§ 3.57 p.m.
§ The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood)
My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Inglewood.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Ampthill) in the Chair.]
§ Lord Desai moved Amendment No. 143:
§ Before Clause 62, insert the following new clause—
§ AMENDMENT OF THE BROADCASTLNG (RESTRICTIONS ON 'THE HOLDING OF LICENCES) ORDER 1991
§ (".—(1) The Broadcasting (Restrictions on the Holding of Licences) Order 1991 is amended as follows—
§ (2) In section 12 subsection (3) for "two" there is substituted "three".
§ (3) In section 13 subsection (1) for "hold a licence" there is substituted "hold more than one other licence".
§ (4) In section 13 subsection (1) for "holder of a licence" there is substituted "holder of more than one other licence".515
§ (5) In section 13 subsection (2)(a) for "for which the service" there is substituted "for which a service".").
§ The noble Lord said: Amendment No. 143 stands in my name and is grouped with Amendment No. 156 which stands in the name of the noble Baroness, Lady O'Cathain. I trust that the noble Baroness will speak to her amendment and I shall speak only to mine.
§ At the heart of the Bill is a correct philosophy that in the world of today's technology and competition we need powerful British companies which can compete internationally. Therefore, certain restrictions imposed on television companies as regards licensing and on other media companies as regards cross ownership have rightly been lifted. My amendment addresses the issue of local radio stations being treated unfairly, or asymmetrically at the very least, in this respect.
§ The restrictions on local radio stations having more than one FM station have not been lifted.
§ Members of the Committee will remember that there is a restriction on local radio stations not owning more than one FM station. That was not in the Broadcasting Act 1990 and nor is it in this Act. But that was put in place by an order and because it was an order, my amendment refers to that order.
§ The situation is very simple. An independent local radio station may have an FM station and an AM station. Since those independent stations were able to have two wavelengths, the Gold station has been transmitted on AM and current news and so on transmitted on FM. In the spirit of the Broadcasting Bill, it would be quite right to allow radio stations to be able to bid for two FM wavelengths. That will enhance the quality of transmission of the programme and it is quite clear that AM is a technology which is less preferred than FM by many transmitters. That seems to me to be a straightforward argument. We wish to be able to allow our radio stations to have two FM wavelengths.
§ It may be said that having one radio station with two FM transmitters could restrict competition and that we would not have diversity. It is almost a well known result in many of these industries that if different owners have the same kind of channel, there is a great deal more uniformity of service rather than rivalry. If you do not believe me, go to Heathrow Airport and you will find that flights to the United States leave more or less at the same time whether it is British Airways, United Airlines or American Airlines. That is how people tend to behave. You would think that they would provide diversity because there is competition, but instead they provide identical services. Therefore, if we want to have diversity, it is better to have a producer of the size and range that can produce diversity.
§ This is a straightforward amendment. I hope that the Minister will not find much objection to it. Perhaps I may add briefly that across the country many independent radio broadcasters are in favour of this amendment. I beg to move.
§ 4 p.m.
§ Baroness O'Cathain
My Amendment No. 156 is grouped with this amendment and I wish to speak now to that amendment.
516 Amendment No. 156 addresses one of the particular issues where I believe this Bill could be improved. My amendment is placed with the specific intention of ensuring that three of the objectives of government policy are supported: first, by encouraging greater diversity of broadcast output—in other words, consumer choice; secondly, by deregulating the restrictions on the media industry; and, thirdly, by ensuring the commercial strength and success of our much valued media industry.
Currently, an independent radio station is restricted from applying for a licence for more than one station on the same waveband in the same geographical area. This amendment aims to allow independent radio stations to apply to the Radio Authority for more than one licence on one waveband in any licensed area. That will offer local radio stations the opportunity to move their popular AM Gold music stations onto the better quality FM frequency.
For the benefit of Members of the Committee who are not quite sure what "Gold" means, it refers to what I would call easy listening muzak which one hears in hotels and shops but which in fact is extremely popular. Gold stations are currently listened to for something like 17 million hours per week. That sounds a great deal. That may mean that 17 million people listen to it for one hour per week but it is more likely that, for example, 4 million people listen to it for 4.5 hours per week.
Gold music output is currently listened to for that amount of time and the majority of that output is on the AM frequency which, as we have said before, is notorious for its poor quality. With the advent of digital audio broadcasting—DAB—the AM frequency will disappear—at least, it will not disappear but it will be even more sub-standard. Therefore, it is important for millions of listeners that the quality of output of those popular stations should be improved.
The restrictions which prevent that at present are contained in the Broadcasting (Restrictions on the Holding of Licences) Order 1991. Some may say that giving existing companies greater access to FM frequencies may reduce diversity of output. In fact, the exact opposite is the case. For example, two different companies running two FM stations may have very similar output in a particular geographical area with both aiming for the same most lucrative advertising market. However, if the same company owns two FM licences, by commercial definition it will aim for different audiences and a different advertising market through significantly different programming, thereby creating diversity.
As regards deregulating the media industry, the Government have achieved much in allowing greater cross-media ownership. However, they may have overlooked the need to ensure that each specific media sector is allowed an equal amount of freedom. If this Bill passes into law unchanged, a local radio station could own a greater "share of voice", as it is called, by purchasing a local newspaper, but would be prohibited from obtaining a similar percentage of "share of voice" by expanding in its own sector. Surely it should not be more difficult for a company to expand within its current media sector than to diversify outside its core 517 expertise. From my understanding of the radio industry, very few radio companies have any interest in developing into local press barons.
The popular Gold music stations are in direct competition with the BBC's Radio 2. Radio 2 is on an FM frequency and therefore has, I believe, an unfair competitive advantage over local radio stations which must broadcast on an AM frequency.
As regards the commercial strength and success of our valued media industry, I believe that the majority of the radio industry is not interested in diversifying into the print media. It is interested in excelling in the industry in which it has the greatest expertise; namely, radio broadcasting. That in turn should be encouraged by the Government. Giving independent local radio companies the same commercial freedom as other media operations will create greater choice and better quality of radio broadcasting to consumers. I hope that the Government will consider that issue as it would add to the improvements which the Bill brings to the media industry.
§ The Earl of Onslow
I was approached by my noble friend Lord Dixon-Smith, who cannot be present today, to add my name to the amendment tabled by the noble Lord, Lord Desai. I was extremely willing to do so until I saw all the Members of the Opposition Front Bench putting their names to it. I thought that they wanted to ban me from speaking on the matter and therefore I did not add my name to it. However, I support them in principle, especially the noble Lord, Lord Desai.
It seems to me that the Government are worried about a monopoly situation, and they are right because we should worry about a monopoly situation. But surely such a situation should be dealt with either by the radio regulator or by the monopolies commission. Capital Radio gave me a sandwich lunch and a drink of water, because I was dying of thirst, when explaining this matter to me. If Capital Radio wished to buy half of the FM frequencies available in London, that would obviously be monopolistic. But all the independent radio stations have said that they do not wish these restrictions to be placed upon them. I did not understand until it was all explained to me but FM radio produces a far higher quality of music transmission. Whether it is that disgusting noise which sometimes one's children will listen to or whether it is Brahms, is relatively immaterial. However, it seems to me to be right that, provided that it is non-monopolistic and non-area dominating, people should he allowed to have two or three stations. After all, if the Evening Standard were to take over Capital Radio, it would actually have a far more monopolistic access to news and media ownership over London than would be the case if Capital Radio were to have a second FM channel.
I am suggesting that the monopolistic tendencies are obviously real. I recognise the fact that everyone, from the Venetians through to Adam Smith, wants a monopoly because it is a licence to print money and that it is the duty of regulators to stop that happening. But it seems to me that a blanket ban is not the correct way to do it. It would be much better to approach the 518 monopolistic angle which, I believe, is the only angle which has any truth or value. As I said, it could be done by the regulator rather than by a blanket ban. That is why I support not only my noble friend and the noble Lord, Lord Desai, but also the Opposition Front Bench on the issue.
§ Lord Thomson of Monifieth
The noble Earl is absolutely right to say that at the heart of the matter is the question of monopoly and how one handles monopolistic tendencies. For my part, I do not know what the other Opposition Front Bench will say on the amendment. Indeed, the noble Earl should not give a blanket assertion about the Opposition because, from these Benches, we have given most careful consideration to the matter. I did not get a glass of water from Capital Radio; indeed, I gave them a cup of tea.
We considered the pros and cons of the matter most carefully and came to the conclusion that the danger of a monopoly was such that the amendment should not be accepted. I believe that it is fair to say that it is supported by some of the most successful and powerful groups of independent local radio stations in the country. If the amendment were accepted, my fear is that such groups would become even more powerful. Of course I wish them every success, but I do not wish to see them become so powerful that they reduce the plurality of ownership of independent local radio stations.
§ The Earl of Onslow
I should like briefly to take up that exact point. I, too, was worried about that aspect. That is why, over my lovely glass of water which I enjoyed in the headquarters of Capital Radio, I pressed those concerned very strongly. They told me that the smaller London radio stations agreed with the relaxation of the ban on dual ownership. Therefore, it is not fair to say that it is a matter only for big radio stations. It was only when I had been persuaded on that point that I was prepared to speak in favour of the amendment.
§ 4.15 p.m.
§ Lord Chalfont
As a former chairman of the Radio Authority, perhaps I may offer a few words of comment on the amendment. I have a natural sympathy for the amendment moved by the noble Lord, Lord Desai, but, unfortunately, the amendment would not achieve the desired effect. I believe it is true to say that the radio companies would like, as the noble Lord says, to put their "gold" output (their easy-listening output) on to FM because it has a better transmission quality. It does not, I fear, improve the music at all; but it does improve the quality of the transmission and, therefore, of the reception.
However, if that is what radio companies wish to do, the amendment would not achieve that aim. I say that because there are no spare FM channels at present. Moreover, even if there were, it would certainly not make sense that existing holders of licences should have a prescriptive right to receive them. Therefore, in most cases, the amendment would not necessarily mean that people who wished to transfer their gold service to FM would be able to do so. Indeed, as the noble Lord, 519 Lord Thomson of Monifieth suggested, it would enable stations to take over other stations and thereby reduce the plurality and diversity which the Radio Authority as the regulator is meant to ensure.
The noble Earl said that it should he a matter either for the Monopolies and Mergers Commission or for the regulator. It is indeed a matter for the regulator. When I was chairman of the Radio Authority, one of the tasks that we sought constantly to undertake was to ensure that, in the issue of licences, diversity of ownership and plurality in local conditions was maintained. That is what is at issue. The amendment would not allow people to move their gold format on to FM; it would enable powerful, big radio stations to take over small ones in the same area.
I have one further point to make. The noble Baroness mentioned the implications of DAB—digital audio broadcasting. I believe that there is a contrary argument here. If people were allowed to achieve two analogue FM frequencies in the same area, it is possible that they would cease to have much interest in pursuing digital audio broadcasting which is what, I believe, we are all inclined and intending to do. Therefore, with the greatest respect to the noble Lord, Lord Desai, and with every sympathy for what he is trying to achieve, I must suggest that the amendment would not achieve the desired effect. Instead, it would remove a good deal of the diversity and plurality from local broadcasting.
§ Lord Colwyn
We are having a most interesting debate. I am sympathetic to the thoughts behind the amendments. Newspapers and new radio players can find much to encourage their aspirations in the Bill, but perhaps it does less than it should to help those who wish to concentrate their skills and investment in radio only. There is no good reason to have rules which entirely close the door on a radio company owning more than one service on a single waveband in a single geographical area. I believe that the Radio Authority should at least have to consider proposals on their merits rather than ruling them out completely.
Schedule 2 to the Bill allows for the inclusion of two of a station's services on a multiplex, where available capacity allows, and for influential local newspapers to own local radio services. It seems inconsistent for the Bill to condone the merger of a leading local newspaper with a leading local radio station in the same geographical area, albeit subject to public interest criteria, when the expansion of radio interests beyond a single FM and a single AM service in the same area is prohibited.
It seems especially unfair when that restriction does not apply where there are only a few, if any, competing commercial radio services. Under current Radio Authority proposals I believe that the restriction is confined to highly competitive markets where many stations vie for revenue and listenership. It is worth thinking about again. I hope that my noble friend the Minister will give the matter serious consideration.
§ Lord Inglewood
As we have heard, radio companies are currently restricted to controlling one FM and one AM station in each local licence area under the so-called 520 "overlapping areas" rule. The noble Lord, Lord Desai, comprehensively explained his argument as to why broadcasters should be allowed to run up to four radio stations, two on each waveband, in areas which overlap to a significant extent. My noble friend Lady O'Cathain would simply dispense altogether with the overlapping areas rule.
Perhaps I should first explain that the Government intend to revise the restrictions on secondary holdings, many of which are also contained in the 1991 order. The scope of those changes is substantial. I anticipate that we shall revoke the 1991 order in its entirety and replace it with a new one. I shall have more to say on this at Report stage. But, as I made clear at Second Reading, we do not plan to change the existing restrictions on the use of the AM and FM wavebands. The Radio Authority, which advises the Government on how best to promote a thriving plural and diverse independent radio sector, supports that view. I believe that we ought to think hard before rejecting its advice.
The companies lobbying for change are largely those which originally held franchises to simulcast their radio services on both FM and AM but were later allowed to split their services to provide different formats on each waveband. Typically, as was explained by my noble friend Lady O'Cathain, such companies offer complementary services—one on FM, based on current hits and a so-called "gold" service on AM, based on hits from the 1960s, the 1970s and the 1980s. Given the scarcity of FM channels, that splitting has represented both an efficient use of the scarce public resource of the spectrum and a broadening of choice.
The main arguments for reform are, as we have heard, that popular "gold" formats, broadcast on AM, would be able to provide better reception for listeners if they were switched to the FM waveband, and that the growth of successful companies should not be restricted. But let us just look a little more closely at the current position. In the metropolitan areas of Britain there are typically two or three companies in operation; in London there are more than a dozen. But across shire England and the non-metropolitan areas of Wales and Scotland there is often only one local independent radio licence-holding company which operates on both the AM and FM frequencies.
Across the country, then, the position in local radio is that there is often a single monopoly or heavily dominant player. This derives to a considerable extent from the Radio Authority's remit to promote diversity in the radio services available in a particular area. When it does advertise a further FM licence in a franchise area, it for that reason tends not to relate to a popular hits format, and the successful applicant for the further FM licence accordingly is unlikely to acquire a major share of the market, or in effect to compete directly for most purposes with the dominant station. Moving a popular current AM station onto an FM channel is not the only thing a strong player might do if the rule were relaxed. I refer to the points made by the noble Lords, Lord Thomson and Lord Chalfont. Indeed, the opportunity of bidding for new FM licences, or challenging renewals of existing ones, 521 is much less frequent than that of simply taking over an existing competitor, with the result that, for example, separate news reporting facilities would be closed down, thereby diminishing local diversity of voice.
I should say to the noble Lord, Lord Desai, that we must focus here on voice. Diversity of service is guaranteed by the Radio Authority agreeing the differing formats applying to different FM licences. What we are aiming to ensure is a diversity of voice. Moreover, what may be reasonable in the crowded, diverse context of London radio is less obviously right elsewhere, where a relaxation of the one FM rule might simply consolidate the position of a monopolist or near-monopolist and prevent the development of a healthy diversity. My noble friend Lord Onslow referred to the Evening Standard acquiring a radio station. Of course the Evening Standard would have to pass the public interest test before it could acquire Capital Radio, if it wished to acquire it.
§ The Earl of Onslow
However, it is not banned by law from so doing. That is the point I am making. I should hope that everything could be considered on a public interest basis rather than being banned by law. That is the difference and it is exactly what my noble friend has highlighted.
§ Lord Inglewood
I am grateful to my noble friend for elaborating that point. Because of the Radio Authority's important remit to secure variety in local radio formats, the market remains artificially structured, albeit far less regulated than the corresponding television one. Arguably, that means that there is still a need for checks on the further growth of dominant players in a particular area. If the existing rule is overturned, such groups would be able to buy their only significant competitors in their locality. In addition, new entrants to the radio market who seek to provide different services would be forced onto the inferior AM waveband, diminishing their effectiveness as competitors with existing companies and reducing the prospect of greater diversity.
We should also not forget that the Government are already providing the larger radio companies with substantial opportunities to grow. Last July an order increased from 20 to 35 the number of licences that any one company may own. That limit is removed entirely by the Bill. During the Second Reading debate I made clear that the Government are as yet unpersuaded by proposals to abandon the overlapping areas rule. That remains the case. If these amendments were to be accepted we believe, like the noble Lords, Lord Thomson of Monifieth and Lord Chalfont, that they could threaten plurality at local level, undermine competition in the provision of services, and inhibit the promotion of diversity. It is for those reasons that we are opposed to these amendments.
§ Lord Desai
I am grateful to those Members of the Committee who have spoken to this amendment. I am especially grateful to the noble Lord, Lord Chalfont, for informing me of the technological details of this matter. I remain convinced that there is confusion here as 522 regards the notion of monopoly and competition. If we consider, for example, the larger metropolitan areas where—as the Minister said—there are a number of competing radio stations, those areas are referred to as the A and B types of area. In that case, if an existing large producer acquired another station that would not necessarily reduce competition because much competition already exists. If, however, there are areas in which there is only one dominant producer and that dominant producer acquires another FM channel, that again in my view does not reduce competition. The technology of radio is such that one can always move the dial and obtain a broadcast from the next area. It is not as if one is confined to listening to the station in one's local area.
