§ 7.55 p.m.
§ Lord Buxton of Alsa rose to ask Her Majesty's Government what measures they will introduce to avert any take-over of British independent television companies by non-UK European interests after 1st January 1994.
§ The noble Lord said: My Lords, I should declare an interest as a minor shareholder in Anglia Television since 1958. I should like to say that I find it most encouraging to have in this debate such a distinguished gathering of experts with great experience. Also perhaps, in case he disagrees with what I am about to say, I should say how helpful and comforting I find it to have my noble friend Lord Astor replying to the debate. He has taken a very special interest in these difficult matters and is very open and flexible about them. I shall be as brief as I possibly can be, in view of the lateness of the hour, but also because I know that most of your Lordships are familiar with many of the arguments that I shall present.
§ The current position on ITV is that from 1st January 1994 the existing moratorium on take-overs comes to an end. I read that the former IBA asked for one year, which was conceded. However, I believe that that is not strictly accurate. My recollection is that the IBA wanted three or four years but was advised during the forced passage of the Bill to ask for only one year because it would never obtain three years. That was a pity. There was strong pressure in the other place and in this House for a longer moratorium.
§ But now that one year will soon be over. It has obviously proved inadequate. This debate is about the consequences that will follow unless something is done about it in one way or another and very soon.
§ What has to be recognised are the tremendous technological changes that have taken place, with new channels and the effect of satellite broadcasting and so on. In fairness to the former government and the Broadcasting Act, nothing like the present multiplicity of channels seems to have been foreseen or forecast. Understandably, what was then thought to be right is now obviously wrong.
§ Fortunately it falls to new Ministers to avert a possibly lasting injury to the nation and the national television services, who are not responsible for the Act 967 and were not authors of the Bill. However, if nothing is done, after next January all ITV companies will be vulnerable to take-over by foreign interests in the EC. The predators will most likely come from Germany, Italy, France or Luxembourg, where one can find the headquarters of one of the biggest conglomerates, or indeed from any other country in Europe.
§ There are many unacceptable aspects to the situation. ITV companies can be taken over 100 per cent. by EC nationals; but, as most of your Lordships will know, British companies cannot take over European television companies. The position is inequitable and the United Kingdom is penalised. There is no harmonisation on TV ownership in the EC. Whatever the merits of the case, this hardly seems a good moment for the Government to have to concede that other EC countries have blatant and legal advantages over the United Kingdom.
§ The rules in different countries certainly vary, as my noble friend Lord Astor pointed out when I and the noble Lord, Lord Thomson of Monifieth, asked questions about that matter. Every country does not necessarily resist foreign predation in the same way. But that is hardly relevant, because the majority are still protected in one way or another. The United Kingdom is not protected at all and is probably the only country that is not protected at all. That will be, the situation on January 1st next year.
§ It is sometimes said, and it may be true, that there is no apparent evidence that any Europeans are ready to bid for our companies and to jump in in the new year. But that is pure speculation. In my view it would be reckless to depend on it. No predator would dream of announcing what his intentions are. It is easy to be taken by surprise. I remember my noble friend Lord Ferrers speaking from the Front Bench in the debate on the Broadcasting Act and saying that it was impossible to treat Sky and BSB in the same context because technologically, in practical terms and in many other ways, they were clearly entirely separate; four days later they merged. The Government must therefore be careful in depending on anything that is not fact.
§ Furthermore, we must be realists. It is widely recognised that even though national rules abroad may seem to offer an open door, other countries are far more sensitive than the United Kingdom about having their news and current affairs programmes controlled by foreigners. In those EC countries, even if take-overs from abroad are permitted in theory and bids are made, in some mysterious manner they would almost certainly fail at the last hidden hurdle.
§ One knows from experience that it is easy enough to set up a secret panel to screen the franchise applications which does not have to make its findings public. I have been informed in Europe by one or two people who know that that is what they do and how they deal with the situation, whatever the EC legislation says.
§ In recent memory it would have been regarded as sheer folly to put our primary means of communications in foreign hands. Those who remember the 1930s and 1940s would have found it incomprehensible. 968 However zealous one might be for a common market, it really looks like a bridge much too far to surrender our primary means of communication with the nation to non-UK proprietors. Furthermore, the UK television industry is more vulnerable than the industry in other countries. It has its hands tied behind its back and is unable to consolidate and defend itself against foreign predators.
§ A supplementary rule to the Broadcasting Act is that it designates nine ITV companies as "large" and the remainder as "small". The point is that "large" cannot amalgamate with "large"; therefore two-thirds of the ITV industry are like battery chickens. They can exist but they cannot mate or get into the same coop. The notion behind that is to prevent the concentration of too much TV power in too few hands. It was thought that in that way TV ownership would remain more widely spread. But in trying to achieve it in that way the Government are letting foreigners in through the middle and defeating their own intentions. The very thing the previous government sought to avoid may actually come about.
§ Other factors have radically changed the position from before the Act came into force. First, there was the bizarre franchise tendering process, which failed to include a reserve price on the one hand and on the other encouraged certain companies to bid high in order to protect their own employment. All that coincided with an endless recession. The outcome is considerable disarray throughout the industry and its balance and structure have been severely shaken. In fact, in theory the smallest of "small" companies could become pro rata the most profitable, and a large company, naturally bidding high to protect its long-serving staff and employees, could become marginal if not insolvent. That is the result of the bidding process, and that is where we are.
§ "Large" no longer means large in financial terms. Financial terms, rather than quality and creativity, for better or worse, are the main terms that count as a result of the Act. In fact some so-called "large" companies could be among the most vulnerable.
§ As a result of that confused state of affairs the companies have tended to be thrown apart, acting somewhat narrowly in the best interests of their shareholders. To retain the classification "large" suits some, while understandably other large companies with successful low bids would like to be rid of any restrictions and get on with amalgamations. All that is quite understandable.
§ It has been said critically that there is little unanimity of view among the companies on those matters, as though it was their fault. But can we be surprised? It is the responsibility of the government who introduced the system and the Broadcasting Act and who subjected the industry to the franchise process. It has distorted what was formerly a balanced and successful industry, with incidentally the unchallenged reputation of being the best commercial television in the world. However, I feel confident that the new Ministers will bring an open and objective mind to this new and urgent situation because there is no time to lose.969
§ There is still another significant factor which militates against United Kingdom companies; that is, the substantial difference in scale between the television structure in the United Kingdom and in Europe. Europe is dominated by huge conglomerates and cross-frontier consortia—some almost as big and perhaps bigger than the whole British ITV industry put together. British regional ITV companies are tiddlers by comparison and could be mopped up almost without noticing, although the combined might of French, Italian and German interests may be more likely to target the larger ITV companies if they were isolated. Our companies may be no match over here for the European "collosi"—if that is the right word—unless they have partners, are interdependent to some extent and can present a robust and solid British front.
§ With regard to the ITV industry, I feel that no company on either flank of the industry position would want ultimately to stand solid against any movement on the moratorium, which is at the heart of the matter. I believe that in the end all the ITV companies will support the Government if they extend the moratorium until 1996. At the same time, the question of classification of "large" and "small" could be given attention and be synchronised.
§ Regional ITV is one of the great innovations and is now part of British life. The BBC cannot match it and nobody abroad has done anything to compare with it. Everyone accepts that regional television is now an integral part of British life. If ITV is strengthened by consolidation in the long run, certainly regional ITV in the UK will be sustained. In ITV everyone knows how to do it. There is a deep-rooted tradition and style for serving the regions. Regionalism must be kept intact. But it is fanciful, and even painful, to picture foreigners responsible for regional television services. The mind boggles at the thought of people from Stuttgart, Milan or any other European city knowing how to provide regional services in any part of Wales, Scotland, East Anglia, the South of England or wherever. However much the ITC protested at the service they provided, I doubt whether it could even explain to some foreigners in EC countries what was expected of them or what they should do.
It may be said that proprietors have nothing to do with management or the editorial. But that is no longer valid. In a statement issued last week in connection with a release made about Granada television, the ITC said,
Specifically, the Broadcasting Act's provisions relating to control [it gives the paragraphs] relate not to directors but to the shareholders of the company, those who have the power to appoint and remove directors".
That implies that the proprietors are able to call the shots, which we all know. If they are abroad and do not even live here or in the region they will be interested only in making money, which is why they would invest in it, and in the results. If they were not satisfied with the results, they would simply give instructions about the reduction or diminution of whatever regional service was in place.
§ Whatever one's position on Europe, it may make little difference in theory if a factory making boots or shoes or producing beer or cars is owned by 970 foreigners. But when it comes to ITV, one would be offering them a camera, a microphone and the airwaves, with instant and direct access to the people of Britain, to say and show what they want. The huge responsibilities that this brings have to be taken extremely seriously. It is no good allowing those responsibilities to be handed to people who are untried and do not live here.
§ The official position on this point is that there is nothing to worry about because any new owner, having taken over a British ITV station, would be obliged to observe the terms of the contract. But I have to say that, apart from the broad rules and requirements of the contract, this can in the end be a hollow argument. I have no criticism of the ITC, which would obviously do its best—in fact I have a great regard for its initiatives and its position—but there have been several incidents in the past (before the ITC came into being) where the contractor has failed to observe the contract terms.
§ In practice it has been very difficult for the authority to do anything about it if the result is to be a blank screen. It is simply not feasible to have a blank screen. It is not in the public interest and therefore it is almost impossible to sack a contractor. If the contractor were sacked and the signal was fed from another area, it would be impractical to feed news or local programmes from another part of Britain. One cannot have news about Steeple Bumpstead being fed into Yorkshire. The same applies to other companies. That does not make any sense. There could also be the prospect of litigation and a time lag, perhaps for years. More often than not difficulties are escalated because of the howls of outrage from the intelligensia and from Parliament about interference and censorship. The likelihood is that the station stays on the air, whatever it fails to do, and probably continues broadcasting, even in a new form.
§ If that can happen when all the parties involved are British subjects, not much imagination is required to perceive difficulties in sacking a contractor which has become French, German or whatever. If there is trouble, other government departments are sure to feel forced to intervene. Just at the point when a licence is to be taken away from a German contractor another department will say, "You can't possibly do that because we have a state visit coming. You will just have to wait". In another situation it may be said, "A vital contract for £6 billion is at stake. We don't want to upset that so please leave it alone". I do not believe that it is practical or feasible to say that the foreign contractors would be subject to the rules of the licence and that it would therefore make no difference. It would make one hell of a difference in my view.
