Broadcasting Bill [H.L.] (Hansard, 5 March 1996)

HL Deb 05 March 1996 vol 570 cc235-90 235

§ Further consideration of amendments on Report resumed.

§ Clause 26 [Provision for broadcasting of services provided by independent analogue broadcasters]:

§ Lord Cledwyn of Penrhos moved Amendment No. 47: Page 24, line 11, at end insert— ("(c) ensure that the amount of digital capacity to be reserved for the Welsh Authority and Channel 4 respectively in Wales shall not be less than the digital capacity reserved for the Channel 3 and Channel 5 services in Wales.").

§ The noble Lord said: My Lords, I regret that I was unable to attend the Second Reading of the Bill and the Committee stage, but I have been following events carefully and reading the Hansard reports of the debates. I see that the case for the amendment has already been argued in a number of powerful speeches. I wish to reinforce the central theme of those speeches; namely, that S4C must be in a position to compete for viewers on the basis of equality between it and its competitors. It must be a competition between equals. But on the evidence of the White Paper—this has been confirmed by the Minister during the debates on the Bill—there will not be a level playing field.

§ According to the White Paper, S4C, as will be the case with Channel 4 in Wales, will enjoy only a quarter multiplex, whereas it is intended that its competitors—namely, BBC1, BBC2, ITV and Channel 5—will be guaranteed twice as much digital capacity as S4C and Channel 4 in Wales.

§ Unlike its competitors, S4C will be unable to provide all the technical benefits of digital broadcasting. It is not fair. It is not acceptable to the Welsh people. If S4C cannot offer to its viewers the technical benefits which will be on offer from its competitors, its services will be seen as old-fashioned and second-rate, and many viewers will not choose to watch its programmes. As a result, S4C will inevitably lose some of its audience. Surely that is unfair to S4C.

§ I am sure that there is no need for me to remind the House that the Act of Union of 1536 relegated the Welsh language to an inferior status in the public life of Wales for centuries. It was one of the black spots in our history. It was my great privilege as Secretary of State for Wales to pilot the Welsh Language Bill 1967 through the other place. The central purpose of that Bill 236 was to confer on the Welsh language, for the first time since 1536, a status of equal validity with the English language in the public life of Wales. That has been the policy of successive governments since then.

§ It was also my privilege to co-operate with other noble Lords, in particular the noble Viscount, Lord Whitelaw, in setting up S4C 15 years ago. I can assure the House that the founders of S4C never intended that its programmes should be of second-rate technical quality compared with English language programmes. It was intended that they should always be technically comparable with the English language programmes of its competitors. Otherwise, how on earth could they hope to withstand competition? They have been technically comparable and, as the whole House heard on Second Reading, the S4C programmes have been a huge success. It is an achievement of which we are proud.

§ I would respectfully say to the noble Lord, Lord Inglewood, who has shown great understanding and compassion in the course of our debates on the Bill, that it is far too late in the day to expect Wales to put up with a Welsh language service which is inferior in technical quality to alternative services in the English language. Indeed, Welsh speakers would feel justifiably aggrieved if they were deprived of Welsh language television services of technical comparability with the English language television services. This amendment would ensure that such a grievance would not arise.

§ My amendment affords the opportunity for the Government to promise that they will think again. I hope that the noble Lord and his right honourable friend will respond positively to it. If he does so the news in Wales will be received with pleasure. If he fails to do so there will be great disappointment in the Principality. I beg to move.

§ Lord Aberdare
My Lords, I am pleased to support the amendment. We all want the Bill to succeed. It will have been a terrible waste of time if the digital revolution never occurs. We all assume that it will occur because there will be an incentive for ordinary viewers and listeners to invest in the new digital equipment.
Aside from the arguments in equity that S4C should enjoy equal access to capacity which the other main terrestrial broadcasters enjoy, there is the argument that the Welsh viewers of S4C will have little incentive to invest in digital technology if their programmes can be delivered only at analogue quality or if the ancillary features which will be available on other channels will be unavailable on S4C.
We can all appreciate the unique remit that S4C has in delivering Welsh language programmes of quality to its viewers. The other side of the coin is that Welsh-speaking viewers have no other channel to which they can turn in order to view programmes in the language of heaven. It follows that the Department of National Heritage is missing out on a particularly strong marketing opportunity by depriving Welsh-speaking viewers of the prospect of enjoying full digital capacity on S4C. The achievements of S4C in creating an independent film and television industry essentially from scratch have already been rehearsed in this House. 237 It has been a significant contribution to the richness and diversity of culture within Wales and the UK. It has helped to diversify the economy of Wales, once so dependent on heavy industry.
If S4C is to continue to seed such welcome development and growth it will need to be able to commission programmes with full digital capacity. If a constraint of capacity is put on S4C, that constraint will be reflected to the independent production industry in Wales. It would handicap the development of the industry, making it less viable in the face of competition from companies elsewhere, experienced as they will be in the production of content dependent on the latest technology.
Perhaps I may ask my noble friend one question. Is there any inescapable shortage of capacity in the Principality which makes awarding S4C parity of capacity impractical? Is there really no multiplex with adequate coverage that would accommodate S4C's requests? As I hope I have explained, if there is parsimony in the award of capacity the danger is that the move to digital will be slower in the Principality and the emerging production industry in Wales will be handicapped. I am sure that that is not the Government's intention.

§ 8.45 p.m.

§ Lord Elis-Thomas
My Lords, I support the amendment which stands in my name and in the names of the noble Lords, Lord Prys-Davies, Lord Aberdare and Lord Cledwyn of Penrhos. We are facing a difficult issue as regards the relationship between technology and culture. In a sense, we are speaking in the dark because we are not clear about the nature of the frequency planning exercise. It would be helpful if in response the Minister could let us know the state of play on the ongoing frequency planning exercise. Can he also tell us what news he has of the technical capacity that is becoming available?
I was involved in discussions on the broadcasting legislation which established capacity for the IBA, as it then was, to begin the engineering work for what became S4C in Wales and Channel 4 and to carry on later when the channel was established. I am anxious about the tendency to make a more limited form of technology available for the channel. If there were an argument as regards the then terrestrial capacity and the fact that it was appropriate to allow the technology of S4C to develop later in terms of the fourth station on the repeaters and on the main transmitters in the 1970s and 1980s it is certainly not the case that it is inappropriate to allow S4C to have full capacity at the present stage. We are not talking only about the broadcasting capacity but about all the other digital services which we hope S4C will be able to provide.
I am grateful to the Minister for the discussions that he has had in this Chamber and outside about the arrangements. No doubt he will tell us that it is not the Government's view that digital capacity should be put on the face of the Bill. I submit that the form of the amendment clearly indicates that we are arguing that the 238 capacity should not be less than the capacity for Channels 3, 4 or 5. We are arguing for a flexible form of delivery on whatever multiplex is most appropriate but we are seeking parity of delivery on that particular multiplex with the other services being made available. In view of the total capacity which will be available through the new digital system it seems a reasonable argument that we are putting forward.
S4C and Channel 4 in Wales have been offered one-quarter of a multiplex. Channel 3 and Channel 5 have been offered one-half of a multiplex in Wales, as in the rest of the UK. I believe that that is an unacceptable structure. It will limit the possibility of S4C being able to develop a wider choice of services, unlike its competitors. We are awaiting the Minister's further amendments on the question of the commercial flexibility available to the channel, as we discussed in Committee.
By denying S4C as equal an access to multiplex as Channels 3 and 5 the Government are in danger of undermining the possibility of the very commercial flexibility of which they say they are in favour. There must be the technical capacity to be able to deliver that range of services but that will not be made available under the present arrangements. It will also seriously limit the possibility of the Welsh authority to raise additional commercial revenue at a time when the Government—and I agree with their emphasis—are looking for commercial partnerships as the funding for additional services.
As we have indicated, there has been a level of commercial success in terms of the income generated by the Welsh authority and the possibility of generating further income may well be reduced as a result of this decision if S4C is unable to have the same technical capacity as the other players in the field.
For all those reasons, I hope that the Government will indicate that they are prepared to accept the spirit, if not the letter, of my noble friend's amendment. We are seeking to ensure that the full capacity available to the other channels in Wales should also be available to S4C. I am pleased to support the amendment.

§ Lord Prys-Davies
My Lords, I support this important amendment. The Minister will know that since the Second Reading debate we have tried to extract from the department the assurance which is embedded in this amendment.
On the first day in Committee, in responding to a similar amendment, the Minister said: We are providing guaranteed places for S4C and Channel 4 in Wales".—[Official Report, 6/2/96; col. 229.] Of course, we welcome the terms of that guarantee as far as they go. But with the greatest respect, the wording does not in itself meet the anxiety expressed this evening by my noble friend Lord Cledwyn and the noble Lords, Lord Aberdare, and Lord Elis-Thomas. That anxiety relates to the digital capacity which has been reserved for S4C.
It seems to me that to reserve for S4C a lesser capacity than that for its competitors will be transparently unfair to S4C, its viewers and the Welsh 239 nation. Anyone who is familiar with the history of Welsh language broadcasting from the beginning will know that in the past it was always claimed that frequencies were not available or could not be found until the distant future. My noble friend Lord Cledwyn made it abundantly clear that Wales is no longer prepared to tolerate such unfairness.
I support entirely the anxieties expressed by the noble Lord, Lord Aberdare, as to which frequencies are currently available for digital broadcasting in Wales. If the Minister is unable to accept the principle of Amendment No. 47 this evening, will the department disclose the identity of the engineers upon whose advice it is relying? That would be extremely helpful.
I suggest that the engineers for S4C and the engineers for the department should exchange reports with a view to establishing the present position and to get at the truth before the Bill proceeds to another place. For those reasons, I support the amendment but I suggest that it is perfectly fair to ask for the engineers' reports to be exchanged.

§ Lord Inglewood
My Lords, I begin by saying how glad we are to see the noble Lord, Lord Cledwyn, in his place and to hear him again in such persuasive form.
I first congratulate the noble Lords who have moved this amendment on their persistence and ingenuity in pursuing the cause of S4C. This is certainly not the first time that we have debated the provision we propose to make for S4C with regard to digital broadcasting and I suspect it will not be the last. But I welcome the opportunity to look at the new angle which the noble Lords have put before us today.
As I have emphasised before, our main concern is to ensure that the Welsh language programming which is at the core of S4C's purpose and remit is made available in digital form as widely as possible throughout Wales. I make it clear that it is absolutely no part of our remit that that channel should be anything less than first class. That has to be our primary objective. That is why we announced that S4C would be allocated its own capacity on the multiplex assigned to the ITC which offered the widest possible geographical coverage, because that would guarantee S4C the widest possible reach in Wales.
The planning of frequencies for digital terrestrial broadcasting is a long and complex process. The ITC, the BBC and NTL are co-operating on this work at the moment, and have yet to finalise their report. I understand that the bulk of the work will not be finished until April. Although it seems that noble Lords have had privileged access to some early findings, those must inevitably be tentative and subject to revision. I therefore believe it would be premature to move from our original assumption about the outcome of the exercise and that the best coverage in Wales will be on the multiplex offering the widest coverage overall.
However, I assure noble Lords that, if it transpires that there is no significant difference in coverage in Wales between the top multiplex assigned to the ITC and the next best, I will certainly look again at the position of S4C. In doing this, however, I should remind 240 noble Lords that I will need to take other factors into consideration as well. I know, for example, that another aspect of the debate about the coverage of multiplexes is the fact that there can be a trade-off, at the margins, between coverage and capacity. Thus it may be possible to increase the capacity available without moving broadcasters from one multiplex to another.
I should say to the noble Lord, Lord Prys-Davies, that the department relies on the advice of the Radio Communications Agency and the ITC. I understand that S4C is in touch with the frequency planning exercise being conducted by the ITC, BBC and NTL and with work led by the ITC on the capacity available on the multiplex. I point the noble Lord, Lord Prys-Davies, in that direction towards the ITC in relation to those technical engineering matters.
A further point was raised by the noble Lord, Lord Elis-Thomas, about S4C's commercial services. I must apologise to your Lordships because I do not have ready the amendments which I had hoped to put before the House. Suffice it to say that we intend the regime for S4C to be along the lines of those applied to the BBC's commercial services or to any new service provided by the Channel 3 companies on their guaranteed capacity. I hope that that answers the noble Lord's questions.
I put forward those points not because they are in any way decisive but to illustrate the complexity of the issues involved. Nevertheless, I hope that what I have said gives noble Lords a sufficient assurance that we are listening to their anxieties and are doing our best to achieve the most satisfactory result for S4C. Against that background, I hope that noble Lords will feel reassured.

§ Lord Prys-Davies
My Lords, will the Minister confirm whether there is any objection to the engineers exchanging their reports?

§ Lord Inglewood
My Lords, I can see no objection from the department's point of view. However, I am not involved intimately in the exercise and nor do I necessarily fully understand all the implications of such an exchange.

§ Lord Cledwyn of Penrhos
My Lords, I am grateful to the noble Lord, Lord Aberdare, and my noble friends Lord Elis-Thomas and Lord Prys-Davies for what I thought were constructive speeches which have obviously made an impression on the Minister.
I am grateful also to the Minister for what I thought was a constructive response to what we said. He certainly left me with a measure of confidence, especially when he said that he will reconsider the whole problem when he receives the report in due course. It is in that spirit—a spirit of hope—that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ Clause 27 [The S4C digital service]:

§ Lord Prys-Davies moved Amendment No. 48: Page 25, line 11, after ("57(4)") insert ("58(1),").

241

§ The noble Lord said: My Lords, in Committee on 8th February at col. 340 of Hansard, I drew the Minister's attention to the situation which this amendment seeks to correct. Although I do not have a copy of Hansard with me, I understood from the Minister's reply that he would be bringing forward an amendment on Report. I am rather concerned that I have not seen that amendment. Does the Minister intend to accept the amendment? Can he give us that assurance? If he is not minded to do so at present, can he give us the reasons for his hesitancy?

§ 9 p.m.

§ Lord Inglewood
My Lords, the explanation for the noble Lord's amendment is most helpful. I appreciate the way that it has been brought forward. As I understand it, the purpose of the amendment is to ensure that the BBC would continue to be obliged to provide S4C with 10 hours a week of Welsh language programming after the frequencies carrying the analogue channels were switched off. I believe that the effect of the amendment would, in fact, be to double the obligation placed upon the BBC while both S4C and S4C Digital were being broadcast simultaneously. I am not sure whether that is the intention behind the noble Lord's amendment and would like some reassurance in that respect.

§ Lord Prys-Davies
My Lords, it is my understanding that it is not the intention that the contribution of the BBC should be doubled, so to speak, but that the contribution should be available when the analogue service is switched off.

§ Lord Inglewood
My Lords, I am much obliged.
We have looked at the issue and I can certainly assure the noble Lord that it is our intention that the obligation on the BBC should continue beyond the time when analogue frequencies were turned off. However, I must here admit what is, perhaps, a shortcoming of the Bill. It does not deal, nor does it pretend to deal, with all of the issues which would arise from the cessation of analogue broadcasts. The Bill is concerned with getting digital broadcasting off the ground. That, as we all now know, is quite complex enough. I fear that we must accept that further legislation will be needed to deal with all the implications of analogue switch off.
Even though we all hope that that day will come, even the most optimistic among us must, I think, accept that it is reasonable to expect that there will be plenty of time for at least one more Broadcasting Bill before that day actually dawns. The alternative would be to take very wide-ranging delegated powers now to deal with an event which is certainly some, and probably many, years in the future. It is much better, in our view, to focus on today's requirements and not seek to overcomplicate matters by trying to anticipate all the implications of analogue switch off.
242 I hope that what I have said will reassure the noble Lord as regards the first part of his concerns. In the circumstances, I hope that he will feel that I have given him a sufficient explanation of the longer term view.