I could understand anxieties about a monopoly situation if there were no substitute easily available, or if the substitute were costly. If I may say so to the Government, we are discussing an old fashioned view of monopoly and competition. If they had read their Professor Hayek carefully, they would be reassured that it is not difficult to have competition provided there are substitutes available. There will not be dominance because people can always turn the dial and turn to a station in another area. That has been the case in the computer industry where IBM was a large player but it faced competition from small minnows. Diversity is not the issue either because, as I pointed out, if there are several players they tend to offer the same kind of broadcasts. They all offer "gold" broadcasts. Therefore, the situation is contrary to what the Minister thinks it is and it is contrary, somehow, to common sense. Common sense is wrong in this respect. I urge the Minister to think about this matter and I am grateful to him for saying that he will return to it on Report. In the light of that good discussion—
§ The Earl of Onslow
Before the noble Lord sits down, I shall now confess to a frightful piece of peeking. In looking over the shoulder of my noble friend on the Front Bench, I see that he has an alternative reply. Everyone will say that it is unfair to do that and I admit that is cheating, but I cannot resist it all the same. His alternative reply states that in view of the feeling expressed in the House he will go away and—
§ Baroness Trumpington
This is quite intolerable, even from one of my noble friends. I ask my noble friend to sit down.
§ The Earl of Onslow
I do not see that it is intolerable. Where in the Standing Orders does it state that one should not quote from a brief? Let me just finish the point I am making. The only noble Lords who have spoken on the Government side are two who have done so on behalf of the Radio Authority. I am not asking the Government to agree to the amendment. I am simply asking the Minister perhaps to choose the second of the alternative replies in front of him.
§ Lord Boyd-Carpenter
I really must protest at my noble friend's attitude in looking over and reading from 523 the Minister's brief. This is contrary to the normal good manners and standards of this Chamber. I hope that he will now apologise.
§ Baroness Trumpington
I do not know whether the noble Lord, Lord Desai, had finished his remarks but he was interrupted in the middle of his speech.
§ Lord Desai
An interesting discussion is taking place. Therefore I shall try to find out what the discussion comprises before I do anything further with my amendment.
§ Lord Inglewood
There are all kinds of things that I have notes on—that applies to what we are discussing today and on previous occasions when we sat in Committee on this Bill—which I deemed not appropriate to mention. Whatever the noble Earl may have thought that I had written in my notes, what I said was what I meant to say.
§ Baroness O'Cathain
Like the noble Lord, Lord Desai, I am grateful to all Members of the Committee who have taken part in this debate. The comments of the noble Lord, Lord Chalfont, worried me because he said that if the aim of the amendment was to put "gold" on FM, that would not be achieved. Obviously I shall have to reconsider that matter. I understood the noble Lord to say—I do not know whether I understood him correctly—that that is because of the limitation on the number of FM hands, or at least space on the FM band. Obviously I shall have to look at that matter again.
I am also grateful to my noble friend Lord Colwyn, who suggested that the authority should consider proposals on their merits and not condemn them outright. When my noble friend the Minister spoke he raised my hopes because he said that he intended to revise the restrictions and to revoke the 1991 order in its entirety. However, he then stated that, on the advice of the Radio Authority, there would be no change to the AM and FM wavebands. That does not encourage me at all.
People are talking about competition and monopoly. The reality is that there is already competition. If there were not an increase in competition, with a greater number of FM bands being given to independent radio stations, there would be a greater monopoly by the BBC which, I remind my noble friend the Minister, has four FM wavebands in each geographical area. We are looking for competition in the independent radio sector, which competes with the BBC, although not for advertising. Perhaps I did not make that point clear.
I reiterate that if the radio company were allowed two hands, that would provide greater diversity. The second FM band would not compete with another news station or current hits stations but with an easy listening station.
Therefore, the market is not the monopoly that many Members of the Committee seem to think it is. The dominant player in any area is always the BBC. I shall withdraw the amendment and look forward to hearing what will he said at Report stage, when I shall probably return to the matter. In the meantime, I beg leave to withdraw the amendment.
§ 4.30 p.m.
§ Lord Desai
The Minister should remember that small radio stations, no matter how cuddly and lovely, will not survive. If there is to be new technology, one has to build up a few major players. Radio does not have highly capitalised companies. Even in companies such as Capital Radio the capitalisation is about £400 million.
We ask that the spirit of the other part of the Bill he extended to radio. Have confidence and courage and one will be all right. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 62 agreed to.
§ Lord Thomson of Monifieth had given notice of his intention to move Amendment No. 144:
§ After Clause 62, insert the following new clause—
§ COMMUNITY SERVICE LICENCES
(".—(1) Section 84(2)(a) of the 1990 Act is amended as follows.
(2) After "restricted service")" insert "or—
§ (iv) for a defined locality and operated for the benefit of the community, or a particular section of the community, by a non-profit distributing body (a "community service").".").
§ The noble Lord said: Amendment No. 144 and the following amendment deal with the future of community radio, a matter on which we had some discussion in relation to amendments moved last Tuesday. We may wish to return to the issue at Report stage, but in view of the pressure on time I shall not move the amendments.
§ [Amendment No. 144 not moved.]
§ [Amendment No. 145 not moved.]
§ Lord Thomson of Monifieth moved Amendment No. 146:
§ After Clause 146, insert the following new clause—
§ DURATION AND RENEWAL OF CHANNEL 3 LICENCES
(".—(1) Section 20 of the 1990 Act (Duration and renewal of channel 3 licences) is amended as follows.
(2) In subsection (2) for "four" there is substituted "five".
(3) Subsection (3) is omitted.").
§ The noble Lord said: Amendment No. 146 is an important one. It is a significant piece in what might be described as a jigsaw of amendments that we shall discuss today. Taken together they seek to reshape the financial arrangements between Channel 4 and ITV, between the ITV companies and the ITC in terms of the renewal of their licences, and between the large ITV companies and the small ITV companies. The issues hang closely together, and it is a pity that the groupings do not allow us to discuss the whole area at the same time.
§ Suffice it to say at this stage, however, that one of the anomalies of the disastrous 1990 Act was that the timetables within that Act did not synchronise with each other. Under the Act the Channel 4 funding formula, which we shall consider later, can he reviewed and ended from January 1998. However, under that same Act the licences of the ITV companies cannot be reviewed and adjusted until January 1999 at the earliest. There is a glaring gap of a year in which the ITV companies could lose their subsidies from Channel 4 525 without any chance of relief from the terms of their licences from the ITC. For some of the ITV companies that is critical.
§ The solution appears to be simple. It is to move forward by one year from 1st January 1999 to 1st January 1998 the earliest time when the new ITV licences could start. That involves bringing the specified date forward by five years from the end of the licence period—2003—instead of the four years that are specified in the 1990 Act.
§ This is perhaps a deceptively straightforward amendment. By accepting it, the Committee will simply correct one of several anomalies of time which exist between the Broadcasting Act 1990 and the new Broadcasting Bill.
§ Whatever the outcome of the Channel 4 argument later in the proceedings on the Bill, this should be a commonsense and uncontroversial amendment to establish consistent review dates within the new legislation. I beg to move.
§ Lord Crickhowell
I must first declare an interest as a director of the Channel 3 company HTV.
There is little that one need add after that admirable introduction by the noble Lord, Lord Thomson of Monifieth. He rightly described the situation as a jigsaw. The companies which have the unenviable task under the bidding arrangements of looking 10 years ahead and forecasting a range of changing circumstances have to consider all kinds of things and bring the totality together to form a judgment about their bids. One of those elements is clearly the Channel 4 rebate. We shall debate that later and I do not want to anticipate that debate. However, some of the money coming to the companies has proved even more important than was realised when the Bill was originally drafted. Certainly, for those companies with relatively high bids it makes a significant contribution to income.
If part of the prospectus on which the bidding process was based is changed, it is right that the whole should he taken together. If a private sector organisation put forward a prospectus and suddenly changed the rules it would be subject to great criticism. Here we have a situation where it may be that, as a result of the review, the financial position of the companies will be substantially altered, perhaps in 1998, but because of the absurd anomaly in the original timing of the events there is no opportunity for them to have the contract reviewed in parallel with the change, whatever it may be.
All that is suggested in the amendment is that those two elements should be brought together. There is no attempt to suggest what the outcome of the review should be or to impose a solution. The purpose is merely to ensure that if a change arises in one part of the package a balancing change can be made at that time in another part of the package to provide a fair situation for all the companies involved. The case is overwhelming and I hope that the Government will be able to accept the amendment.
§ The Earl of Arran
I too would like to support the amendment in the name of the noble Lord, Lord Thomson 526 of Monifieth. Inasmuch as the Bill as a whole seeks to provide a sensible framework for the future of British television, the amendment can only be regarded as extremely welcome. These are uncertain times for independent television. If the Government adhere to the timetable for re-evaluating Channel 4's finances, as I profoundly hope they will, then 1998 threatens even greater uncertainty.
My interventions on these issues of broadcasting policy are fired by a desire to maintain quality television. However, 12 months of limbo will do nothing for confidence in the industry at any level—from the boardroom to the studio floor. Moreover, tomorrow's critics have an uncanny knack of blaming today's legislators. I am told that good lawyers loathe anomalies. The Minister has a reputation for being a very good lawyer. I commend the amendment to him and rest my case.
§ Lord Donoughue
From this side we totally support the amendment in the name of the noble Lord, Lord Thomson. It seems sensible and practical and I cannot see what the Government would have against adopting it.
§ Lord Inglewood
The noble Lord, Lord Thomson, explained the purpose of his amendment as being a means of providing Channel 3 companies with greater certainty of income levels in the light of expected changes to the Channel 4 funding formula. As already noted, we shall discuss the formula later this evening. I do not wish to pre-empt that debate by going into detail now. However, there are certain objections in principle to what the noble Lord, Lord Thomson, proposes.
The Broadcasting Act 1990 was absolutely clear as to the duration of the Channel 4 funding formula which it set in place. It made clear that no order providing for different payment thresholds should be made before the end of 1997, as has been explained. The Act was also clear on the duration of the Channel 3 licences. They should continue in force for 10 years, with application for renewal no earlier than four years before the date of expiry.
In bringing forward our proposals to amend the 1990 Act formula, we have made clear that we do not think it right to change the rules applying to the flow of payments between Channel 3 and Channel 4 before 1997. To do that would be unfair. It seems to us that by the same token Channel 3 companies cannot have any specific expectation of arrangements applying after that date. It follows that there is no case for re-opening the timescale for licence renewal as set out in the 1990 Act.
However, there are more general arguments against the proposal to bring forward renewal of Channel 3 licences to five rather than four years ahead of their expiry date. At only halfway through the licence period, the ITC would be less able to make a fully informed assessment of the licensee's performance to date. Indeed, it was the noble Lord, Lord Thomson, himself who made that point during the Committee stage of what became the 1990 Act.
If licence renewal four years in advance of renewal leaves the ITC a short time in terms of assessing the quality of the licensee, leaving only five years of performance and removing the ITC's power to defer 527 consideration of the application seems to me significantly to erode the ITC's ability to assess the renewal of the licence properly.
As I mentioned, the amendment also proposes removing the ITC's discretion to defer considering an application for a licence renewal to a more suitable date. With the renewal of 16 Channel 3 licences to consider and with a variety of market interests affecting different regions, it is only prudent to permit the regulator the flexibility to assess the application at the most sensible time. For those reasons, we oppose the amendment.
§ Lord Thomson of Monifieth
I find that a deeply disappointing and in some ways rather baffling reply. In this major Broadcasting Bill we have probably the last piece of broadcasting legislation this century on such a scale. With it we have the chance to make a fresh start and put right the anomalies of the 1990 Act. Although that Act occurred under this Government, it was in a different mood. There is a fairly general feeling around, not entirely on this side of the Committee, that the 1990 Act has turned out in practice to be pretty disastrous. The bidding system for television contracts left grotesque anomalies between one regional area of commercial television and another.
We greatly welcome the noble Lord's presence at the Dispatch Box but he might have sought to ensure that we try to put right in the Bill some of the more glaring anomalies of the 1990 Act rather than stand on the arguments put forward during proceedings on that Act. They were poor arguments at the time and this is a chance to put matters right. I find astonishing the Minister's resistance to this simple example of at least getting two timescales to coincide with each other and enabling two parts of an integral commercial television system to be dealt with on an even footing. However, this is not the time to pursue such matters. There are many others related to them with which we have to deal tonight. Therefore, I beg leave to withdraw the amendment.
§ Lord Peyton of Yeovil
Before the noble Lord sits down, I wish to say that I entirely agree with every word he said. So far as I am concerned, the 1990 Act is nothing to be proud of. My noble friend has been broadminded, and I hope that he will undertake at least to look carefully again at the amendment. The noble Lord, Lord Thomson, does not say what he has just said without the backing of a great deal of experience and much thought.
§ Lord Thomson of Monifieth
I am grateful for the noble Lord's support. We shall certainly wish to return to the matter on Report when we shall be able to take all the interrelated issues as a whole depending on the outcome of matters later this evening. In withdrawing the amendment, I give notice that we shall return to it on Report.
§ Lord Inglewood
In the light of those remarks, I wish to assure the Committee that we shall pay considerable attention to what Members of the Committee said. They bring with them a considerable corpus of experience and expertise. We shall think carefully and reflect on what has been said.
Amendment, by leave, withdrawn.
§ 4.45 p.m.
§ Baroness Dean of Thornton-le-Fylde moved Amendment No. 146A:
§ After Clause 62, insert the following new clause—
NON-DOMESTIC SATELLITE SERVICES: LICENSING PROCEDURE
(". After section 45 of the 1990 Act there is inserted—
§ "Non-domestic satellite services: licensing procedure.
§ 5A. Section 44(4)(b) shall apply to a licence to provide a non-domestic satellite service as it applies to a licence to provide a domestic satellite service.").
§ The noble Baroness said: This amendment deals with the shortcomings of the Broadcasting Act 1990 and seeks to rectify them. The amendment would add a new paragraph under Section 45 of the 1990 Act bringing non-domestic satellite services into line with the provisions of the 1990 Act covering the BBC and Channel 3 licensees. It creates a fairer competitive playing field by setting similar standards for the commissioning of programmes from independent producers. Under Section 16 of the 1990 Act Channel 3 licensees are required to broadcast a range and diversity of independent productions for not less than 25 per cent. of the total allocated time. Section 186 extended that requirement to the BBC. Section 44(4)(b), to which the amendment specifically refers, extends that provision also to domestic satellite services. In a nutshell, what is missing from the 1990 Act is non-domestic satellite service providers. As such, BSkyB is exempt from the requirements of the 1990 Act.
§ BSkyB is covered by the 1989 European directive Television without Frontiers, which is currently being renegotiated, I gather. That directive requires 50 per cent. of the material to be of European origin and just 10 per cent. from independent producers. However, the directive does not cover sport. Amendment No. 146A is not specifically related to sports.
§ The definition of what is an independent production is covered by another order, the Broadcasting (Independent Productions) Order 1991. I apologise for referring to specific pieces of legislation which are complex, but the issue is simple. It takes into account and changes the 1990 Act to cover non-domestic satellite services.
§ Under the 1991 order, independent producers must use their own facilities, not those of the broadcaster to whom they are selling their programmes. The broadcaster is not allowed to own more than 15 per cent. of shares of the independent producer. I suggest that this amendment would bring about a fairness that does not exist under the 1990 Act, nor under this Bill. There was an oversight in the 1990 Act. Domestic licensees—the BBC, Channel 3 and domestic satellite services—were covered quite specifically by the Act. The requirement was that 25 per cent. of their productions must come from independent producers.529
§ The amendment must be acceptable, on grounds not only of competition but of equity. It must be in line with the declared policy of the Government on independent productions and the interests of diversity and high standards as introduced under the Bill.
This amendment concerns me slightly. As the noble Baroness quite rightly said, it amends the 1990 Act as regards non-domestic satellite services.
It should be remembered that the 1990 Act passed through this place before we had those satellite services. The noble Lord, Lord Thomson, regards the 1990 Act as at the very least disappointing. However, the Act tried to look forward. In many ways it did so rather well, but it did not foresee what would happen in some areas.
There is a difference between non-domestic and domestic satellite services. The amendment would mean a non-domestic satellite service having to contain various European programmes and being subject to the independent productions order. That might be absolutely fine for BBC, ITV or Channel 4. But satellite broadcasters relay specialist programmes. They relay films, for example, and programmes in minority languages. They are highly specialist in the material they broadcast and are different from domestic services. We ought to think carefully before imposing restrictions on the material that could be broadcast. I believe that we all want the maximum opportunity to receive the programmes we want, or to turn them off, and not to have them restricted in this way. I understand the noble Baroness's concerns about the independent productions order and other matters. However, I am not sure that they should apply in these cases.
§ Lord McNally
It is interesting to hear a debate such as this. It reminds us just how quickly circumstances in broadcasting change. During the passing of the 1990 Act and thereafter, I was an adviser to the ITV Association. I therefore remember some of the current thinking about satellite broadcasting. It was a leap into the unknown on the part of those investing; namely, Mr. Murdoch and BSB. At that stage Members on all sides of this Chamber thought that in order to invite the courage needed to invest in satellite broadcasting, it was necessary to give the broadcasters a pretty free hand. For Mr. Murdoch to take on BSB to give us Sky broadcasting was in the circumstances, as has been acknowledged in this debate, a piece of commercial courage.