§ It is important—and it is no laughing matter—that we all speculate on the hypothetical consequences if, for example, Ulster were taken over by Ireland or if a network company were taken over by clients of the Bundesbank. I read this morning about the fishing problems in the Channel Islands. The Guernsey sea fisheries officer said that the four-and-a-half-hour meeting which persuaded the French to end their protest at St. Peter Port was conducted with an undercurrent of threat. Mr. Ozanne said that the 971 French warned that they would block the port if no pact was reached. As far as I understand it, the fisheries association in that port would be permitted to bid for and take over the Channel Islands' television service. One could go on for ever thinking of such situations. It would be a totally different situation from the current one where British companies are subject to the ITC.
§ One does not have to be at war to suffer the possible internal consequences, and national security is not the only issue. That was all we thought about in the 1930s, the 1940s, and even the 1950s where broadcasting was concerned. When television came on the air every effort was made in legislation to ensure that foreign take-over could not happen. I am not clear what has suddenly happened to make it acceptable. Biased presentation and reporting in peacetime can possibly be more insidious and long range (and I have to repeat that with foreign contractors the authority would prove much weaker in the end to act). Everyone should note the situation with the British press as a result of its ownership in such a huge measure overseas.
§ I realise that it is unfashionable to ask what would happen if there was some kind of war in Europe, but conflicts, as we have been discovering recently, do not have to be fighting wars with arms. The national characteristics of nations do not appear to me to have changed at all, and countries in Europe are still fighting their own corners, in their own interests, in their own ways, and with their traditional national characteristics and style. Why should the United Kingdom of all countries be the only one to allow its television services to be owned and controlled by anyone outside this country?
§ This issue of cross-frontier control of broadcasting has been referred to the EC by the Government, and also by Central Television, but there is not the slightest possibility of anything being achieved about harmonisation before 1994, or probably for many years to come, if ever. That is the point of my Question and that is what the debate is about. It cannot be done before the end of the year. At the end of the year things can rip. No doubt the bureaucrats in Europe will claim that they intend to knock everyone into shape, but I believe that other countries will laugh at them behind their hands and behind closed doors.
§ Furthermore, I believe that the more the issue is raised and debated in the Community over the next few years the less likely there is to be harmonisation. I do not believe in it and I do not believe it will come. It will not come if it involves any country losing any control of its own broadcasting. Positions will harden, not lead to harmonisation. I trust therefore that we will not be the only country to submit in advance. I urge my noble friend the Minister, and through him the Secretary of State, to reflect how foolish we may look in the years ahead if we alone have sold the pass while everyone else stands firm. That is a clear possibility at this stage. That is surely enough to justify extreme caution and postponement of anything 972 so critical and final. Some action soon is imperative—and of all the solutions, extending the moratorium is the most practical.
§ Finally, there is the BBC. We do not know yet what the ultimate outcome will be with the BBC. Whatever emerges in 1996 is certain to have a critical effect on the operations of ITV. There is no doubt about that. It always has and it always will. It could surely prove most improvident, or even reckless, to risk the structure and ownership of ITV going through substantial changes through foreign take-overs when the future of the BBC is not even known for perhaps a couple of years yet.
§ The Government may still live to regret having let things get out of hand while still in the dark about the broad picture at home. The Government may even have to return to the subject and tinker with ITV yet again in 1996–97 to iron out some new problems which have arisen from the BBC conclusions. There is clearly everything to be said for synchronising television policy and arrangements as a whole across the broad spectrum when the horizon on all fronts becomes clear. At this stage it is extremely confused.
§ It is understandable that Ministers may find it difficult to deal with primary legislation which is necessary to extend the moratorium. But if a vital part of legislation is manifestly wrong and was passed when future technological developments were not apparently recognised or appreciated, and the situation has now totally changed, then it makes no difference whether the legislation is primary or not; it is still wrong. To go on being wrong is bound to lead to further problems.
§ I understand those difficulties. I know that there is a problem about the Government's programme and so on. We all recognise that. Therefore, I only mention a notion in an attempt to be helpful to the Government. I shall be grateful if my noble friend Lord Astor will consider carefully with the Secretary of State the possibility of a one-clause Private Member's Bill extending the moratorium, certainly with the support of all parties in both Houses if it is available. The large and small factors could be attended to separately.
§ This is a situation now where the national interest allows no delay. At all costs there must be no sliding into a situation where it is too late to prevent the worst. One way or another extending the moratorium to 1996 by whatever means is preferred would seem to be sensible at this stage.
§ Lord Bonham-Carter
My Lords, before the noble Lord sits down, as regards his very interesting remarks about foreign rules on the ownership of television stations, will he confirm that in order to acquire five television stations in America, Mr. Murdoch had to sell his Australian citizenship?
§ Lord Buxton of Alsa
My Lords, I understand that that is true. There are greater experts on that matter in the House than myself. My noble friend Lord Stockton will be speaking later and no doubt he will refer to it. But I am sure that that is so.
§ 8.23 p.m.
§ Baroness Birk
My Lords, I am sure that we are all very grateful to the noble Lord, Lord Buxton, for raising this matter, although it is unfortunate that it had to come after such a long debate. He has always asked questions and kept to the point on this subject. He has done his best to try to get some changes.
I shall skate lightly and briefly over some of the sombre history of the Broadcasting Act 1990. It is clear that the trouble was that the name of the game was market forces. When I was listening to my noble friend Lord Richard this afternoon moving the Motion on the coal industry, it was interesting to hear that once again the primary purpose was to fit in with market forces. That cannot always be done if one wants to have a society which is more healthy all round.
The Act was born out of an auction, which was a disgraceful way to give out licences to those who were going to be responsible for our viewing and listening for years to come. It is impossible to deal with this matter without taking in the picture of the Act, its genesis and the way in which it was worked out because we are feeling the effects of that all the time. That was the first disaster as millions of pounds headed for the Treasury from the auction, which was money which should have been used for creating high-quality programmes for the viewer who really was dropped from the picture.
The ITC did what it could within its remit, but its hands were tied, as the noble Lord has pointed out in a different context. Then came the battle over the moratorium. Again, in aid of market forces, the Government resisted any moratorium both in another place and when the Bill first came to your Lordships' House. The pressure grew not only from the Opposition parties but from all round the House. The Government gave way very slightly.
As the noble Lord said, what we wanted was at least three years—a year from when the licences were awarded and then two years during screening in order to bring some stability into the turmoil that was bound to arise with a change of system, particularly when one changes the whole broadcasting system in that way. But no, the Government wanted exposure to the rigours of market forces as soon as possible.
So from 1st January 1994, there will be a takeover free-for-all. But as the noble Lord, Lord Buxton, has pointed out, that means not just domestic companies, but European companies as well. They will be able to take over our companies. It is true that while we may be able to do the same, since so many European companies are larger and wealthier than our own, it is going to be rather a one-way traffic. The potential threat to British-made programmes is very great indeed. It is something which we have to watch and to try to protect. Under the old rules, 84 per cent. of programmes had to be made in Britain and only 16 per cent. imported. But now up to 35 per cent. of programmes can be imported. Despite winning some oscars, unfortunately our film industry is still in bad financial health. But we have always managed to sustain British screen culture through television.
974 With that vulnerability the last thing we need is to have our main engine of British culture overwhelmed by foreign predators. When there is enough uncertainty in the air around the future of the BBC, that adds to the agony of what we are expecting. Quality will fall even further. I cannot be the only person who has noticed that there has been a decline in the quality of many of the programmes since we had the new regime. The companies do not have the resources that they need to make good programmes. We shall not see the like again of those magnificent drama programmes, which were particularly liked. That is the trouble.
The strength of ITV has been its regional make-up. If that again is left to market forces, the whole situation can be turned upside down. Regionalism could be lost and concentration will be mainly in London and the South. We can see it going that way. When this Bill was introduced and going through Parliament, Mrs. Thatcher was the Prime Minister. She stressed the importance of competition. But what kind of competition is it when the whole effect of what will happen with the companies, once they are allowed to take over is, as the noble Lord, Lord Buxton, has suggested, that the large companies may in some circumstances take over other large companies? That is a consolidation and not competition. It is also going further away from regionalism, because there will not be, for example, local news. We shall have a lot of local unemployment. That is one of the things which is already happening with the merger of Tyne Tees Television and Yorkshire Television.
What then should the Government do? I agree entirely with the noble Lord, Lord Buxton, that first—and fast—they should extend the moratorium, preferably until 1996 when the BBC charter comes up for renewal. I wholly agree with the noble Lord on that point. The Minister will doubtless say once again that that needs primary legislation. Of course it does: but all that is needed is a very short Bill which could go through quickly. There would be very little opposition to such a Bill if the Government were to introduce one.
Extending the moratorium would also allow time for the European factor to be examined. The Commission has recently produced a Green Paper, Pluralism and Media Concentration in the Internal Market. Its purpose, as it says, is to initiate wide consultation throughout member states and interested media bodies on the possible need for action to restrict media concentration at a Community level, and on the form any such action should take. Whether that proves to be successful, it must be given a try. In any case, it is underway. We need to ascertain whether any form of harmonisation might help.
By extending the moratorium until the renewal of the BBC charter, it would then be possible to work out a coherent and stable policy for broadcasting rather than doing it in an ad hoc manner starting with ITV on the one hand and then the BBC, each being dealt with in isolation. I believe that what we need in this country is a broadcasting policy.
Unless the Government will accept that broadcasting (whether ITV or BBC) is not just another product 975 to be judged solely in financial terms but is a part of our lives which informs, educates and entertains, we are lost. Our television is envied all over the world. That does not mean that every programme that we make is good; it is not, and we accept that. However, when one compares our television with so many of the programmes that are broadcast in the United States and throughout Europe, one realises that we ought to want to preserve and improve what we already have, otherwise our children and grandchildren will grow up being used only to mediocre and poor television and radio. And that would be terrible.