§ Lord Prys-Davies
My Lords, I must say that I am not reassured by that response. However, the Minister has been very frank with us and I appreciate that fact. I propose to reflect on what he said. Obviously I would prefer to have a bird in hand, but I shall take instructions and possibly return to the matter at the next stage. In the meantime, I thank the Minister for his frank information. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ [Amendment No. 49 not moved.]

§ Clause 29 [Promotion of equal opportunities]:

§ Baroness Dean of Thornton-le-Fylde moved Amendment No. 50: Page 25, line 26, at end insert— ("( ) to adhere to a code of practice, drawn up by the Commission, to promote equality of opportunity in the employment of women, paying special attention to the participation of women in decision-making and editorial processes, to make arrangements for promoting it, both with the licence holders and independent companies working with them, ( ) to set up clear monitoring procedures, to review progress and to publish statistics annually on progress within the agreed arrangements, and ( ) to ensure that in its membership, the Commission itself will reflect fairly the diversity of society, including women, different racial groups and the disabled.").

§ The noble Baroness said: My Lords, in moving the above amendment, I shall speak also to Amendment No. 81. Both amendments deal with equal opportunities. The first relates to equal opportunities in television and Amendment No. 81 relates to the area of the Bill dealing with radio provision.

§ The amendments are not new. Indeed, we discussed them in Committee but, unfortunately, because of the time factor we grouped them with amendments covering the areas of racial discrimination and disability. We felt that we should bring them forward again and talk specifically to the area of equal opportunities relating to women in an industry which has substantial numbers of women employees.

§ If accepted, the effect of the amendments would be to change the emphasis from the multiplex or digital licence, including conditions requiring the licence holder to make arrangements for promoting equal opportunity, to one of adhering to a code of practice drawn up by the ITC and then promoting that code. So it would be very much a proactive role for the ITC rather than a reactive one.

§ A further amendment to the Bill would require the licence holders to set up monitoring procedures which would track the progress, or otherwise, of the equal opportunities policy in their companies. It is not a new or unique proposal; in fact, this happens in a number of the very broadcasting companies which will be covered by the Bill. The BBC is just one of them. As I said, it is not unusual and we do not believe that it would prove to be too much of a burden on companies.

243

§ The last subsection in both amendments seeks to ensure that the Commission itself which will be monitoring and drawing up the code reflects "diversity" in society. Again, that is not a unique development; it is happening continually now in representative bodies. In Committee, the Minister referred to the Equal Pay Act and the Sex Discrimination Act. He said that they were there to take care of the problems in equal opportunity provision in companies and that, therefore, those Acts would cover the clauses in the Bill which deal with equal opportunities.

§ The words in Clause 29 as it stands at present were in fact in the Broadcasting Act 1990. I should like us to consider what has happened from the time that the 1990 legislation was enacted. Quite frankly, its provisions have proved to be totally insufficient in achieving their worthwhile aims; namely, equal opportunity within the industry. It may be helpful to the House if I were to quote some statistics. I am told that women make up less than 35 per cent. of the employees in ITV companies. Let us remember that we are dealing with broadcasting which is received in all our homes and which is supposed to reflect society and the diversity within it.

§ Women constitute less then 10 per cent. of the membership of the boards of ITV companies. All prime time commissioning editors of the BBC and of the ITV Network Centre are men. Moreover, women appear in front of camera less often than men and, when they do, they get paid less. We are talking about an Act of Parliament which is now nearly six years old and which has not moved this ground on very far.

§ Even television companies themselves recognise that there is a problem, though their policies are not in any significant way changing the situation. In May of last year a Charter for Equal Opportunities for Women in Broadcasting was endorsed at a conference which took place at the BBC. The charter was endorsed by 49 European broadcasting organisations and 14 British broadcasting organisations. The BBC, ITN, Channel 4, Carlton and Granada were among them. It is no good signing charters or saying how good we are, let us look behind the words at what is happening in this industry.

§ The Bill requires a commitment to equal opportunities, as did—as I have said—the 1990 Broadcasting Act. However, the requirements for implementing that commitment are vague. The ITC has a mandatory responsibility to review each company's performance annually against its franchise contracts. The 1993 review made it clear that the monitoring procedure on equal opportunities needed to be more rigorous. Why not treat failure to meet equal opportunity requirements—which are provided in this Bill, and in the 1990 Act as a real requirement on companies—as seriously as non-compliance in other areas?

§ The Bill calls for the equal opportunity arrangements to be reviewed from time to time. What does that mean? Does it mean at the end of the licence period, or when someone feels moved to do it? The expression "from time to time" can mean that nothing is done at all. I think, quite frankly, that is what may be happening in some cases. I agree with the phrase in relation to good 244 business that if one cannot measure it, one cannot manage it. That is a clear, factual statement. If one cannot measure the equal opportunity improvements that this Bill is intended to implement—the 1990 Act sought to implement those improvements, but has failed abysmally—one cannot monitor them. Monitoring should take place annually. The position should not be reviewed from time to time; it should be reviewed annually. I suggest that the results of that monitoring should be published in a company's report. I beg to move.

§ Baroness Rawlings
My Lords, naturally I would not he against anything that favoured women, but I do support the original text in this case because if we try to introduce quotas of any kind, it would invariably be unsatisfactory. We have seen the same problem in the past with the Télévision sans frontiérs report to the European Parliament when the French tried to introduce Euro quotas barring American and Australian programmes. That was a disaster. It does not work and I urge your Lordships to support the original text.

§ Baroness Jay of Paddington
My Lords, as a signatory to the amendment, I should tell the noble Baroness that the amendment does not mention quotas. My noble friend simply talked of the commission adhering to a code of practice on equality of opportunity rather than promoting any concept of numbers of women. As she said in her concluding remarks, she seeks to introduce the clear monitoring procedures which are necessary to measure the appropriate employment of women as part of that process. Certainly the word "quotas" and reference to the numbers of women to be employed are not mentioned in this amendment.

§ Baroness O'Cathain
My Lords, would it not be possible in the circumstances to meet the principle of this amendment in terms of putting some sort of obligation on the companies which recommends them to follow the leadership 2000 programme whereby companies are committed, on a year-by-year basis, to increase the proportion of women in senior positions? That is not a matter of quotas but of making a public commitment through annual reports that they will try to help younger women to achieve promotion and acquire senior management positions in the longer term. I make that suggestion because most large, respectable companies in the private sector are doing just that.

§ Lord Inglewood
My Lords, I inevitably open my remarks by saying that I feel a trifle diffident as the only man to participate in this debate. I am answerable to a lady Secretary of State, so I am pinned in on every side. I understand the wish of the noble Baronesses to see a higher representation of women in broadcasting. Of course the Government agree with that, but we do not believe that it is necessary to introduce a code of practice of the kind suggested, as the ITC and the Radio Authority licence holders are already bound by the terms of the Sex Discrimination Act 1975 and by the United Kingdom's implementation of a succession of EC directives in the equal opportunities field.
245 In addition, the Bill as drafted already requires television and national radio multiplex and programme service licence holders to make arrangements for promoting, in relation to employment by "him"—which presumably includes "her"—equality of opportunity between men and women and between persons of different racial groups, and to review those arrangements from time to time. Therefore, I do not believe there is any need for further provisions above and beyond this. The suggestion put forward by my noble friend Lady O'Cathain seems to be a possible way forward in this area. I also believe that it would be quite improper to expect regulators to interfere in the internal affairs of independent companies working for broadcasters. The Equal Opportunities Commission already has a code of practice on sexual discrimination in employment which would apply to independent companies.
In respect of the third subsection of both amendments, the Government do not believe that it is necessary for the Secretary of State to be directed in the manner specified when making appointments to the ITC and the Radio Authority. As a matter of course, the Secretary of State already ensures that the best possible appointments are made from the pool of talent available at any one time. She has asked particularly that candidates should reflect the diversity of the viewing and listening population and would like to achieve across all broadcasting appointments at least 35 per cent. women, and representatives from different ethic and disabled groups.
We also hold firm to the principle that only the best candidates should be appointed. I understand that that may not go as far as the noble Baroness would like. However, having heard what I have said, I hope that she will withdraw the amendment.

§ Baroness O'Cathain
My Lords, before the Minister sits down, perhaps I may make a correction. I referred to Leadership 2000. I meant Opportunity 2000. I apologise.

§ 9.15 p.m.

§ Baroness Dean of Thornton-le-Fylde
My Lords, I thank the noble Lords who have joined in the debate. I assure the Minister that he should not feel too lonely when he is the only one of his sex who has spoken. It happens to women all the time.
In responding, I declare that I am a member of the target team of Opportunity 2000 and have been since it was formed. The BBC is a member of Opportunity 2000 and has been since it was formed.
I do not believe in quotas; I never have. I think that they turn people off. They do not encourage people to make equal opportunities happen. Quotas were the subject of one of Opportunity 2000's earlier debates. Targets are better. It is far better to have targets set individually within the company. The Bill does not provide for targets. It is woolly and vague, as is the 1990 Act.
246 Opportunity 2000 also requires that companies who are members monitor their progress annually, publish their progress in their annual report and have internal reviews and discussions on it. That is what a code of practice would do. However, the Bill and the 1990 Act do not provide for that.
As regards the code referred to in the amendment, I would expect the ITC to consult industry on that code. It would not simply draw up the code and impose it on industry.
The Minister believed that it was wrong for a regulatory body to interfere in the internal management of companies. What then does the clause in the Bill require, if that is the view of Government? I am strengthening a clause already in the Bill which requires the licence holder to make arrangements for promoting.
I am not sure whether the Minister was given briefing on this issue, but the ITC already publishes figures with regard to women in this industry. It must obtain them from individual companies. So we do not seek to impose more on companies but to attain a better structure and ensure that progress is monitored year on year against a code issued by the ITC and measured within the industry.
The Minister hoped that I would withdraw the amendment. I seek to be realistic. Looking around the Chamber, perhaps we might have eight members voting against my amendment with six for it, unless the Government blow the whistle and draw Members in on the Government Benches. It is regrettable that I have to beg leave to withdraw the amendment, but that is the leave that I seek.
Amendment, by leave, withdrawn.

§ Lord Inglewood moved Amendment No. 51: After Clause 30, insert the following new clause— POWER TO VARY AMOUNT OF FINANCIAL PENALTIES (".—(1) The Secretary of State may by order amend any of the provisions specified in subsection (2) by substituting a different sum for the sum for the time being specified there. (2) The provisions referred to in subsection (1) areߞ

section 11(5)(a);
section 17(2)(a);
section 21(2)(a); and
section 25(2)(a).

(3) An order under subsection (1) shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

§ The noble Lord said: My Lords, I have spoken to this amendment. I beg to move.

§ On Question, amendment agreed to.

§ Clause 33 [Interpretation of Part II]:

§ [Amendment No. 52 not moved.]

§ Clause 34 [Radio multiplex services]:

§ Lord Inglewood moved Amendment No. 53: Page 27, line 40, leave out ("provided for any area of") and insert ("provided without any restriction by virtue of this Act to a particular area or locality in").

§ The noble Lord said: My Lords, this is a minor amendment but one which we believe makes fully watertight our definition of national radio multiplex. 247 The amendment provides that a national radio multiplex is by definition any multiplex which is not by virtue of this Bill a local multiplex. This will avoid any problems of definition which might otherwise occur. I beg to move.

§ On Question, amendment agreed to.

§ Clause 40 [National radio multiplex licences]:

§ Lord Inglewood moved Amendment No. 54: Page 34, line 26, at end insert— ("( ) In subsection (4)(f) "acquisition" includes acquisition on hire or loan."). On Question, amendment agreed to.

§ Clause 41 [Award of national radio multiplex licences]:

§ Lord Inglewood moved Amendments Nos. 55 to 57: Page 35, line 3, leave out from ("regard") to end of line 4 and insert ("to the extent to which, taking into account the matters specified in subsection (2) and any representations received by them in pursuance of section 40(7)(6) with respect to those matters, the award of the licence to each applicant would be calculated to promote the development of digital sound broadcasting in the United Kingdom otherwise than by satellite."). Page 35, line 23, at end insert— ("( ) In subsection (2)(e) "acquisition" includes acquisition on hire or loan."). Page 35, line 24, leave out subsection (3).

§ The noble Lord said: My Lords, I have spoken to these amendments. I beg to move.

§ On Question, amendments agreed to.

§ Clause 43 [Duty of Authority to reserve digital capacity for certain purposes of BBC]:

§ Lord Colwyn moved Amendment No. 58: Page 36, line 33, after ("BBC") insert (", and to all independent local radio services in operation at the relevant date, except where the number of existing analogue licences exceeds the number of available channels on the multiplex,").

§ The noble Lord said: My Lords, I beg to move Amendment No. 58 and speak to Amendment No. 59. Your Lordships will be pleased to hear that the subject has not come up during the passage of the Bill so far and is appropriate to the Report stage.

§ Many people will be pleased that independent national radio is to be guaranteed right of access to the national multiplex and that the Secretary of State has promised that national stations will be able to renew their national analogue licences for a further eight years if they take up their guaranteed digital radio places. I understand that similar renewal of analogue licences will be offered to local commercial stations that elect to take out DAB licences. That might encourage commercial radio participation in DAB and is a good thing. However, it is less easy to understand why current local commercial radio services are not afforded the same courtesy as that granted to local BBC services. That is, guaranteed places on the local multiplexes.

§ Commercial radio might be said to be treated as a second-class citizen in the Bill, despite enjoying a greater share of listening than the BBC. Each national commercial radio station must be in separate ownership and so will not be allowed the same DAB advantages 248 as those available to the BBC which will own its own national multiplex and may own and operate all the services on it. In addition to giving the BBC that important national monopoly advantage, the Government wish local commercial broadcasters to compete for multiplex places while BBC local services are guaranteed a presence on all local multiplexes, irrespective of either the popularity or merit of the BBC services concerned or the business interests of the commercial broadcasters involved.

§ Perhaps the Minister is unable to treat local commercial radio with the same care as he has shown to BBC local radio because it is not possible to get all the current London independent stations on the available local DAB space currently set aside. Please do not allow this local London difficulty to affect the rest of the country. There is no need for it to do so, as the words of the amendment make clear. It seeks automatic access only where that is possible. I urge the Minister to reflect on the need for DAB to be strongly supported by all radio broadcasters as soon as possible. The BBC wishes commercial broadcasters to participate fully, swiftly and loudly so that the fruits of the corporation's enormous investment in DAB come through swiftly. The gesture I seek will improve the prospects for that to occur.

§ If either the amendment I have proposed or the principle behind it is accepted, no doubt subsequent related clauses will also need to be changed. I hope that my noble friend and his department will be able to help in that way. I commend the amendment to the House and take the opportunity to raise briefly a related issue which I hope the Minister will take into account as the Bill proceeds. I have already mentioned the Government's announcement at the time of the Bill's publication which proposed to offer extensions of analogue licence to those who take up digital opportunities. This was encouraging.