There comes a time, however, when commercial courage has been rewarded enough. There is no doubt that the strength and power of satellite broadcasting today and as we see it in the future demands of that service some of the responsibility and contribution to the overall benefit of broadcasting that terrestrial suppliers undertake. Ministers could well indicate that the period of grace for satellite broadcasting remaining outside some of the broader responsibilities is coming to an end. They could give fair warning to satellite 530 broadcasters that we intend, either by this amendment or by other means, to bring them into the family of responsible broadcasters.
Perhaps I did not do sufficient homework, but I had assumed that BSkyB, as a UK company, was a domestic satellite service. Perhaps someone will correct me.
I do not see how a UK Act can possibly control services that may come to us from France, Germany, Holland, or other countries not within our jurisdiction. I therefore do not see how the amendment could be made to work.
§ Lord Donoughue
In particular reference to the remarks of the noble Viscount, Lord Astor, we need to focus on the basic principles. We are dealing with the need to encourage independent production and the need to support European production. The decision to exclude these particular satellites was not made on the principle that they are exempt from those imperatives; it was simply a matter of historical chance that they were not taken into account.
I support the point made by the noble Lord, Lord McNally. Now is the time to correct an anomaly. We do not mind that it was an anomaly; we do not mind that a particular non-domestic satellite producer has benefited greatly. That was an award for enterprise. However, that is over now, and we need consistency.
This amendment produces that consistency and the Act ought to contain it. It ought not to prolong a quite illogical exemption that runs contrary to the main imperatives that have to be taken into account. I hope that the Minister will take the amendment seriously. This is in no way a party issue; there is concern and support on many sides. It is not personally against any particular broadcaster. I should certainly be prepared to divide the House on this matter at another time.
The Earl of Stockton
I agree with Members on the other side of the Committee. As the noble Lord, Lord Thomson of Monifieth, among others, will remember, during the Committee stage of the 1990 Act we were very close to introducing a threshold of penetration, at which time non-domestic satellite companies would come under the aegis of that legislation. It was agreed by those involved that a limit should be set by statute to reward enterprise, courage and ingenuity in setting up the system. For reasons beyond the control of this place, and certainly beyond my control, that was not to be.
As a consequence, instead of having a non-domestic satellite company outside the control of the Act and a domestic satellite company within the control of the Act, within a matter of days the two had merged. Indeed, discussions on that merger were continuing even as the Committee stage was held in this place.
Therefore the amendment is entirely reasonable. The penetration threshold of 14 per cent.—the number of households—discussed at that time and agreed by 531 executives of some of the principal companies has now been well surpassed. Now is the moment to bring the companies within the terms of the legislation.
§ Lord Desai
To respond to a point made by the noble Viscount, Lord Chelmsford, as the Minister may remember, I moved a similar amendment earlier, to bring about a level playing field, as we call it.
Once Sky had taken over BSB, the domestic spectrum had been sold to foreign broadcasters. Sky was transmitted to domestic receivers via Luxembourg. The domestic/non-domestic distinction in the 1990 Act has been overtaken by technology and by mergers. The amendment moved by my noble friend is therefore entirely appropriate to the present day.
§ 5 p.m.
§ Lord Inglewood
I am grateful for your Lordships' concern about this matter, particularly the noble Baroness, Lady Dean, who clearly spelt out the reasoning and effect of her amendment. Her desire to promote the European independent production sector, and the UK industry in particular, in the context of European programming content is admirable. However, I am not convinced that the requirements she seeks to impose are either practical or desirable.
We listened carefully to what has been said this afternoon and I should like to reflect on that. However, I shall explain what we see as the general position in relation to satellite broadcasting.
Both terrestrial and satellite channels are already hound by the terms of the 1989 broadcasting directive to secure, wherever practicable, 10 per cent. of their output from producers independent of broadcasters. Given the number of hours broadcast by the satellite channels, that is already a significant requirement. To seek to more than double that requirement by means of this amendment would not be in the interests of the broadcasting industry, especially when significant amounts of independent production for sports, news and game shows are excluded as qualifying towards the European quota.
I note what was said by the noble Lord, Lord Desai, about establishing a level playing field for the competition between BSkyB and the terrestrial channels. I fully understand what I imagine to be the thoughts behind his intervention. But the products of traditional terrestrial broadcasters and satellite broadcasters are not the same. The first and most important requirement for a new entrant satellite broadcaster is to establish the financial viability of his operation. Without access to terrestrial frequencies, that broadcaster needs to start from scratch to win access to the millions of homes which the terrestrial commercial broadcasters automatically reach with both their programme material and their advertising in support of it.
BSkyB is a good example of a much more developed and diverse broadcaster than many others. It is now able to expand and the company has introduced a number of new channels, such as the History Channel. Others, such as the documentary based Discovery Channel, also use significant amounts of European and independent 532 production content. Looking across the complete range of BSkyB channels, I am pleased to note that they seem comfortably to exceed the European broadcasting directive quota of 10 per cent. for independent European production.
We must not forget, however, that although BSkyB is the biggest satellite broadcaster it is not the only one. Satellite broadcasting is a growth area. At the end of 1992 there were some 42 channels. Today there are over 60. Some of the 42 are no longer in business. It is a high cost, high risk business which as yet attracts a total viewing audience of only 8.7 per cent. It is also a highly consumer-led industry, catering for specialised tastes. It needs to research its potential audiences very carefully. For some thematic channels, especially nostalgia movies, soaps or sport, the question of independent production quite simply does not arise. For others, such as those eight catering for non-European language populations, 25 per cent. would be an onerous and, indeed, impossible requirement.
We are comfortable with the existing obligations in the 1989 broadcasting directive precisely because they allow for a diversity of channels, and recognise the problems of new entrants, particularly where commercial and cost considerations are concerned. The flexibility allowed for in the current broadcasting directive has encouraged companies such as Turner Broadcasting to establish a European base in the United Kingdom. I would also like to think it plays a part in encouraging potential developments such as the one announced today of a £225 million international film and television studios and theme park to be opened by Warner Brothers and MAI at Hillingdon. Ten per cent. of independent programme content, where practicable on individual channels, in this rapidly expanding sector can only be good news for United Kingdom and European production companies.
I have taken a little time trying to explain the context of the satellite broadcasting industry as we see it. We believe that there is a real risk that if one imposes too high a threshold of the kind proposed in the amendment it may fail to draw broadcasters. That will be to the detriment of potential independent producers in this country and production of television material in Britain.
We must try to ensure that there is sufficient diversity of transmitters—if I can call them that—of television material that will create a market for the material produced in the United Kingdom. We are anxious not to put hurdles and barriers in the way of that happening in the form of driving away potential broadcasters who may use that material.
I listened carefully to the arguments put forward lucidly this afternoon by Members of the Committee and hope that, in turn, the Committee will consider carefully the points I have put forward in order to explain my standpoint at this Dispatch Box.
§ Baroness Dean of Thornton-le-Fylde
First, I thank all those who have taken part in the debate and the Minister for the detailed and considered way in which he responded to the amendment. However, I should like to comment upon one or two points that were made.
533 I feel that we sometimes tend to apply a higher threshold on our producers of television programmes than we apply to non-domestic providers. When we talk about small companies, it is worth looking at the annual turnover of some of our regional television companies, because this Act applies to them. I do not believe that equity comes into the equation. The noble Lord, Lord Astor, said that the amendment would restrict choice; that satellite is more specialised. That is not the intention of the amendment and I do not believe that would be the result if the Minister accepted it.
I heard the Minister's response and am not absolutely convinced by it. Before I conclude, I should like to refer specifically to the point made by the noble Viscount, Lord Chelmsford, who focused sharply on what the amendment means. At the moment we are discussing BSkyB, but the amendment is not aimed at BSkyB; it is aimed at non-domestic satellite services in the belief that when the Bill becomes an Act it may put us ahead of the game for once, which certainly was not the case in 1989. But the noble Viscount, Lord Chelmsford, is absolutely right that Section 45 of the 1990 Act deals with the licensing of non-domestic satellite services. Section 44 deals with domestic satellite services. The difference between the two is that, whereas Section 44 requires the 25 per cent. from independent producers and the European origin content, Section 45 specifically does not. The amendment would bring Section 45 into line with Section 44 of the Act.
I shall reflect on what the Minister said and read Hansard carefully. I felt that there were some positive messages coming through. I may come back to the matter on Report but, in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendment No. 146ZA not moved.]
§ [Amendments Nos. 146B to 150A not moved.]
§ [Amendment No. 151 had been withdrawn from the Marshalled List.]
§ [Amendments Nos. 151B and 151C not moved.]
§ [Amendment No. 152 had been withdrawn from the Marshalled List.]
§ [Amendments Nos. 152A to 152E not moved.]
§ Viscount Chelmsford moved Amendment No. 153:
§ Page 80, line 1, at end insert ("relevant").
§ The noble Viscount said: In moving Amendment No. 153, I wish to speak also to Amendments Nos. 154 and 157 to 161. Part III of Schedule 2 lists those services which are licensed by the commission and which are thus subject to various restrictions. The list is basically one of programme providers. However, paragraph 1(2)(f) extends the list to include local delivery services. In general the Bill recognises the difference between a programme provider and a delivery operator. Its restrictions as to the number of licences held and to audience share are aimed at programme providers, not at delivery operators. That recognises the interests of the 534 delivery operator which are to transmit material for as many different programme providers as possible. His competitors are rival delivery operators. He has no interest in preventing programme providers from broadcasting. It therefore came as a surprise to cable companies, whose trade is that of delivery operators, to find that, under paragraph 1(2)(f), they are included in the restrictive provisions. I understand that in discussions with the ITC they were reminded that they had editorial control of local advertising and also foreign non-European programmes delivered by them. I am told that they have in fact a statutory responsibility to vet such local advertising and that the only foreign programmes are from a Russian channel called Moskvar. It is arguable that those editorial responsibilities are so de minimis that the Government could delete paragraph 1(2)(f) entirely. Indeed, that would make everything very much simpler. However, the cable companies decided to ask for a more modest solution. Their association approached me to seek an amendment which would limit the effect of paragraph 1(2)(f) only to those situations where the cable companies act as programme providers. The amendments are drafted to achieve that.
§ At this point it is best for me to advise the Committee that I am a director of EURIM and that the CCA is a member, as are others from different parts of the broadcasting and communications world. However, I do not work for any cable interest; nor do I personally take any money from any party. I am moving the amendment because I was asked to and because it seems to me a reasonable thing to do, and not for any other reason.
§ The wording of Amendment No. 154, the principal amendment, may look complex; it is actually quite simple. It restricts the effect of paragraph 1(2)(f) to circumstances where the companies act as programme providers, using the definition for the licensed service set out on page 66, line 14, of the Bill. It uses the Government's own definition. I should add that without the amendment the industry will find itself double-counting audience time, once in respect of the programme concerned and again for the local delivery operator. Should the amendment be accepted, the other amendments in my name fall logically into place, including the deletion of references to the local delivery services on page 90, lines 38 and 51, in order to remove cable . companies from cross-media ownership restrictions.
§ In local delivery services the true competitors of the cable companies are MTL, the BBC's transmission arm, SES Astra and, perhaps sometime in the future, British Telecom. None is subject to restrictions about licences, audience share or ownership. My amendments seek to return the cable companies to the same position, a position which they have historically enjoyed. I beg to move.
§ 5.15 p.m.
§ Lord Inglewood
My noble friend's amendments, Amendments Nos. 153 and 154, seek to meet the concerns of the cable industry about how audience shares are attributed to their services. I recognise that holders of local delivery licences usually transmit 535 programmes which are provided for them by other broadcasters as part of the programme service. As my noble friend pointed out, they are normally only held accountable for the content of any advertisements and any foreign satellite programmes they may relay which are not otherwise licensed for broadcasting in the United Kingdom. My noble friend's amendments seek to ensure that it is only these programmes which are included in the audience share attributed to the local delivery licence.
It has not been our intention that programme services provided to a local delivery service by another channel which holds a UK licence should count towards the cable service's audience share. In our view the drafting of paragraph 3(1)(a) of Part III of the schedule ensures that audience time attributable to a service would be produced,by ascertaining, in relation to every person who in that period watched any programme included in that service, the total amount of time he spent in that period watching programmes so included".The wording means that if a programme is delivered as part of a licensable programme service, regardless of whether it is delivered by cable, satellite or terrestrial television, the watching of it will be included against that programme service and not against the local delivery service or, as the case may be, satellite service. In our view there is no question that a programme provided via, say, Channel 3 which is received through a local delivery service would count towards both the Channel 3 service and the cable service. If it is a Channel 3 service it will only count against that service regardless of the means of delivery. I hope that that reassures my noble friend and meets his point.
Perhaps I may talk briefly about the practice. The ITC is likely to use statistics provided for it by the Broadcasting Audience Research Board—BARB—which already provides viewing figures for the industry. These are gathered by means of a panel consisting of some 4,700 households spread geographically across the UK. The viewing of programmes by all members of the household over the age of four is recorded electronically by means of a so-called people meter, regardless of the means of delivery used. The figures provided for the viewing of BBC1, for example, reflect viewing by those who receive the signal through terrestrial as well as through local delivery service. Although in practice BARB is able to say what percentage of viewing of BBC1 was in cable and satellite homes, it would not be able to identify what viewing of that channel was attributable to each local delivery service.
We conclude that the amendments are not necessary as viewing of licensable programme services and other television channels which are delivered through cable will not be counted against that local delivery service. In fact, the effect of my noble friend's amendments would not be quite the one that I think he intends. In strict terms it would mean that the only programmes delivered through a local delivery service which could he counted towards audience share would be those for which cable companies were deemed to have editorial responsibility; namely, satellite services which were not licensed in the UK but were relayed by means of cable and the cable service's own advertisements. The result 536 would be that those people who chose to watch services like BBC, ITV or Sky but received them through cable would have to he discounted from the total television audience. That, in turn, would distort the overall picture and lead to the disappearance of audience share statistics for those programme services, such as, for example, Live TV, which are delivered exclusively through cable.
I appreciate my noble friend's wish to ensure that local delivery services are not subject to unnecessary regulation as they are essentially a means of delivery rather than a broadcasting service in their own right. However, to exclude them from the 15 per cent. audience share threshold altogether would open up a damaging loophole in our policy. As we believe the amendments are not necessary to protect the interests of local delivery licence holders—I hope I have reassured my noble friend about that—and as we believe that they do not achieve the objective that is intended, I ask my noble friend if he will consider not pursuing them.
I thank the Minister for his reply, which was a long and detailed response on double counting. That was a side issue to my amendment, which was effectively asking the Government to look at delivery operators rather than service providers. I still hope that we may find some way to exclude cable companies from the restrictions that are put on service providers. I shall study what the Minister said. It may well be that I shall want to come hack to this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendment No. 154 not moved.]
§ Baroness Dean of Thornton-le-Fylde moved Amendment No. 155:
§ Page 80, line 39, leave out ("three") and insert ("two").
§ The noble Baroness said: This part of the Bill deals with multiplexes. At present we suggest that it provides for an in-built potential monopoly situation if one person bids and receives licences for all three. At the moment, in the first stage of development of digital television and radio, six multiplexes will be available. One of those will go to the BBC, one to the independent companies such as ITV, including Channel 4 and S4C, and half to Channel 5, leaving three-and-a-half multiplexes.
§ We suggest that enables one person to develop immediately a monopoly situation. Against the background that we want pluralism and diversity, we suggest that the Bill as it stands is flawed. The amendment will reduce the number of multiplexes not from three to one but from three to two because we do not want to discourage digital television getting off the ground.
§ There is another factor. We are not yet clear about the strategic importance of multiplexes within broadcasting in this new digital age. We believe that we know the direction in which it is going but we arc not absolutely sure. The Government's proposals in the White Paper did not refer to three multiplexes being able to go to one purchaser. In fact, the Government probably 537 had it right originally in the White Paper when they spoke about establishing a maximum below three. I beg to move.
§ Lord Inglewood
I am most grateful to the noble Baroness who has clearly set out her concerns and explained why she is proposing that the maximum number of television multiplex licences that one person might hold at one time be reduced from three to two. The launch of digital terrestrial television will carry with it significant long-term investment. There will be six multiplexes initially and more may become available, perhaps with more restrictive coverage. Our original proposals were, as the noble Baroness said, to restrict companies to the ownership of two television multiplexes, ensuring thereby competition between at least three companies. However, consultation produced significant feedback from the industry that it would be necessary to allow companies to reap the maximum possible economies of scale from rolling out infrastructure from more than one multiplex. Many in the industry also argued that companies would only consider entering the market if they could see a prospect of controlling three licences. Indeed, many actually argued for a monopoly.
A higher ownership threshold would also allow multiplexes to develop a sufficient base of subscription television to enable them to make a reasonable return on their investment. We have taken these arguments on board. The revised limit of three multiplexes helps to make digital terrestrial television a better business proposition while continuing to ensure that there is some competition in provision to the benefit of broadcasters.
There is one point I should like to emphasise. There is no requirement under our proposals that there be only two providers altogether. However, our proposals allow the ITC the flexibility to bundle multiplexes in a way that might best result in the successful launch of digital terrestrial television. We have also taken powers in paragraph 5(3), which will allow the Government to respond to future developments in the market and to amend the position should that prove sensible, particularly as more multiplexes come on stream.