It is not too late for the Government to take the first step and to extend the moratorium. It would not mean them going back on their words. Nobody is going to criticise them for it. The noble Lord, Lord Buxton, and I sit on different sides of this House and I bet that we voted in different Lobbies on the last debate; but we are absolutely at one on this matter.
§ Lord Harmar-Nicholls
My Lords, before the noble Baroness sits down, I should like to ask her this. She knows that if the usual channels agree, things can be done quickly and effectively. Does she think that her influence on that side of the House would enable the Opposition to co-operate with the passage of a one-clause Private Bill with the pure purpose of extending the moratorium? I shall ask the same question of my noble friend Lord Astor in my speech.
§ Baroness Birk
My Lords, my noble friend Lord Donoughue, who is to reply to the debate from this side, will deal with that point in detail. However, perhaps I may say briefly that I should not have to persuade any of my noble friends to do that because we are all agreed on it. We tried to achieve that when the Bill was passing through the House.
§ 8.34 p.m.
§ Viscount Whitelaw
My Lords, I am delighted to support my noble friend Lord Buxton in raising this Unstarred Question. No one knows more about the workings of independent television than he does. For a good number of years he ran a highly successful regional television company, Anglia, which was closely associated with a particular area of the country which is very proud of itself. For some time he was also the chairman of ITN. He can therefore speak from close personal knowledge, and he has done so tonight. He made a very good case for taking action on the difficult problem that now confronts us.
From 1964 onwards I was connected with the political side of broadcasting, first as Opposition Chief Whip, and culminating with four years as Home Secretary, so I think that I can see a broadcasting problem when one comes before me. I see one tonight which is why I am so pleased to be speaking to this Unstarred Question. During the time that I was responsible for these matters as Home Secretary (and, of course, for long before that) I was constantly reminded of the local, regional nature of our independent television companies and of their viewers' loyalty to them. Indeed, that was recognised by the IBA of the day, which on some occasions, decided to 976 take away franchises because those holding them were not giving proper consideration to regional matters. If I remember correctly, one company lost its franchise because its offices were in London, not Wales. At the same time, franchises were awarded to local people who wanted to put the local case. So the idea of local and regional loyalty runs deep within our independent sector—and so it should. Indeed, if that were not the case, broadcasting would lose something that it has had right from the very start.
I have been a great supporter of duopoly in broadcasting right from the start and I am not ashamed of it. I have been told that that is a naughty thing to be, and when I was a member of the Government I was constantly told that it was not wise. But as I am not in the Government now I can say that it is wise. In fact, it was an extremely sensible way of proceeding. The BBC had one role, with the independent companies having a regional and somewhat different role, just as they have today.
Suddenly against that background and as a result of the 1990 Broadcasting Act (of which I was not exactly a warm admirer, as the noble Baroness, Lady Birk, knows very well), all British ITV companies will be vulnerable to take-overs by foreign interests. I do not think that our viewers have the slightest conception that that could happen. I think that they would be very upset if they suddenly found that that risk had materialised and that their local companies were about to be taken over in that way. What would the Scottish viewers say? After all, during the passage of the 1990 Broadcasting Act, they spent a lot of time trying to get two companies for Scotland, not one. And they succeeded. I shall not enter now into a discussion of whether or not that was right, but they pressed for it and they succeeded. They would not particularly like it if their companies were owned by Englishmen. But they could now discover that those companies could be owned by somebody from outside Britain altogether and they would then cause considerable trouble. We might as well accept that. The viewers in Northern Ireland have every reason to be proud of the performance of Ulster Television in the difficult situation there of which I have considerable experience. Ulster Television has done very well, but as it has not strengthened its financial position because of the situation in which it is placed in Northern Ireland, it could quickly become vulnerable. It could be very damaging if it ended up in certain hands.
There is no doubt that if such things happened there would be great indignation from the viewers and great pressure for action of some sort. If that is the case (as I believe that it is) surely it is right for the Government to take action before it is too late. It would be a very great pity if the Government were later to come along and say, "We are frightfully sorry but we have found this terrible situation", when everybody knows that it could happen at any time after the end of this year. When the 1990 Act was before Parliament, the ITC and, as the noble Baroness said, many other people in this House and elsewhere, saw the dangers and pressed for the moratorium to be 977 extended. Indeed, a moratorium was not even specified in the Bill at the start. With great reluctance, it was decided to give a one-year moratorium.
It is clear that with all that is going on in broadcasting today, one year is not sufficient. If one looks at the broadcasting scene as a whole, one must take account of the fact that 1996 is an important year. It is the year in which the BBC will have its new charter. I cannot understand why it is not possible to continue the moratorium until 1996. That is the obvious time. It will give existing companies more time to become stronger and to see what is happening in the field of broadcasting not just in this country but all over the world, and to see the position of the BBC. All that should be done. One year is not enough.
If we are to have more than one year so as to avoid what is an unacceptable risk, primary legislation is, alas, now important. I have to say to my noble friend on the Front Bench, who has done a great deal and has taken a good deal of trouble over this issue, that it is no good the Government turning round to Parliament and saying, "No, we cannot do this. We do not have time for it", because they were asked to do it during the passage of the Bill and they refused to do so. So they are not in a terribly strong position. I know what it is like to be in a bad position in government, and so I understand that they are in a bad position. When I am not in government I am not as sorry as when I was in it, but there it is.
Surely it makes sense to act now before it is too late. What can be done? The Government could put forward a Bill. I should have thought that it could be a one-clause Bill. I believe that it would go through if it were supported by all parties in both Houses. However, we in this House cannot say whether that would be the case in another place. I hope that it would be so because, as has been seen, many people support the idea. We cannot say that. We can say—I am grateful for what the noble Baroness said, and I believe others will say the same—that we in this House would support a Bill.
If the Government say they cannot put forward a Bill, there is an alternative which may be the right course to take. It is possible for a Member of this House to introduce a Bill. If one of your Lordships were prepared to do that and had the support of all parties, such a Bill could be passed through the House. How it would get on in another place remains to be seen. If the Government make it clear that they cannot introduce a Bill and that they do not have time in another place, well, that is their affair, but we could do so. It may be the best answer, because I doubt whether the Government would wish to change the moratorium now. It is a pity, but I believe that that would be their position. If it is, and that is what my noble friend will have to tell us, we should consider the course I have suggested.
If we do not do so, it will be felt that many people in Parliament have not realised what viewers and independent television is all about and what the viewers have been watching. They will be amazed that we have all been such sillies as to sit here for all this 978 time and not do anything about the problem. If we cannot get the Government to act, we should consider someone in this House doing so, and go on from there.
§ 8.43 p.m.
§ Lord Sharp of Grimsdyke
My Lords, first, I wish to express my sincere apologies to your Lordships and to the Minister, because I have to leave shortly after my speech to fulfil an outstanding engagement. I am most apologetic about that. Secondly, I have to declare an interest in so far as I am a non-executive director of Carlton Communications which is the parent body of Carlton TV. In consequence of that interest I shall confine my comments to issues of public policy with particular reference to the Community Green Paper entitled Pluralism and Media Concentration in the Internal Market.
As my noble friend Lord Buxton in his admirable speech has pointed out, from next January the ITC's broad power of veto expires, and thereafter it can only prohibit ownership changes which are explicitly banned by the ownership rules set down in the Broadcasting Act 1990. From that date, and subject to those rules, any quoted ITV company could pass into the ownership of a European company. That unrestricted access to our media market is, in part, a consequence of the single market and development of that market must be welcomed, but the single market can operate only if there is full reciprocity of opportunity under equal conditions or restrictions, and it is that aspect of our current media policy upon which I wish to dwell.
The Commission in its recent Green Paper recognises the concern of member states to protect diversity of information, and that they have introduced at national level various restrictions on multiple ownership. The objectives of member states, including Her Majesty's Government, are wholly admirable. It has been stated correctly that if our democratic society is to function, nothing can be more important than ensuring that there is a free flow of information from as many divergent sources as possible. Pluralism is therefore a legitimate objective.
The Commission however recognised that to determine how far concentration may create problems for pluralism, it would be necessary to define what is meant by diversity in the choice of information offered to the public at a particular place. Diversity can be assessed in many ways: according to editorial content; according to the number of channels and titles; or according to the number of media controllers or owners. Those three methods vary in importance. In contrast to the policy enshrined in the Broadcasting Act 1990, and particularly in reference to the UK restrictions on ownership of more than one large C3 licence, the Commission emphasises that effects of a media merger on pluralism should be assessed by reference to the environment in which it occurs, and, consequently, to assess choice in any given area, account must be taken of the availability and consumption of all media; that is, not just of each type but of all types.
In France and Germany anti-concentration level takes into account media holdings in other member 979 states when calculating concentration thresholds. In France, the Freedom of Communication Act strictly limits the capital structure of a broadcaster to spread decision-making power over a television channel among several companies. Other Community countries impose different restrictions.
That leads the Commission to the view that harmonisation of restrictions on media ownership is necessary. It states that the principle of harmonisation would be that member states could not grant broadcasting licences or concessions if the harmonised conditions were not met. In exchange, member states could not invoke other conditions relating to pluralism in order to reject an applicant. While such national anti-concentration legislation is not in itself incompatible with EC law, the Commission believes that in the interests of the single market, and to avoid restricting necessary structural alignments that may be necessary, the most effective way of eliminating disparities between national restrictions is at EC level. That applies particularly to the TV sector where operators are being forced to expand and become active in other countries to create synergies, a problem which has given rise to this debate.
It is clear that the Commission believes that media ownership control and mergers are matters to be resolved by specialised bodies as proposed by the European Parliament or certainly at Community rather than national level; in other words, the subsidiarity principle would not apply to this sector. I should be most interested to learn of the Minister's reaction to that and, in particular, what is Her Majesty's Government's policy in respect of the specific questions posed by the Commission in Chapter III of the Green Paper.
I referred previously to the lapsing of the ITC veto on 1st January next and the current restrictions on acquisition of more than one "large" C3 TV licence. In the light of the Commission study that restriction on the number of TV licences is a weak method of defining concentration of media control as distinct from local audience or consumption of all types of different media, will the Minister take the opportunity to review such restrictions before January 1994? I am sure that the Government would not wish their policy on restrictions on the number of C3 licences held by one operator to have the effect of frustrating legitimate structural alignment and rationalisation of the TV network to achieve greater financial stability and operational efficiency, which will be for the ultimate benefit of the viewer.