§ However, I understand that some parts of the United Kingdom (mainly along the south coast and in East Anglia) are unlikely to have DAB frequencies made available until around 2005. If and where that is the case, I hope those stations that wish to participate in DAB once it is licensable will be able to declare their interest and claim an extension to their analogue licence, even if they have to wait considerably longer than those more fortunately placed. I am sure that the Minister will share my concern at the possibility of DAB creating a two-tier independent local radio system. I beg to move.

§ Lord Inglewood
My Lords, as my noble friend Lord Colwyn explained, the amendments seek to require the Radio Authority to reserve digital capacity for independent local radio services as well as for the BBC's local services.
Independent local radio companies have petitioned for some time to be given a guaranteed place on a digital multiplex, arguing that this would give them parity both with BBC local services and the national independent radio services. However, there are important differences which lead us to believe that the case for guaranteeing capacity for independent local radio cannot be sustained.
249 Let us first consider the position of the BBC. The BBC has been assigned a full multiplex for its UK-wide services, and indeed began broadcasting those services in digital form last September. However, at the local level the BBC's local radio stations must be broadcast on frequencies allocated to the Radio Authority for independent local radio. It is therefore necessary, on the face of the Bill, to provide for the BBC's local services in that context.
Under our proposals, the BBC will negotiate capacity for its local services with the authority. This does not amount to a guarantee that every BBC local and regional service available in an area will automatically gain a place on a digital multiplex. Rather, it allows the authority to look at the coverage of each digital multiplex and agree with the BBC a suitable allocation. If the BBC and the Radio Authority cannot agree, the Bill provides for referral to the Secretary of State for her to determine the matter.
This arrangement is quite proper, given that the BBC has certain duties and obligations placed upon it to ensure that if fulfils its public service broadcasting remit—something which is not the case for local independent radio.
Independent national radio has also been allocated guaranteed slots on a multiplex; but here again there are important differences with the situation for local radio. Independent national radio is subject to a different licensing regime, and competitive tender against formats determined by Parliament. That is not the case for local radio. At the national level, there are important spectrum gains to be made—guaranteeing INR capacity on digital opens up the possibility of eventually reclaiming their analogue frequencies. At the local level, we envisage that digital and analogue services will continue to be broadcast alongside each other for the foreseeable future. On the national multiplex, the guaranteed slots will occupy just half of the capacity available. Guaranteeing local radio services capacity might, in some areas, completely fill a multiplex and prevent new entrants to the market. In many areas, however, where there are only two or three local services, they will probably find little problem in going digital if that is what they want to do.
Local multiplexes do not have to put forward proposals for promoting or assisting the acquisition of receivers, nor will they be required, at any stage, to pay a percentage of multiplex revenue. I also remind noble Lords that we intend to provide greater security for independent local radio licence holders going digital by allowing them to renew for a further eight-year term, their analogue licences.
Extension to analogue licences, as I explained, linked taking up the digital audio broadcasting place. We shall consider the point that my noble friend raised, although we can see difficulties in giving open-ended guarantees of the kind that he asked for.
I believe that the regime we propose recognises both the needs of the BBC and the differences between national and local independent radio. It provides ILR licence holders with the incentive to invest in DAB and 250 the security to ensure that they can benefit from that investment. For these reasons, and in the light of my remarks, I hope that the noble Lord will be reassured.

§ Lord Colwyn
My Lords, I thank my noble friend the Minister for that long and complex answer, and I think a hint of encouragement.
BBC local radio is very well cushioned. It does not have to bid for its licence or pay part of its revenue. However, I feel that it should perhaps have a guaranteed place on the multiplex. If there is not enough space, then perhaps places should definitely be made available to existing broadcasters. However, I have listened, and I look forward to reading my noble friend's remarks. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ [Amendment No. 59 not moved.]

§ Lord Inglewood moved Amendments Nos. 60 and 61: Page 40, line 31, leave out ("national"). Page 40, line 34, leave out from ("period") to (""the") in line 35 and insert—

("(a) in the case of a local radio multiplex licence, a financial penalty of £50,000, or
(b) in the case of a national radio multiplex licence, a financial penalty of whichever is the greater of—

(i) £50,000, or
(ii) the prescribed amount.

(6) In subsection (5)(b)(ii)").

§ The noble Lord said: My Lords, I have spoken to Amendments Nos. 60 to 80 with Amendments Nos. 22, 24, 27 and 35. In those circumstances, with the leave of the House I beg to move Amendments Nos. 60 and 61.

§ On Question, Amendments agreed to.

§ Clause 48 [Conditions attached to national or local radio multiplex licence]:

§ Lord Inglewood moved Amendment No. 62: Page 41, line 47, leave out subsection (3) and insert— ("(3) No order under subsection (2) shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament."). On Question, amendment agreed to.

§ Clause 51 [Attribution of multiplex revenue to licence holder and others]:

§ Lord Inglewood moved Amendments Nos. 63 and 64: Page 45, line 35, leave out (" 53(2)") and insert (" 53(2A)"). Page 46, line 1, leave out (" 56(2) or section 60(2)") and insert (" 56(2A) or section 60(2A)"). On Question, amendments agreed to.

§ Clause 52 [Duration and renewal of national or local radio multiplex licences]:

§ Lord Inglewood moved Amendments Nos. 65 to 68: Page 46, line 36, leave out subsection (4) and insert— ("(4) At any time before determining the application, the Authority may—

(a) require the applicant to furnish—

(i) a technical plan which supplements that submitted by the licence holder under section 40(4)(b) or 44(4)(b), and
(ii) in the case of a national radio multiplex licence, proposals which supplement that submitted by the licence holder under section 40(4)(f), and

(b) notify the applicant of requirements which must be met by that supplementary technical plan or those supplementary proposals and relate to the matters referred to in section 40(4)(b)(i) and (ii) or 44(4)(b)(i) and (ii).

(4A) The consent of the Secretary of State shall be required for any exercise by the Authority of their powers under subsection (4) and for any decision by the Authority not to exercise those powers."). Page 47, line 4, leave out from beginning to ("or") in line 8 and insert— ("(b) any supplementary technical plan or supplementary proposals submitted under subsection (4)(a) fail to meet requirements notified to the applicant under subsection (4)(b),"). Page 47, leave out lines 12 to 14 and insert— ("(7) Subject to subsection (7A), on the grant of any such application the Authority may with the consent of the Secretary of State, and shall if so required by him—"). Page 47, line 23, at end insert— ("(7A) Where an order under section 49(2) is in force on the relevant date, no percentage of multiplex revenue shall be payable as mentioned in subsection (7)(a) during the period for which the licence is to be renewed.").

§ On Question, amendments agreed to.

§ Clause 53 [Enforcement of national or local radio multiplex licences]:

§ Lord Inglewood moved Amendments Nos. 69 to 71: Page 48, line 9, leave out from beginning to ("3") in line 11 and insert ("shall not exceed whichever is the greater of—

(a) £50,000, or
(b) the amount determined under subsection (2A).

(2A) The amount referred to in subsection (2)(b) is— (a) in a case where a penalty under this section has not previously been imposed on the holder of the radio multiplex licence during any period for which his licence has been in force ("the relevant period"),"). Page 48, line 14, leave out ("shall, in any other case, not exceed") and insert ("in any other case"). Page 48, line 16, at end insert— ("and in relation to a person whose first complete accounting period falling within the relevant period has not yet ended, paragraphs (a) and (b) above shall be construed as referring to 3, or (as the case may be) 5, per cent. of the amount which the Authority estimate to be the share of multiplex revenue attributable to him for that accounting period (as so determined)."). On Question, amendments agreed to.

§ Clause 56 [Enforcement of digital sound programme licences]:

§ Lord Inglewood moved Amendments Nos. 72 to 76: Page 51, line 2, leave out ("two years") and insert ("one year"). Page 51, line 9, leave out from beginning to ("3") in line 11 and insert ("shall not exceed whichever is the greater of—

(a) £50,000, and
(b) the amount determined under subsection (2A).

(2A) The amount referred to in subsection (2)(b) is— 252 (a) in a case where a penalty under this section has not previously been imposed on the holder of the digital sound programme licence during any period for which his licence has been in force,"). Page 51, line 15, leave out ("shall, in any other case, not exceed") and insert ("in any other case"). Page 51, line 17, leave out ("(2)") and insert ("(2A)"). Page 51, line 32, leave out subsection (7).

§ On Question, amendments agreed to.

§ Clause 60 [Enforcement of digital additional services licences]:

§ Lord Inglewood moved Amendments Nos. 77 to 80: Page 53, line 25, leave out ("two years") and insert ("one year"). Page 53, line 32, leave out from beginning to ("3") in line 34 and insert ("shall not exceed whichever is the greater of—

(a) £50,000, and
(b) the amount determined under subsection (2A).

(2A) The amount referred to in subsection (2)(b) is— (a) in a case where a penalty under this section has not previously been imposed on the holder of the digital additional services licence during any period for which his licence has been in force,"). Page 53, line 38, leave out ("shall, in any other case, not exceed") and insert ("in any other case"). Page 53, line 44, leave out ("(2)") and insert ("(2A)"). On Question, amendments agreed to.

§ Clause 61 [Promotion of equal opportunities]:

§ [Amendment No. 81 not moved.]

§ Lord Inglewood moved Amendment No. 82: After Clause 61, insert the following new clause— POWER TO VARY AMOUNT OF FINANCIAL PENALTIES (".—(1) The Secretary of State may by order amend any of the provisions specified in subsection (2) by substituting a different sum for the sum for the time being specified there. (2) The provisions referred to in subsection (1) are—

section 47(5)(a) and (b)(i);
section 53(2)(a);
section 56(2)(a) and (4); and
section 60(2)(a) and (3).

(3) An order under subsection (1) shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

§ The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.

§ On Question, amendment agreed to.

§ 9.30 p.m.

§ Lord Thompson of Monifieth moved Amendment No. 83: Before Clause 65, 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: My Lords, this is the same amendment that was tabled at Committee stage, unlike the previous amendment of the noble Lord, Lord Colwyn, whom I congratulate on having introduced new material into our proceedings. I should not have brought 253 forward the amendment again in the same terms if I had not been encouraged by the tone of your Lordships' Chamber when this matter was discussed at an earlier stage and by the not unsympathetic response of the Minister at the end of that discussion.

§ I do not wish to take up much time at this stage but this is a very important amendment in terms of the Bill's consequences for the overall financial relationships within independent television. We shall certainly want to try to come to a conclusion on this matter before our proceedings ultimately end.

§ It is sufficient to say that the amendment reflects the fact that one of the many anomalies of the 1990 Broadcasting Act was to lay down a different timetable for the financial arrangements in relation to Channel 4 from the financial arrangements in relation to the bids that the ITV companies had made for their contracts. I am very happy to see the noble Lord, Lord Crickhowell, in his place. I know that he feels strongly about this matter. He has some direct personal knowledge of the problems created by it.

§ Before we leave the subject this evening, I remind the Minister that this Bill gives a very important opportunity to the Government to put British broadcasting generally on a more sensible and even base for the challenges of digital technology that lie ahead and to correct some of the major unfortunate consequences of the 1990 Act. Two things went wrong. One was that the bidding system produced results which, even by the standard of Treasury hopes at the time, must have seemed totally grotesque. In the Yorkshire area, which is a prosperous region of the country, there was a bid around the £30 million plus mark; in the neighbouring central region around Birmingham there was a bid of £2,000; and there was a bid in Scotland for £2,000. The most grotesque anomalies arose.

§ The second major mistake in the 1990 Act occurred with the Channel 4 formula, which was well intentioned and meant to sustain Channel 4 on an independent basis of selling its own advertising with a possibility of a subsidy if it became necessary to enable it to fulfil its remit. In our Alice in Wonderland world that formula has been stood on its head. Channel 4 has been heavily subsidising ITV companies, including some very prosperous and profitable ones.

§ The general point that I wish to make to the Minister is that there is an opportunity in this Bill to deal with those anomalies and try to obtain a timetable for a change in the Channel 4 arrangements which coincides with a timetable for a change in the ITV arrangements. It is a nonsense that they should be on different timetables. If the Channel 4 formula is altered in a way that reduces the payments from Channel 4 to ITV, there should be a year's gap so that the ITV companies have the possibility of seeking in some cases to renegotiate their arrangements.

§ The Minister has been understanding and sympathetic about this matter. I have no complaint about that. I recognise the difficulties. But those grotesque mistakes—that is the proper description of them—have produced a certain financial result which affects the 254 Treasury. Trying to put right those mistakes may very well reduce, if only marginally—I do not know the figures—the return to the Treasury. I know very well from my own experience long in the past that anything which affects the return to the Treasury produces the deepest resistance for all Ministers, however understanding they are of the sense and basis of principle of a proposed change.

§ I do not ask tonight for a response from the Minister of the kind that I hoped for when I tabled the amendment. I know the difficulties. I know that he recognises the strength of the case and indeed the strong views on all sides of the House. For instance, the noble Lord, Lord Peyton, spoke of this in Committee.

§ We will need to come back to the issue; but I beg the Minister, in whatever he feels able to say to me tonight, not to close the door on the matter. I say that not merely because of this amendment, but also because it is in the interests of the Government, if they wish to produce a Broadcasting Act 1996 that will correct the great mistakes of the Broadcasting Act 1990, to leave the door open to bring about the necessary changes. I beg to move.