I am sure that we are in agreement on both sides of the Committee that it is important to ensure that digital terrestrial television is given every opportunity to succeed. I very much hope that the noble Baroness will now understand the thinking behind the change that we effected between the White Paper and the introduction of the Bill.
§ Baroness Dean of Thornton-le-Fylde
I appreciate what the Minister says. We want to see digital television get off the ground. One must bear in mind that one multiplex can provide between two and 10 programmes. The Bill as it stands will put multiplexes out for licence and there will be criteria which the ITC will apply such as the area covered, the timetable, programme variety and fair competition. We have difficulty reconciling fair competition, on the one hand, with a company having a potential monopoly on the other, bearing in mind that licences for programmes are automatically awarded and do not have to meet a criteria as such in the Bill as it 538 stands. We believe that there is a danger here of a monopoly developing and that this amendment would avoid that. I heard what the Minister said and at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendment No. 156 not moved.]
§ The Deputy Chairman of Committees (Baroness Serota)
If Amendment No. 156A is agreed to, I shall not be able to call Amendments Nos. 156C to 161ZG.
§ Lord Thomson of Monifieth moved Amendment No. 156A:
§ Page 88, line 15, leave out from beginning to end of line 39 on page 93 and insert—
("Restrictions on links between newspaper proprietors and licence holders
§ 2.—(1) A person who is the holder of a licence to provide a national or local service specified in sub-paragraph (2) below may not run, or become a participant in a body corporate which runs, a local or national newspaper—
- (a) without the consent of the relevant authority, or
- (b) if the Monopolies and Mergers Commission report that the running of the newspaper by the person who holds the licence or the participation (as the case may be) in question may be expected to operate against the public interest.
§ (1A) A person who runs a local or national newspaper may not become the holder of a licence to provide a national or local service specified in sub-paragraph (2) below or a participant in a body corporate which holds such a licence—
- (a) without the consent of the relevant authority, or
- (b) if the Monopolies and Mergers Commission report that the holding of the licence by the person who runs the newspaper or the participation (as the case may be) in question may be expected to operate against the public interest.
§ (1B) In any case—
- (a) where—
- (i) a person to whom sub-paragraph (1) above applies runs or is a participant in a body corporate which runs a local or national newspaper, or
- (ii) a person to whom sub-paragraph (1A) above applies holds a licence to provide a national or local service specified in sub-paragraph (2) below or is a participant in a body corporate which holds such a licence; and
- (b) there is an increase in any of the following—
- (i) the level of that person's participation in that body corporate;
- (ii) the aggregate market share of the newspapers in question;
- (iii) the aggregate audience time attributable to the services in question (determined in accordance with paragraph 3 of Part III of this Schedule),
§ the relevant authority may refer that increase to the Monopolies and Mergers commission for investigation.
§ (1C) A reference may not be made under sub-paragraph (1B) above more than 3 months after the relevant authority first knew of the increase in question (or ought to have know from information available to it), but such a reference shall be made in anticipation of an increase within paragraph (b)(i) of that sub-paragraph if the participator makes a written request to the relevant authority for such a reference.
§ (1D) For the purposes of this paragraph the market share of a newspaper shall be determined in accordance with regulations made by the Secretary of State which shall be laid in draft and approved by resolution of each house of Parliament before being made.").539
§ The noble Lord said: In moving this amendment, with the leave of the Committee I shall speak to the two amendments grouped with it, Amendments Nos. 161A and 161B, because they go together.
§ These amendments deal with the arrangements for newspaper owners to seek ownership of television companies. They deal with what is now popularly called the "20 per cent. rule". In these amendments I am seeking to remove that rule and I shall explain why in a moment or two.
§ Currently, under Schedule 2 of the 1990 Act there is the general rule that newspaper companies of whatever size should not have more than a 20 per cent. interest in a terrestrial television broadcaster or radio station. The new Bill changes that to reflect changing circumstances. We all recognise and accept that. Perhaps I may say in parenthesis that I am perhaps less starry-eyed than some who believe that by encouraging greater cross-media ownership and larger units in the media field we are going to create world-class companies and compete with the Warner Brothers and the Disneys of the global economy. I believe that there is a good deal of exaggeration about that. Nevertheless, circumstances have changed and we accept that.
§ National or local newspaper owners who want to own a terrestrial television or radio licence are now simply to be subject to a case-by-case public interest inquiry by the ITC, but only where the newspaper group in question has a newspaper market share of under 20 per cent. That does not seem to be logical and forms the objection of principle which I and other Members of the Committee have as regards Schedule 2, paragraphs 4 and 5 on pages 89 to 92 of the Bill. They use arbitrary limits to prohibit participation in markets which ought to he open to all unless—and I emphasise this—the public interest is adversely affected by any particular participation.
§ The Bill as it stands provides that any national newspaper group with more than 20 per cent. of the market cannot have more than a 20 per cent. interest in a Channel 3 licence, a Channel 5 licence or a radio licence, but any other newspaper can. According to my sense of fairness, it does not make sense that a national newspaper group with, say, 19 per cent. of the market may fully own such a licence, subject to the public interest test, whereas a group with a 21 per cent. market share must he banned absolutely from owning it, regardless of its good or bad effect on the public interest. Equally, it is nonsense to suggest that a participation level of 19 per cent. by one larger newspaper group may be allowed but that a group with a level of 21 per cent. should be prohibited absolutely. I do not see how one could regard such a system as anything other than arbitrary. It is difficult to see how the public interest can be adequately served by such a system.
§ We all know what we are talking about in practical terms. Only Mirror Group Newspapers and News International are affected by the prohibition in the 20 per cent. rule as they are the only newspaper groups with more than 20 per cent. of the national newspaper market. All other newspaper companies are free to 540 invest heavily in mainstream television, subject to the Bill's public interest test. Just two companies are being treated unequally. I hope the fact that I have tabled this and similar amendments will enable us to create a fairer situation all round. This is not a vendetta against Mr. Murdoch and all his works.
§ Returning to the specifics of the amendments, the first seeks to leave out the provisions which introduce the arbitrary 20 per cent. barrier, together with attendant definitions, and instead to make all licence holders and newspaper owners subject to a public interest inquiry. The requirement is that the ITC should first look at the situation and decide whether there should he a full MMC inquiry or whether it is plain that the public interest will not be adversely affected by the level of cross-media ownership in question. So where newspapers and television are involved, ownership changes would be reviewed on a case-by-case basis under the public interest and would be decided on their merits. It may be expected that where the level of participation is very low, the ITC will consent so that an MMC inquiry will not be required. Bringing all the players in the market within the public interest test will undoubtedly increase the level of the protection for the public interest, but it will also allow the industry to operate more fairly.
§ I can deal briefly with the second of my amendments. It is a technical amendment which seeks to replace the definition of "newspaper proprietor" although it is not intended to change the meaning from what is in the Bill at present.
§ The third amendment would allow participants or would-be participants to ask for clearance in advance so that they may know where they stand before investing large amounts of money in the business. Unlike the Government, I believe that the ITC should he required to come to a decision within a specified time. I have proposed a period of one month. I am not dogmatic about that, but I propose that there should be a time limit which provides just enough time to determine whether there is something which needs investigation. If investigation is needed, the matter is to he referred to the MMC within the one month allowed. The MMC will have three months to make its inquiry unless the Secretary of State allows an extension of time. I do not believe that the Government's attitude of allowing the ITC unlimited time to make its inquiry can be justified on any grounds.
§ The amendment also replaces some of the provisions in the Bill which provide for public interest inquiries. The replacement is necessary not because I disagree with the broad thrust of this part of the schedule, but because in my view the provisions are too narrow. I want to widen the scope of the inquiry to all players in the market and to have those inquiries carried out by the MMC.
§ On that point, perhaps I may deal with a slightly wider matter than the 20 per cent. rule and advise the Minister that I am concerned that the Government should make arrangements to have the public interest tests applied in the most rigorous and effective way. We were happy to hear the Minister confirm on Second 541 Reading that the Bill would be subordinate to the Fair Trading Act and the normal workings of the Office of Fair Trading. However, the fact of the matter is that there is some confusion about the provisions in this sphere in both the television and advertising industries as well as among the general public. There is a feeling that the audience share limits proposed in the Bill imply a potentially higher level of ownership than is likely under the competitive rules of the OFT. In moving Amendment No. 156A, I have dealt with a slightly wider point, but I should like to press the Government for further reassurance that anti-competitive positions will not be permitted.
§ In conclusion, the amendments would broaden the use of the public interest test for cross-ownership and, in doing so, would treat all companies equally and on a case-by-case basis. I commend the amendments to the Committee. I beg to move.
§ 5.30 p.m.
The Earl of Stockton
I should like to support the noble Lord, Lord Thomson of Monifieth, in this amendment. It seems to me that it makes perfect sense in a very fluid series of interlocking media industries to say that the public interest should be the primary criterion—in fact, the only criterion—by which such matters are judged.
We are now moving from broadcasting to narrowcasting. We are moving from being providers of newspapers to being providers of data bases which may or may not be supplied down cables or wires or on surplus frequencies in the multiplex. The situation is such that the previous definitions with which we have been working will no longer be applicable in a far more immediate future than I suspect many of us are prepared to grasp. It seems to me that the noble Lord's amendment meets exactly the repeated concerns of your Lordships in these discussions by a very simple, and I think elegant, formula.
My noble friend has just made a rather convincing argument for an amendment; but I am not sure that his argument is relevant to the amendment moved by the noble Lord, Lord Thomson of Monifieth. This amendment is not about new technology or anything like that. It is simply about ownership. It seeks to amend the ownership schedule which deals with the 20 per cent. rule. I am sure that all of us consider that we do not want large concentrations of ownership in either the broadcasting industry or the newspaper industry; nor do we want an overlap of such a high concentration as to cause us concern.
The noble Lord, Lord Thomson, in effect asked, "Why 20 per cent?" The answer is, "Why not?" because 20 per cent. is the percentage that we have lived with, as the noble Lord explained during the 1990 Act. Therefore, I do not accept the noble Lord's argument about unfairness arising to those with a market share of 21.1 per cent. as opposed to 19.9 per cent. It may be said that that is unfair but everybody, whatever side of the divide they are on, knows what the rules are. I do not think that it is sustainable to argue that there should not be a percentage rule because of that.
542 The Bill rightly says that broadcasting is special in this country. Broadcasting is not like any other industry. It has an influence on our society and nation which is out of due proportion to perhaps any other industry. I am sure that the noble Lord would agree with that. Therefore, in drawing up the Bill I think that the Government were right to say that there must be some restrictions on what is a fair percentage. I think that the Government got it exactly right with 20 per cent. because that will stop undue concentrations of newspaper ownership affecting television. It will allow plenty of people to operate in the market. Therefore, with great respect to the noble Lord, Lord Thomson, I do not think that his amendment is right and I hope that my noble friend will resist it. I am sure that he will have a convincing argument for doing so.
§ Lord Wyatt of Weeford
At a previous stage in this Committee, I referred to my interest in News International and News Corporation. If any noble Lord would like me to recite those interests again, I am happy to do so. They did not arise because of my membership of this House; I had them long before I became a Member of your Lordships' House.
I should like to support the amendment which I think provides a fair and sensible arrangement. Some things about News International have been forgotten. First, it has no regional newspapers, and so when one says that it has an undue proportion of readership of newspapers in this country, that is untrue. It is in fact in a small minority. Again, it has no consumer magazines which are widely read by all manner of people. News International has only 40 per cent. of Sky. It is a minority shareholder. It may be that Mr. Murdoch is an active 40 per cent. shareholder, or representative of that shareholding, and that is no doubt to the benefit of BSkyB, but it has only 4 per cent. of this country's TV audience. So it can hardly be said to be a monopoly, or that it should be restrained from competing, for example, with the BBC which has 44 per cent. of the country's viewing audience.
I do not want to labour those points, but it is clear that the Bill as framed is unfair to anyone who happens to be concerned with News International or News Corp. On reflection, perhaps the Government will consider accepting the amendment.
§ Lord Desai
Perhaps I may ask a general question in relation to the amendment. It relates to the relationship of the Bill to the Fair Trading Act. Why do we need conditions to be laid down in the Bill? Why cannot we just trust the Fair Trading Act to take care of the matter? There are concentrations of ownership. We have a mechanism under which the Office of Fair Trading can proceed. I ask the question out of curiosity, because I am somewhat confused. Why do we need to lay down these limits?
§ Lord Colwyn
I regret that I find the whole issue of the 20 per cent. rule bizarre and difficult to understand. For a start, I believe it to be unnecessary. A public interest test has already been expressly, although perhaps not perfectly, drafted into the Bill with the issue of cross-ownership between newspapers and broadcasters. It 543 is clear that that would suffice whatever the size of the newspapers involved. Why is the 20 per cent. rule there if a public interest test operates already? Its existence is artificial. I hope that this afternoon we shall not become part of a commercial battle.
Noble Lords opposite will try to change the 20 per cent. to a 25 per cent. rule in their Amendment No. 156E. Conveniently, the Mirror Group would then be excluded from its application. The reasons for any proposed change are not clear. Could it be that News International already has satellite TV so it deserves to be treated roughly? But the Mirror Group already has cable TV with its subtle and intellectually challenging news bunny. As far as I am aware, the Mirror Group is, and always has been, free to enter the satellite world as well.
The 20 per cent. rule business is a nonsense. I ask the Committee to look at its implications. Just two companies are affected by it as it stands at present—the Mirror Group and News International. It is the ownership of popular newspapers that they have in common that causes them to deserve this stigma.
If the 20 per cent. rule becomes the 25 per cent. rule, News International only is affected because of its ownership of the Sun. In fact, any owner of the Sun would be caught because of its circulation. Effectively, we should be punishing the Sun for being too good. It may not be my cup of tea; it may not be that of Members of the Committee. So its circulation figures are not our fault, but nor are they the fault of the owners. They are, I am afraid, the fault of the readers.
Successful circulation figures would thus keep News International out of mainstream TV which all other newspapers can get into. Perhaps the Mirror Group has thought of that too. It cannot make sense for a newspaper group to have to get its circulation figures down below a threshold to avoid this absurd success penalty. Unless steps are taken to get a newspaper's market share down to below 20 per cent., one can still buy only 20 per cent. of one ITV company. It is all very different if one has 19 per cent. That is about the total market share of every British national broadsheet paper—dailies and Sundays—put together.
If one has 19 per cent. one can buy TV companies up to an overall audience share of 15 per cent. I am not sure whether that is in line with the Government's views on plurality. But let us remember that it is no longer a share of one company; it is a share of the total television audience. That makes a huge difference.
One percentage point more and one has the automatic imposition of these strict limits slapped upon one. One percentage point less and one can have a substantial newspaper and television business.
There are many companies with huge media interests which will not come within the 20 per cent. rule, because the combination of media which they own happens not to offend that rule. Pearson or the Daily Mail, to name but two, are excellent and successful companies, but just because their interests are spread around all the different sectors of the great media market far more widely than News International—magazines, regional newspapers, terrestrial channels, and cable 544 radio—they are not subject to these whimsical and arbitrary rules. They will be subject only to the public interest test just like everyone else.
Even the live TV news bunny would find it hard to smile if the 20 per cent. rule disappears. It is unnecessary, unfair and inefficient. I hope that my noble friend will consider the amendments carefully. They would treat everyone equally and allow the MMC to apply a public interest test. At the same time, I hope that when the amendments tabled by the noble Lord, Lord Donoughue, come up, we shall reject them.
§ 5.45 p.m.
§ Lord Harris of High Cross
As I have not had an opportunity previously to take part in debates on the Bill, I have to declare a direct interest in the matter as one of the six independent national directors of Times Newspapers which is a subsidiary of News International. In that role, my responsibilities relate to five titles only—The Times and the Sunday Times and the three educational and literary supplements. I suspect that were they to be produced by the BBC they would be described as an example of public service publishing. Yet the circulation of those five papers, for example, contributes towards the market share that rules out, as the noble Lord, Lord Thomson, said, News International from certain capabilities in the broadcasting field.
I find myself in total agreement with the noble Lord, Lord Desai, who said that these matters can be left to the ordinary processes of fair trading, the MMC, and all of that. I strongly oppose the noble Viscount, Lord Astor. He seemed to say that we should perpetuate controls and restrictions. He did not quite come to the rationing of newspaper readership into the indefinite future.
At later stages, if there is an opportunity, I might refer to an extensive piece of research conducted in 1994, I think, by Arthur Andersen, which had a sample of 30,000 for some parts of the survey. It looked at the average time devoted by people to watching television, listening to the radio, and reading newspapers. That is a single market for information, news, entertainment and so forth.
The conclusion was that watching television occupied 60 per cent. of the average weekly time devoted to those activities; listening to radio accounted for 28.5 per cent; newspapers, in total, took 9 per cent.; and magazines a mere 2 per cent. We are becoming too excited about the modest role played by newspapers—dominance, press barons and all that stuff—which reflects the old party political knock-about which I was so glad to hear the noble Lord, Lord Thomson of Monifieth, scrupulously avoid.