However, if it were deemed necessary as proposed by my noble friend Lord Buxton, to continue the ITC's broad power of veto for a further period beyond 1st January 1994, the lifting and modification of current restrictions on C3 licences might be far more acceptable to the industry than the prospect of the ending of the moratorium on 1st January 1994 and no change in current policy on licence restrictions. This latter situation would be the worst of all worlds. I urge the Minister, therefore, to reflect carefully on the dangers of that course as pointed out by my noble friend Lord Buxton and the noble Baroness, Lady 980 Birk, and I hope that he will take a more positive way forward, before 1st January 1994, as urged by my noble friend Lord Whitelaw.
§ 8.51 p.m.
§ Lord Hollick
My Lords, I too wish to thank the noble Lord, Lord Buxton, for giving the House the opportunity to debate the moratorium on take-overs of ITV companies, which expires at the end of this year. The noble Lord, Lord Buxton, eloquently argued the case for an extension of the moratorium. In adding my voice to his call for an extension I must declare an interest as chairman of Meridian Broadcasting, which is the ITV contractor for the south and south-east of England.
The case for the moratorium was clearly expounded by the noble Earl, Lord Ferrers, during the Committee stage of the Broadcasting Bill. He said that the moratorium period was designed to give a period of stability at the beginning of the new licence period but that after that time the licensees did not need to be unduly cosseted. Your Lordships will recall—indeed, we have been reminded today—that the debate at that time focused on the period of the moratorium with noble Lords on all sides of the House arguing for a period of between two and three years from the start of broadcasting. Indeed, the Independent Television Commission also argued in favour of a longer period. Despite widespread agreement on the need to allow reasonable time for the industry to settle down, the Government's view prevailed and we are now nine months away from the end of a moratorium, which could bring a free-for-all rush by non-UK European interests to acquire UK regional broadcasting companies.
Is it likely that this short period of stability will give sufficient time to enable the industry to settle down, to face up to the rigours of an open market and to cope with the inevitable destabilisation that will follow from the threat or indeed reality of corporate takeovers? I suggest that it will not. The industry remains in a state of flux and considerable instability as a result of unforeseen flaws in the workings of the Broadcasting Act, the continuing recession and the failure to date to settle important networking arrangements.
The Broadcasting Act ushered in a bidding system which has given rise to the most absurd results. Companies with essentially the same size of television business, as measured by share of advertising revenue, are paying on the one hand as little as £2,000 per year and on the other more than £40 million. The disparity of bids, with some franchises being returned unopposed and some highly contested, has led to inevitable tensions within the federal network of the ITV which need time to be resolved. The network centre has only just come into being and assumes responsibility for programming commissioning in October this year. The arrangements for a network programming commission, having been set out in the first instance by the ITC, were overturned by the Office of Fair Trading and are now being examined by the Monopolies and Mergers Commission, which is due to deliver its verdict shortly. These network 981 arrangements lie at the heart of ITV's continuing success in an increasingly competitive environment. It may well take until the end of 1994 before the new networking arrangements have settled down and are working satisfactorily.
All the franchise applications were submitted in May 1991. At that time it was widely believed by all of us that the economy, which was already deep in recession, would recover by 1992 and certainly by now. We all took heart from the optimistic Treasury forecasts. I recall that when the ITC developed its own economic model, against which it judged the franchise applications, it used a growth rate of 4 per cent. That is nearly twice the level of the most optimistic current forecast for 1993 and 1994. We are all too well aware that the recession continues to be with us: even the most optimistic forecasts suggest only anaemic growth during the next few years. The unforeseen length and depth of the recession is bearing down heavily on independent television companies as they organise to compete with an independent Channel 4, a merged BSB and Sky with six channels—vociferously supported and promoted by 36 per cent. of the national press and quite disgracefully allowed to remain under the same ownership —and a BBC with two national networks that has not been subject to quite the same economic buffeting as ITV. In other words, the going is a lot tougher for ITV companies in 1993 than any of us, either here at Westminster or in the industry, could reasonably have anticipated in 1991.
As mentioned by the noble Viscount, Lord Whitelaw, one of the unique features of ITV is its regional strength. Companies large and small deliver a range of regional programme and in particular regular local news bulletins. Many of the new licence holders, Meridian included, are introducing far more extensive local news coverage. We have done so because we know that it is popular with local viewers and also with local advertisers who wish to access small regional markets. This tradition of regional broadcasting is one that should be fostered and nourished: it will benefit from a further period of stability free from predatorial manoeuvring.
So the hope and indeed the expectation was that at the end of the moratorium the industry would be in fine fettle, its new networking arrangements tried and tested and the unique regional character of ITV therefore strongly entrenched. The dispassionate observer would have to conclude that while we still have every expectation of achieving our goal it will inevitably take more time because of the adverse economic and other factors that I have mentioned. If the moratorium is not renewed, non-UK European companies will be free to acquire ITV companies. I have no objection to companies in Europe being able to acquire UK companies. But I object strongly to allowing foreign companies to buy UK television companies before the UK companies have fully established themselves after a period, which continues, of economic difficulty and considerable structural change. Furthermore, I object strongly to foreign 982 companies being able to acquire UK companies when we are prevented by their laws from having the same access to their markets.
In reply to a recent question on EC ownership rules the Minister drew comfort from the European Commission's intention to proceed towards harmonisation. The recent publication of a Green Paper in Brussels is evidence of this intention but I suggest that any relief under such proposals is several years away. We should actively support the principle of harmonisation and fair competition but we should not allow access to our broadcasting markets until the same opportunity is available throughout the Community.
An extension of the moratorium would command widespread support from ITV companies. Furthermore, the chairman of the ITC, Sir George Russell, in a recent speech, signalled the ITC's strong support when he said:Originally, I pressed Government for a two or three-year moratorium following the start of the new licence period. In the end they agreed to only one year plus a run-up period from award to the start of the licences. There has been, and still is, so much upheaval in UK broadcasting, including now the long run-up to the BBC charter renewal. I do think an extension of the moratorium to bring some stability would be highly desirable, mainly from the Government's point of view as it will enable them to assess the whole shape of the UK broadcasting at the conclusion of the BBC charter debate.The extension of the moratorium would, I understand, require primary legislation and, of course, as we are well aware, time for such legislation is in short supply. A short one-line Bill extending the moratorium would, I am confident, command the support of the Labour Party in both Houses and would have a very high chance of achieving a rapid passage through Parliament.
When we consider the desirable period during which the moratorium should be extended, I think it is necessary to look at the number of other structural problems within the ITV system. I should like to refer to three in particular. Under the current arrangements, small regional companies with a lower advertising earning power pay a reduced contribution to the network. In 1993 and 1994 this benefit to the smaller companies is of the order of some £27 million in each year. The arrangements presently extend to the end of 1994. In the absence of the arrangements, the financial position of many small companies would be severely undermined and their very future could be imperilled. Any review of the structure of ITV must preserve the regional strength and must therefore address the arrangements on a satisfactory long-term basis.
Under the current arrangements, companies can, at their option, request a review of their cash bids in 1999, obviously with a view to getting some abatement. This means that for the next six years the network will be potentially destabilised by the wide variation in bid levels. If the bid review date can be brought forward, those small companies which will suffer from the phasing out of the beneficial networking arrangements I have described would have the opportunity to seek at least a compensating reduction in their cash bid. An earlier review would also allow more funds generally to be made available 983 for programming and in particular would enable companies like Meridian to realise their plans to extend their regional and sub-regional coverage and in practice increase their licence obligations.
At the same time as these changes are put in place it would be appropriate to look at the current ownership rules within the UK. As already mentioned, there are two categories of ITV companies—the nine so-called large companies and the six so-called small companies. The categorisation of companies and the rules governing the take-overs are unique to the independent television industry. I can see no other industry which has such quaint rules. The effect is to prevent the natural coming together of companies into larger, more efficient units and so eliminate much of the duplication of administration and selling costs among the 15 companies.
With the inevitable growth of satellite stations and other terrestrial stations, ITV's share of the market will fall. Even the largest ITV company will, by the end of this decade, probably only account for around 7 per cent. of the total UK market. These companies would be sub-scale on a national basis and minnows on an international scale. British television is a thriving and successful industry with an international reputation and growing international ambitions. It is important that while ensuring that the unique regional obligations are fully protected and extended, companies should be allowed to come together into larger groups to compete internationally. The Government may be tempted to consider not extending the moratorium but changing instead the nine and six ownership rules so as to allow UK companies to compete with European companies to acquire other UK companies. I do not believe that such proposals would command widespread support within the industry. The need for stability, which I regard as over-riding, and the need to resolve the structural imperfections in the network argue for an extension in the moratorium and the retention of the nine and six rules.
As a first step in the reform of the legislation governing independent television companies I would like to see an extension of the moratorium until 31st December 1996. That would give ITV companies a further period of stability during which the structural problems that I have outlined can be addressed. I suggest that the beneficial network pricing arrangements for smaller regional companies should be extended to the same date. Further, companies would be given the option to request a review of their licences and, in particular, the cash bid level with effect from 1st January 1997; that is, two years earlier than is the case under current legislation. On the same date, the current nine and six ownership rules would fall away. The arrangements would go a long way to dealing with serious structural anomalies which have arisen and might also coincide with arrangements in the EC to harmonise media ownership arrangements throughout the Community.
§ 9.5 p.m.
§ Lord Elton
My Lords, I thank my noble friend for giving us this valuable opportunity to discuss these matters. I begin with an apology because I am neither as distinguished nor as expert as other noble Lords contributing to the debate. However, it is important that the Government should realise that it is not only the experts who hold the views which the experts are expressing. If I have an interest to declare, it is merely as a viewer both of television and the national scene. Looking at it, I see something which the public sees as well but it seems that the public is not aware of the issues which we are discussing this evening. That would account for the fact that the Government are perhaps not aware of the position which might develop when the public becomes aware of it. The public believes that people like us are looking after those issues and that things will not go wrong as a result. That is why I am grateful to my noble friend for giving us this opportunity this evening.