§ Lord Crickhowell
My Lords, I speak in very much the same spirit as the noble Lord, Lord Thomson of Monifieth. Again, I declare an interest as a director of HTV.
As I shall indicate, Amendment No. 83 has considerable significance for HTV and for other Channel 3 companies. There are not many who now defend the Broadcasting Act 1990 as being fault-free legislation. But whatever its shortcomings, it was the foundation on which business plans and bids were based by those who won and those who lost in the somewhat bizarre bid process. My company had to make a relatively high bid to retain the franchise, though not as high as some others. We pitched it about right. If it had been much lower we would have been beaten and, after a difficult period in which we had to fight literally for survival, by improving efficiency and widening the market for our products we have been able to announce a good result for our shareholders while maintaining the outstanding regional programmes which are both a licence obligation and a subject of which we are justifiably proud.
In putting together those bids, companies looked at the prospectus as a whole—pluses and minuses; obligations and opportunities. Those pluses and minuses included the Channel 4 funding formula and the possibility of—in the event the actual—loss of net advertising revenue (NAR) to the new channel.
Channel 4 complained loudly and with great effect about the consequences of the funding formula. Practically every day I drive past its splendid new palace and see its great advertising hoarding proclaiming the iniquities of the system. Among other things, Channel 4 argued that the sums it pays deprive it of money that would otherwise be spent on UK productions. One can argue about the extent to which money would be spent in that way; no doubt the amounts would be quite large. However, much of the same money is at present being 255 spent by Channel 3 companies on their existing production in the UK and specifically on regional programme making.
It was suggested by some at Committee stage that the sums were pretty marginal for Channel 3 companies. They are certainly not marginal for Yorkshire Tyne-Tees and HTV, to take just two companies. If the Channel 4 rebate were to end in 1998 without other adjustments, I would guess that my company would either see about 40 per cent. off the bottom line or, because there would have to be a combination of effects, less would be spent on regional programme making and UK programme making, which would have to be squeezed to offset the consequences. As any change in the funding formula has a variety of consequences, and not just for one channel—the noble Lord, Lord Thomson of Monifieth, referred to the Treasury as well—I am certain that the Government are right to think that it should not be written into the Bill now but should be the subject of detailed review and analysis in 1997 before final conclusions are reached. However, I think it not unlikely that the result of that review will be either the ending of the formula or a substantial dilution of it. If that is so, there must be a parallel examination of the consequences for Channel 3, which will be very great, and for the Treasury, and of any other impacts there will be.
The trouble with the 1990 Act is that it does not make that parallel consideration possible. Under the existing rules, the Channel 3 companies cannot go to the ITC until a year later to ask for their bids and their licences to be reviewed. That is an absurd anomaly which must be corrected. Furthermore, if they ask for their licences to be reviewed there is no obligation on the ITC to carry out that review immediately or indeed at any time until the end of the licence period. It is those faults that the amendment seeks to correct. The case is overwhelming. The amendment does not seek to impose a solution on the ITC or on the Government. It seeks to bring into line the two reviews that ought to take place at the same time and to allow for the possibility that the potentially very severe consequences for Channel 3 companies should be adequately considered.
On Thursday, when regrettably I shall not be able to he in the House—I have to chair the final board meeting of the National Rivers Authority on that day and I decided that it had a prior claim on my time—another series of amendments will be considered about regional programming. We have been delighted to hear the commitment made by noble friend the Minister to strengthening the clauses already written into the Bill to protect regional programming. That is an indication of the importance the Government attach to regional programming. In a debate on an earlier amendment we considered Welsh language broadcasting and the impact of changes to digital. I have to say that the abolition of the present funding arrangements for Channel 4, without any parallel changes in the arrangements for the Channel 3 companies, will have adverse consequences—more severe consequences—for a far larger number of people in Wales than the consequences debated a few minutes ago of digital on Welsh language broadcasting.
256 This is a very important matter. It affects a crucial aspect of broadcasting. Like the noble Lord, Lord Thomson of Monifieth, I do not expect to get a definitive answer from my noble friend tonight. I know that he has to argue a case elsewhere with the Treasury and I know that he is giving most careful and sympathetic consideration to the case. But I do not want to leave him in any doubt of the importance which I, too, attach to this matter and of my determination, along with the noble Lord, Lord Thomson, to return to the matter later in order to find a satisfactory way forward.

Viscount Astor
My Lords, I support what my noble friend Lord Crickhowell said and in general give my support to the amendment on the noble Lord, Lord Thomson. However, as he said, his amendment is not without problems. We have to remember that we cannot deal with this issue without looking at the Channel 4 funding situation. Noble Lords should remember the concession that my noble friend the Minister gave Channel 4 at an earlier stage, which will be worth £30 million to it. It is achieved by releasing money from the reserve.
The effect of this amendment, if the two dates are brought together, will be that those who make low bids will not want to negotiate and they will hang out for as long as possible. Those who make high bids will want to negotiate as early as possible. As my noble friend said, the problem is that that will fall foul of the Treasury, and it will mean less revenue.
How will the Treasury make it up? Will it take some of the money that Channel 4 is currently paying to the ITV companies? The Treasury will be getting an extra £22 million from the licence fee of Channel 5, which is going to be a new sum of money coming in. Will the amendments of the noble Lord, Lord Thomson, on domestic satellites make them fall into the net so that they can charge? It is a very difficult issue.
The point I make is that when we come to look at the matter we should not be in a position where the companies who got their bids right end up subsidising the companies whose bids were too high. That seems iniquitous and unfair. As my noble friend said, the bids were put forward on a commercial basis. We must be careful when we come to look at this matter. I very much support the general principle of what the noble Lord, Lord Thomson, said. I am sure that the Government will have to look at the whole issue with great care. I emphasise again that it is a crucial issue for the future of terrestrial broadcasting.

§ 9.45 p.m.

§ Baroness Wharton
My Lords, I agree with much of what my noble friend Lord Thomson said, so I am not going to add anything to this debate other than to say that I believe we should negotiate the Channel 4 funding at the same time as we deal with the Treasury and the Channel 3 licence fee payers. It seems very unfair to take one out of context with the other. They should be dealt with at the same time. I support the amendment.

§ Lord Donoughue
My Lords, I completely support my noble friend Lord Thomson. This amendment seeks 257 to simplify and rationalise the ill consequences and irrationalities of the 1990 Act. We appreciate that there are problems within it. I agree with everything that the noble Viscount, Lord Astor, said.
We know the problems of dealing with the Treasury. If the Minister can come up with any kind of package solution that silences the Great George Street gang, but produces a simpler and more rational situation, I am sure that we will look at that very constructively.

§ Lord Inglewood
My Lords, the noble Lord, Lord Thomson, most helpfully and candidly explained the purpose of his amendment. He very clearly set out the implications of the issue we are discussing. I am very grateful to him for that and also to my noble friend Lord Crickhowell for talking about this issue from his perspective. I am also grateful to all noble Lords who have contributed to this debate. I have listened very carefully to what has been said and I shall note it with very considerable care.
This amendment is predicated on assumptions about the timing of changes to the Channel 4 funding formula and about the level of Channel 4 payments to Channel 3 companies in future. We shall return to this subject in discussing Amendment No. 162 of the noble Lord, Lord Thomson, as regards Clause 69, but not, I trust, this evening. For the time being I say only that a range of possibilities exist for changes to the Channel 4 funding formula and that these issues are not cut and dried.
Leaving aside that underlying issue, the Government see objections in principle to what the noble Lord, Lord Thomson, has proposed in his amendment. The Broadcasting Act 1990 was clear as to the duration of the Channel 3 licences. They indicated that they should continue in force for 10 years with applications for renewal no earlier than four years before the date of expiry. That was the basis on which the Channel 3 companies bid for their licences. Nothing has changed the underlying legislative framework since that time and as a matter of principle the Government are not persuaded that a change in the statutory ground rules is appropriate at this stage.
The noble Lord indicated that the purpose of his amendment is to enable Channel 3 companies to seek an early renegotiation of their licence conditions in order to compensate them for the projected loss of income from Channel 4. In effect, the proposition is that there should be an early reduction in Channel 3 companies' payments to the Exchequer. The Government do not accept that taxpayers should be asked to accept an uncovenanted loss in order to offset a reduction of Channel 3 companies' income in that way.
As I have said, we shall return to the noble Lord's amendment on the Channel 4 funding formula at a later stage, but, for the reasons I have given, the Government do not support the noble Lord's amendment on the duration and renewal of Channel 3 licences. As I said at 258 the beginning of my remarks, we shall take careful note of all that has been said this evening. I am absolutely sure that we shall be debating the matter further.

§ Lord Thomson of Monifieth
My Lords, I am not surprised, and in that sense I am not disappointed, by what the Minister said but I ask him to take back to his Secretary of State and ask her to take to the Cabinet more generally the unanimous view that has been expressed even in this modest House. All sides of the House have been represented and have tended to express the same view.
It is a question of trying to deal with the problems that have arisen from the 1990 Act and achieving a more sensible outcome from this Bill. In view of the feelings on all sides of the House I hope that the Minister will return to the matter in a more positive manner than he has shown in simply reciting his Committee brief. He has not moved any further forward. However, I know that he recognises the feelings of the House and that the proposal has some merit. I am content to rest with that tonight, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ Lord Dixon-Smith moved Amendment No. 84: Before Clause 65, insert the following new clause— AMENDMENT OF THE BROADCASTING (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 article 12(3) for "two" there is substituted "three". (3) In article 13(1)—

(a) for "hold a licence" there is substituted" hold more than one other licence"; and
(b) for "holder of a licence" there is substituted "holder of more than one other licence".

(4) In article 13(2)(a) for "for which the service" there is substituted "for which a service". (5) In article 13(2)(b) there is inserted "and (c) provided as a local radio service falling into category A or B". (6) After article 13 there is inserted— "Radio service licences 13A—(1) Subject to paragraph (5), a person who holds a licence to provide a local radio service shall not at any time hold a licence to provide a local radio service to which this article applies; and, subject to paragraphs (3) and (4), such a person shall not be a participant with more than 20 per cent. interest in a body corporate which is the holder of a licence to provide a local radio service to which this article applies. (2) This article applies to a local radio service which is—

(a) provided for an area which is substantially the same as that for which the service provided by the person mentioned in paragraph (1) is provided; and
(b) provided on the same frequency band as that service; and
(c) provided as a local radio service falling into category C or D.

(3) A person who holds a licence to provide a local radio service may be a participant with more than a 20 per cent. interest in a body corporate which is the holder of a licence to provide such a local radio service as is described in paragraph (2) if the number of persons over the age of 15 resident in the smaller area does not exceed 10 per cent. of the number of such persons resident in the larger area. 259 (4) Where such a person as is described in paragraph (3) is a participant with more than a 20 per cent. interest in a body corporate which is the holder of a licence to provide such a local radio service as is described in that paragraph he may not be a participant with more than a 20 per cent. interest in any other such body corporate. (5) Nothing in this article shall prevent a person from holding licences to provide local radio services if—

(a) that person was, immediately before the grant of the licences, a local radio contractor for an area which was substantially the same as the area in respect of which those licensed services are provided: and
(b) he provided two or more different programme services on different frequencies pursuant to his contract.

(6) For the purposes of this article two areas are to be regarded as substantially the same if at least 50 per cent. of the persons over the age of 15 resident in the smaller area are also resident in the larger area.".").

§ The noble Lord said: My Lords, this amendment returns us to the more intimate field of independent local radio. It has been tabled to bring a limited relaxation of the regulation which at present controls that sector by permitting an independent local radio station to control two FM channels in particular circumstances. It is not my purpose tonight to go over the ground which I advanced at Second Reading and which was developed in Committee by the noble Lord, Lord Desai, and others. However, the amendment has been amended in the light of our Committee debates.

§ I regret that the noble Lord, Lord Chalfont, is not in his place because his concern in Committee related to the possibility of local monopoly. I spoke to him earlier today. He had received a copy of the revised amendment which puts in place both limitations on the possibility of holding two FM channels in terms of population size—it can happen only in communities of more than 1 million people—and an arithmetical formula which would limit the power of monopoly. The noble Lord was kind enough to inform me that we had answered the vast bulk of his concerns about the original amendment.

§ I do not propose to take up any more of the time of the House. The case is a strong one and I hope that my noble friend on the Front Bench may find it possible, in the light of this revised amendment, to agree that such provisions should go forward. I beg to move.

§ Lord Thomson of Monifieth
My Lords, since our debate in Committee, developments have reinforced my view about the risks of excessive monopoly arising out of the proposals in the amendment. I am not sure that I fully understand all the complexities of the amendment. If there is room for manoeuvre in less populous areas of the country in the direction proposed, I am ready to look at it. In terms of the great centres of population, I must say—

§ Lord Dixon-Smith
My Lords, the purpose of the amendment as now drafted is to ensure that the less populous areas of the country would not be areas where it would be possible for a local station to have two FM channels.

§ Lord Thomson of Monifieth
My Lords, I am ready to look at that before coming to a conclusion. I note from the media press since we last discussed this matter that, for example, the degree of sales monopoly that is 260 developing in independent commercial radio is very worrying indeed. There is now a sales group in independent local radio that, together, controls almost 90 per cent. of total advertising sales. The advertising industry has a legitimate point of view in this matter which has not been much heard in the debate. If the great stations—I welcome their success—were to be allowed to expand further, the reality is that there are no frequencies for them and they would expand by further mergers and takeovers. One would have a greater degree of concentration and of monopoly. I am reluctant to see that happen.

§ Baroness O'Cathain
My Lords, when a similar amendment was discussed in Committee my noble friend the Minister raised some interesting points that I should like to address in an attempt to allay the Government's fears relating to diversity of output and market domination in any particular area.
The principle of market forces undermines any rationale for a company that owns more than one station on a similar waveband to replicate its broadcasting output. No company would establish a direct rival with itself. My noble friend the Minister appeared especially worried about the convergence of news output. I understand from a leading independent radio operator who owns 28 licences that it has always produced different news items on its AM and FM channels. For example, on its AM channel it might deal with the Budget, whereas on its FM channel, which is mainly music, it might deal with the latest developments in the life of Michael Jackson.
That common practice would extend to companies owning more than one licence on the same waveband. My noble friend the Minister was also worried that in a certain area there was not enough existing competition to allow one company to own more than one station. However, we should consider the listener and the diversity of output. Without the shared resources that would enable one company to offer two stations, a second service might not be economically viable. Therefore, the local listening population may not have the opportunity of diversity to benefit from a second service.
There are two key issues on market domination. The first is that the BBC already dominates the FM market in any area with Radio 1, Radio 2 and the local radio network. All three stations broadcast on the better frequency; that is, the one which has fewer reception problems. Some may say that the independent sector, however, has domination in some localities by way of population reached. We cannot legislate against those organisations that use the same resource more successfully than another. That happens to be business.
Secondly, the Bill provides the Radio Authority with increased powers to scrutinise changes of shareholding and corporate structure. In addition, the Bill allows for the Radio Authority to impose conditions as a result of those changes. The interpretation of such powers can be far-reaching, and would ensure that diversity and listener choice are preserved through revising the promise of performance or other licence requirements.
261 To conclude, the key reason for my support of the amendment is that I believe we have a strong Radio Authority that, with its additional powers as proposed in the Bill, will regulate the industry effectively to preserve diversity and equity.
We honestly do not need to make decisions on behalf of the Radio Authority imposing prescription legislation on an industry which is developing very fast. I am sure that we all agree that legislating for broadcasting is extremely difficult. That has been proved during today's debate. Simple solutions do not reflect the diverse nature of the industry across the country. The Radio Authority is strong and active. Let it have the freedom to examine each case on its merits, as it has done so effectively since the introduction of the 1990 Act. We must allow for flexibility. I am sure that this Bill is the Bill for the future.

§ 10 p.m.

§ Lord Colwyn
My Lords, I too support the amendment. In Committee I spoke in favour of allowing a station to run two different services on the same waveband in a single area. Nothing I heard the Minister say then persuaded me to change my mind, but I hope that he will be able to offer some encouragement tonight.
It seems to me that we may be in danger of trying to do the Radio Authority's job for it. We cannot know in advance what circumstances will prevail in, for example, Liverpool, Newcastle or Worcester. It may well be that a minority service of great value is proposed which can be best supported from within a company already broadcasting in the area whose credentials and ability to serve the community concerned have been well established. Let the authority make up its mind in the circumstances that prevail at the time rather than those that prevail at present. Let us free our regulators to regulate in a way that can reflect future circumstances rather than shield them behind legislation based on yesterday's experiences. I support the amendment.