As I said in my original remarks, my contribution to this debate relates to my experience during the past six or seven years as an independent director of Times Newspapers. The Times is run wholly separately and independently under its editor and the hoard has no regulation. The job of an independent director is to ensure that the editorial process is wholly removed from proprietorial pressure. The same applies to the Sunday Times and the three supplements under their editors.
545 I have not mentioned the Sun. Ownership of the Sun alone would put any newspaper publishing company beyond the pale, according to the noble Viscount, Lord Astor, because the Sun, over which I have no influence or control, has more than a 20 per cent. share of the national readership. Indeed, the Daily Mirror titles have more than a 20 per cent. share. I strongly support the amendment tabled by the noble Lord, Lord Thomson.
§ Lord Inglewood
The amendments of the noble Lord, Lord Thomson, as he fairly said in his opening remarks, taken together would alter fundamentally the way in which we intend to regulate cross-holdings between newspapers and broadcasters. They would remove the market share limits which we intend to set for both national and local newspapers, and for broadcasters investing in newspapers. Instead, regulation would be reliant upon the application of the public interest test alone. Under these proposals, it would he for the Monopolies and Mergers Commission to determine whether a proposal was in the public interest. The revised public interest test would apply not just to the control of broadcasters by newspaper groups and vice versa, but also to participation by way of minority shareholdings.
With the agreement of the Committee, I wish to explain the Government's position and to comment on some of the points arising from the noble Lord's amendment. I wish to deal first with the removal of the newspaper market share thresholds. The current rules prevent any national newspaper group from owning more than a 20 per cent. stake in holders of licences to provide a Channel 3 service, a Channel 5 service, a domestic satellite service and national radio services. These restrictions will be relaxed in the Bill but the core concept at the heart of our policy allowing greater cross-holdings between media is that those who enjoy a position of dominance in the national newspaper market—we believe that this is a distinct phenomenon from local newspaper markets—should not also be allowed to become dominant broadcasters and vice versa. Uniting the leading sources of the national news agenda with the most potent sources for influencing opinion through broadcasting, carries the risk of concentrating too much power in the hands of one organisation. The proposed 20 per cent. market share threshold for national newspapers will continue to prevent those exceeding the threshold from controlling licences to provide a Channel 3 service, a Channel 5 service, a domestic satellite service and national or local radio services. The 20 per cent. and 50 per cent. thresholds for regional and local newspapers will prevent the most dominant newspaper groups from controlling broadcasters operating in the same region. They do not, however, prevent them from entering the television or radio market altogether.
I do not believe that it would be right to allow newspaper acquisitions of broadcasters to be entirely dependent on the judgment of the broadcasting regulators and the MMC. There must as a matter of public policy, which it is right for Parliament to decide, 546 be a cut-off point above which a newspaper group is simply too big to be allowed to become one of the more powerful broadcasters as well. Similarly, it must be right that large regional newspaper groups should not be able to secure a more dominant position in a particular region through ownership of the regional Channel 3 service, or local radio licences, without Parliament setting an appropriate threshold.
I am not persuaded, therefore, that it is right for us to abandon the market thresholds for newspapers and simply to rely on the public interest test. Clear thresholds provide a measure of certainty for the industry, which the simple reliance on a public interest test would remove. They will also insulate the regulators from special pleading and other pressures that may be brought to bear on them if there is no threshold.
On the public interest itself, the Government concluded, after consultation, that it was right for the broadcasting regulators to retain their role in determining whether a company should become a licence holder. Both the Independent Television Commission and the Radio Authority have a considerable understanding of the media industry. We concluded that they would best be able to judge where the public interest lies in protecting plurality and diversity, which is at the heart of the test we propose. We would expect that, in applying the other elements of the test, which involve economic considerations, the broadcasting regulators will consult the Office of Fair Trading. We have not made this a requirement in drafting the test because we understand that in practice, the ITC, the Radio Authority and the OFT keep in touch with one another on matters of policy involving broadcasting and economic considerations. We did not therefore need to compel them to do what is already their standard practice.
I am also concerned that these amendments would extend the public interest test to participation by way of minority shareholdings. In the Government's view, this would only add bureaucracy and reduce transparency. If there is a case for applying the public interest test to participation, and I am not persuaded that there is, there is little point in applying it to stakes below the level at which shareholders might be regarded as being able to exert a material influence. We intend to bring forward revised proposals for regulating secondary holdings, but these will be based on absolute limits and will not involve a public interest test.
I should also add that the noble Lord's amendment envisages a number of circumstances in which a group's holdings in newspapers and broadcasters could be referred to the MMC for consideration; namely, if it increases its levels of participation, its aggregate share of the newspaper market, or its aggregate share of audience time. This would mean that even where a company had acquired a licence or a newspaper it would still face the continuing uncertainty of having to satisfy the public interest test as its circulation or audience levels rise. That would undermine the ability of media companies to plan their business. The test proposed in the Bill is intended to be a one-off test, applied on the 547 acquisition of a newspaper or broadcaster, not one which can be applied continually as and when market shares increase.
We do not see that the sole authority which the noble Lord proposes for the MMC in applying the public interest test is desirable. We consider that the ITC and the Radio Authority are better able to judge matters of plurality and diversity in broadcasting, which are central to the objectives of this Bill and to the separate broadcasting industry ownership regime. The formal involvement of the MMC in this process would, in the Government's view, serve only to complicate the regulatory structure through the addition of another regulatory body in the process of determining whether a newspaper group should be allowed to become a licence holder.
I wish to turn to a point raised specifically by the noble Lord, Lord Thomson; that is, that media ownership regulation in no way inhibits the normal operation of competition legislation. That is absolutely clear. In responding to a point raised by the noble Lord, Lord Desai, we believe that, first, we have competition legislation which is intended to regulate competition and is based on economic considerations of what is involved in a commercial sense. In addition—and I have made this point on a number of occasions in this Chamber—we believe that the media are so important, because of their effects on the way in which people in this country obtain information and the relationship between the media and democracy and so forth, that it is appropriate to have a different set of rules which overlie the generally applied competition policy rules for the reasons I have just described.
Should a merger between a newspaper group and a broadcaster fall to be considered under competition legislation then, of course, the Secretary of State for Trade and Industry and the Office of Fair Trading and, where appropriate, the MMC will have a role in determining whether that merger should proceed. But in such a case, the OFT and MMC would primarily be concerned with the economic consequences of the proposal and not with questions of plurality and diversity.
The amendment also provides the Secretary of State with powers to determine the method by which newspaper market share is to be calculated. In bringing forward this Bill we have made it clear how we think newspaper market share should be calculated by including the method on the face of the Bill. I see no advantage in leaving this to be determined by order. On the contrary, I can envisage that winners and losers would be constantly lobbying the Secretary of State to change the method of calculation for the benefit of their newspaper business. I think it is better that such rules for calculation remain on the face of the Bill.
In this rather long contribution to the debate I have endeavoured to set out the Government's stall. It is important to have an upper threshold beyond which the most dominant newspaper groups should be prevented from also becoming dominant broadcasters, while at the same time remaining free to develop broadcasting 548 interests in emerging markets. It is right that Parliament should set that threshold rather than leaving it for the regulators to determine.
The ITC and the Radio Authority are best placed to consider matters of pluralism and diversity which are at the heart of the public interest test and, where appropriate, they will consult the OFT on economic considerations. We see no need to have the formal involvement of the MMC in applying the public interest test. But where a merger falls to be considered under normal competition legislation, the MMC will continue to consider medium mergers where appropriate.
The noble Lord's amendments would effectively remove the distinctive role which the ITC and the Radio Authority play in policing ownership in the broadcasting industry and the distinctive system of controls which recognises the uniqueness of that industry.
§ 6 p.m.
§ Lord Wyatt of Weeford
Perhaps the noble Lord will allow me to intervene. I listened with great interest to what he said. His government is the champion of deregulation, the market knows best and free competition. Why, then, does he propose to shackle one of the most successful competitors in the country instead of leaving it to carry on in the way described by the noble Lord, Lord Thomson, and leaving it to the public interest? Why should he also shackle the Daily Mirror? That is an unreasonable point of view too.
§ Lord Inglewood
I was endeavouring to explain to the Committee that we believe it right, when dealing with the media, to take into account the fact that the media are unlike any other industry. As I said, they play such an important part in our lives in respect of providing information and as an important element in the background to our democracy. As I explained, against that background, so far as the business and economic aspects of those industries are concerned, we believe that the general rules, as practised right across the board in respect of competition policy, should apply.
However, as I also said—it is entirely consistent with the Government's position and, I believe, equally consistent with the generality of the policies advocated by the parties on the Benches opposite—we believe that the media cannot simply be left to find their own level in a marketplace which is regulated by competition policy alone because of the implications for everybody in society that I described. That is the answer to the point raised by the noble Lord, Lord Wyatt.
I have tried to explain the position from which the Government have come, in order to reach the proposals that are contained in the Bill. In giving that exposition, I very much hope that I have clarified the position and, needless to say, equally hope to have convinced all those who expressed dissent or doubt about some aspects of the policy.
§ Lord Thomson of Monifieth
I am, like other Members of the Committee, very grateful for the way in which the Minister so fully and carefully explained government policy. It sets out the whole background to the issues that I raised. He gave a detailed account and 549 raised a number of matters to which I had not previously given thought. In deciding whether or not to carry the arguments further at a later stage in the Bill, I shall certainly want to study carefully what he said.
The noble Lord mentioned the local situation. I deliberately did not apply myself to that. I think, from what he said, that I totally agree with him about the considerations that affect a regional newspaper owner acquiring a dominant position in a region or television company. Effective action has to be taken to prevent that.
On the national newspaper scene there are wider considerations. I fully take the points made about the problem which arises whenever a percentage is established; namely, that some people are on the right side and some people on the wrong side of it. But the national newspaper scene is, in a sense, one with a small number of very substantial newspaper groupings. It still seems to me rather unfair that, because of the percentage rule, two of them should be absolutely debarred. For that reason I felt that a rigorous public interest test, through the ITC and the Radio Authority in the first place and then through the OFT and MMC, might be the better way to proceed.
I shall think carefully about the Minister's comments. I profoundly agreed with one remark when he almost seemed to say that whatever happened, there would be any amount of special pleading from other interests. My goodness, after some weeks of this Bill, we are all aware of that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendment No. 156B had been withdrawn from the Marshalled List.]
§ Lord Donoughue moved Amendment No. 156C:
§ Page 88, line 38, leave out ("national").
§ The noble Lord said: We have now entered the Schedule 2 world of ceilings of 15 per cent., 20 per cent., 25 per cent. and 50 per cent.; of shares of audience time; of advertising and circulation; of the national, regional and local; and of point systems beyond my capacity to calculate. I was tempted first to move an amendment to the effect that any errors of ceilings, shares or points by either side in this debate should tactfully not be referred to by the other side. On that basis I hope that we can proceed.
§ I do not believe that I have any interest to declare, since I have no outside earnings from the Mirror or anywhere else. But a typical modern journalist—the Committee will know what I mean by that—took the trouble to telephone me and assert that I had tabled these amendments because five years ago I worked for the then proprietor of the Mirror (though he had nothing to do with the present Mirror and I never worked for the Mirror under that or this management). So I mention that because the minds of many journalists are occupied with such conspiracy fantasies.
§ The amendments in my name follow from the general points made by my noble friend Lord Thomson in Amendment No. 156A. He argued against the percentage ceilings and sought to rely on the public 550 interest test. I do not go so far. As I said before, we understand the Minister's concern and the fact that broadcasting is different. I refer him again to my earlier amendments strengthening the public interest obligation. We shall come back to that because the stronger the public interest obligation, the less agitated we need to be about various ceilings. In my amendments I seek to loosen the ceilings. Above all, I am concerned with the discrimination, mentioned by others, against one group; namely, the Mirror group.
§ By picking on the arbitrary threshold of 20 per cent. and using the single market determinant of national share, the Bills ends up discriminating against the Mirror. In principle, though it is in fact theoretical, it also discriminates against News International. But that is not discrimination that has any practical effect because News International is not banned from entering television. It already has a giant television business. I understand that it probably does not wish to expand into terrestrial because it would soon hit the 15 per cent. ceiling limiting its growth in satellite.
§ Lord Wyatt of Weeford
But the noble Lord also said that a combination of the two was unsatisfactory.
§ Lord Donoughue
We know that the Mirror Group is not banned from entering satellite. It has other constraints on entering satellite, but that is not what I mentioned. We are discussing terrestrial and loosening the cross-media ownership rules in relation to terrestrial and especially ITV Channel 3. I am talking about that. The amendment bans the Mirror Group from entering that.
It is also arbitrary to treat national newspapers as one sector separate from local newspapers. I can see the practical effect because the moment the two are treated differently the Mirror Group, looking at the national share, is above 20 per cent. I do not believe that it is necessary or logical to separate the two. In fact, they compete with one another in the same sector. If they were treated as one newspaper sector as national and regional television, for audience share, is treated as one sector, the Mirror Group would have less than 15 per cent. of the total.
The Bill liberates other newspaper groups—United News and Associated. If the purpose is liberation, why not liberate the Mirror Group? Why should that one group, among newspapers the largest supporter of the Labour Party, be shackled? That is the main thrust of my approach. I do not think it correct that we should support a Bill which discriminates against one group.
I ask the Minister whether the Government are confident that their proposals in relation to the Mirror Group would survive legal challenge? The removal of restrictions on cross-media ownership among newspapers does not apply to the Mirror; in fact both the Mirror and News International continue to be affected. I have said why I think News International and Sky are 551 in a different category. I ask the Minister whether he is aware—I suspect he is—that it is senior Queen's Counsel opinion that the restrictions on the Mirror in the Bill constitute interference with the Mirror Group's rights to freedom of expression under Article 10(1) of the European convention of rights. Legally, to justify the Government's discrimination under the convention it would have to be shown that the proposed restriction advances "a pressing social need" in what is called "a proportionate manner"; otherwise, such discrimination is not allowed or justified in a democratic society.
When Article 10 is read together with Article 14 of the convention, such discrimination seems again to be unlawful in that it constitutes what is there described as arbitrary discrimination. Given the arbitrary mechanical mechanism imposed, given the lack of pressing social need, which is the justification required by the convention, and given the severe practical impact on the business health of the Mirror Group, I suspect that the Government will have difficulty in justifying that discrimination under the convention. That is particularly so because under the convention special care is specifically required when assessing the justification of those particular restrictions on Opposition media. I believe that the Government are in even greater difficulties in that regard. I see no justification for such constraints and suggest that there are serious grounds for legal challenge under the convention.
In that context, I suggest that the Government should look seriously at what I propose. I suggest either that they should not proceed with the 20 per cent. provision until they are absolutely confident that they will not be challenged legally or that they adopt my amendment to raise the ceiling to 25 per cent. which would let in the Mirror Group and therefore not activate the legal challenge.
§ Lord Wyatt of Weeford
Why would it enable the Mirror Group to make a legal challenge under the European convention but not Sky and News International?
§ Lord Donoughue
I sympathise with what the noble Lord says. I suspect that News International might have grounds for challenge but at present it would not benefit from the extra thrust in the convention dealing with Opposition media since News International has for some time not come into that category. It had an excellent newspaper in that category—Today—but chose to close it. In what I am saying I am certainly not opposing News International. I am sure that it will wish to look at the matter and if it succeeds I wish it all luck.
Specifically, Amendment No. 156C, which seeks to leave out the word "national", would remove the artificial distinction between the prices of national and local newspapers. It would require the national market share to be judged against the total circulation of all national and local newspapers sold or distributed free of charge. That is the practical market definition which would be best and which would leave the Mirror Group within the ceilings to expand into Channel 3.
Amendments Nos. 156E and 156G, which I wish to take with this amendment, lift the ceiling from 20 per cent. to 25 per cent., thus removing the 552 discrimination. Taken with the national change, that would leave the Mirror Group comfortably within the ceiling and might conceivably bring in News International too. That is quite acceptable to me, as it is to the noble Lord, Lord Wyatt. I beg to move.
§ 6.15 p.m.
§ Baroness Jay of Paddington
I support my noble friend on the Front Bench. These measures would be arbitrary and unfair, as he described. As my noble friend mentioned in referring to learned counsel's briefing, they are susceptible to legal challenge under the proportionality and non-discriminatory effect of the human rights provisions of the European convention.
My noble friend mentioned the problems of Opposition newspapers. It is interesting that learned counsel says that it is likely that the Department of National Heritage has not given consideration to those anxieties. If there is a very powerful case to be made in support of the Bill and against my noble friend's amendment, the Government need to answer the points made by my noble friend concerning the opinion of learned counsel on these matters. What the Bill proposes is susceptible to legal challenge under the European convention rules. If the amendment is not agreed, it seems important that the Government should justify in precise terms their rejection of my noble friend's amendment.
§ Lord Desai
I return to a point I made earlier to which the noble Lord did not give a reply. I wish to continue to question him. It is obvious now that a 20 per cent. limit is arbitrary, as was mentioned by the noble Lord, Lord Colwyn. If the ceiling is raised to 25 per cent., it helps one organisation but not another. Clearly, the Government believe that the media are so special that their competition policy needs extra help and an extra belt and braces arrangement which is not needed elsewhere. The Government may be happy for one to eat dangerous food which harms one's health but the media require special attention.