When I look at the national scene I see an evidently powerful medium in a healthy duopoly as favoured by my noble friend Lord Whitelaw and prospered by him. I see that it is of a higher quality than that in the rest of Europe. Nevertheless, there is a good deal of dissatisfaction as regards some aspects of it which the regulatory system is not able to bring into line with what many of us feel this country is owed in respect of violence and such matters.
If the television medium were to be owned in large part by foreign companies, the confidence which the regulatory system has given us so far is such that we should not regard that as a great threat because television is what gives us our view both of and about events in the world and in this country. My noble friend Lord Buxton has ably shown your Lordships many ways in which that could act against the public interest, not just against the interests of a political party in this country but in relation to the whole. That is a threat which we must take steps to avoid.
We also have to avoid the manifest absurdity, which would be a political as well as a commercial absurdity, of allowing a one-way traffic in ownership of television companies whereby the European companies could buy into British companies but British companies could not buy European. If that is really the situation which my noble friend described, and if it is true, it would be regarded as outrageous.
Having served as a Minister of State under my noble friend Lord Whitelaw, I know it is dangerous to speak for more than a few minutes in his presence on a subject about which he knows vastly more than I do, but my principal reason for standing up in your Lordships' House is to make the observation, with temerity, that this is a very narrow Motion. To do it justice one should see the context in which it takes place. The context is not Europe; it is the world; it is both global and orbital.
I was recently in Singapore visiting an exhibition organised by a company of which I am deputy chairman called Communicasia in conjunction with Broadcast Asia and the conference of the Communications Ministers of the Pacific rim 985 countries. I discovered there exhibitors from countries all in the same satellite footprint comprising something like 20 per cent. of the world's population.
We cannot look at Europe alone. We are part of a huge pattern, and if we look over our heads there is another satellite there, so foreign ownership of the medium is with us already.
The final context to which I ask your Lordships to pay attention when looking at this debate is the question of the aggregate ownership in multi-media terms; that is to say, where there is foreign ownership which is not merely of a television station or a number of television stations but also of a number of newspapers. The medium of television is powerful and so is the medium of print. We have recently seen the influence on the printed medium of foreign ownership in the standards of our national press. It would be exposing us to very great danger if multi-media ownership as a result of the infiltration or take-over of British independent television by foreign countries was allowed to spread. That would be a very great danger to this country.
I therefore add my inexpert and I hope sufficiently brief voice to that of your expert and distinguished Lordships in asking Her Majesty's Government to grant the moratorium for at least as long as my noble friends have asked, and for possibly longer, and in that time to look at questions wider than those of this Motion involving the charter of the BBC, aggregate multi-media ownership and the control and influence of foreign satellite broadcasts, as well as their monopoly.
§ 9.11 p.m.
§ Lord Harmar-Nicholls
My Lords, there are nine months to go before ITV companies can be taken over by foreign companies. They can be taken over legally under circumstances that have been agreed by the present Government. It is quite clear now that, while the Government at the time of bringing in the Bill in 1990 hoped that they were covering all of the risks that would be involved as a consequence, inadvertently they have not.
The dangers pointed out by my noble friend Lord Buxton are very real. The British market is a very attractive one, and people from other countries are desirous of coming in on it if they can. I do not say that lightly. For 28 years I was a director of Radio Luxembourg, London, and for eight of those years I was chairman. On the board we had French, German and Luxembourg nationalities. They were very conscious of the attraction of the British market and very eager to get in on it if they could. There is nothing wrong with that. Indeed they made several bids and efforts to try to come in on some of the existing companies. I merely mention that as definite evidence that my noble friend is not tilting at windmills when he talks of the possible eagerness of foreign countries to take over the control.
The first problem is the danger, as has been pointed out. I think it should be clear by now that the danger is real and that it exists. Secondly, if we now recognise 986 the danger, we have given ourselves little time to try to do something about it. That is the aspect about which I shall talk.
Our parliamentary system is quite excellent. If we have taken the trouble to know all the ingredients and how it is made up, it is quite clear that, if the Government get into trouble, there is some mechanism somewhere within our procedures which will help them get out of it. That is what I want to concentrate upon. I have no doubt about the dangers of putting ourselves in the position where foreigners could take over control of our regional companies. There are, as my noble friend said, probably dangerous and negative reasons involved; but there are also positive reasons that I believe would affect the nation.
I cannot imagine foreign-controlled companies being as eager as our home-grown local ones to do what is done at the moment. Central Television broadcasts job finder and employment information as a service to the unemployed. It uses its broadcasts to help, for example, the fire service to do the many jobs that it has to do. It also has a phone-in programme designed to help the blind. Those are positive ways in which British people can tackle British problems. I cannot imagine that foreign owners, whose main interest would be to have a share of whatever profits may be on offer—there is nothing wrong with that; I am all in favour of it—would do that. But the considerations that I have just outlined that are in the minds of our own people would not be there. So for the negative reasons of preventing dangers that could flow, as described by my noble friend, and for the positive reasons of retaining the local contributions such as those I have described, it is an important matter.
I believe that the case has already been made. I am also concerned about other EC countries not being prepared to give the same freedom for Britain to own some of their services. It is a very real problem. The noble Lord, Lord Thomson, had something to do with Europe and I served as a Member of the European Parliament for five years. I saw very clearly what happens when you try to take something away from Continental countries; for example, the complete control of their insurance and also the complete control of their air space and air traffic controllers. That was in the national interest, but they were not prepared to give up their personal ownership. I sat for five years on a committee trying to win the battle about widening the way in which we deal with such matters. We did not get very far.
We shall let it be known that this freedom of the air that we are giving as the Act stands at present will not be too easily available until such time as other countries become more generous in the way that they share theirs. We should let it be known by the methods at which I have already hinted, and which I shall repeat in a moment, that we are going to extend the moratorium with the main purpose of trying to persuade them that they have to give the same freedom to Britain that Britain will be giving to them. They would then know that that was our legal position as distinct from that of the minute. But if they know 987 on 1st January next year that we legally have to give them the freedom without having anything in return, we shall be putting ourselves into unnecessary difficulties.
I agree with the noble Lord, Lord Buxton. Anyone who has had anything to do with such business affairs knows that you do not shout about what you might be doing; you keep quiet until the opportunity is there to take advantage of it. It will not be long after 1st January before we see other countries taking what advantage they can. I never blame people who get away with anything that is legal; I always blame those who let them get away with it. Now that we are alerted to the dangers, both negative and positive, that can flow from the situation as it now stands, I believe that we have a duty to do something about it. We cannot have a stronger authority than my noble friend Lord Whitelaw. He has held almost every office that matters. During the short period that I was in government, he had a reputation for using Cabinet Committees to suit his purpose in the way that only astute people can. If he believes that the Government can, if they wish, bring in the necessary primary legislation to extend the moratorium, then they can do so.
If, for reasons which my noble friend anticipated, the Government do not want to do that, any one of us could table a Private Member's Bill in order to rectify the situation. The noble Baroness—who is one of my pin-ups—has already made it clear that the Labour Benches would support such a Bill. The noble Lord, Lord Hollick, repeated that. I do not know how noble Lords lower down on the Liberal Democrat Benches would react. I never quite know what they will do. Nevertheless, tonight the main members of what are normally called the usual channels seem to have committed themselves to supporting a Private Member's Bill if one is introduced.
If, as intimated by my noble friend Lord Whitelaw, the Government do not want to bring forward a Bill themselves, but someone else who has been alerted to the dangers brings forward a Private Member's Bill, will the Government undertake not to use the Whips against such a Bill? The Government would not be retreating from much. It would be the House which made the decision. If the House can express itself freely on such a Bill, with guaranteed support from the Opposition Benches, and if the Government Benches do not oppose it, then we have a chance of doing something practical.
I remind my noble friend that as long as a man lives he can change his will. There is every good reason in the world why on this occasion the will which the Government expressed in 1990 should be altered. My noble friends Lord Whitelaw and Lord Buxton spoke with common sense. The ideal time to act is when the BBC's charter is renewed. That would be the proper time to look at the matter as a whole so that we can see how ITV and the BBC will serve the country while at the same time protecting them from predators.
I hope that we shall receive a helpful reply to the questions which I have put. There should be no Whips on a Private Member's Bill. However, if my noble 988 friend can persuade his right honourable friend that the Government should bring forward a Bill themselves that would be better still. It is in the hope that that sensible idea will prevail that I make this appeal to my noble friend.
§ 9.22 p.m.
The Earl of Stockton
My Lords, why do I get the impression that we have all been here before? I look around the Chamber and I see noble Lords who spent many happy hours in your Lordships' House debating the many clauses of the Broadcasting Bill. I am sure that my noble friend Lord Astor is happy to have picked up the baton of broadcasting from my noble friend Lord Ferrers. However, I had hoped that with a new runner the Government broadcasting relay team might have turned a corner and taken a new direction, but my noble friend Lady Denton's reply to a Question from the noble Lord, Lord Thomson of Monifieth, in the House yesterday rather dashed those hopes.
Other noble Lords have addressed a wide range of issues around the threat to British broadcasting from operators within our Community partners. Happily, since we debated these issues in the Broadcasting Bill we now have a Ministry of Culture (although not called that), and I must congratulate my right honourable friend the Member for the Two Cities in another place on the rapid and comprehensive grasp he has shown of his new responsibilities. I had hoped that my noble friend the Minister of State for the Home Department might have been in his place, because I would not have been able to resist quoting back to him his own words in reply to the Second Reading of the Broadcasting Bill, when he rejected my call for a Minister of Culture. But then your Lordships will recall the words of the noble Lord, Lord Wilson of Rievaulx that a week is a long time in politics.
I should like to thank my noble friend Lord Buxton for this opportunity to discuss the workings of the Broadcasting Act in respect of ownership trends of independent television companies. Noble Lords have rightly pointed out the threat to the pattern of British commercial broadcasting as laid down by Parliament from broadcasting organisations stemming from countries that do not share either our vision or our standards. I hope that my noble friend will excuse me if I say to him and his Government, "we told you so".