§ Lord Inglewood
My Lords, we have once again had an interesting debate on this question. It is an important one for local radio. Moreover, my noble friend Lord Dixon-Smith has done me the kindness and courtesy of seeking in his amendment to address some of the points that I made in debating the similar amendment put down in Committee. So I hope the House will forgive me if I seek in responding now to set out the Government's position in a little detail. However, I wish to avoid going over the ground already covered at some length on the previous occasion.
As my noble friend made clear, his amendment is designed to respond to the reservations about plurality which I expressed in responding to earlier suggestions that the current limit should be generally removed. Let us examine a little further, however, exactly what benefit would accrue from accepting the amendment before us. There is not really appreciable potential gain in terms of the diversity of services offered to the listener. That is separately guaranteed by the Radio Authority, which has a duty to develop it and seeks to 262 secure it by licensing new services, both on AM and FM, which are commercially sustainable and extend choice. Diversity, then, is not primarily in the hands of the programme service provider or at the mercy of that provider's choice. Of course greater diversity might well indeed be promoted were existing licence holders in an area free to take up new FM licences awarded by the authority; that is, licences to which they could bring existing local expertise and a ready-made incentive to cultivate a different audience. But frequency scarcity dictates that there are likely to be very few further FM licences awarded for category A or B areas. Once a further Greater London licence has been awarded—and that process is likely to begin as soon as next month—there are only three further category A or B licences for which frequencies are likely to be found. Ironically, the case for removing for the existing one FM licence limit to promote diversity is in fact strongest in category C and D licence areas, where the same frequency scarcity considerations do not apply, and allowing what is often the only existing operator to open a further station might be the only way of providing a further commercially viable choice. But, of course, this goes flatly against the purpose of promoting plurality.
Much the likeliest way, then, of companies actually using the freedom they would gain from the relaxation of the current limit in category A and B areas is in fact to take over other existing licence holders. This would facilitate greater consolidation within the radio sector, given that it is usually easier to expand from an existing base in a given area. It is indeed this facilitating of consolidation within radio that is the real benefit which might in practice obtain from relaxing the limit. As the noble Lord, Lord Desai, put it when we debated these matters in Committee, the future will not be mainly to the cuddly local radio station, and arguably only the larger consolidated business emerging from expedited rationalisation will be able to launch the improved service for the listener which digital broadcasting offers.
I confess also to aspiring to a future where there is a place both for strong cross-country conglomerates and for smaller, genuinely local, radio stations. That is certainly what the Radio Authority is seeking to achieve. We should also bear in mind that, as I mentioned in Committee, the Bill removes any limit on the number of radio licences a company may control, subject only to a maximum of 15 per cent. of the total points in the radio system. That represents substantial room for growth, albeit across the country rather than in particular areas.
The Government therefore have various conflicting considerations to assess in deciding whether to amend the existing local radio licence limits. I hope that I have sufficiently indicated in the debates we have had that I have a reasonably open mind on the issue and am aware of the various cross-currents surrounding it. I propose to discuss this matter further with the Radio Authority to see whether the current arrangements can be improved. However, in doing that I hope that no Member of your Lordships' House will take that as being a commitment to do anything.
263 I assure the House that in their further considerations, the Government will have the overall interests of the viewer primarily in mind while recognising that the continued development of strong and successful players within the radio sector is by no means necessarily opposed to those interests. I hope that that explanation of the Government's position has been helpful to your Lordships, especially to my noble friend Lord Dixon-Smith. In the light of that explanation, I hope that he will not seek to press the amendment this evening.

§ Lord Dixon-Smith
My Lords, I am reassured by the detailed reply given by my noble friend. While he avoids giving any commitment to do anything, I hope that he will forgive me if I continue to press him for a commitment to do something.
Perhaps I may answer to some degree the point raised by the noble Lord, Lord Thomson of Monifieth, on the question of dominance in advertising. It must be said that the reason for that apparent dominance is the successful organisation of MSM by Capital Radio which handles a very great deal of advertising on behalf of other independent local radio stations. It happens to find that that is the best way to deal with its business.
In all the circumstances and in the light of the debate, I am happy to withdraw the amendment; but in doing so, I look forward to some action rather than no action by the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ Lord Thomson of Monifieth moved Amendment No. 85: After Clause 65, insert the following new clause— (" . At the end of section 45(2) of the 1990 Act there is inserted "and section 16(2)(g)".").

§ The noble Lord said: My Lords, this is a modest but not unimportant amendment which, to judge from my mailbag, seems to have caused excessive alarm in some quarters.

§ The amendment is intended to ensure simply that non-domestic satellite services should be encouraged to do more original programming than they have so far been able to do. Non-domestic satellite services cover a wide variety of activities. Some of them are specialist services like 24-hour news services where there is no opportunity for original programming. But BSkyB, by its own enterprise, has been very successful and is now an extremely profitable business. It does some original programming but it should do a good deal more.

§ There have been fears that my amendment intends to impose some sort of quota. I should like to put on record that I am opposed to quota in that aspect of broadcasting policy and have been over many years. The wording of the Broadcasting Act 1990, which we seek to insert into this Act, is simply that non-domestic satellite services should ensure that a proper proportion of the matter included in their programmes is of European origin. "European origin" is a term of art for original programming in this country. It is in that spirit that the amendment is tabled. That is a perfectly legitimate demand to make, particularly on BSkyB. I beg to move.

§ Lord Donoughue
My Lords, my name is to the amendment and I support everything which my noble 264 friend Lord Thomson said. I have a further question for the Minister. As I understand it, under the European directive the Government—in this case, the Department of National Heritage—have the responsibility for monitoring the extent to which licensees meet the targets of the directive.
Can the Minister tell us what his reaction would be were we to suggest that those targets should be monitored by the ITC, which seems a much more appropriate body than a heavily overworked and deeply understaffed Whitehall department? In my view, it is not appropriate that those in the department should be wasting their time monitoring the matter in detail. In attempting to do so, it may be the case—as is so often suggested—that they are perhaps a little more accommodating and slack towards Sky's meeting of those targets. Does the Minister agree that it might be more appropriate if the ITC monitored the matter and reported it to the department? The department could in turn report to the Europeans on the extent to which those targets had been met.
There are two points for the Minister to consider. First, I support the noble Lord in all he said about European origin programmes. Secondly, there is the question of whether the department would actually be best employed in monitoring such matters.

§ 10.15 p.m.

§ Lord Inglewood
My Lords, the noble Lords, Lord Thomson and Lord Donoughue, have raised a number of important points. It may appear to be an apparently modest amendment, but it is one that would have significant implications. I hope that your Lordships will bear with me while I talk to the amendment at some length. I do so because, as I said, it is an important matter.
Noble Lords will be aware of the obligations laid on all European member states in the 1989 Broadcasting directive. That is the directive we spoke about in Committee under which, Member States shall ensure where practicable and by appropriate means that broadcasters reserve for European works, within the meaning of Article 6, a majority proportion of their transmission time, excluding the time appointed to news, sports events, games, advertising and teletext services. This proportion, having regard to the broadcaster's informational, educational, cultural and entertainment responsibilities to its viewing public, should be achieved progressively, on the basis of suitable criteria". The UK has implemented the directive administratively and my department is in regular communication with individual non-domestic satellite broadcasters to discuss the degree of practicability and the targets and timescales for implementation of agreed percentages. We have deliberately not made an order under Section 188 of the 1990 Act directing the Independent Television Commission to act on our behalf.
The amendment, if your Lordships were to agree to it, would achieve the same result and oblige the ITC to make "a proper proportion" of European content a condition of a licence for non-domestic satellite broadcasters. So I ask your Lordships to consider most carefully what I say and the reasons why the Government cannot accept the amendment which, on the 265 face of it, would merely transfer the existing government-broadcaster dialogue to one between the ITC and the broadcaster.
The provision in Section 16(2)(g) of the 1990 Act places a requirement on Channel 3 licence applicants to reflect "a proper proportion" of European works in their programming. Similar obligations are placed on Channel 4 and on Channel 5 applicants in Sections 25(2)(e) and 29(2)(b). They are terrestrial free to air channels with a guaranteed audience base of many millions. This particular public service obligation, as well as complying with the majority quota laid down in Article 4 of the directive, must also be seen in the wider public service context of Section 16(2) which requires such licence applicants to provide high quality and diversity in programme material. That must especially reflect adequate news and current affairs coverage, regional interest material where appropriate, religious and children's programmes, and programmes to appeal to a wide variety of tastes and interests. Clearly, much of that will properly and inevitably be of British origin. We in this House easily translate it also to mean European and vice versa. So the ITV and Channel 4 terrestrial commercial channels carry over 70 per cent. of works of European origin, demand led by their audiences which, in turn, attract a solid advertising base to fund those channels.
Why do the Government not wish to place a similar direct obligation, as an ITC licence condition, on non-domestic satellite channels? I believe that that question lies at the heart of the amendment. Noble Lords suggesting the amendment have agreed that their proposals reflect the flexibility allowed for in the 1989 directive with "a proper proportion" giving adequate scope for individual satellite channels to establish the amount appropriate to the individual themes and commercial viability. But the amendment does more than that. It would place an obligation on the ITC to assess, when a licence is first applied for, what amount of European programming would be "proper" for that channel. At present a licence applicant needs to satisfy the commission that he understands and will comply with the general conditions in section 6 relating to impartiality, taste and decency. Interpretation of these matters is never black and white; there are no clear cut boundaries beyond which a broadcaster may not step. Alleged breaches of these conditions are always looked at very carefully, in the overall context of the programme and of the nature of the channel itself.
But this contrasts with a pre-licence condition relating to quantity. A satellite broadcaster, before he has even had the opportunity to test the market for his product, would be asked to give firm projections of how much European programme content he intends to include, and to convince the ITC of the reasonableness of his assessment at that point. We consider this to be onerous, and potentially counter-productive. Why is the kind of protection inbuilt in the amendment helpful to the European production industry? Why should it not produce what the viewer wants like everyone else in the market place? Knowing that sanctions are available against him, an individual broadcaster will be inclined 266 to make cautious and conservative assessments. That is likely to act as a brake on the development of new channels, because broadcasters are not able to predict exactly how things may develop. Indeed, it might even kill off potential channels before they are born.
The regime which the Government presently operate, where it discusses with individual channels the quantity of European programming practicable to a channel and over what period with the aim of achieving as much as possible, preferably a majority, is a satisfactory regime. It has led to the United Kingdom being in the forefront of satellite broadcasting, with today 100 channels licensed by the ITC.
This administrative regime is delivering what the subscriber wants. I am pleased to say that it is also beginning to deliver what noble Lords wish to achieve by statutory means in their amendment. Just as UK viewers on terrestrial channels demand recognisable and largely home produced programmes, alongside—it has to be said—a preference for American movies, so, too, are these same consumer demands being reflected in the content of some of the satellite channels. The oldest of these, BSkyB, is now making a significant investment in original programming.
In the fiscal year 1995, Sky spent some £328 million in total on programming, which represents 62 per cent. of operating costs; £150 million of this was spent on original programming. Sky still has only 4.5 per cent. of the total audience share, compared with the 90 per cent. of the four terrestrial channels. Therefore, the £30 million per audience percentage point spent on original works compares favourably with, for example, Channel 4, with 11 per cent. audience share, spending £19 million per percentage point. Another, much newer entrant, Turner Broadcasting, also is steadily building up European programming and original production. In 1996 it will spend £70 million in the United Kingdom, with about £55 million of that in original production, which is not bad for a channel with an audience base of well under a million in this country.
We should do nothing in this Bill to affect adversely this healthy industry. We should particularly bear in mind that that figure of 100 today could, with the advent of digital satellite as well as terrestrial channels, easily become 1,000. A regime which encourages European-origin programme content, by means of quotas or quantity, regardless of quality, as in the broadcasting directive, will become as increasingly irrelevant as it would be in a bookshop. This is why the majority of member states in the European Union would prefer abolition of the quota provisions.
We would be swimming against the tide of developments in the broadcasting industry if we were to place an onerous and, in our view, an increasingly unworkable and irrelevant statutory obligation on the ITC in relation to satellite broadcasting. Far better, we believe, to leave matters as they stand. Administrative implementation of our European quota obligations can more easily reflect new developments and changes in Brussels legislation. It is correct that we should continue to expect our existing terrestrial broadcasters to include a proper proportion—much of that is British 267 programming—demanded by their large viewing audience. Even if there was no such statutory requirement, they would produce what their audience expected in order to maintain their commercial viability, and attractiveness to advertisers, and in the case of the BBC, to meet licence fee obligations.
Largely subscription channels are quite different, looking to satisfy particular interests or hobbies to maintain their viability. For that sort of reason, the proper proportion may be zero. It may be, as with some existing channels, as high as 100 per cent. We must look forward to the days of real consumer choice and not backwards to the days of a few monopoly channels where legislation sought to provide the viewer with a varied and quality menu. Provided that proper standards of impartiality, taste, decency and consumer protection in advertising are maintained, we should be less and less concerned with the origin of programme material. Why should not the viewer have what he wants rather than what someone else thinks is good for him or her?
The amendment would seek to make us more and more concerned, and suggest that we are immobilised like rabbits in a car's headlights by the prospect of the future. I urge your Lordships not to go down that path. We believe that the right way to encourage domestic programme making is to have as many channels as possible wanting domestic programmes for their own commercial reasons. I very much hope that this response will explain to the proposers of the amendment the thinking behind the Government's position in these matters.

§ Lord Thomson of Monifieth
My Lords, my goodness! I did not expect our very modest amendment to provoke such an extraordinary exposition of the total free market philosophy in terms of British broadcasting. When that explanation is read tomorrow morning people will feel that the Minister has abandoned a good deal of what we thought was the main motive of British broadcasting policy: to do what one could to promote excellence in broadcasting. That carried the free market philosophy of just going for the lowest common denominator and the maximum number of bums on seats rather far. When what he said is examined in Hansard tomorrow morning by Michael Grade and David Elstein, I foresee some fireworks in the letters columns of the press on the claim that BSkyB is engaged in more original programming, more original film making, than Channel 4.
However, I am far too sleepy tonight to wish to raise the temperature. In all the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ Schedule 2 [Amendments of Broadcasting Act 1990 relating to restrictions on holding of licences]:

§ Lord Thomson of Monifieth moved Amendment No. 86: Page 79, line 31, at end insert— ("(3A) After sub-paragraph (3) there is inserted— 268 (3A) Notwithstanding the provisions of sub-paragraph (3) above the ITC may, where it considers that the purpose of an arrangement is to prevent disqualification arising or a breach occurring in any other provision of this Schedule, consider control to arise in that arrangement."").

§ The noble Lord said: My Lords, at this time of night, in my present state of sleepiness, I am sorry to have to move Amendment No. 86 which is a serious and rather major amendment. It is one on which I need to say a word or two.

§ I say to the Minister straightaway that I found great difficulty in drafting the amendment which seeks to define more precisely and effectively the control responsibilities of the Independent Television Commission. Therefore if the Minister wishes to say that the amendment is not effective in terms of its wording, I am ready to accept that.

§ However, underlying the amendment is a real problem which upsets me a good deal and has certainly upset the Independent Television Commission. It relates to the fact that the various franchise holders of the independent television system now have got themselves into a mood—I think encouraged by the climate created by the present Government—that they do not need to observe the spirit of broadcasting law so long as they can find clever enough lawyers to get round it with the letter of the law.

§ I refer, for example, to the ownership of Independent Television News. We argued a great deal about the pattern of ownership for ITN in the 1990 Act. At the end of the day, the Act emerged with certain provisions which limited the amount of shareholding by individual ITV companies. If I remember rightly, the figure was 20 per cent. In fact, two shareholders—Granada and Carlton—today have 36 per cent. each. The ITC is always patient and understanding in these matters— I think excessively patient in this case. It gave both those companies an extended time beyond the letter of the law to make the necessary divestments by the end of last year. At the end of the year, they did not make those divestments. They engaged instead in the so-called deadlocking formula, blatantly defying the spirit of the law which Parliament passed and the ITC has the responsibility of administering. I noticed that in the proposed merger of MAI and United Newspapers, involving the Meridian television company, the same deadlocking device has been used, defying the spirit of the law and getting clever people to follow its letter. In that case, it went even further.