I would like to know why the figure of 20 per cent. has been chosen. Why do the Government feel that above 20 per cent. there is scope for arbitrary power and great domination while that is not the case below 20 per cent.? Without any particular bias to anybody, I suggest that the Government should think of a combined measure of all-media ownership—newspaper and television—either in terms of readership or the amount of time spent by people watching television or whatever.
We need some sort of overall measure which would cover not just newspapers, television and radio but also whatever other media one can think of. We should look at market power in that way. We could then say that competition policy requires us not to have too much concentration from that point of view. If we take 20 per cent. from one medium and use it to restrict ownership in another, I believe that we will run into rather arbitrary thresholds which have no economic logic whatever.
The Earl of Stockton
Following on from what the noble Lord said, can my noble friend the Minister say 553 why 25 per cent. should apply? It is another arbitrary figure which may have been chosen for reasons of mathematical ingenuity or, indeed, for personal taste in popular literature, and so on. I am pleased to see that my noble friend Lord Stevens is in his place, but unhappy to see that the noble Lord, Lord Hollick, is not present in the Chamber. However, there is a possibility that their great new media empire will grow to that larger size. Indeed, there are other newspaper proprietors who have proved in the past that they can be successful and there are other television proprietors who, equally, might wish to buy newspapers. What is the magic of any of these numbers, other than pulling something out of the air? Are we in the business of legislating by pulling numbers out of the air? I trust not.
§ Lord Thomson of Monifieth
Perhaps I may point out that the Minister admitted that we are discussing an absolutely one-off percentage. The noble Lords, Lord Stevens and Lord Hollick, may be immensely successful in their merger and the percentage of the Express Group rise to 22 per cent. or 23 per cent. If it has managed to get into the television business in the meantime, it will be there; it will not be debarred. This is an extraordinarily arbitrarily method of dealing with such problems.
§ Lord Inglewood
We are now dealing with a technical matter, and I should like to respond to the noble Lord's point. I should make it clear that the one-off application of the test relates to the public interest test as we have defined it, not to the thresholds. If groups are below the threshold and are potentially capable of coming together in terms of mergers which involve newspapers, it is necessary to satisfy the additional public interest test. It is a one-off test. If, subsequently, the proportion of the national newspaper market obtained by the particular newspaper in question were to rise above the threshold, that would trigger off the consequences.
§ Lord Thomson of Monifieth
Perhaps the Minister can further clarify the matter. Would it mean that, after the noble Lords, Lord Stevens and Lord Hollick, have been outstandingly successful and the Express Group has gone beyond the 20 per cent. barrier, they would then need to divest themselves of either a newspaper or of their television holdings?
§ Lord Inglewood
That is correct. If they breach the mathematical test in such a way, that would be the case. In order to merge at all after the Bill has become enacted, it will be necessary to satisfy the public interest test to which I referred because of the involvement of a national newspaper. As I said, that is a one-off test. Thereafter, there is still the question of remaining below the threshold, whatever that might be. That will depend upon what Members of this and another place decide.
Perhaps I may now respond to the amendment moved by the noble Lord, Lord Donoughue. I am most grateful to the noble Lord for approaching the matter from an essentially enumerative perspective, although I wish that he had told us to which amendments he was speaking 554 as he did so. The amendment seeks fundamentally to change the entire basis of our system of cross-media ownership controls, by comparing like with patently unlike. In our view, it is quite ludicrous to suggest that the Sun is equivalent to the Keswick Reminder. For those Members of the Committee opposite, I should point out that the noble Lord, Lord Judd, and probably the noble Lord, Lord Dubs, will be able to tell them about the latter, which is a local newspaper.
Of course, it is true that in market terms there is an overlap between national newspapers and those which are primarily local or regional. But, as I have consistently said throughout our debates on this schedule, we are not concerned in broadcasting legislation to regulate the operation of markets as such, particularly markets in newspapers. That is a matter for competition policy. Broadcasting legislation has, rightly, only sought to regulate newspapers seeking to buy into broadcasting. Newspaper markets and advertising markets are regulated under the normal operation of competition law, as I have already said. What concerns us in this context is the interaction between publications and broadcasters which play a key role in determining and debating the national news agenda. The local and regional newspapers pay little or no part in that process. Quite simply, I cannot accept that we should include them in the threshold calculations because to do so is self-evidently absurd, as I have already intimated.
Whatever the configuration of the media markets, there are substantially distinct national and sub-national news agendas, and plurality and diversity are separately desirable in each. Carlton and Central between them carry the ITV network to approximately 28 per cent. of TV homes. That ITV network is a major commentator on the national news for those viewers—viewers who form part of a national population where the Mirror Group has around 22 per cent. of national newspaper circulation. Similarly, the Mail Group has just under 68 per cent. of local circulation in the South West. It is equally undesirable for that group to have control of the West Country regional Channel 3 franchise. Similarly, again, the Guardian Media Group holds 27.8 per cent. of the newspaper market in the Manchester area. At that more local level it is wrong for them to own the dominant local radio station in Manchester. That is because democracy and public affairs operate at different levels—national, regional and local—and it is important that the citizen has some choice of independent sources of information. It is for those reasons that I am not persuaded of the merits of Amendment No. 156C.
I move on to deal with Amendments Nos. 156E and 156G. The noble Lord, Lord Donoughue, and the noble Baroness, Lady Jay, referred to certain specific provisions of the European Convention on Human Rights. We have not taken specific legal advice on those points, but it is not intended that the provisions we introduce will discriminate. We have explained the social policy and thrust behind them and arc confident that they are defensible.
I am aware of counsel's opinion to which the noble Baroness and the noble Lord referred. If Members of the Committee would like us to form a considered 555 opinion on that advice, the first condition that would have to be met would be the provision of a copy of such an opinion. I leave that thought with those concerned.
Whatever else can be said about our proposals, I should point out that we are not proposing a regime which is arbitrary—and I use that word in the sense that it is capricious. Our regime is inherently not arbitrary because the rules will be set in place and it will be possible for all those who wish to do so to ascertain the current position.
The noble Lord, Lord Donoughue, made it quite clear that his amendment which seeks to increase the newspaper market share threshold from 20 per cent. to 25 per cent. is intended to address a wrong that he perceives in the exclusion of the Mirror Group from controlling licences to provide Channels 3 and 5 and radio services. As Members of the Committee will know, the Bill currently prevents any national newspaper group from owning more than a 20 per cent. stake in the holders of such licences.
With the leave of the Committee, perhaps I may to a slight extent go over some of the remarks that I made previously. The position that we have adopted in allowing greater cross holdings between media is that those who enjoy a position of dominance in the national newspaper market should not also be allowed to become dominant broadcasters, and vice versa. As I explained, uniting these two sources for influencing opinion carries the risk of concentrating too much power in the hands of one organisation.
The 20 per cent. market share threshold was set after careful consideration of conditions in the market. It was not devised—and I must emphasise this point—because of its impact on any particular group or groups. Therefore, our proposals do not single out the Mirror Group. The latter are caught by provisions not because of who they are, but because of their ability to influence opinion. The group, in terms of its ability to reach the public, is the second largest national newspaper group in the United Kingdom after News International. The position we start from is that we are talking about national newspapers in this context. I want to be sure that the Committee is clear about that. That is our starting point in the consideration of these matters.
As I have already explained, media ownership regulation is about protecting the public interest in pluralism and diversity. The regime we propose seeks to ensure that we shall continue to enjoy the provision of news, information and entertainment from a wide variety of sources. It does not seek to regulate competition in the overall media marketplace because the ordinary mechanisms for securing fair competition—for which the Department of Trade and Industry and the Office of Fair Trading are responsible—apply to the media just as they do to other industries.
I believe it was the noble Lord, Lord Desai, who said that the figure of 25 per cent. is used for the purposes of regulating competition in markets. However, the point here is that we are not talking about regulating competition. The basis of the separate broadcast licence regulation system is precisely that, in broadcasting, 556 levels lower than 25 per cent. of market share can affect plurality and diversity if they are allowed to control other sources of influence, whether within a particular medium or across the media as a whole. This is the approach which we have adopted throughout the Bill with a 15 per cent. audience share for the powerful broadcasting media and 20 per cent. circulation for the influential local and national newspapers; these being the levels that we believe represent the current tolerable levels of concentration.
Despite the 20 per cent. threshold, the Mirror Group will still be free to expand into cable, as it has already done, and to enter the satellite market, as indeed it is free to do now. It can do this either by setting up new businesses or by taking stakes in existing businesses. It is also free to establish itself as a programme provider through the independent production sector and to acquire stakes of less than 20 per cent. in those broadcasters it is forbidden to control. The Bill also—as we discussed at some length on a previous occasion—will create a new opportunity for the group in digital terrestrial television broadcasting.
The Government believe that the 20 per cent. threshold is right and have not been persuaded by any of the arguments which have been advanced so plausibly for raising it to 25 per cent.—or for that matter setting it at any other level. It would in our view be wrong to raise the threshold merely to benefit one particular media group. If any one group thinks that it is essential for it to be allowed into Channel 3, it is open to it to devise a strategy that will bring it below the 20 per cent. threshold. After all, is Paris worth the Mass? I hope that I have explained clearly and comprehensively the basis of our position in this regard and why we disagree with those on the Benches opposite in this matter.
§ 6.30 p.m.
Before the noble Lord, Lord Donoughue, replies, I wonder whether he would be kind enough to answer one question. He said that the Government have imposed an arbitrary threshold. Does he not accept that any threshold by its nature h8 to be arbitrary? That is the nature of thresholds. What matters is that that threshold is based on good sense and sound logic, which I believe the 20 per cent. threshold is. The noble Lord's Amendment No. 156G which seeks to raise the threshold from 20 per cent. to 25 per cent. is exactly the opposite of sound logic because it would include one dominant newspaper chain and exclude another dominant newspaper chain. Is that not even more arbitrary and even more unfair—in his words—than the Government's position? The noble Lord must reply to those points to enable his amendment to make any sense.
§ Lord Donoughue
All the figures are arbitrary, but the 20 per cent. was chosen arbitrarily by the Government. I have heard nothing to explain that other than that it is a mechanism which happens to exclude two newspaper groups. However, one of those already has a strong presence in television but the other one does not. Therefore the impact is differential in that sense. I listened to the Minister's reply but I still did not detect 557 any basis for this discrimination. I understood that if an organisation does not pass the 20 per cent. threshold it is excluded from the measure. However, I did not hear an argument for maintaining this discrimination.
I heard that the Minister had not taken legal advice. I do not propose to let him see the legal judgment because, as he will be aware, something like one-third of Members of another place comprise lawyers. We in this place are led by lawyers in all directions. Therefore I feel it is prudent on my part to generate as much business for the trade as possible. I suggest to the Minister that by the time we reach Report stage he and the department should have taken their own legal advice. I hope he will then tell us whether what I believe to be true is the case; namely, that what he has mentioned is legally unsustainable. That is of great significance. If it is legally unsustainable, we should not be spending parliamentary time enacting a measure which will be shown, after a long and expensive process, to have no legal basis. It is important for us to make sure that what we are doing is proper. My amendments should be grouped logically together. In the meantime I beg leave to withdraw the amendment.
§ Lord Inglewood
I am grateful that the noble Lord, Lord Donoughue, is as solicitous for the interests of lawyers as he is for the Mirror Group.
Amendment, by leave, withdrawn.
§ [Amendment No. 156D had been withdrawn from the Marshalled List.]
§ Lord Harris of High Cross moved Amendment No. 156DA:
§ Page 89, line 19, at beginning insert ("Subject to sub-paragraph (4) below").
The noble Lord said: I propose, with the Committee's indulgence, to speak also to Amendment No. 156GD which is grouped with Amendment No. 156DA. Amendment No. 156GD seeks to insert the following new subsection:
Sub-paragraphs (1) to (3) shall not apply to prevent any newspaper proprietor controlling a body corporate which holds any licence unless a reference of that newspaper proprietor's control of that licence holder has been made under paragraph 9 below and the Monopolies and Mergers Commission has found that that control operates or may be expected to operate against the public interest".
§ Some of this argument repeats what we have discussed on previous issues. I was rather disappointed by the Minister's bearing this afternoon. I hope that he will not be off colour for too long. I remind him that in last Thursday's debate—at cols. 349 to 350 of Hansard—he described his standpoint as deregulatory. There was a splendid purple passage where he urged the importance of stability and consistency in regulation, not least to encourage continued investment. We are expecting billions of pounds to be shovelled into this fast moving industry. We are confronted with a cable, satellite and digital revolution. The Minister talks of stability; but this is a second effort in barely five years of Parliament to regulate such a rapidly changing industry. I look at this complex and, for me, largely incomprehensible Bill and I cannot help wondering what would have happened to the first Industrial Revolution if well-meaning 558 politicians had spun and respun a comparable web of restriction around developments in textiles, coal mining, iron and steel, shipbuilding, canals, railways, roadways and the rest of it.
§ This group of amendments seeks to remove another 20 per cent. arbitrary restriction—this time not as regards the circulation of newspapers but the ownership by a newspaper of a satellite; namely, BSkyB. It is part of the deregulatory feature of this Bill that it would now allow satellite and cable companies to control Channel 3 and Channel 5 licences, which in turn are free to move into satellite broadcasting, as the Minister has explained. That gives a welcome green light to cross-media or cross-sectoral growth so that companies can take advantage of internal and external economies in developing a structure which we cannot at the moment even begin to predict. Yet once again BSkyB is cast as the Cinderella at the feast. It is to be excluded from the general rejoicing. In Schedule 2, in the provisions relating to restrictions on proprietors of newspapers, a new formula is conjured up which deliberately excludes BSkyB from that otherwise welcome liberalising process.
§ Under that formula a satellite company can control a commercial terrestrial television company, but it may not do so if it is more than 20 per cent. owned by a newspaper company with more than 20 per cent. of the total national newspaper circulation. It could do so if it was owned by a duff company which does not have a large circulation. News International, alas, since taking over the ailing Sun and the threatened Times, has built up their circulations. News International is guilty of building up a total diversified newspaper circulation in excess of 20 per cent. of the national circulation. That is naughty. The mathematical application of the rule concerning 20 per cent. control and more than 20 per cent. of newspaper circulation succeeds in singling out Sky for punishment.
§ I argue that both of the 20 per cent. rules collapse on close examination. News International owns more than 20 per cent. of Sky. Indeed, it owns 40 per cent. However, that 40 per cent. does not give News International a controlling interest. There are two reasons for that, which the Minister can verify. First, Stock Exchange rules require that a company is capable of operating independently of any shareholder owning 30 per cent. or more of the voting rights. Secondly, the board of BSkyB numbers 18 directors, of whom only five are News International appointees. Therefore, the 20 per cent. control by News International is a phantom. It is frightening Ministers needlessly when there are many other things for them to be frightened of.
§ In the same way the 20 per cent. control of national newspaper circulation has already been exposed to a good deal of criticism by the Committee, in particular by the noble Lords, Lord Thomson of Monifieth, Lord Desai and Lord Donoughue. We are not faced with News International as a unique mixed-media giant. Together with Carlton, Granada, Pearson, the Daily Mail, or the proposed United News/MAI merger, it is one of a number of strong, powerful, mixed-media companies. The Mirror Group has other titles. It is naughty that its circulation is now 22 per cent. or 23 per cent. of total 559 circulation, but it is allowed to have part of Scottish Television, a bit of cable channel and to become involved in satellite television if that takes its fancy.
§ I return to the study which I mentioned earlier, towards which I believe the noble Lord, Lord Desai, as a fellow professional economist, will be more sympathetic. The survey, by Arthur Andersen, sought to measure the influence of companies on public opinion. Instead of trying to compare the BBC's 40 per cent. share of television viewing and the Sun's 40 per cent. of newspaper readership, it drew on a whole range of sources relating to viewing and readership. It assessed the degree of concentration of attention by calculating for each of the media companies—Carlton, Granada and so on—the total amount of time that viewers, listeners and readers devoted respectively to its television programmes, radio broadcasts and newspapers.
§ Towering above all other influential forces in our society was the BBC. Of audience attention and the time people devoted to these activities, 44 per cent. was controlled by the fearsome BBC. Second was Carlton, that monstrous mixed-media corporation, with 6.9 per cent. of audience attention. Channel 4, another public interest company, had 6.2 per cent. Poor News International, with its newspapers and television stations, was sixth with a paltry 3.4 per cent. of audience attention. That is a degree of influence which has Ministers and former Ministers cowering in their tents for fear of the takeover of opinion by those powerful companies.
§ The success of News International in building up newspapers that attract growing readership, and launching, with enormous courage, risk and enterprise, the satellite television stations, has been turned against their creator by excluding it from more than a 20 per cent. share of Channel 3 or Channel 5 licences. Why should Sky's success be curbed simply because a minority shareholder also owns and runs a successful newspaper? I hesitate to say in front of the noble Baroness, Lady Dean, that it is a company which has contributed much to the multiplication of channels, including newspaper facilities. It is treated less favourably, even in my opinion grossly unfairly, in regard to terrestrial television. Channel 3 and Channel 5 companies can exploit BSkyB's pioneering enterprise by entering satellite broadcasting but BSkyB is not free to become involved in terrestrial television.
§ If we recall that the pretext for all that discrimination is to guard against undue influence, we need to remind ourselves that consumer protection and positive programme requirements are already in operation and are designed to protect the public against undue influence. The argument behind the amendments is that there is no need for that discrimination in the form of the 20 per cent. restrictions. The amendments seek to bring broadcasting more fully within the general framework of monopoly law and practice on which we rely elsewhere to maintain the vigour of competition. I beg to move.560
§ 6.45 p.m.
