that these arrangements relate solely to the experimental period and areas for pay-T.V. With this brief explanation, I would ask your Lordships to approve the Regulations.

§ LORD CHAMPION
My Lords, I thank the noble Lord, Lord Drumalbyn, for his explanation of this Order. Of course it relates to something new which seems to be coming into our lives, at least in an experimental way. I cannot pretend to have made a careful study of the whole background to this Statutory Instrument. I have, however, consulted some of my honourable friends in the other place, and a knowledgeable noble Lord here, and I understand that although they have some doubts as to whether, in fact, the experiment of pay-T.V. should be conducted at all, on balance they seem to think that the Regulations ought not to be opposed.
Having said that, I think it must also be said that the Government seem, to some of us at any rate, to have intervened in order to create a privileged position for pay-television. The noble Lord has told us that under the existing regulations a British film forfeits any entitlement to benefits from the levy made on cinema charges if at the date of its registration with the Board of Trade for cinema showing there is an agreement for its exhibition to the public 450 on television, or if the film is exhibited on television earlier than twelve months after the registration. These regulations exempt pay-television from that provision while maintaining the existing provision as it relates to the showing of British-made films on I.T.V. or B.B.C. One is bound to ask: why is there this seeming discrimination in favour of pay-television as against B.B.C. and I.T.V.? It is not difficult, of course, to see why the film industry has developed an organisation to defend its interests against the very early showing of films on television; for, clearly, once a film has been shown on television its cinema box office drawing power is seriously diminished. That is why the films we now see on television are all the old masters—or, rather, in so many cases, the old "flops"—of ten to twenty years ago.
I suppose that the real justification for these Regulations to-day is to enable pay-television to get off the ground for the experimental period. But one is bound to ask: why is it to be assisted off the ground at all? I am one of those who think that there is already too much skilled manpower and too many national resources employed in television; especially at a time when we are told by "Neddy" that the present shortage of skilled manpower is the greatest single limiting factor to a greater rate of expansion. So I certainly have some doubts about this whole matter, and I hope the noble Lord will be able to assure me on these points.
But having expressed these doubts, I should like to ask the Minister one small question. I understand that in the agreement arrived at with pay-television there is provision for a quota, and that any film which has at any time been registered as an exhibitor's quota film will count towards the quota, without regard to the time at which the film is being shown. If that is so, it follows that the peak-hours screenings could be reserved by pay-T.V. for new foreign films, and the British quota may be fulfilled by the showing of old British films at the off-peak and less remunerative hours. I am wondering whether the Government have considered this and if they are satisfied that in this particular the agreement is fair to British film makers, for whom the whole principle of the levy was devised.

§ LORD DRUMALBYN
My Lords, I certainly would not blame the noble Lord for not having made a careful study of the background of this matter, because I can assure him that it is a very complicated one. I think I would agree with him that one of the purposes of these regulations is to enable pay-television to get off the ground. After all, if you are going to have an experiment you must experiment with something; and, as I explained earlier, with a comparatively small experiment of this kind it would obviously not pay the operators to create their own material to any large extent. So they are almost bound to make use of cinema films.
The noble Lord asked about the apparent discrimination against the B.B.C. and the I.T.V. in not allowing them the same facilities. Again, it has to be borne in mind that this is an experiment on a small scale, not to be compared with the B.B.C. and the I.T.V., and that the purpose of these Regulations is to make certain that British producers are not placed at a disadvantage compared to foreign producers. I am not certain that I would agree with the noble Lord that if pay-T.V. proves to be successful it will necessarily increase the demand on manpower. This is one of the matters that I think the experiment may help to show. There is so much that we cannot foresee: the size of the audiences; the amounts that can be charged to them; the type of material to be used, and a host of other things.
Finally, the noble Lord asked whether it would be likely that the operators would use the peak hours for exhibiting new foreign films rather than British films. My Lords, I should have thought that this was extremely unlikely. It is, of course, a question of judgment; but it would presuppose that foreign films were likely to be more popular than British films, which I should doubt. The experience so far as the first-feature films is concerned is that in the cinemas far more than the quota of British films is normally being shown at the present time. Secondly, I think it is worth pointing out that the pay-television operators have everything to gain by keeping both the public and the authorities on their side in the course of the experiments. I would also say that it has to be borne in mind that this is an experiment and 452 it is impossible to cover in the minutest detail every possible eventuality.