§ I have spent most of my working life in Parliament in one way or another. I do not like Parliament being taken for granted. We are engaged in passing a Broadcasting Bill, which has still to go from here to another place and return. Who knows what the final Broadcasting Act 1996 will be after we have managed to persuade the Government to make various amendments? However, there are people using the deadlocking device, getting round the normal definition of "control" in order to take for granted what will finally come out of Parliament and anticipating legislation. Anticipating legislation is not so serious a matter as going in for retrospective legislation, but I find it distasteful. It is particularly distasteful that in the present spirit which 269 exists in certain quarters in the ITV system there is a mood that one can find clever people to get round the undoubted wishes of Parliament and the spirit of the law that the Independent Television Commission has to administer.

§ I am not privy to such matters these days but I understand that there have been discussions between the Government and the ITC to find a more effective definition of control and more effective legal powers to make control a reality and prevent deadlocking devices being operable. That is the motive behind the amendment. I do not expect the Government to say at this stage that they will deal effectively with the matter. I wish them to say that they are as concerned about the underlying ethics as I am and will consider whether there are remedies for what is undoubtedly an objectionable situation. I beg to move.

The Earl of Stockton
My Lords, I support the amendment. I vividly remember the discussions that took place during the passage of the 1990 Bill through your Lordships' House. I recall the noble Lord, Lord Thomson, and myself forecasting precisely the present possibility. My noble friend's predecessor at the Dispatch Box rejected it as not being the kind of thing that broadcasters would do — people would be fair and live within the spirit of the Act. Once again, we come to the problem. The track record of broadcasters, irrespective of the various topics which we are discussing, does not fill one with hope when it comes to people taking apart the carefully expressed wishes of Parliament and driving a coach and horses through them. That is what has happened on this occasion.
I urge my noble friend to listen carefully to what the noble Lord, Lord Thomson, said. If his amendment does not meet the situation—and I accept the noble Lord's reservations on the drafting which is very difficult— I ask the Minister to come back at the next stage with a proposal which will lock the matter up tight.

§ Lord Inglewood
My Lords, the remarks of my noble friend Lord Stockton and the noble Lord, Lord Thomson, echo the Government's concerns. The amendment is concerned with the definition of "control" in the Bill and your Lordships are anxious that it should be adequate to deal with ownership structures which use devices such as deadlocking and warehousing arrangements in an attempt to get round the limits set out in Schedule 2. Since the 1990 Act, we have seen a number of instances where that has occurred within the letter of the law but contrary to the spirit of it. There is no need for me to enumerate them.
The new definition of control in the Bill is one which we believe will be effective in most instances. However, we recognise the concerns of the noble Lord, Lord Thomson, and others that the new definition of control may not catch all ownership permutations. Indeed, both the ITC and the Radio Authority remain concerned that the definition may not be adequate to deal with all circumstances.
270 We do not as yet have proposals for amendments, but I assure all noble Lords that we are considering this matter very carefully. If we deem it necessary, we certainly shall bring forward proposals for amendments in due course.
I very much hope that my remarks will have provided noble Lords with some reassurance and explained just how seriously we regard this matter.

§ 10.30 p.m.

§ Lord Thomson of Monifieth
My Lords, I am very grateful to the Minister for his remarks. His opening sentence in respect of me brought me total reassurance that he has taken this concern on board and that the Government share it. I am very content indeed in this case to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ Lord Inglewood moved Amendment No. 87: Page 79, leave out lines 46 and 47.

§ The noble Lord said: In moving this amendment I should also like to speak to Amendments Nos. 98, 99, 102, 113, 114, 127 and 128.

§ This is a group of highly technical amendments, primarily aimed at removing the operators of cable systems—local delivery service licensees, to use the jargon—from the scope of various order-making powers in Schedule 2 to the Bill.

§ I will willingly expand on these amendments. However, bearing in mind the lateness of the hour, if noble Lords are prepared to accept that they are simply technical amendments, I am prepared to move them in that spirit. I beg to move.

§ On Question, amendment agreed to.

§ [Amendments Nos. 88 and 89 not moved.]

§ The Chairman of Committees (Lord Boston of Faversham)
My Lords, in calling Amendment No. 90, I should point out that if it is agreed to, I cannot call Amendment No. 91 or Amendment No. 92.

§ Lord Harris of High Cross moved Amendment No. 90: Page 82, line 5, leave out from beginning to second ("a") in line 16 and insert— (".—(1) Subject to the following provisions of this paragraph, the Secretary of State may at any time refer to the Monopolies and Mergers Commission the holding by any person of one or more licences to provide relevant services falling within one or more of the categories specified in paragraph 1(2)(a), (b), (c), (d), (f) or (h) in any case where during the relevant 12 months the audience time attributable to those services exceeded 15 per cent of total audience time for the same 12 month period. (2) Paragraph 2A below shall have effect in relation to a reference under this paragraph. (2A) In this paragraph "the relevant 12 months" means, in relation to any reference, any consecutive 12 months falling within the 15 months immediately preceding the date of the reference. (3) For the purposes of this paragraph, "relevant service" also includes").

§ The noble Lord said: My Lords, these two groups of amendments are directed at the issue of imposing a 15 per cent. upper limit on television audience share. 271 I am sorry to detain noble Lords at this late hour, but these amendments were due to be discussed in Committee, when I was "bushwhacked" and did not arrive here in time to move them.

§ Amendment No. 90 is linked with Amendment No. 96. It seeks to replace the 15 per cent. maximum television audience limit by requiring a reference to the Monopolies and Mergers Commission. Amendments Nos. 91, 92 and 94 are simply referred to as presenting a different way of tackling the 15 per cent. by resting on the 25 per cent. that is commonly thought to be in line with competition policy. Amendment 95 would exclude the 15 per cent. limit where growth in audience viewing was due to "organic growth" rather than to a merger or takeover.

§ I must confess, even approaching the witching hour, that a belief I have developed over 40 years of studying economics is that, faced as we are in this particular market with the quite unfathomable uncertainties of rapid change, competitive markets cope, not perfectly, but better than the inevitably bureaucratic procedures, targets and plans of fallible government.

§ I have already welcomed the general emphasis of the Bill on liberalisation. There are many parts of it that I greatly support. However, I think there are unfounded fears, or well-funded pressure groups, that inhibit the Government from consistent support for competitive enterprise as the best discovery mechanism towards the evolving new structures in television and other forms of broadcasting to which the Minister has referred in other contexts. Instead of opting wholeheartedly for deregulation, the Bill opts in some respects for re-regulation.

§ I do not know whether, in some years' time, we shall look back with astonishment to our obsession with the phantom threats to plurality and diversity that we all very much uphold. There are already sufficient safeguards in place. If the noble Lord, Lord Thomson of Monifieth, says that they are not functioning or are being evaded, by all means let them be strengthened, where they are safeguards that have been well established.

§ I asked my research assistant to let me have a note of some of the safeguards and my fax machine was overwhelmed with yards of material. It told me that there is a two licence limit, positive programme requirements for Channel 3 and Channel 5 licences, impartiality and consumer protection for all broadcasts. There are of course increasing market opportunities through satellite, cable and digital delivery, and there are competition laws with a presumption against control of more than 25 per cent. of the market. Now the Government are fearful of domination by a company striving and struggling to work from 10, 11, 12, 13, 14 per cent. and breaking through the 15 per cent. limit.

§ More irksome than any other feature of the Bill is that the 15 per cent. limit on audience share entirely omits the BBC, which already enjoys 43 per cent. of the viewing audience. That gives me an opportunity to say that if we look back 40 years (which is still in the memory of some of those in the Chamber this evening) 272 we may remember that commercial television was introduced in 1953 or 1954. Before then, the BBC enjoyed not 15 per cent. or 25 per cent. but 100 per cent. of television and radio audiences, with the exception, I believe, of Radio Luxembourg. Does that mean that our nation was dominated by the successors of Lord Reith? Did it mean that the BBC ran the country? Was 100 per cent. of television viewing so terrifying? Was that a black period? We had a diverse press and political debate. What is now going on that people should quake in their shoes and stay awake at night worrying about whether it should be 15 per cent. 16 per cent. or 20 per cent?

§ I wish that there was a better sense of perspective and less fear and fright about all these things. The objection to the BBC monopoly was rather that it enlisted political support to obstruct competition; and, as noble Lords will remember, it relied on the scarcity of wavelengths, which led it in the end even to try to rule out programmes being carried by rediffused wire down in Guildford, because they had not come from the BBC. Rediffusion was radio broadcasting—Radio 1 and Radio 2 or the Third Programme of those days. The BBC was not interested in increasing the number of channels, catering for minorities, 24-hour news, minority programmes or even majority programmes if they were thought to be vulgar.

§ I must remind the House, which I am sure has a large number of unpaid and voluntary supporters of the BBC's dominating position, that the ITC's Public View showed that a good proportion of the objections and complaints to the Broadcasting Standards Council on partiality and all the rest of it were directed at the BBC. So why should the audience ceiling of 15 per cent. be imposed on commercial programmes, leaving the BBC still with 43 per cent. of the television business? Why is it 15 per cent? It is more restrictive even than the 20 per cent. for television holdings proposed in the Green Paper for the longer term. It is lower than the 25 per cent. in general competition policy.

§ I do not want to stir up the Minister too much at this hour. But in my view this kind of element in the Bill is more appropriate to the Department of National Heritage and the slightly nostalgic, backward-looking days of monopoly control. There is a certain suspicion of business. I wish that the Department of Trade and Industry was running the operation because it has a real interest in increasing the vigour of this marvellously expanding market.

§ We have had a 10-fold increase in television channels over the past decade; from four to 40. I have seen that announced somewhere. That great development will continue. This country needs in broadcasting, as in other aspects, strong, expanding companies able to compete with international diversified giants in rapidly-growing world markets. I scorn anyone who supposes that companies will monopolise the eyes, the ears and the minds of an increasingly sophisticated and selective audience. I beg the Government to exhibit less fear about the future and the possibilities that it will bring 273 with it in this exploding information market of television, radio, press, Internet and so forth. I beg to move.

§ The Chairman of Committees
My Lords, I should point out to your Lordships that, Amendment No. 93 having been spoken to, if it is agreed, I cannot call Amendment No. 94.

§ Lord Inglewood
My Lords, in responding to the amendments of the noble Lord, Lord Harris, I do not want to repeat the arguments I gave in Committee for the Government's view that distinct controls on the media are appropriate above and beyond those of general competition policy. The thought occurs to me that in a nutshell it is precisely because broadcasting has been so heavily regulated in the past that wholesale immediate deregulation would have arbitrary and potentially uncompetitive effects. Hence it is important to bear in mind that we are talking about an interim regime. That is why we introduced a measured deregulatory step in the Bill.
I am grateful to the noble Lord for drawing to my attention matters of 40 years ago. I am afraid it was more or less before my time—not quite—and I am therefore not in a position to respond first-hand to that. I was slightly surprised to hear his remarks about our fear of the future. Two amendments earlier I was slightly chided by the noble Lord, Lord Thomson of Monifieth, for taking a face-to-face view of the future. I feel therefore that the noble Lord was being rather unfair in some of his strictures.
The Bill proposes a relatively simple way of regulating television ownership. Companies will be allowed to expand up to 15 per cent. of the total television audience. They will not, however, be able to breach that limit. It will be clear to broadcasters from the outset whether they are likely to breach the limit, and it will be up to them to take remedial action in the event that they do so. A failure to take remedial action could lead to the ITC imposing a fine or revoking a television licence.
The absolute 15 per cent. total television audience share limit was set because television has a uniquely powerful influence and it is important that undue concentrations of ownership are not allowed to develop. In the case of terrestrial television in particular, there is, and will remain, a substantial element of rationing of a scarce resource, given the limited number of channels available. Fifteen per cent. is not an unrealistic limit. Currently, the largest commercial broadcaster in audience terms, Carlton, has a 9.4 per cent. share of the audience. Its nearest rival, Granada, has a 6.9 per cent. audience share. The largest cable and satellite broadcaster, BSkyB, has a 4.5 per cent. share of the audience. The 15 per cent. limit will therefore allow considerable scope for all commercial broadcasters to expand, while ensuring continuing plurality and diversity in the provision of television programming. We believe that the 15 per cent. limit is appropriate for television; that it should remain an absolute limit; and that it should not be subject to a discretionary test.
274 Given the current audience shares for major television companies, I find it difficult to foresee a situation in which a service would breach the 15 per cent. audience limit by organic growth alone. Carlton could not breach the 15 per cent. limit without acquiring further television licences. Similarly, BSkyB could not breach the limit without providing additional television channels. Indeed, Amendment No. 95 seems to acknowledge that through its reference to, new services which commence during that period". The point is that once there is a risk of a service provider breaching the 15 per cent. limit, they should not be allowed to provide new services which would lead to them exceeding that limit.
It follows that we do not believe that there is any need for a separate assessment of the public interest should the threshold be exceeded—either for the ITC or for the competition authorities. I should, however, add and emphasise that media ownership regulation in no way inhibits the operation of competition legislation. Where any merger between broadcasters creates or increases a market share of at least 25 per cent. or involves a takeover of assets exceeding £70 million in value, the Director-General of Fair Trading will advise the Secretary of State for Trade and Industry as to whether or not to make a reference to the MMC. Similarly, the monopoly provisions of the Fair Trading Act will continue to apply to broadcasting in the normal way.
The 15 per cent. television audience share limit is simple and transparent. It was set after careful consideration of the television market. At present no commercial broadcaster has more than a 10 per cent. share and most are well below that. The 15 per cent. threshold will allow considerable concentration within the industry. However, it is up to companies to ensure they do not breach the limit and to take remedial action if they do. The Government do not see the case for making the 15 per cent. threshold discretionary; and nor do we see a role for the MMC.
I turn to Amendments Nos. 91, 92 and 94. Our policy document, Media Ownership: The Government's Proposals, published in May last year, made it clear that the Government had concluded that there was a continuing need for specific media ownership regulation beyond that applied by general competition law in order to protect the plurality of the British media industry. As I have said on a number of occasions, the media industry is unlike others because of its ability to influence opinion and engender debate.
In setting the market limit for television at 15 per cent. of the total television audience, which is to include all public and commercial broadcasting services, we took careful consideration of the current market shares of major television companies. At present, the commercial group with the highest audience share is Carlton, with 9.4 per cent. The next largest is Granada, with 6.9 per cent. The 15 per cent. limit really will allow significant room for expansion.
We expect the expansion of cable and satellite broadcasting to continue for some years. The market will also expand significantly with the advent of digital 275 terrestrial television. We may therefore need to raise the threshold from 15 per cent. to say 20 per cent. in the future when there are a substantial number of services available.
If we were to move immediately to a 25 per cent. market share limit for television then it would have damaging consequences for plurality. It would mean one group could control about 70 per cent. of the ITV network. Additionally, such a group could notionally control up to 20 per cent. of national newspaper circulation and up to 15 per cent. of the available radio points. I believe that such a move would damage the British media industry because it would allow the development of extremely powerful groups which could undermine the competitive position of smaller media companies. Things may look different in some years' time, if the number and market share of cable and satellite services continues to grow and digital terrestrial services emerge. But for the present, we believe that 15 per cent. strikes the right balance between allowing television companies to expand and maintaining plurality, particularly in the Channel 3 network. For those reasons, the Government oppose the amendments.