I should like to take issue with the noble Lord, Lord Harris. As was said earlier, the broadcasting and newspaper industries are unique. They have a significant influence on life in this country.
The noble Lord approached his argument as though BSkyB and News International were somehow being excluded from this vast new growing industry. However, the share price of BSkyB shows that the company is worth over £ 6 billion. That is rather more than the individual ITV companies put together. News International has a circulation of 36 per cent. of national readership. The companies are huge and they are dominant in their industries in this country.
To go back one stage, the White Paper which was published earlier this year stated that the eventual goal should be overall market shares. That was welcomed. The noble Lord, Lord Desai, supports the logic and thrust of that. News International protested because it saw even that as a restriction on its growth. It should still be our goal in the long term, but in order for the industry to reach that point, we must allow everyone to grow and compete on a level playing field. That means allowing some of the smaller players in the industry the ability not immediately to be swallowed up. We must allow them the ability to control, to grow and to merge within their sector and with others so that they can then compete successfully with the vast organisations that exist.
I am not against those vast organisations, I admire them enormously. BSkyB is a wonderful British company, a leader in its field and it is hugely successful. I admire everything it has done. However, because it is so dominant we must not forget one of the reasons for its dominance. Under the 1990 Act the ITV companies were precluded from competing with it. That is an important reason. We are simply trying to give the companies an opportunity to catch up before they compete; otherwise, they will be swallowed up.
§ Lord Wyatt of Weeford
I am surprised to hear the noble Viscount running down the Observer with which he was associated for so long. He suggested that because its circulation was small it had no influence. I thought it was supposed to have a great influence, particularly under Mr. J. L. Garvin.
Have not the Government so far made a total muddle and mess of all the regulations, counter regulations, slip holes and arbitrary numbers? You can get underneath them or you cannot, and if you cannot, then this, that or the other happens. Would it be wise to examine all the implications again thoroughly before Report stage? Perhaps the Government can take on board the demonstration by the noble Lord, Lord Donoughue, that what may be done could be in contravention of European law by which we are bound. Would not the Government be wise to go away, try to understand some of the comments made in the Committee stage so far, think again and consider their position more carefully?
§ Lord Desai
I support the amendment in the name of the noble Lord, Lord Harris, and wish to respond to what the noble Viscount, Lord Astor, said. He is on the 561 right lines; we need a measurement of the market, of market power, and of market share. But given that the different media interact and that there are cross-influences, we need a common measure of market power across the different sectors.
I have raised this issue before. We should consider how the 1990 Act got the domestic and non-domestic distinction totally wrong within three weeks of the passing of the Act. We are about to see tremendous technological change in the industry; we know that. We are about to enshrine in print proposals from 1995 which are likely to be out of date before 1996 has gone. I put this to the Minister. Suppose we want to restrict the influence of certain big barons on political opinion, for whatever reason. I imagine that the Minister would say that if people own news channels, in terms of news channel percentages and newspaper percentages, that is political influence and therefore we should do something about it. There may perhaps be logic in that. However, one would not want to put all television and newspapers together and say that 15 per cent., 20 per cent. or 25 per cent. of that is a meaningful figure when there is already a competition policy. I must emphasise that there is a competition policy. People will not be able to gobble up smaller producers just like that. The noble Viscount need not fear that, given that we have the MMC and the OFT. Therefore, I do not see the logic of having another competition policy. I am still not convinced by the sincere arguments of the noble Viscount showing that somehow the media are peculiar and that we must be more careful with them than with any other commodity. I am not persuaded of that.
§ Lord Inglewood
I begin my remarks with the obvious point that the noble Lords, Lord Harris, and Lord Wyatt, do not agree with our policy. That is the fundamental division between us.
I wish to pick up the point made by the noble Lord, Lord Desai, about finding a way of measuring the impact of the media. The suggestion of the noble Lord, Lord Harris, about measuring influence solely through time shows how wise the Government have been in the Bill in not attempting to suggest a common currency. It does not underscore the credibility of his proposal that his approach to the problem suggests that BSkyB has less influence than Capital Radio. We have at least found one currency of which the noble Lord seems to approve.
I wish to go to the heart of the debate because I do not wish to go over our general policy. I have explained what it is, some Members of the Committee accept it and others clearly do not. As it stands, the Bill will also prevent newspaper groups having 20 per cent. or more of national market share from exerting an influence over Channel 3, Channel 5 and radio licence holders through cable and satellite companies in which they have an interest above 20 per cent. Even if one disagrees with the approach which the Government adopt, it must follow that if there is a market share threshold, one must ensure that the Government's intentions cannot be circumvented by newspaper companies using companies 562 in which they have major shareholdings from controlling such licences. The amendments of the noble Lord, Lord Harris, would remove that restriction from the Bill.
We must be clear about one point which was touched on earlier in the debate. We are not saying that News International controls Sky. We say that News International has such a large share in it that it should not be allowed, through Sky, to acquire control in leading broadcasters on top of its national newspaper dominance. It seems to me that that is a relatively simple and straightforward proposition to grasp.
However, at the same time, the debate has illustrated another important point. It is that if any organisation which has above the 20 per cent. newspaper threshold wishes to become involved in television, a great deal can be done if it is not a company acquiring Channel 3 licences or a Channel 5 company. In the case of BSkyB, it is a large company and a large proportion of its shares are exchanged on the Stock Exchange. There are plenty of ways in for those excluded from the Channel 3 and Channel 5 sectors of the market, and if a company wishes to go in that direction it can play a big part.
I conclude not by rehearsing the arguments again but by making two points. In bringing forward our proposals we have endeavoured to work out a scheme which we believe will deliver the policy aspirations which we have in the world as it is. I suspect that it is always tempting for professional economists to reduce their arguments towards abstraction because that is the nature of their trade. I sense that I have been hearing from one or two Members of the Committee this evening an analysis which provides enormous intellectual coherence in a purely abstract sense. However, it does not measure up to the realities of the world, as it is out there at the moment.
We have endeavoured to bring forward a series of suggestions which provide a proper balance between a number of conflicting goods which come into conflict with each other when considering such matters. I wish to emphasise one point before I sit down. It was suggested that in this area, in one way or another, the Government were cowering in their tent. I am not cowering in any tent. The Government are coming forward with these proposals which they are endeavouring to present to the Committee and to the country in as clear a manner as possible, in order to try to take a positive step in response to the technological changes affecting the media. Thus, on the one hand, the changes can be driven forward and at the same time the public interest is properly protected.
§ 7 p.m.
§ Lord Harris of High Cross
I do not wish to prolong this absorbing debate very much longer. I urge the Minister and his friends to bear in mind the remarks of the noble Lords, Lord Thomson, Lord Donoughue and others: the 1990 Broadcasting Act has not survived the dramatic changes that are still going forward. This very detailed kind of regulation is brittle. It is liable either to prevent fruitful and important developments or to give way under stress and strain.
563 I was much encouraged by the debate on these amendments. The noble Lord, Lord Thomson of Monifieth, on the Liberal Democrat Benches, the noble Lords, Lord Donoughue and Lord Desai, on the Labour Benches, and some Members on the Cross-Benches, all spoke about whether this provision is arbitrary and whether 20 per cent. is the right kind of arbitrariness to go for. As the noble Lord, Lord Thomson, said, before Report there must be some way of putting to the test, in a perfectly open spirit of inquiry, not the abstract view of the economists, but the view of Members of this Committee on the great issue of which way we should lean. Should we lean towards restriction and detailed control; or should we be a little more laid back and trust leading established institutions such as the Monopolies and Mergers Commission and the Director General of Fair Trading to play their proven role?
We are being very noble. We are not dividing the Committee and marching through the Lobby. However, it would be valuable if, on Report, we could find between us some way of presenting that choice in some part of the Bill. In that way we could test the blinkered, tunnel vision of the Government's spokesman against the more confident, optimistic, forward-looking and dynamic view represented in all parts of the other side of the Chamber. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendments Nos. 156E to 156EB not moved.]
§ [Amendment No. 156F had been withdrawn from the Marshalled List.]
§ [Amendments Nos. 156G to 156GH not moved.]
§ [AmendmentNo.156H had been withdrawn from the Marshalled List.]
§ [Amendments Nos. 157 to 161B not moved.]
§ Schedule 2 agreed to.
§ Clause 63 [Variation of regional Channel 3 licence following change of control]:
§ [Amendment No. 161C had been withdrawn from the Marshalled List.]
§ Lord Crickhowell moved Amendment No. 161D:
Page 55, line 43, leave out ("referred to in section 14(1)") and insert ("or
(d) the quality of range of programme originating from each regional service area and offered for inclusion in the nationwide system of services,").
§ The noble Lord said: In moving this amendment, I propose to speak also to Amendments Nos. 169B and 171A grouped with it. Again, I declare an interest as a director of HTV.
§ During an earlier debate, the noble Lord, Lord Thomson of Monifieth, pointed out that sometimes the grouping of amendments and the order in which we take debates is not exactly helpful. We now come to a very important series of four debates on regional broadcasting. Had I had the choice, I think I would have taken them in reverse order. It is not entirely rational to start with the contribution to the nationwide system, follow it with a debate about the relevant period and then touch on what constitutes a significant reduction, 564 before debating the crucial and important issues of editorial control, where programmes are produced and who produces them.
§ However, faced with this difficulty, I say one general word about the importance of regional broadcasting. Last night, speaking at the Royal Television Society dinner in honour of David Glencross, John Birt said that regional programming is surely the singular achievement of ITV. That is a judgment with which I agree. My company, HTV, is responsible for two quite separate regional areas and provides very different services to each.
§ For Wales, regional broadcasting is of absolutely crucial importance. In Wales, HTV provides a national service to its viewers which records, reflects, questions, reveals and celebrates all aspects of Welsh life. Of all the television channels available in Wales, it is the most watched. Its news programmes, for example, regularly attract a greater number of viewers than any other channel. The programmes that the company produces include drama, documentaries, sport, music, arts, entertainment, current affairs, education, community programming and religion. At least 95 per cent. of HTV's regional programming is produced in Wales. The same could be said about other regional companies. I use this example only to illustrate the importance of regional broadcasting.
§ I am therefore pleased that Clause 63 of the Bill recognises that new licence conditions may need to be imposed to maintain the standards of the regional Channel 3 service when control of either the licence holder or the body providing programmes for the service is changed.
§ However, I am concerned that, as presently drafted, the clause does not protect the level of service currently provided. It is important to emphasise that the two are not necessarily the same. In most cases the regional broadcasters provide a service that is significantly better and greater than that demanded of them by the licence conditions. We need to consider whether we can strengthen the provisions in the Bill in any way. A number of attempts are being made in this grouping and in those that follow to do just that.
§ This amendment deals with a matter that is clearly considered relevant. The Government refer to it in Clause 63(3)(c), which relates to the quality or range of programmes included in the nationwide system of services known as Channel 3. The balance is provided by programmes that are acquired or commissioned for transmission across the whole of the United Kingdom.
§ At the present time all regional broadcasters are able to offer programmes to the Channel 3 network for commission and subsequent transmission throughout the United Kingdom. The existing provision ensures that the Channel 3 network carries programmes which are properly representative of the geographical diversity of the United Kingdom. I welcome the attempt by Clause 63(3) to strengthen the Independent Television Commission's ability to ensure that programmes from all parts of the country continue to be offered to the Channel 3 network and to monitor the supply of programmes to that network. But we must consider one or two problems in that connection.565
§ One could make an interesting speech and write an interesting book about the factors that help to decide exactly what is included in network broadcasting and how decisions are taken by the powers that be to put specific programmes onto the network. Clearly large companies have a considerable influence in deciding what share of the network is taken by their companies. But it is also true that if we do not have good quality programmes produced by the right kind of staff in the regions, with the necessary skills and experience to make programmes that are attractive not just in the regions but throughout the country, we shall not have the opportunity to share in the national network.
§ There is a danger that the situation could arise where we are down to two or three large companies producing the bulk of their production in London, the Midlands or elsewhere. The chance of obtaining good regional programmes is then reduced because the scale of the production facility, the numbers of people involved, and so forth, have been whittled down in the regions and concentrated in the centre. The object of the clause is to strengthen the ability of the Independent Television Commission to protect that aspect of regionality as part of a package of measures to protect the great achievement of ITV in its contribution of regional programmes to television. I beg to move.
§ Lord McNally
I strongly support the noble Lord, Lord Crickhowell. Listening to the noble Lord, Lord Desai, earlier I was reminded of a definition of economists; that they are men trained to predict the past. Broadcasting legislators, too, are men and women skilled at predicting the past. We always seem to be behind the game. I suspect that in this Broadcasting Bill we shall find ourselves behind the game, such is the rapid change in technology and the structure of companies.
I do not know whether it is a sign of the times that the noble Lord, Lord Stevens, left by one door and the noble Lord, Lord Hollick, came in another. I do not know whether they are pairing to cover the Bill and that that is a sign of what we will see in the future in the new arrangements. Knowing both of them, though only vaguely, I am sure that their marriage was not arranged by one of the computers that puts together compatibles.
I want to remind the Committee that, despite all the changes and the number of times that the legislators have got behind the game in relation to broadcasting, one stroke of genius has stood out over the years, right back to 1950; that is, the setting up of commercial television on a regional basis. That has been a massive triumph and one which, as the noble Lord, Lord Crickhowell, pointed out (and attention was drawn to it last night at the Royal Television Society) is an enduring achievement. Those of us who want to see that achievement retained see Clause 63 as an iron pole in terms of the ITV network. The dangers referred to by the noble Lord, Lord Crickhowell, of the ITV system with 15 companies gradually concentrating into three big groupings, all of them based in London, is a danger to that regional strength in which we take pride.
566 My background is from the North West and I was proud to grow up in Granada-land. It is very much in my mind, as I see the developments in television, what a privilege it was to live in Granada-land in the 1950s and 1960s and have a regional television company that had social interests, quality and regional pride. In talking about Granada this evening, I realise that I must sound a little like the character in the Victoria Wood sketch who talks about the gritty realism of the North and the softness of the South. After a long diatribe he finally confesses that he lives in Woking. I am afraid that at present I live in the gritty north of Hertfordshire, but have many business, political, social and family ties with the North West that make me feel concerned to retain those regional strengths.
I happened to be in Liverpool on the day it was announced that Granada was moving the broadcasting of its successful morning programme from Albert Dock in Liverpool to London. The feeling was akin to that aroused by the closure of a large factory. Liverpudlians felt that they had lost to London a major national programme which gave identity to the region and to the City of Liverpool.
I understand the problems. Twin forces are at work. On the one hand the ITV companies say that they must increase in size to be able to play nationally and globally and must acquire critical mass. At the same time, there is no doubt that the bean counters are within the walls and testing each little bit of regional initiative against its cost-effectiveness. All I would say to those people in the ITV companies who are fighting against the bean counters is: "Clause 63, however strong it eventually ends up, is intended to help you. If we do not accept it I fear that, just as we have discovered in other parts of broadcasting where our good intentions are pre-empted by the realities, so the regional strengths of ITV—not only the small companies, but also the big companies—will be gnawed at by the realists, the cost-accounting bean counters, who do not see the strength and value that the commitment to regionalism has given over the years".
Perhaps I may relate an anecdote which applies to Granada, but could apply to any of the other big regional companies. A colleague in this Chamber who had a long tradition in and experience of broadcasting said, "In the past I have defended Granada right down the line when it was under assault from Rank and when it was under-bid at the time of the licence renewals. I am not sure that I would go to the wall for it today".
I remind the big companies within ITV that if they lose the commitment and the support which regionalism has given them, they may be losing more than they yet know. I warned Granada that I would be mentioning it and so, quite rightly, it sent me a great bundle of facts and figures about its regional commitment. I respect that. But the worry of many colleagues is what I would call the body language of the ITV companies. That body language sees the regional commitment not as an 567 opportunity for them to exploit talent but as a burden that has to be carried and got round. That is what makes me want to see a strong Clause 63 survive in the Bill.
§ Lord Elis-Thomas
The debate on regionalism in this series of amendments echoes a similar debate we had on the BBC Charter in which we spoke of the importance of regional production in terms of the region itself and also in terms of inter-regional broadcasting within the UK and within the wider European context.
It gives me pleasure to support the amendment for the reasons already set out and for a few others. Regional television looks at least two ways. It reflects regional culture. I have always lived on the borders of HTV-land, Granada-land and almost into RTE-land. I have been able to get different regional and national messages from different areas. There is the creation of employment within regions. There is the creation also of centres of regional journalism, drama and cultural activity. The region is able to express its identity and contribute to a broader cultural picture. If that sounds like last night's guest list revisited, perhaps I may refer back to the RTS dinner and to the excellent and distinguished speech of the noble Lord, Lord Thomson of Monifieth. At the dinner we were celebrating not only the work of David Glencross but the particular regional strengths of the ITV system.
What concerns me is that, as a result of the Bill and the changes in ownership which are now taking place, we may well see a reversal. ITV was clearly more regional in its accents and its culture than the BBC which relied on its heavily centralised network channels with opt-outs. However, after the assurances given by the BBC centrally as a result of pressure and our debates on the Charter, we may well see a BBC which is more decentralised while the ITV Channel 3 system becomes more centralised. It is for us to voice those concerns.