Those of your Lordships who were present will recall that I tried to formulate an amendment to the Broadcasting Bill to include non-domestic satellite broadcasting systems within the controls of the Act. That was seen by some noble Lords, including the noble Lord, Lord Wyatt of Weeford, and my noble friend Lord Orr-Ewing as a personal attack on Mr. Rupert Murdoch and his then company Sky. I was told that Mr. Murdoch was a great entrepreneur, an embodiment of enterprise, and a friend to this country; and the then Prime Minister, my noble friend Lady Thatcher, especially supported him and his enterprise. The ink was hardly dry on the Act when the uneven playing fields on which satellite broadcasters were playing produced the very result that we had forecast and BSB was gobbled up by Sky. While I am 989 sure that my noble friend Lord Ferrers was unaware of the dealing and double-dealing that were going on behind the scenes at News International, Marco Polo House, and in the City, I remain unconvinced that all other Members of the Government were equally unaware. My noble friend Lady Thatcher is open in her admiration of Mr. Murdoch, and that is her prerogative, for she is independent of News International although enjoying the support given her by the organs of that company. The support of the noble Lord, Lord Wyatt, is influenced, in my view, by his position as a columnist for News International.
What of the man himself? Entrepreneur Mr. Murdoch certainly is, especially in take-over battles, but friend of this country I doubt. He despises many of the institutions of this country and he and his henchmen, especially Mr. Andrew Neil, appear to have the objective of their destruction. The treatment of the Royal Family by the Murdoch press is symptomatic of the attitude of the man and the company. His operations in Australia have been in the forefront of such exposees. But how highly does Mr. Murdoch hold his native country? Not very high for he was only too happy to toss aside his nationality and become an American citizen in order to qualify as a television operator in the United States.
If Mr. Murdoch can cast patriotism for Australia aside, why should we have any faith in his avowed feelings for this country? However, my real concern is to prevent Mr. Murdoch, an American based in Luxembourg with BSkyB, extending his dangerous preeminence in our media, about which I shall remind noble Lords. It extends to The Times (once owned by the family of my noble friend the Minister), the Sunday Times, the Sun, the News of the World, Today, BSkyB, the William Collins Group which includes mass-market paperback imprints, Twentieth Century Fox, film and television production and many television stations around the world.
Do we have any guarantee that Mr. Murdoch will not use his status as a Luxembourgeois business to buy into terrestrial independent television stations? I cannot believe that the Minister can offer any such guarantee. Personally I would trade a bit of Red Hot Dutch for such a guarantee. The pornographers are far less of a threat to this country than the chip-on-the-shoulder, nihilist, negative, destructive and disparaging attitudes of News International. I am therefore happy to join with noble Lords on both sides of the House in calling for an extension of the moratorium until at least at least 1996.
§ 9.28 p.m.
§ Lord Thomson of Monifieth
My Lords, the noble Earl, Lord Stockton, made a powerful speech in which he drew attention to one of the paradoxes of the debate. We are all properly concerned about the possibility of non-British ownership of our independent television stations. However, perhaps the Government's rather supine attitude to-date on those issues is not unconnected with the fact that they seem to be perfectly content to see 37 per cent. of the national press of this country in the hands of foreign ownership. As the noble Earl said, it is foreign 990 ownership that does not seem particularly sympathetic to the institutions of this country. He made an important point.
Like everyone else, I express gratitude to the noble Lord, Lord Buxton, for introducing this important subject tonight. He speaks with good experience on the subject as a distinguished chairman of both ITN and one of our major regional companies in what now seems to me rather like the golden age of independent television in this country. The noble Lord, Lord Buxton, accurately described our independent television as the best commercial television in the world. Britain was the only major country to create a public service broadcasting system of quality entirely commercially funded by advertising. In those days, with men like the noble Viscount, Lord Whitelaw, around, Conservative Governments had the wisdom to enjoy the best of both worlds: programming of high quality provided by profitable private enterprise. It was a system which was widely admired.
However, what we face tonight in the consequences of the Broadcasting Act 1990 is that that system was wantonly undermined for doctrinaire reasons under the Act. The new regime came into operation only a few months ago on 1st January and already the signs of a damaging instability are everywhere to be seen, aggravated—as the noble Lord, Lord Hollick, said —by a recession which has proved deeper and more prolonged than anyone anticipated.
The distortions created by the auction bidding process for franchises are extreme. For example, the wealthy Central region was won with a bid of £2,000, while the neighbouring Yorkshire and Tyne-Tees, between them, paid nearly £54 million. As a result, almost before the ink on the new licences was dry, Yorkshire and Tyne-Tees have had to join forces. I notice that the ITC has had to issue a solemn warning about Tyne-Tees continuing to meet its regional programme commitments in the new situation.
On the other side of the Pennines, there is Granada, once the jewel in the crown of the ITV system. The departure of so many of the leading programme-makers, led by David Plowright himself, who helped to win the renewal of the franchise for Granada, has caused the official Opposition in another place to make a major protest to the ITC. The ITC has given a reasoned rebuttal of those protests.
Whatever the rights and wrongs of the matter, time alone will tell whether the distinguished programme traditions of Granada will survive the new pressures created by the Broadcasting Act. It will take some time before we know for sure what is likely to happen. In London, the new breakfast contractor with a big bill to pay to the Treasury has faced a boardroom revolution within weeks of going on the air. In Wales, the financial pressures on HTV are causing widespread anxiety.
What ITV and its viewers desperately need—and it has come out with extraordinary unanimity from every quarter of your Lordships' House in this short debate—is some time in which to settle down and try to minimise the damage of this disastrous Act. But what is ITV getting from the Government? It is getting a further dose of instability, if no action is taken. As 991 has been said by all speakers, at the end of the year the moratorium on takeovers wrung from a grudging Government in the debate on the Broadcasting Bill comes to an end. There is then the possibility—indeed, I think the probability—of a spate of take-over situations, both between ITV contractors within the United Kingdom and from interests in other Community countries. It could not happen at a worse time for British broadcasting generally, with the BBC itself in the throes of internal change in the run-up to the renewal of the Charter.
Television contractors, in my judgment, cannot be totally exempt from take-over situations, either internally or, these days, within the European Community. But timing is everything, not primarily in the interests of the contractors but in the interests of the public, who seek continuity and quality in programming. At the moment, most TV managements are so preoccupied with economic uncertainty that they have little time left for the long-term planning of programmes. As the noble Lord, Lord Hollick, reminded us, the complicated arrangements for the new network system are not even yet in place, and will begin to operate only in the autumn of this year.
A strong case can be made—it was made by everybody who spoke in this debate—for extending the present moratorium until the decisions are taken about the future structure and finance of the BBC. Then the total shape of British broadcasting before the early years of the next century can be looked at and determined as a whole. That would also give time for the European Community aspects to be dealt with properly, in a way that resolves the problems raised by the noble Lord, Lord Buxton. It is undoubtedly unsatisfactory, as all noble Lords who took part in the debate agreed, that Britain should be the one country within the European Community that seems ready totally to expose its television system to takeover from outside our frontiers where there are serious difficulties about any sort of reciprocity taking place in the other countries of the Community.
Nothing that comes out of Brussels is ever simple. It is not a simple case of continental governments erecting barriers to foreign takeovers. I believe that is true of some countries—of Greece, Portugal and Belgium—but in France, for example, the restriction is a restriction on anyone, whether French, British or any other nationality, having more than a 25 per cent. shareholding in any channel. A level playing field harmonised on that basis would not suit, for example, Granada Television, which is a wholly-owned subsidiary of the great Granada group.
The European Commission has just produced (as was mentioned by a number of speakers) its massive Green Paper with the forbidding title Pluralism and Media Concentration in the Internal Market. I do not recommend it to noble Lords as easy bedtime reading unless they suffer greatly from insomnia. It seems to me to read as if the more opaque bits of the Broadcasting Act had been badly translated into German, and then equally badly re-translated back into English. It is nevertheless, as was pointed out by 992 a number of speakers, a very significant and important document which will generate a great deal of discussion, and it will probably take—as the noble Lord, Lord Hollick, said—some years for any kind of agreed view to emerge on how those problems should be dealt with. I rather agree with the view expressed by the noble Lord, Lord Buxton, that at the end of the day it will be decided that broadcasting is such a distinctively national and regional activity, that any attempt to harmonise the arrangements over the whole of the Community will simply not work. One hopes that a sensible way of operating will be determined. That will all take time. That is an additional powerful argument for extending the moratorium on takeovers until the British broadcasting interests can feel that they are fairly treated alongside their mainland competitors.
I should like to make one more point. The noble Lord, Lord Sharp of Grimsdyke, who has not been able to stay with us, raised the question of changing the internal arrangements in this country in respect of television ownership. In the Broadcasting Act, the question was set aside of allowing mergers between the companies within the big nine instead of merely allowing mergers in due course between a big company and a so-called small company.
I urge the Government to resist the noble Lord, Lord Sharp, on this matter and to resist the siren voices that are to be heard from a number of quarters in the ITV industry seeking an immediate change in the present statutory instrument. It is a tempting situation because primary legislation is not required; it merely needs a new statutory instrument. The noble Lord, Lord Hollick, was right, in what I thought was a particularly interesting and thoughtful speech, about a number of changes that are required to be considered within the Broadcasting Act. Changes in regard to internal takeovers, which may be inevitable in the long run and indeed may be in the industry's interests in the long run if they are properly safeguarded, should not be allowed to take place just now. Above all, we need a period of some stability so that the new arrangements can settle down and be carried through more effectively.
As a number of noble Lords pointed out, regional independent television companies are peculiar forms of business. They are not simply like a factory which produces baked beans or motor-cars. They have a distinctive regional identity. They have regional roots and have a regional role. Certainly in the past we always sought so far as possible to ensure a regional aspect to the ownership and management. It is very important that that aspect be preserved within the ITV system and positively protected.
So while change in our internal restrictions on ownership can be made by statutory instrument—I urge that that should be resisted—I appreciate that extending the moratorium requires primary legislation. I add my voice to those who have already spoken about the Government's approach to this matter. I have had my days in government in the long distant past and I understand the reluctance of the Government to start amending an Act of Parliament which has only fairly recently been passed, as well as 993 the argument that it is very difficult to find legislative time. But by the same argument, my experience is that where there is a will there is always a way in these matters. I am sure that the correct course, having found that the arrangements made in the Broadcasting Act will work very much against the British national interest, is for the Government to take the initiative in a very short Bill.