§ Lord Harris of High Cross
My Lords, I accept what the noble Lord says about the Government's position but I find it totally incomprehensible. I find it impossible to understand how even, if I may say so, a young Minister, unaware of the secrets I have revealed about the 1950s, can go on talking as though the BBC can be trusted with 43 per cent. of something, but that Carlton or BSkyB must be content with 15 per cent.—they are, after all, puppies; they have only 7 or 8 per cent. and there is room for them to grow. It is a preposterous kind of condescension coming from someone in the public sector about another part of the public sector.
I welcome the Minister's statement that this is an interim regime between severe restriction and regulation and greater freedom. If I were given to making predictions, I would say that we shall be back with another Broadcasting Bill. It is five years since the last one. It will be less than five years before we come back with substantial changes. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ [Amendments Nos. 91 to 96 not moved.]

§ Lord Inglewood moved Amendment No. 97: Page 83, line 33, leave out ("national Channel 3 services") and insert ("a national Channel 3 service").

§ The noble Lord said: My Lords, this is a technical amendment. I beg to move.

§ On Question, amendment agreed to.

§ Lord Inglewood moved Amendments Nos. 98 and 99: Page 88, line 4, leave out ("to (f) or paragraph 1(2)(j),") and insert ("(c) or (e),"). Page 88, line 6, leave out ("to (f) or paragraph 1(3)(j),") and insert ("or (f),"). On Question, amendments agreed to.

§ Lord McGregor of Durris moved Amendment No. 100: Page 91, line 44, leave out ("local").

276

§ The noble Lord said: My Lords, I have tabled seven amendments—Amendments Nos. 100, 101, 108, 110, 131, 132 and 134—for the single purpose of attempting to reduce some of the discriminations in the Bill, as I interpret them, against regional and local newspapers which might wish to own regional broadcasting services. Accordingly, although my amendments are scattered within the latter groupings, I hope that it may be for the convenience of the House and the noble Lord, Lord Inglewood, if I save time at this hour by speaking very briefly to all of them in general terms.

§ As the Bill stands, it disadvantages regional and local newspapers as against national newspapers, which will be able to own radio stations in circumstances in which a local newspaper is prohibited from so doing. Regional and local newspapers compete with national papers for readers and advertising. The Government are making cross-media ownership more available to national media companies as a response to competitive pressures, domestic and international. But the Bill will not give local newspapers the opportunity to create locally-based media companies so that they can exploit for themselves the opportunities for linked marketing, cross-promotion and the sharing of resources for reporting and newsgathering.

§ Local media will become more diverse with new technologies, with the onset of cable, on-line services, the proliferation of commercial radio services and increased free-sheet distribution. Where news is concerned the strengths of local newspapers derive from the community in which they are based and their strengths need to be sustained if the social need which they serve is to benefit. That cannot happen if local newspapers are weakened, as this Bill will weaken them, in the face of competition.

§ As they stand, the Government's proposals are likely to undermine diversity, not underpin it. The Bill fails to follow the logic of the current rules, which enable local newspapers to provide news services to radio stations. They should be allowed to own a radio station as well and thereby be able to respond to market pressures and technological opportunities.

§ In the Bill the Government have separated diversity in local newspapers from competition, but the two are the same issue. If they cannot compete effectively, local newspapers will lose market share, and the plurality and diversity of local media will diminish.

§ These amendments would strike a better balance. The public interest test would be maintained, but the threshold calculations would be amended; first, to take account of the sales of national newspapers; secondly, to reflect where there is a BBC local radio station or Channel 3 service; and, thirdly, to take the market share to 30 per cent. as the Government first proposed. The amendments would also ensure that restrictions are applied only where newspapers have a substantial penetration of households in the area. I hope that the Minister will reflect on the amendments and on the arguments which support them, and undertake a more realistic analysis of the market for regional and local papers and media groupings.

277

§ I believe that the amendments accord with the aspirations of the regional and local press, which were set out decisively in a letter today in The Times by the director of the Newspaper Society, who wrote: The Bill would allow multimedia conglomerates and most national newspapers to purchase local broadcasting outlets, while prohibiting local newspapers from doing so. The former would have massive commercial advantage over the regional press in the day-to-day competition for advertisers, readers, news stories and markets. To thrive, a lively and locally responsive media sector needs scope to expand and diversify into locally-based media companies by being able to compete on a fair basis with other industry sectors". I hope that the Minister may be sensitive to those considerations and that he may be willing to consider whether the Government will be able to introduce their own amendments to meet those points at the next stage.

§ Baroness Rawlings
My Lords, I fear that, as the noble Lord just said, the clause discriminates against local and regional papers, many of which compete with the nationals, although some are owned by the nationals. I am concerned that the Bill might prohibit a regional or local newspaper from owning a radio station in circumstances in which the newspaper's circulation in the radio station's area was modest. It would allow a national newspaper with a high circulation in a licensed area to own local broadcasting stations. I hope that the Government will amend the provisions to make them fairer.

§ Baroness Wharton
My Lords, as I understand them, the amendments seek to ensure that regional newspapers are treated fairly when in competition with national newspapers especially when bidding for local stations in their own areas. Local papers are a major factor in creating cohesion in a local community, often giving greater value for money as they tend to be far more responsible than the national press in that they are directly answerable to the local community that they serve. A regional newspaper with a circulation smaller than that of a national newspaper should not be automatically barred from being able to compete for a local station in its own area. It is with that in mind that I support the amendments.

The Earl of Stockton
My Lords, having listened to the debate and particularly to the contributions from the two noble Baronesses, I am a trifle concerned. This was precisely the position in many towns and cities in the United States before and after the Second World War when the local radio station was often controlled by the same business group as the local newspapers. It was for that reason that restrictions to inhibit that were introduced by the Federal Broadcasting Commission, later the Federal Communications Commission, because for obvious reasons local business interests took control not only of them but of local politics. While there are good commercial reasons, there are dangerous democratic reasons in allowing the amendment to go forward in its present form.

278

§ 11 p.m.

§ Lord Inglewood
My Lords, since the noble Lord, Lord McGregor, spoke also to the other amendments in his name, I feel that it would be appropriate for me to respond in general terms. As he explained, all his amendments are designed to remove or relax the restrictions in Schedule 2 imposed on local newspapers seeking to control local broadcasting services.
I should like to respond for now with a few general remarks. What Schedule 2 does is to liberalise the arrangements for cross-media holdings, while continuing to protect plurality at both national and local level. Indeed, in my view, one of the strengths of this Bill is that it pays particular attention to protection of plurality at local level.
The local market share proposed in Part IV is intended to ensure that no one player can assume a position of dominance in the local media market place; that is, that part of the media which has a specifically local or regional focus: regional Channel 3 services, local radio stations and regional and local newspapers. I am sure that your Lordships acknowledge that national and local newspapers are distinctly different products in terms of their editorial focus.
I accept that national newspapers compete to some extent with local papers for readers and advertisers. They do not, however, provide the local news and information, for which readers turn to local and regional newspapers. Our proposals are about protecting plurality, and not about regulating competition in the markets. Newspaper markets and advertising markets will continue to be subject to normal competition law.
As the Bill stands, local newspapers will be free to buy broadcasters outside their circulation areas and to apply to control broadcasters within their own areas where their circulation is within the thresholds. The 50 per cent. threshold proposed for local newspapers buying into local radio already allows a considerable level of local media concentration. It seems to us that any local newspaper so dominant within its own area as to fall foul of that threshold should not also be allowed to control the local radio station. That was the point made by my noble friend Lord Stockton. The inclusion of national newspapers in the calculations would seriously dilute our proposals and remove in practice the protection of plurality at local level at a stroke.
In summary, we remain broadly satisfied that cross-media ownership restrictions as set out in the Bill are needed to limit local newspapers' capacity to buy into local broadcasters. However, we accept that some detailed improvements may be needed, and I hope that with those assurances and explanations of Government policy the noble Lord will feel that he now understands the position that we have taken in this regard.

§ Lord McGregor of Durris
My Lords, I thank the Minister for his remarks. I understand the position that he outlined, but I still believe that it is mistaken. I do not believe that we can increase local plurality of information by weakening one important group of providers of information. There is no doubt that the Government's proposals in the Bill will weaken the 279 local press considerably. I am disappointed that the Minister felt unable to say that he would consider the issue further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ [Amendment No. 101 not moved.]

§ Lord Inglewood moved Amendment No. 102: Page 92, leave out lines 11 to 15. On Question, amendment agreed to.

§ Lord Thomson of Monifieth moved Amendment No. 103: Page 92, line 17, at end insert— ("Public interest enquiries where paragraphs 4 to 8 otherwise apply .—(1) The restrictions imposed by or under paragraphs 4 to 8 shall not have effect in relation to—

(a) the participation (direct or indirect) of any person in any other person, or
(b) in a case falling within paragraph 8, the control by one person of another,

unless the relevant authority has found that participation or control to operate or to be expected to operate against the public interest. (2) Paragraphs 10 and 11 shall apply, with such modifications as may be necessary, for the purposes of sub-paragraph (1) above as they apply for the purposes of determining whether a situation within paragraph 9 operates or may be expected to operate against the public interest.").

§ The noble Lord said: My Lords, as I read the Marshalled List, this is the last amendment of substance and I will not detain your Lordships at this late hour. However, I cannot resist remarking that it is perhaps a reflection of a Broadcasting Bill which has not divided us on party lines that an amendment tabled in my name has attracted the support of s, Lord Harris of High Cross and Lord Pearson of Rannoch. I am fairly sure that this will be the only occasion on which the noble Lord, Lord Pearson, and I will be together on the same amendment. In the case of the noble Lord, Lord Harris, it is a different matter; he is an old Liberal and I am a new Liberal Democrat. I am professionally a regulator and he is a free marketeer of deep conviction. But we both come from around St. Andrews and we have not always disagreed on everything. Therefore I am happy to see his name attached to the amendment.

§ The amendment is a re-draft of one that I moved in Committee. I will not weary the House with the detail, but it has been re-drafted in order to meet the various objections which the Minister made to my original amendment. It also seeks to deal with some of the objections which the Minister made to the amendment proposed by my noble friend Lord Donoughue. My starting point was the belief that as regards the particular case of restrictions on national newspapers the right course was to apply a rigid public interest test as to whether ownership of a television contract by any of the great national newspaper groups should be acceptable rather than to apply the arbitrary numerical test which affects only two newspaper groups.

§ Your Lordships have been very patient with me during our proceedings on the Bill and as you will know I am not an uncritical admirer of Mr. Rupert Murdoch. However, I believe that a provision which discriminates 280 simply on numerical grounds solely against the Daily Mirror and the Murdoch newspapers is the wrong way to approach the problem. As a matter of general principle, I believe it right to apply a rigid public interest test to any aspirations that either of those groups have for the ownership of television stations rather than have them put in this particular position.

§ That is the background to the amendment. It has been revised in a way which I hope will meet some of the Minister's objections. However, I recognise the fact that it does not meet the basic objection. I simply put it forward again as a matter of general principle. I beg to move.

§ Lord Harris of High Cross
My Lords, I am pleased strongly to support the amendment. The effect of this on the noble Lord, Lord Pearson, seems to have been to land him in hospital. He will no doubt read the debates with great interest. He asked me to apologise for being unable to be present.
I shall not go over the argument, but shall make two observations. First, this is a joint effort by the noble Lord, Lord Thomson, and me to rescue the noble Lord, Lord Donoughue, from having to put forward the awkward amendment raising the limit to 25 per cent. in order to keep Rupert Murdoch out of reach, but allowing the Daily Mirror under the wire. No doubt if the noble Lord, Lord Desai, were here he would join us in saying that the limits are arbitrary and of all arbitrary limits 20 per cent. is the wrong one to choose.
My second observation is that in a fair world we have the Minister on the run. A moment ago he made a fantastic emphatic appeal saying that television is most important and dominant; it rules the world; we must watch it; it has a unique influence and so forth. Now he says said that newspapers are also important and that we must not have more than a 20 per cent. control of newspapers because owners will control the world and distort our affairs. That is a narrow, blinkered, fearful, backward-looking attitude for a young man, as the Minister is. However, he has time to get better, which is one encouragement. I believe in the idea of moving from a 20 per cent. fixed limit on which you bang your head and must not go above, to having a public interest test, as suggested by the noble Lord, Lord Thomson of Monifieth.

§ Lord Colwyn
My Lords, I am delighted to be able to add my name to the list of supporters of the amendment. Like the noble Lord, Lord Harris, I have been inundated with briefs on the subject. However, I rejected them and turned to the Conservative Research Department brief which I found extremely interesting. Addressing the issue of media ownership, it summarises the changes by saying that, the main proposals on media ownership in the Bill will allow greater cross-holdings between newspaper groups, television companies and radio stations, at both national and regional levels". It then covers other points such as the removal of the two-ITV-licence limit and the restrictions on local newspapers with over 50 per cent. of circulation having local television and radio holdings. It concludes that the ITC and the Radio Authority will continue to regulate 281 television and radio and that existing competition legislation will apply to mergers involving broadcasters. It ends up highlighting the new public interest test, by which the regulatory authorities can assess and approve mergers or acquisitions between newspapers and television and radio companies. The public interest test will be based on whether the proposed merger poses a threat to diversity and on certain economic criteria". That all seems very reasonable but, as I said in Committee, it does not mention that the public interest test does not actually apply to everybody. Noble Lords will be aware that some newspapers, by virtue of the fact that they are bought by more readers than others, will not have the privilege of being assessed in the light of the particular circumstances of their case. For the largest newspapers, there is an automatic and insurmountable prohibition on their serious involvement in mainstream television.
My research department brief sounds so obviously reasonable but beyond it there is that great anomaly. Could it be because those prohibitions were included as an afterthought? They certainly do not make sense when considered with the logical and eminently fair system of public interest tests. Getting rid of the 20 per cent. rule is not the same as saying that large newspaper groups will enter ITV. It is merely saying that if the newspaper group is to be refused entrance it should at least have its case properly looked at and the reasons given.
It is not possible to imagine the reasons which might be given—no doubt justifiably. Perhaps permission will be refused because of the newspaper's high market share; perhaps because it has more than, for example, 20 per cent. But at least the ITC will have looked at the issues, weighed them up, and come to the conclusion that the 20 per cent. level is the right one at that time. It may prefer 25 per cent. or 15 per cent. That is fine, but it should say so and rule the merger against the public interest. At least it should do the company the basic decency of listening to its arguments, giving them some genuine thought and giving reasons. That is natural justice at its most rudimentary and removes the capricious nature which otherwise characterises a single and apparently arbitrary percentage figure. Everyone will accept a well reasoned refusal. That is what this amendment is saying. I support it.