When we raise issues we are not being critical of the ITV network centre or the work of the ITC as a regulator. Our concern is that we have a cultural remit in this area. We need to ensure that when changes of ownership take place they do not result in disenfranchising regional populations from having their own internal cultural life reflected and from having the communication between regions which is an important part of national, international and inter-regional life.
The Wales-based company HTV has made its own distinctive contribution to the network but has also been rooted within its region through a network of offices which enable it to report on its region and to contribute that reporting not only to the whole of Wales but beyond. For all those reasons I press on the Government the importance of maintaining the distinctive regional identity of ITV at a time when there is a great danger that ownership concentration may undermine the very distinctiveness which the Channel 3 system has so far maintained.
§ Lord Prys-Davies
Those of us who see the existence, the strength and the vitality of regional broadcasting as being good are grateful to the Government for Clause 63. But we believe there is need for more safeguards. I trust that the Minister will listen 568 sympathetically to our arguments. I shall say no more in support of the amendment because it is the first of a group dealing with regional broadcasting. I hope very much that the Minister will listen sympathetically to the arguments in support of the amendment and succeeding amendments. If they are acceptable to the Government that will be a clear message that the Government place value on regional broadcasting.
§ Baroness Dean of Thornton-le-Fylde
I support the amendments. The difficulty every Member of the Committee has had in speaking to them is that it is like dealing with a jigsaw puzzle. One amendment overlaps another so it is difficult to compartmentalise the debates.
There is no doubt that the requirement on Channel 3 companies to regionalise under the previous legislation helped considerably with the quality of broadcasting and with the regional input. The Bill allows for larger concentrations of ownership. We are told that that is necessary to ensure that our companies can compete. We are also seeing a concentration of ownership anyway. I suggest that it is essential to have within the Bill protection for regional programming for our television companies.
The noble Lord, Lord McNally, referred to Granada-land. I remember Granada-land very well. I am very proud of it, as I come from that part of the world. I also remember Granada's nervousness when it was coming up to its licence review. There had been complaints that Granada was not dealing with regional programming in the way that it should. That is one of the reasons why the Liverpool studio, to which the noble Lord, Lord McNally, referred, was opened.
Under the 1990 Act the ITC was given quite wide-ranging powers to ensure protection for regional programming. It carried out those duties well. I suggest that more powers should be available to the ITC to protect regionalisation of programming. We are pleased to support the amendments.
§ Lord Inglewood
There is near universal agreement around the Chamber about the aims we are attempting to implement. We in government are at one with the remarks made about regional broadcasting. We endeavour to recognise that while there will be change—it is inevitable and desirable—there is need at the same time to ensure that we entrench all the best qualities of regional broadcasting and, where we can, enhance them. In doing that we must avoid becoming so focused on protection that we end up entrenching the status quo and therefore do not enable the best of regional broadcasting to go forward with the changes we are talking about in the generality of the Bill.
I wish to emphasise that the proposals in Clause 63 include a power to protect existing levels of achievement at the time a licence changes hands. It is not a question of carrying forward the existing licence conditions. It is a matter of being able to protect existing levels of achievement.
I am pleased that the clause has been so widely welcomed. We shall consider carefully the suggestions that have been made for improvement, as we shall 569 throughout this group of clauses. I hope that that gives reassurance to noble Lords, and in particular to the noble Lord, Lord Crickhowell, who moved the amendment.
§ 7.30 p.m.
§ Lord Crickhowell
I do not intend to press this amendment at this stage in the light of what has been, said. I am grateful to the Minister for his reply. As I pointed out, in a sense we have taken this matter in reverse order. I believe that we are coming to some even more significant amendments. We wish to consider the collectivity of the debate at the end and, perhaps at Report stage, decide whether anything further needs to be done. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ Lord Kirkhill moved Amendment No. 162:
age 55, line 45, at beginning insert ("during the relevant period").
§ The noble Lord said: As has been said by quite a number of speakers, this is a series of linked amendments. An area of overlap does exist. I welcome Clause 63 and support its objectives. My aim in submitting these amendments to the Committee is to help the clause achieve its purpose of ensuring that ITV's unique regional television service is maintained in terms of quality and quantity for viewers throughout the United Kingdom no matter—and this is a very important qualification—what change in control of the licence holder takes place.
§ These amendments are therefore intended to help Clause 63 fulfil its objectives. I believe that Members of the Committee may find these amendments of appeal to them. They do not stand in the way of progress or of allowing the media industry to be internationally competitive or of introducing digital television and the rest of it. Therefore, I can see no reason why the small regional companies cannot continue to provide a bespoke service in Britain in tandem with the creation of the larger media groups.
§ As a native of the north of Scotland, I am acquainted with beautiful scenery. I am well acquainted with travellers who frequently ask directions of me and others. There is the well known tale of the Highlander who, when asked how to reach a particular destination replied, "If I were you, I would not start from this point". I am rather like that as regards this series of amendments. It is difficult to guide the Committee through the labyrinthine progress of them all.
§ In considering Amendments Nos. 162, 169 and 169A before we consider Amendments Nos. 163 and 165, we are being asked to consider the efficacy of the mechanism of achieving an objective before we consider the central principle which the mechanism seeks to establish. Therefore, at the heart of the amendments which I have tabled is the principle that there should be no loss of regional programme service to viewers in the event of a change of licence ownership or control; that the benchmark should be the actual service enjoyed by viewers rather than a licence minimum. Furthermore, regional programming should be comprehensively defined.570
§ Amendments Nos. 162, 169, 169A and 172 deal with the mechanism to achieve that. Amendments Nos. 162, 169 and 172 were designed, at least by me, to be read together. The grouping has come out somewhat differently, but I am attempting to give such guidance to the Committee through a rather difficult minefield of amendments, as it is open to me.
§ As well as offering precision and measurability, Amendment No. 172, which is at the tail end, crucially seeks to be fair to all parties who may be involved in a change of ownership control. If the benchmark is to be the level of existing services rather than a licence minimum it is therefore crucial that there is a fair definition of existing services. The underlying principle behind Amendments Nos. 162 and 172 is thus to ensure fairness to all parties who may be involved in a potential change of ownership. Therefore, the amendments set a time frame for the benchmark service to be evaluated. A definition based on a snapshot period—for instance, just before a change of control—could enable the incumbent licence holder to raise the level of regional programming to an unrealistic level in the short term in order to deter a potential takeover. Such an action would be unfair and, I believe, anti-competitive. Both the ITV companies and the ITC keep detailed records of the service throughout the year. Statistics are kept each quarter and then aggregated to analyse a year's performance along with the monitoring of programme quality.
§ By defining the relevant period as covering 12 months, the ITC is better able to judge the level of service that should continue following a change of licence control. While I agree with the sentiment behind Amendment No. 169A, I believe that Amendments Nos. 169 and 172, as I have been explaining, offer greater clarity and that the element of fairness, which is introduced in Amendment No. 172, is essential. The amendments are somewhat complicated. I have done what I can to explain the basis of why they are before the Committee. I plead with the Committee to give them wholehearted support. I beg to move.
§ The Earl of Kinnoull
As my name is associated with other distinguished Members of the Committee, I support the noble Lord, Lord Kirkhill, in his amendments. I can well understand his problem when one looks at 21 amendments surrounding this one clause and the groupings. He has explained the matter with great clarity, as one would expect of him.
I believe that everyone agrees that the standard, quality and quantity of the regional television services is currently very high. I share the real fear that new owners may be drawn in and could damage the ethos and the culture of these regional services which have a very strong community connection. I very much welcome this clause. As we study it tonight with care, our efforts will pale into insignificance compared to the toothcomb study of the clause when it eventually becomes part of an Act. I am sure that those outside will be looking carefully to see what loopholes have been left open. If we are to try to ensure that this clause achieves perfection, or near perfection, it must be both 571 clear and draw a proper balance between mandatory duties and the discretionary powers of the commission to control the new owners.
As regards Amendment No. 162 and the others grouped with it, the noble Lord, Lord Kirkhill, described the purpose of introducing them into the Bill with the term "a relevant period of time" as a benchmark when considering the performance of existing licensees and how best that must be maintained or improved by a new owner. The noble Lord suggested a period of 12 months for judgment on how the existing licensee had performed. I believe that that is a reasonable period when one considers that the commission has up-to-date figures month by month of the performance of all the companies. These figures are readily available. I am sure that a balanced benchmark is a fair reflection and would not lead to false hopes.
The Bill as currently drafted considers the relevant period of time to be immediate and, as the noble Lord has explained, that could lead to unhappy consequences. I support the noble Lord and his group of amendments and I hope that my noble friend will look on them with his normal kindness and courtesy.
§ Lord Thomson of Monifieth
The first thing to say about the clause is how much we welcome it. I congratulate the Government, and particularly some members of the Government, on having included it in the Bill because it is an important bulwark for the essential character of the ITV system. In this world of take-over frenzy, it is important that we have such provisions, so we welcome the clause but we are always ready to be helpful to the Government and we offer some suggestions of how to make a good clause even better. That is the main thrust of the amendments.
I never quite understand the groupings in your Lordships' House. I believe that there is normally some wording at the top of the groupings list to the effect that if noble Lords do not like the groupings, they can please themselves to some extent. I think that I shall please myself. It might be for the convenience of the Committee and the Minister if all the amendments to Clause 63 were discussed en bloc because they all provide methods of strengthening the clause.
Regionalism in commercial television is the essential distinctive element of ITV as compared with the BBC. I hope that the noble Lord who spoke earlier with pessimism is wrong in believing that ITV will become so centralist that the BBC will seem the more regional. I think that the distinctive regional character of ITV is one of its greatest qualities and needs to be protected and preserved.
Before turning to the individual amendments, perhaps I may say that there is a rather glib view in certain quarters of ITV these days that the great thing to do is to have companies of world-class size within which one can still maintain the regional character of ITV. That has to be watched vigilantly. Perhaps I may refer to the part of Scotland that I know best. Like the noble Lord, Lord Kirkhill, I should like to refer to Grampian Television in Aberdeen. It is sometimes said that it does not matter who owns Grampian because it will still be a perfectly good Scottish regional company. After all, 572 the Aberdeen Press and Journal, which is a very good regional newspaper, was owned by my namesake, the noble Lord, Lord Thomson of Fleet, for many years. Indeed, he ran it more recently from Toronto and it still remained a good north-east of Scotland newspaper.
However, the analogy between newspaper ownership and television company ownership is a false one. The position certainly needs to be watched carefully. You can produce a good regional newspaper only by having the editor, his top management team, the reporters and all the panoply of a good newspaper actually in the region. You cannot do it by having those chaps in Toronto. When it comes to television, one can fiddle around and send a team with their cameras from London or Manchester in an aeroplane and make programmes about the region in the region. However, those programmes will not have an essentially regional character because they will not have been made by people whose roots are in the region. That is the important difference between maintaining the essentially regional character of a television company and maintaining the essentially regional character of a newspaper which may be owned by someone far away.
Taken together, the amendments seek to provide additional safeguards. As has been pointed out, by and large the regional companies are so proud of their regional programming that they do a good deal more than is required of them under the licence. If there is a takeover bid, the level of regional programming that is provided should be a benchmark, as the noble Earl, Lord Kinnoull, said. I think that that benchmark should be judged over 12 months. That is a reasonable period. Other amendments provide that the senior management responsible for the programmes should be present in the region. Those are the main elements in the amendments. Having done so well with the clause, we hope that the Government will be sympathetic to improving it, but I await the Minister's speech with interest.
§ 7.45 p.m.
§ Baroness Carnegy of Lour
I shall not take up the time of the Committee, but should like to endorse what the noble Lord, Lord Thomson, said about the characteristics of Grampian Television and the advantages of its smallness and concentration on the area where I, too, live. The important point about a company such as Grampian is that it is able to be about not only Aberdeen, where it is mainly based, but also about Inverness and Dundee. Grampian Television is highly valued by the people who live in our area. I do not have the figures with me, but people in the area watch it in preference to anything else. They are extremely interested in it.
Grampian Television has written to me to say how strongly it welcomes Clause 63. I have studied the clause and the proposed amendments. I shall be interested to hear whether my noble friend feels that the amendments improve Clause 63 from the point of view of a small company. I am not sure that they do, particularly in view of what has been said about the need not to freeze things so that we cannot move on in the future. The position does not have to remain as it was at a given moment or over a given period of time. I shall 573 be interested to hear what my noble friend says on that. It is important that Clause 63 stays intact. I shall be interested to hear further discussion and what my noble friend says about whether the amendments would improve the clause.
§ Lord Donoughue
The subject of regionalism is central to the Bill. So as far as we are concerned, it is one of its most important aspects. It has been a decisive characteristic of our ITV from the beginning and one of its proudest characteristics. What the Government have drafted in Clause 63 is pretty good and they should be congratulated on that. We are talking only about refinements.
With the permission of the Committee, I propose to speak to Amendments Nos. 169A, 163A and 164A because our approach was totally to support the more general amendments on regionalism and those amendments are three detailed tightenings of the provisions. We saw them as all falling within the same grouping. I am intrigued to find the amendments distributed among three different groupings between which there are very few differences.
First, Amendment No. 169A would improve the existing provisions because it is slightly worrying that under subsection (6) the ITC is prevented from imposing new requirements after a merger which would follow logically and helpfully from it unless they operated immediately before the change of control. That is an unhelpful restraint on the ITC. It prevents regional improvements, such as occurred after Yorkshire Television and Tyne Tees Television merged in 1993.
Amendment No. 163A refers to "significant" reductions on the regional side. That is repeated in an amendment tabled by the noble Lord, Lord Kirkhill, which we are prepared to accept. We do not like the flexibility to make "significant" reductions.
Amendment No. 164A refers to maintaining regional production programmes. Those amendments provide specific tweaks to reinforce the regional aspect. I propose to move them all across the various groupings in which they have been curiously distributed.
§ Lord Hooson
I rise briefly to mention that under its licensing obligation HTV Wales has to provide ten and three-quarter hours of regional programmes, 95 per cent. of which are produced in Wales. Clause 63 is clearly an important safeguard, but I do not think that it is strong enough.
When the regional companies were set up originally they took cognisance of the wide views expressed in another place and in this place before the hours, and so on, were agreed. What is needed is guaranteed protection. My criticism of Clause 63 as drafted is that the areas of discretion are too wide. All lawyers know, for example, the phrase, "significant reduction". How many times have I argued in court the meaning of "significant"? I have heard different interpretations depending upon the context. The word "significant" should disappear. I am in favour of this group of amendments. It would have the effect of strengthening 574 Clause 63 which is such an important safeguard for regional television, which has been ITV's crowning achievement.
§ Lord Inglewood
The noble Lord, Lord Thomson, said that these were good clauses and asked whether we were prepared to accept improvements to them. The answer is that we are. I have listened with great care and interest to the points that have been raised. I am not clear as to which clauses we are talking and to which we are not talking, and which we shall deal with after dinner. We are most sympathetic to the thrust of what has been said. We are concerned that in a number of instances the drafting might not meet the case, but I do not want to labour that point.
We must put ourselves in the ITC's shoes. It must be given some discretion to respond to circumstances, otherwise, as the noble Lord, Lord Hooson, said, clever lawyers will get round the matter. We want to give the ITC sufficient flexibility so that it can catch the wheeling and dodging that we suspect will inevitably go on. It is for that reason that we have reservations about such things as the definition of "relevant period", "making a programme", and so on, because there is a risk that we may introduce into this regime elements which are over-rigid. At the end of the day we want regional health and growth and not atrophy. We accept the point made by the noble Lord, Lord Kirkhill, that predators too, may be studying these clauses carefully, and we do not want to give them any comfort.
On the point raised by the noble Lord, Lord Donoughue, on his amendment, we are concerned that it may give the ITC excessive powers to impose more onerous conditions even when they are not agreed by the parties concerned and not currently being achieved.
We are concerned about the implications of the definition of "relevant period" as it has been inserted into the Bill, because it could have certain unfortunate consequences.
We agree that the matter should be approached from the perspective of not describing in legal terms what might be called the "relevant period", although it would normally be a year, with some leeway where the immediately previous level is significantly different from the norm of the whole year. We should like to talk to the ITC about that, because we want to ensure that we achieve what I think we agree we all want to achieve in looking at the drafting of this clause. I hope that in that hurried way I have given the Committee a clear indication of our response to the proposed amendments. We intend to take them away, think about them carefully, and discuss them with the ITC, with a view, as suggested by the noble Lord, Lord Thomson, to taking on board those which we believe to be an improvement to our version of the story.
§ Lord Kirkhill
I thank the Minister for his courteous and comprehensive reply to what has been a wide-ranging discussion over a number of amendments. The amendments which, so far as I understand have been spoken to, are Amendments Nos. 162, 169, 169A and 172, but we have spilled over into numerous other amendments because they are in part or in whole linked.
575 The noble Baroness, Lady Carnegy of Lour, should mark carefully and note what the Minister has just said about the relevant period, so I do not need to add to that. I say to the Minister that when we come to Amendment No. 165, which we might do fairly soon, because we have already spoken to it, what the noble Lord, Lord Thomson of Monifieth, has just said is surely the relevant core of any argument that any of the rest of us might make. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ Baroness Trumpington
I beg to move that the House do now resume, and in moving the Motion perhaps I may suggest that the Committee stage begin again not before 8.55 p.m.
Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.