For my part, I very much hope that all the opposition parties—I can speak only for myself in this matter—will be ready to co-operate both in this House and in another place to ensure the speedy despatch of that one-clause Bill and resist the temptation to use it as an excuse to open up wider issues. Therefore, I hope that when the Minister comes to reply he will respond to what has been a remarkable degree of unanimity on a very major broadcasting problem.
§ 9.43 p.m.
§ Lord Donoughue
My Lords, it has been a long day and the prospect of any supper is fading. But this is an important issue. We thank the noble Lord, Lord Buxton of Alsa, for having raised it.
The subject has unexpected aspects in common with coal. Yet another great British service industry is threatened by the rampant forces of the free market when yet again a fair, free market does not in fact exist. Once again the Government have acted to structure that market—the television market—against the British industry.
We are dealing with the glaring deficiencies of the Broadcasting Act 1990 and the instabilities that it introduced, as pointed out by my noble friends Lord Hollick and Lady Birk. Its generally baleful effect has been to threaten the unique quality of British television. My noble friend Lady Birk spoke with great authority on that issue. She opposed the Bill tooth and nail and forecast many of the ill consequences that are already apparent. I constantly meet foreigners who cannot understand why this Government constantly tamper with British broadcasting. They see it as the best in the world. It works. Why should one tamper with it?
The 1990 Act may have seriously damaged one of Britain's highest quality service industries. I believe that the noble Lord, Lord Thomson, set out the sad story of damage and decline. The danger we are discussing has been well explored by an impressive list of distinguished and experienced speakers. In a nutshell, it is that British television companies, by world standards, are relatively small. Under the 1990 Act they can be bought by foreign companies in the European Community but cannot themselves buy, or merge with, the designated nine in the UK or effectively, in practice, with anyone in the EC. For instance, Central and Anglia cannot merge or buy in Europe, but both can be bought from Europe. That is not only because, as has been pointed out, most European countries have ceilings on foreign—in this case British—holdings, but also because there are serious threats from predators, such as Berlesconi and Bertesman, which are private companies, and from CLT which is effectively controlled by the Luxembourg Government.
994 British companies are therefore complaining about their vulnerability in a situation where there is no reciprocity. They are not trying to avoid market forces, but to establish fair market competition—the same degree of regulation and the same degree of competition. Ministers should not underestimate the danger now threatening British television. Gaston Thorn of Luxembourg CLT was quite open, speaking recently in London, when he said that CLT's priority was to take over a UK television company and have a UK Stock Exchange listing by 1996. The UK regional companies are the obvious victims, made vulnerable by the 1990 Act—the battery chickens of the noble Lord, Lord Buxton, or turkeys heading for Christmas.
We should note that European companies do not in general, as the noble Lord explained, have our commitment to regional broadcasting. Such a regional dimension as the noble Viscount, Lord Whitelaw, stressed, is a crucial part of the quality of British television. We risk that at our peril.
I might add that the Europeans are not simply being characteristically protectionist and difficult in maintaining degrees of control over their national television. I have a degree of sympathy with them in that regard. A serious point arises concerning cultural heritage. Both our television channels and theirs are perhaps the most potent and vivid means of communicating our culture and our heritage. The reason we quite rightly went to such lengths to have regional channels was to protect and to nourish our regional culture.
We also want to protect our national culture, even within—I would say especially within—a wider Europe. Our European neighbours feel that they must protect their heritage and they have a valid point. In my view we should not be in a great hurry to push them to abandon that part of their national and local heritage, nor should we abdicate our own national influences in this area, certainly not until we have discussed and agreed on a European-wide basis.
What are the possible solutions to the threat? Three have been referred to in the debate. Theoretically the Government could lift the moratorium and drop the distinctions between large and small companies to allow the British industry to regroup and merge and to resist foreign invasion. That has the attraction of a statutory instrument approach. But I share the view of others, especially as argued by my noble friend Lord Hollick and the noble Lord, Lord Thomson, that that would not be sensible or necessary. It risks even more instability and could lose our regional identities in the scramble.
The second option is to extend the moratorium, say, until 1996, as I believe was suggested by my noble friends Lady Birk and Lord Hollick, the noble Viscount, Lord Whitelaw, and the noble Lord, Lord Thomson. That has the attraction of taking us beyond the BBC charter decision. By then the new satellite picture will be much clearer, and I suspect a new government will be in place to handle the matter better after the next election.
The third option is to operate fairly throughout Europe and to extend the moratorium until and so 995 that it matches the protection given on the Continent until the rest of Europe has agreed to equal freedom of access—in other words, harmonisation. All good Europeans will believe in that. Only fools would offer media competitors free access to control of the crucial television industry when there is no reciprocity. Much of the United Kingdom manufacturing industry disappeared down that path.
Of those three possible solutions, the most widely favoured seems to be the extension of the moratorium to, say, three years—until 1996. There certainly seemed to be virtual unanimity in the debate for something like that. Both the experts and the interested viewers, such as the noble Lord, Lord Elton, were virtually unanimous. There is also near-unanimity in the television industry itself. My noble friend Lord Hollick, from his great knowledge of the industry, reported the picture there. What the industry wants, and what it wanted before the Act was passed, would be fair and sensible. It would be fair to British companies, now faced by unfair competition, and sensible because it would give the Government the time to produce a coherent policy for all broadcasting, including the BBC charter, and time to pursue the question of ownership rules on an EC-wide basis. Above all, it would provide the stability in the industry which is so clearly needed.
Extending the moratorium would apparently require primary legislation. I hope that the Minister will not be frightened off by that and will not allow his civil servants to try to frighten him off by that. A one-line Bill would, I believe, suffice; and it would have the support not only of virtually the whole industry but certainly of this side of the House. I say that in response to the earlier question of the noble Lord, Lord Harmar-Nicholls. To the noble Viscount, Lord Whitelaw, I can say that I am speaking for the Official Opposition not only of this House but of another place. The Opposition are here and now offering to assist the Government in passing the Bill easily and quickly. That, I suggest to him, is an offer that the Government should not refuse. Surely the Minister cannot brush aside something so generous.
I should add that if the Minister feels constrained by a wish not to appear to admit that the 1990 Act was not absolutely perfect, I can also offer another assurance from this side of the House. I personally promise not to mention during the passing of a one-line moratorium extension Bill the appalling defects of the lousy 1990 Act. One cannot be more generous or make a greater sacrifice in the public interest than that. Perhaps noble Lords on other Benches will offer the same to save the Government's face. Politics is, after all, often Chinese.
In conclusion, this proposal to extend the moratorium would receive widespread—certainly majority—support from the industry as it has had unanimous support from all sides in the debate. We on this Bench have offered full official support and co-operation for a quick one-line Bill. Given this constructive approach from so many quarters, I press the Minister in the strongest possible terms to reply in a similar positive and constructive tone both on the 996 central issue of the moratorium and on the interesting wider questions raised by my noble friend Lord Hollick; and especially on the views of Mr. Murdoch given by the noble Earl, Lord Stockton, every word of which I agree with 100 per cent.
Perhaps I may leave the Minister with a thought to go to bed with tonight. If he does nothing and the British Regional Television Company is taken over next January, then the Minister and his colleagues will be in deep, deep trouble—genuine, deep fertiliser. So in his interests as well as that of a great British industry, I trust that he feels able to respond positively.
§ 9.56 p.m.
My Lords, we are indeed most grateful to my noble friend Lord Buxton for initiating this debate. Again, this debate has demonstrated that there is a wealth of experience and expertise on the subject of broadcasting in your Lordships' House. We are, quite rightly, proud of our broadcasters and the broadcasting industry. But these are times of considerable change; and, as we have heard this evening, there are those who believe that features of the industry are now under threat. We have heard eloquent and interesting arguments from a number of noble Lords on what the future may hold.
Those of your Lordships who took part in the debates on what became the Broadcasting Act 1990, will remember the aims of the Government's policies in that legislation. These included increasing diversity, choice and competition in the provision of television services. Although the provisions dealing with Channels 3 and 4 came into effect fully only at the beginning of this year, the other provisions for television services have been operating for some time. The Independent Television Commission has licensed more than 100 programme services of all kinds.
In 1990, satellite and cable television services were in their infancy and digital TV technology seemed many years away. Your Lordships will be well aware of the rapid growth in satellite channels, and current developments in the provision of cable television services. Moreover, digital TV technology, once thought to be many years away, may become a reality within a few years. This opens up the prospect of hundreds, rather than tens, of channels. Tomorrow's world has arrived rather sooner than expected.
Of course, since 1990, the economic climate has changed somewhat. Worldwide, companies are looking for ways of improving their efficiency and increasing their share of the market. Given these changes, it is understandable that the ITV companies are questioning the effects of the ownership regulations on the structure and operation of the UK television industry. However, in this time of rapidly changing technology, we must look before we leap, especially as the currents beneath us are swirling unpredictably.
As the noble Baroness, Lady Birk, pointed out, the BBC Charter ends in 1996. But we intend to look carefully at the responses to the recent paper. We intend to publish our proposals for the BBC early next year.
997 The subject of this evening's debate is the ownership of the 16 companies which together provide Channel 3, or ITV. As your Lordships know, one, GMTV, holds a national licence for breakfast-time programmes. There are 15 regional television licences; of these, nine are designated as being large and six are designated as small.
The ownership rules in the Broadcasting Act, and its subordinate legislation, prevent any company or person from holding a controlling interest in more than one of the nine largest ITV licences. A person or company could own two ITV licences provided one was large and the other one was small, and they could additionally have a maximum of a 20 per cent. stake in one further licence, and a further 5 per cent. stake in any additional licence above that.
In these arrangements, the Government's aim was to allow economies of scale but to prevent unhealthy concentrations. Cross-ownership rules were aimed at allowing flexibility of approach but were planned to be sufficient to protect the smaller ITV regions from a loss of identity.
Until the end of 1993, all take-overs of ITV licensees are prohibited, unless they have the specific approval of the Independent Television Commission. This one-year moratorium, as it has become known, was intended to provide a short period of stability at the start of the new licence period. It was not intended to offer long-term protection against the normal discipline of take-overs.
Even now there is no obstruction to anyone taking over a Channel 3 licensee, provided it meets with the ITC's approval. It is clear that, at the moment, the ITC is unlikely to be sympathetic to any hostile take-over. Your Lordships will be aware of the merger between Yorkshire TV and Tyne Tees Television. A deciding factor in the ITC's decision to allow this merger to proceed was that the commission concluded that the merger was in the best interests of the viewers in the area.
