Satellite Broadcasting (Hansard, 12 November 1990)

The Minister of State, Home Office (Earl Ferrers)
My Lords, under the Broadcasting Act of 1981 and under Schedule 2 to the Broadcasting Act 1990, which comes into force on 1st January 1991, non-European Community nationals are prohibited from controlling a domestic satellite service. Schedule 2 also limits newspaper interests in a Channel 3 or Channel 5 licence to 20 per cent. We intend to make supplementary rules also limiting newspaper interests in domestic satellite services to 20 per cent.

§ Lord Donoughue
My Lords, I thank the noble Earl for his Answer, although I am not quite clear where it will leave Mr. Murdoch. Perhaps I may ask him this precise question. Exactly when did the Government know of the proposed merger between Sky and BSB? Were the relevant Minister, the Home Secretary in regard to the broadcasting industry, and the relevant authority, the IBA, informed at the time?

Earl Ferrers
My Lords, at four o'clock on Friday afternoon officials were told that it was likely that an announcement would be made affecting BSB and Sky. At nine o'clock on that evening both BBC News and Sky News said that the two companies were merging. I understand that at three-thirty in the morning of Saturday the legal deal was signed. At ten o'clock on the Saturday my honourable friend the Parliamentary Under-Secretary of State spoke to Mr. Andrew Knight, chairman of News International. I think I am right in saying that the IBA was not consulted in advance; but that of course is a matter between the IBA, Sky and BSB.

§ Lord Donoughue
My Lords, does the Minister deny the statements made in the newspapers that the Prime Minister and 10 Downing Street were alerted to this matter several days before, on Monday, 29th October?

Earl Ferrers
My Lords, what I said to the noble Lord was that my officials were informed formally at four o'clock on Friday. I understand that my right honourable friend the Prime Minister had a conversation about a number of matters with Mr. Murdoch earlier; that he said that the companies were in difficulties and that the possibility of a merger was in the offing. But that was only a matter of informative conversation and not an official indication.

§ Lord Thomson of Monifieth
My Lords, is the Minister aware that what he has just said raises very serious issues indeed? Does he not recognise that the Prime Minister was informed of this impending merger, with all its implications, while the Broadcasting Bill was still before Parliament? Had Parliament been aware of this and not been kept in deliberate ignorance, the decisions that we took might well have been different. Is it not too serious a matter to be dealt with simply by Question and Answer across the Floor of the House? Should not the Government make time available for the matter to he debated properly?

Earl Ferrers
My Lords, I am merely responding to a Question that was put down. If the noble Lord considers that there ought to be another method of dealing with the situation, he is entitled to take such action as he wishes.
With respect, I believe that the noble Lord is mistaken. This was a conversation—as I understand it; I was not privy to it—between Mr. Murdoch and the Prime Minister on a number of questions in which he indicated that Sky and BSB were both in difficulties and that there might at some juncture have to be some form of merger. It was not an indication that a merger was imminent. If I may say so, the noble Lord is also mistaken on this. The Broadcasting Act 1990 does not as yet affect the merger which has just taken place.

§ Baroness Birk
My Lords, does the noble Earl not agree that the action proposed is a take-over by Sky rather than a merger? Does he also agree that it must result in less competition, less choice and lower quality television for British viewers, which is contrary to the Government's intentions as stated in the White Paper and in the Broadcasting Act 1990? Was the Prime Minister aware of that when she obviously gave her blessing to Mr. Murdoch?

Earl Ferrers
My Lords, the noble Baroness really is putting words into the mouth of my right honourable friend the Prime Minister. She never said anything about a blessing. She was informed as a matter of conversation that the two companies were in difficulty. I believe that the noble Baroness is mistaken. It shows what a highly speculative business satellite broadcasting is, and if, as the noble Baroness states, it will result in less choice, it would have resulted in even less choice had both companies gone bust. I am bound to point out to her that Schedule 11 to the Broadcasting Act 1990 permits the existing DBS contracts to be replaced by a licence in 1993. The Broadcasting Act 1990 does not affect that.

§ Baroness Birk
My Lords, I must return to part of the question to which the Minister did not reply. Having read the papers and the reports on the matter, and the acknowledgment from 10 Downing Street that the subject was discussed with the Prime Minister, is it right for anyone to draw the conclusion that if the Prime Minister had objected there would not have been an announcement some days later and that action would have been taken by the relevant Ministers who were not informed?