In the past six months, my department has been asked to alter the current regulations. We have received a number of deputations from the ITV companies, concerned about the continuing viability of the industry and its ability to compete in both the European and world markets. I have to say that there was a wide range of views about the potential problems and the recommended remedies. Indeed, some ideas were in direct opposition to each other. As we have heard this evening, the noble Lord, Lord Thomson of Monifieth, and my noble friend Lord Sharp of Grimsdyke have different views on what could be done.
One of the remedies suggested was extending the moratorium. As noble Lords are fully aware, this would need primary legislation. The purpose of extending the moratorium would be to try to prolong a period of relative stability. But I suggest that it would be a mistake to try to stand still when the rest of the world is moving on.
It is important that we should recognise—my noble friend Lord Elton reminded us of this—that broadcasting has moved from being a national activity to a global industry. This is not just a growing 998 world-wide market in programmes and video cassettes. It is a world market in transmission and programme services. Some organisations are producing programmes for international audiences in several continents; but broadcasting them through local transmission systems. A broadcasting organisation can be based in this country, producing programmes for countries in the Middle East, which are transmitted via a satellite owned by a company based elsewhere.
Several of the larger ITV licensees have been pressing for a relaxation of the rules—
§ Lord Harmar-Nicholls
My Lords, perhaps my noble friend will allow me to intervene. He correctly quoted my noble friend Lord Elton, but I think that he should add that having made the point that has just been reiterated, my noble friend Lord Elton said that he thought that there should also be an extension of the period before we give up that freedom.
My Lords, I have not finished what I am going to say about the moratorium. I am trying to set the background to this.
Several of the larger ITV licensees have been pressing for a relaxation of the rules which limit their holdings in other ITV companies. They believe that if there were fewer companies this would give a stronger domestic base from which to compete in Europe and to fend off foreign take-overs. However, it could be argued that creating larger groups will make such groups more attractive to potential buyers. A large portion of the ITV cake may look more tempting than a small slice. Conversely, some of the smaller ITV licensees have argued that the ownership restrictions should be strengthened. They are looking for greater protection against predatory larger UK television companies.
The Broadcasting Act tried to preserve the regional network structure of independent television. The ownership rules were very thoroughly debated in both Houses during the passage of the legislation. Many of the provisions have only just come into force. The Broadcasting Act allows some flexibility, in that some changes in the ownership provisions can be made by order, rather than by primary legislation. The provisions on the holdings, on the ownership of other companies, are among the requirements which can be altered by an order. However, the Government believe that a very good case indeed would have to be made to change the restrictions at this stage.
The noble Lord, Lord Hollick, made another proposal. Present ITV licences last for 10 years, but licensees can apply for renewal after six years. The noble Lord suggested that the timescale could be shortened so that they can apply for renewal after four years. In those circumstances, he suggested that the present arrangement for paying for network programmes could be extended for two to four years. As we might expect from the noble Lord, that is an ingenious suggestion. However, I am not convinced that it is one that would recommend itself to all ITV licensees. The case for extending the period of the moratorium is that there should be a longer period of stability. Shortening 999 the period before applications to renew licences can be made hardly seems a recipe for the stability that the noble Lord desires.
The present licences are for 10 years. It seems preferable that they should run for at least half their term before applications to renew them can be made. Under the Broadcasting Act, UK nationals and nationals of other member states of the Community have equal rights in the provisions on the ownership of independent television companies within this country. Our rules do not discriminate against other EC nationals. My noble friend Lord Harmar-Nicholls said that member states should not treat their own nationals more favourably than those of other member states. They should not. That would be contrary to our interpretation of the provisions of the Treaty of Rome.
However, although the UK regulations do not prevent ownership of a broadcaster by a national of another member state, it appears that some other countries in Europe place restrictions on ownership. For example, Denmark requires a majority of the board members of private television companies to be domiciled in the area of the licence. In Belgium, at least 51 per cent. of the capital of a Flemish commercial TV licensee must be owned by the publishers of Flemish language print media. In our view those are discriminatory restrictions which operate against potential investors from other member states, including investors from here.
The European Commission has been made aware of many of those instances and the European Court of Justice has also been active. There has been some progress. For example, the European Court of Justice has recently ruled that the Flemish measures are indeed contrary to the Treaty of Rome. There are other examples. Foreign participation in Greek television companies used to be limited to 25 per cent., whereas similar restrictions did not appear to apply to Greek companies. It seems that the Commission opened proceedings against Greece, but new legislation adopted in August of last year may have removed the discriminatory provisions.
Each country can decide how its broadcasting industry should be structured. Provisions which limit levels of ownership are fair so long as countries apply their ownership restrictions equally to their own nationals and those of other member states. But if a country appears to be in breach of the Treaty of Rome, then it is the duty of the Commission to take the necessary action. As I have described, the European Commission is taking action against a number of member states. However, such action takes some considerable time, and I agree that it is frustrating that problems take so long to resolve. As I said, progress is being made.
§ Lord Buxton of Alsa
My Lords, does my noble friend agree that there is no possibility of harmonisation before the end of this year?
My Lords, I said that progress is being made. I cannot guess how fast that progress will be or how long it will take. My noble friend Lord 1000 Sharp of Grimsdyke and the noble Lords, Lord Hollick and Lord Thomson, said that the European Commission has recently produced a consultation document entitled Pluralism and Media Concentration in the Internal Market. That sets out a number of different options for future controls over ownership. The Government are studying very carefully what the paper has to say and we shall be responding with our views. I have no doubt that the ITV companies including Carlton and Meridian will be sending their views to the Commission.
It is encouraging that some UK companies are looking for opportunities for investment in broadcasting organisations in other European countries. But if we want to compete throughout the Community, we must expect that others will want to compete here. It is not reasonable to demand open opportunities for investment on the other side of the Channel, but protection from such take-overs here.
The present moratorium provides a degree of stability. But it does not of itself give absolute protection against take-overs. Extending the moratorium could do no more than provide an obstruction to slow down those who are most determined either to invest or take over individual independent television companies in the UK. But in any take-over it is up to the shareholders to accept or decline the offer. They will decide what they consider is best for the company. And the advice from the chairman and the board of directors is likely to be an important factor in this decision.
So far, little evidence has been produced that there are foreign companies queueing up to take over UK television companies. There was only modest interest from non-UK companies during the licensing process that took place some 18 months ago. I accept that any bidder might be biding his time unknown to us. But the present policies of some of the large European media companies seem to be to aim for minority holdings in companies in other countries.
I have to tell your Lordships that we remain unclear how far the fears of possible take-overs and the worries about practices abroad stem from business pressures or from anxieties about regional structure and identity of the independent television network in the longer term. Is the fear that changes in ownership will result in the loss of regional programmes? The Broadcasting Act requires every regional licensee to provide a sufficient amount and range of regional programmes. The applicants for licences set out their plans for regional licences and these are now conditions of their licences. The ITC will enforce these requirements on each regional licensee regardless of any changes in ownership. No one can simply come along and take over an ITV franchise. The licence conditions will remain in force and any new owners will have to ensure that the original licence promises about regional programming will continue to be met. I am tempted to suggest that, for example, any Spanish broadcaster would have as much success in trying to make "Coronation Street" as the BBC had in making "Eldorado".
My noble friend Lord Whitelaw spoke with great feeling of the importance of regional television 1001 companies in his area and the pleasure and information which regional programmes bring to the people who live there. Moreover, programmes made in the different nations of the United Kingdom and in the regions in England can bring a welcome diversity to the networked programmes on ITV. The noble Baroness, Lady Birk, said that most people do not live in the south-east of England. Diversity of programmes from a diversity of places adds to the richness of the programme schedule.
Take-overs are an important market discipline. They can inject fresh capital, fresh personnel and fresh ideas, which can promote innovation and greater efficiency. Market forces determine that there will be both winners and losers, but my noble friend Lord Stockton referred to the potential dominance of individual people, or a group of companies, and the risk that they may dominate the market with their particular brand of idea. The aim of the present regulations is to prevent such concentrations on ITV, which is the commercial television service most widely used in the United Kingdom. For commercial broadcasting companies to survive they must be both efficient and be in a position to produce programmes which people wish to see. Otherwise smaller audiences will attract less advertising revenue, and may ultimately lead to the demise of the company.
The mixture of old and new companies, which now hold the ITV companies, are unlikely to underestimate people's wish to watch good quality British programmes. We should not seek to put up artificial barriers, either to protect them or to prevent their successful development.
We have been considering two main issues which inevitably are intertwined. First, there is the question of the UK ownership provisions and the effect that those are having on the ITV network. They include the present moratorium on take-overs due to expire at the end of this year. The other main issue is the ownership rules and regulations applying in other European countries, which may disadvantage our own broadcasters from investing and expanding into other European countries.
As I said earlier in the debate, the European Commission is gradually taking action within Europe 1002 to eliminate obvious restrictive practices but progress here is likely to be slow. The Commission is also considering the general issue of ownership in the longer term.
In this country the medium-term question is whether we need to alter the present ownership regulations under the Broadcasting Act. In the short term, the noble Lord, Lord Donoughue, considers that the moratorium should be extended to try to establish an oasis of stability in an otherwise rapidly changing scene. But I must ask what message we should be sending to Europe. We should be sending entirely the wrong message to Europe. It could even discourage other countries from making the changes that we have been urging them to make to their own restrictive ownership rules. The Government do not believe that a convincing case for either of those changes has yet been made. However, my right honourable friend the Secretary of State intends to have further discussions with the ITC and the ITV companies.
The debate this evening has been an important contribution to the consideration of these issues. I listened carefully to the points that noble Lords made. I recognise that they speak from both knowledge and extensive experience. We value your Lordships' opinions greatly and my right honourable friend the Secretary of State will want to give further thought to what has been said.
The Government will continue to keep the working of the Broadcasting Act under review. During these times of considerable change, we shall aim to ensure that the UK broadcasting industry can continue to make progress, taking advantage of the latest technological developments. Only in that way will United Kingdom broadcasters maintain their worldwide standing in producing and broadcasting high quality programmes and services.