Earl Ferrers
My Lords, the noble Baroness can read what she likes into newspaper reports but I doubt whether the reporters were present at the conversation. I was not and therefore I cannot comment on that issue. The merger took place under the auspices of the Broadcasting Act 1981 and not the Broadcasting Act 1990, and therefore the companies were entitled to do what they did. The 1990 Act will begin to bite only in 1993.

§ Lord Cledwyn of Penrhos
My Lords, following the question asked by the noble Lord, Lord Thomson, is the Minister aware that the entire matter has grave implications? Can he say whether the meeting at 10 Downing Street took place at the request of Mr. Murdoch in order to discuss matters about which the Prime Minister had been given proper prior notice? In view of the substance of the conversation, will the Minister say whether anyone from his department was present to advise the Prime Minister, especially in view of the fact that the Broadcasting Bill was then going through this House? I realise that the Minister may be in a difficult position, but it may help the Government if he can clarify the situation so that there is no doubt.

Earl Ferrers
My Lords, the answer to the first of the noble Lord's questions is no and the answer to his second question is no.

§ Lord Bonham-Carter
My Lords, is the Minister ready to let the House know whether the Prime Minister, having had the formal or informal information from Mr. Murdoch about a matter of great public interest and about a Bill which Parliament had been discussing for more than a year, passed on the information to her colleague the Home Secretary?

Earl Ferrers
My Lords, my understanding is that the subject arose during the course of a conversation about a number of matters. When officially there was a likelihood of a merger, Sky Television got in touch with my right honourable friend.

§ Lord Wade of Chorlton
My Lords, does my noble friend agree that the merger of the two companies is most important and beneficial and that it was wrong that many shareholders' funds were being lost through unnecessary competition? Does he further agree that what has happened is in the best interests of the public, the investors and all those who wish to see good television?

Earl Ferrers
My Lords, I am grateful to my noble friend for his comments, with which I agree. It is important to remember that the venture was highly speculative and that both companies were running into trouble. If both companies had been allowed to go bust there would have been a loss of 1,000 jobs.
I commend to your Lordships the remark made by Mr. Andrew Knight in a letter to The Times published today. He said: As for Mr. Murdoch's television interest, he now controls just half of a deadlocked company, heavily in debt, whose programmes will be subject to regulatory control, and whose viewing audience is at best 3 per cent. of that controlled by the BBC and ITV". I do not believe that to be a coveted monopoly.

§ Lord Molloy
My Lords, will the Minister clarify his comment that if any organisation threatens the Government that it may be going bust it will be given licence to thwart the desire of Parliament and, if necessary, to get round the policy of Her Majesty's Government?

Earl Ferrers
My Lords, the noble Lord, Lord Molloy, is mistaken. Perhaps I may explain the matter as succinctly as possible. At present the two companies are contractors to the Independent Broadcasting Authority. Under the Broadcasting Act 1981 they are permitted to merge provided that they have the approval of the IBA. That issue is governed by questions such as whether the company should be controlled by another company based outside the European Community and whether there should be newspaper interests which have had or will lead to results that could be contrary to the public interest. That is what the IBA must decide and what it is now deciding. The fact that the Broadcasting Bill 1990 has gone through Parliament does not affect this merger at this time, but it will when the company becomes a licensee in 1993.

§ Lord Hailsham of Saint Marylebone
My Lords, are not the public policy implications of the merger currently under consideration by the IBA? Will they not again come under public consideration by the Monopolies and Mergers Commission and probably by the licensing authority when it comes into effect? Furthermore, is it not wise not to fish in troubled waters in the meantime?

Noble Lords
Oh!

Earl Ferrers
My Lords, in answer to that extraordinary unparliamentary guffawing noise from the Opposition, I can say only that the observation made by my noble and learned friend, particularly the latter part, was extremely apposite. It would be bad to fish in troubled waters—not that the waters are particularly troubled for the Government—

Noble Lords
Oh!

Earl Ferrers
My Lords, the IBA is considering this matter, as is the Office of Fair Trading.

§ Lord Ardwick
My Lords, for a long time it has seemed probable that Sky and BSB would be driven into a reluctant merger. Did the Government frame the legislation so as to make the conditions of the two companies incompatible in order to deter that or did they not notice that point which would arise, if not now, then in 1993?

Earl Ferrers
My Lords, the Government framed the legislation particularly to deal with domestic satellite broadcasting, which has five frequencies which are internationally allocated to the United Kingdom, and non-domestic satellite services, which are totally different and which can number up to 30 or even 40 different services. In the Broadcasting Act the Government sought to set the scene aright so that those companies which wished to participate could do so.