The Earl of Stockton
My Lords, the Government's assertion that those who sell more newspapers are less to be trusted seems rather dangerous. I can think of some very limited circulation broadsheets which I would regard as having a totally corrupt influence on the public consciousness. Noble Lords opposite might not agree with my particular choice. However, the concentration on numerical values rather than, as the noble Lord, Lord Thomson, said, having a genuine public interest test will lead the Government into some very strange waters.

§ Lord Inglewood
My Lords, in responding to the amendment, it may be helpful to go over the background before addressing the particular points raised by the amendment. In liberalising the restrictions on cross-media ownership we decided that there was a need for a public interest test to meet concerns about alliances 282 involving newspapers and broadcasters. Uniting the leading sources of news with the most potent sources for influencing opinion through broadcasting carries the risk of concentrating too much influence in the hands of one organisation and, in our view, is therefore against the public interest. That is why we have set clear thresholds, which we ask Parliament to endorse, to prevent the most dominant newspaper groups from also becoming dominant broadcasters. I sense from the debate this evening that your Lordships do not take fundamental exception to that underlying principle. However, we recognise that there may be circumstances in which a merger between a newspaper group and a broadcaster could still represent a threat to plurality, even though it would otherwise be permissible under the thresholds.
The threshold indicates a level beyond which a newspaper's dominance makes it clearly undesirable for it also to have a leading position as a broadcaster. But there may be cases where a newspaper below the threshold proposes a particular acquisition which might be thought to imply excessive concentration. Hence the public interest test which acts as a kind of safety net, especially given that the current rules simply keep national newspapers out of terrestrial broadcasting (and local ones out of broadcasting in their area).
Plurality of ownership is the key to the test which we propose. However, in developing the public interest test, we realised that, while common ownership of a broadcaster and newspaper might threaten plurality, there may be other over-riding economic reasons for allowing the merger to proceed. For example, a radio station or a newspaper may not be economic as a going concern but may be able to survive if a merger is allowed to take place. In such an instance, the relevant regulator could conclude that the merger did not operate against the public interest, notwithstanding that it would threaten plurality of media ownership in the local market.
In practice we expect the regulators to presume that a merger between a broadcaster and a newspaper group, which is allowable under the thresholds, should proceed unless there is a clear threat to plurality. We think that the regulators will soon be able to determine whether there is such a threat which is worthy of further investigation by reference to the coverage areas and circulation areas of the services concerned. If they conclude that the matter warrants further investigation, they may call for such information as they think fit in order to make a decision. Where the ITC or the Radio Authority conclude that plurality is threatened, they may then extend their inquiries to consider economic matters and, where appropriate, seek the advice of the Office of Fair Trading. Inquiries under the public interest test will not normally need to be lengthy and elaborate. However, that does not mean that the findings will be less thoroughgoing than those of a more formal inquiry, as both the regulators are respected for their knowledge and understanding of the media industry. The regulator will inform the parties of its reasons for concluding that a merger would be against, or could be expected to operate against, the public interest. As with other 283 decisions made by the ITC and the Radio Authority, such conclusions can be challenged in the courts by way of judicial review.
The amendments of the noble Lord, Lord Thomson, would introduce a much more formal procedure for applying the public interest test, based on the procedures operated by the Monopolies and Mergers Commission under the Fair Trading Act. The regulator, having made a finding on the public interest, would then be required to deliver a report to the Secretary of State to be published in such manner as she thinks fit. We see no reason to give the regulators the power to require the attendance of witnesses, take evidence on oath and order the production of documents on pain of a fine if the orders are not complied with and to require them to produce a report of their findings for publication. The Government's view is that such a quasi-judicial procedure is not appropriate, and, if adopted, would fundamentally alter the relationships between the Radio Authority, the ITC and the media industry.
The amendments would also extend the public interest test to participation in a broadcaster by a newspaper group by way of minor shareholding. In my view it would be wrong to include participation, as opposed to control, within the scope of the test. That would place more of a burden on the industry and the regulators. We intend to bring forward regulations to limit the ability of newspapers and broadcasters to exert a material influence over each other through the shareholdings in due course. That will be done through a replacement for the Broadcasting (Restrictions on the Holding of Licences) Order 1991. So there will be clear limits to minority shareholdings by interested players. We are also of course proposing a wide, de facto test of whether a particular body is exercising control of a licence holder. Given that, inquiry into the public interest in a shareholding seems to us unnecessary and bureaucratic.
The amendments of the noble Lord, Lord Thomson, would also change the wording of paragraph 11 of Part IV which sets out the matters which the regulators should take into account when applying the public interest test. I am concerned that the noble Lord's wording does not include a reference to "plurality". In our view, plurality of ownership is desirable as well as diversity of information sources.
It is perfectly true that a single owner may promote a variety of information sources, but that is not necessarily healthy in securing a range of different views. I am also concerned that the wording that the noble Lord proposes for paragraph 11(1)(b) is not as precise as the present draft which makes it clear that, in considering the economic benefits, the regulator must have regard to the holding of a licence by a newspaper proprietor as regards the holding of that licence by any other body. The wording used in paragraph 11 has been carefully drafted to keep the scope of the matters which the regulators should take into account as narrow and specific as possible.
What I have endeavoured to do in my remarks—I apologise to your Lordships for taking a little time about it—is to explain how we envisage the system will work 284 and to set that against the consequences of the test of the noble Lord, Lord Thomson. I dare say the noble Lord will say that he prefers his way of dealing with these matters, but I wanted to make it clear to your Lordships exactly why we have adopted the position we have.

§ 11.15 p.m.

§ Lord Thomson of Monifieth
My Lords, I am grateful to the Minister for dealing with my amendment at this hour of the night as carefully and as conscientiously as he has. I have listened to his words carefully and will read them even more carefully tomorrow. I am bound to say that if I had thought that including the word "plurality" in one of my amendments would have been acceptable to the noble Lord I would certainly have included it, but, even had I done that, I doubt whether the main thrust of what I seek to do is likely to be acceptable to the Government in their present mood. I still think, in relation to these two newspaper groups, that the present way of dealing with the question of where the public interest lies is a peculiarly arbitrary one. I listened carefully to what the noble Lord said. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

§ Lord Donoughue moved Amendment No. 104: Page 92, line 21, leave out ("20") and insert ("25").

§ The noble Lord said: My Lords, I sadly have to decline the kind offer of the noble Lord, Lord Harris, to rescue me from moving this embarrassing amendment. I am sorry about that as he and I have had much in common over the years. I have often felt that we both share dislikes. We are both on the liberal extreme wings of our respective parties; he is on the liberal extreme wing of the 19th century Liberal Party, and I of the 21st century Labour Party.

§ However, I shall continue as my amendment follows on from what went before; namely, dissatisfaction with the arbitrary limit that is imposed on national newspaper groups. My approach is to take the Government's arbitrary limit of 20 per cent. and to suggest my own arbitrary limit of 25 per cent., because if we are into arbitrary limits we might as well have a better arbitrary limit.

§ The reason behind this, as set out in Committee—there is no need to go over that in detail again—is that the Bill discriminates, ultimately, against one newspaper group. It appears to discriminate against two, but the largest newspaper group does, through its ownership, have a large television presence, whereas the Mirror Group, through an arbitrary limit, and an arbitrary definition of national newspapers—not including local content—is in practice excluded, certainly from terrestrial television in this country. We feel that that is wrong and unfair. It applies to the only major group that supports the Labour Party and so we feel it is doubly wrong: We suggest that that discrimination be removed.

§ I wonder whether the Minister has anything new to say on that since our exchanges at Committee stage, and any response to what I said about the legal situation. We 285 are advised that this discrimination against the Mirror Group would not stand up in European law. I beg to move.

§ Lord Inglewood
My Lords, when the noble Lord, Lord Donoughue, first moved these amendments in Committee, he made it clear—as he has done this evening—that he was, above all, concerned about what he saw as discrimination against the Mirror Group. In withdrawing them then, he made it clear that he would return to this matter on Report, and has done so most eloquently.
On current circulation figures, the 20 per cent. national newspaper market threshold will, as the noble Lord said, prevent both the Mirror Group and News International, to which he alluded in passing, from applying to control licences to provide Channel 3, Channel 5, and national and local radio licences. National newspaper groups falling below the threshold will be permitted to control such services subject to the public interest test. As I said, our policy objective is to prevent those national newspaper groups which enjoy a dominant position in the market from also becoming dominant broadcasters and vice versa. National newspaper groups above the 20 per cent. threshold will be limited to a 20 per cent. stake in Channel 3 or 5 or radio licences because those are the most dominant forms of broadcasting currently available. Approximately 98 per cent. of all homes have access to free-to-air Channel 3 services whereas only 20 per cent. of homes have access to cable and satellite broadcasts.
Let us put this into perspective. I emphasise that the opportunity still exists for dominant newspapers to become broadcasters. All national newspaper groups will be free to control licences to provide domestic and non-domestic satellite services, local delivery services, licensable programme services, digital multiplex services and digital terrestrial television programme services. That is the current position. It may be helpful if I explain in some detail the thinking behind our decision to set the thresholds at 20 per cent. I believe that that is the question the noble Lord, Lord Donoughue, wished me to address.
The 20 per cent. national market share threshold for newspapers was set after careful consideration of the market. It is not a figure that has simply been plucked out of the air, nor has it been chosen with the deliberate intention of penalising the Mirror Group.
As a result of the consultation on our media ownership proposals, the Government concluded that there remains the need for separate media ownership controls, in addition to normal competition legislation, in order to protect plurality. A 25 per cent. threshold was judged to be too high, as that is the level at which competition law would normally bite. By contrast, 15 per cent., which is the level at which the market limits are set for television and radio, was judged to be too low, because while the opportunity to become a broadcaster is restricted by spectrum scarcity, no such hurdle faces those who wish to become newspaper proprietors.
286 Analysis of newspaper market share figures shows that there is a wide difference in share of circulation between the larger newspaper groups and the medium-sized groups (some 9 per cent. in the case of the Mirror Group and United News and Media). We therefore set the threshold at a level which distinguished clearly between those groups with a large share of the newspaper market. Circulation and audience based measures are used in assessing market share because these best reflect plurality and the ability of individual media groups to influence opinion. No account is taken of revenue measures. These tend to reflect market power, which is subject to separate control through competition legislation.
Because national newspaper groups having 20 per cent. or more of the national market have such a significant share of the overall newspaper market (including both national and local newspapers) those publications tend to have a much higher circulation in the regions than many local papers, whose focus is on that specific region. In preparing our proposals, the Government commissioned independent research from National Economic Research Associates (NERA). This reveals that if the share of national press and share of regional press is calculated for each major newspaper group at national level and for the top four newspaper companies in each ITV region, both the Mirror Group and News International come out among the top four newspaper companies in every single ITV region. The only regional titles published by the Mirror Group are its Scottish titles, the Daily Record and Sunday Mail. News International does not publish any regional titles. Thus the respective shares of these two groups at regional level is made up almost exclusively of national titles. It is this degree of influence that caused us to decide that such dominant newspaper groups should not also be allowed to dominate the more influential areas of broadcasting.
It will be clear from what I have said that it is not just newspaper groups having 20 per cent. or more of national newspaper circulation that are prevented from owning Channel 3 companies; others are also caught by the provisions which are aimed at protecting plurality at local and regional level. It is an important point when considering the possibility of acquisition of Channel 3 licences. We do not consider that it is appropriate to rely on the public interest alone to regulate cross-ownership between newspapers and broadcasters. The Government believe—it is a point I made in response to an earlier amendment—that there must, as a matter of public policy which it is right for Parliament to decide, be a cut-off point beyond which a newspaper group is judged to be too large to be allowed to control Channels 3 or 5 or national or local radio licences.
Finally, the noble Lord returned to the point he made in Committee that the Mirror Group has been advised that the restrictions in the Bill could constitute an infringement of the group's right to freedom of expression under Article 10(1) of the European Convention on Human Rights. I should like to reassure the noble Lord that the Government are seeking legal advice on this point and I hope by the time of Third Reading to be able to let him know the outcome.
287 I simply wish to say that the threshold was determined solely on market share considerations. I must emphasise that no account was taken of the editorial direction or nature of the products published by individual newspaper groups, not least because they may come and go. Other newspaper groups which may be regarded as being "opposition media", such as the Guardian, are not caught by the provisions because their market share is below the 20 per cent. threshold. But newspapers published by News International, for example, are caught because they are above the 20 per cent, threshold.
The Government have concluded—and this is the crux of our argument—that in order to protect plurality in the media there is a continuing need for specific regulations governing media ownership beyond those which are applied by general competition law. But there is a need to liberalise the current ownership regime. Our proposals will set market limits for holdings in television and radio. Holdings in television will be limited to 15 per cent. of the market, measured by audience share, and in radio to 15 per cent. of the available radio points.
There is no market share limit for newspapers, but we have decided that it is appropriate to set a threshold which will limit the ability of the most dominant newspaper groups to acquire holdings which would allow them to become dominant broadcasters. After careful consideration of the market, this threshold was set at 20 per cent. of national newspaper circulation. Similar controls apply at local level whereby local newspapers having more than 20 per cent. of circulation in the relevant area are limited to a 20 per cent. stake in regional Channel 3 licences and local radio licences. We believe that those thresholds strike the right balance and that is why we have adopted that policy.

§ Lord Donoughue
My Lords, I thank the Minister for explaining the Government's position. I do not accept it on behalf of the Mirror Group which I still feel is cornered in a way that no one else is.
On the legal question, I was interested in what he had to say, and at Third Reading we shall listen with great interest to his report on what legal advice he receives. If he gets legal advice similar to that which we have had—and I am interested that the noble Lord has seen it, I am sure he read it in a controlled environment—presumably the Government will have to think carefully about not proceeding further along those lines. Another newspaper group will be equally interested. Presumably we would not wish to waste Parliament's time further on something that is legally fragile.

§ Lord Inglewood
My Lords, with the leave of the House, I have been in such a controlled environment that I do not believe that I have seen the legal opinion to which the noble Lord referred.

§ Lord Donoughue
My Lords, if the Minister would accept reading it in a padded cell with three guards, I should be happy to provide him with a copy. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

288

§ 11.30 p.m.

§ Lord Harris of High Cross moved Amendment No. 105: Page 92, line 21, leave out from ("shall") to second ("a") in line 22 and insert ("control").

§ The noble Lord said: My Lords, Amendment No. 105 goes with the others grouped with it on the Marshalled List. I would rather move an amendment to my local train timetable at this time of night, so I shall be brief. If the noble Baroness, Lady Dean, will avert her ears, I shall proudly repeat my declaration of interest as an independent national director of Times Newspapers. I have no direct financial or other interest in BSkyB, except that last week, carried away by the debate which I had been listening to in this House, I signed up. I can only say that if you have not got BSkyB you have not lived. Last weekend I had a new experience with marvellous old films, starting with "Lost Horizon" which I had not seen for 63 years.

§ The purpose of the amendments is to prevent BSkyB being excluded from control of a terrestrial TV company because it is "controlled" by a newspaper, News International, with a shareholding of more than 20 per cent.

§ The Green Paper is full of encouraging noises. It talks of changing environments; exciting possibilities; breaking down the traditional distinctions between the various media; information technology, and so on. It acknowledges that barriers are already crumbling, and points to a unique opportunity to evolve in previously unthought-of ways. That is pure Hayekian, spontaneous evolution. It talks of a market-place in which risks and rewards are high, both for individual firms and national competitiveness. That was the Green Paper.

§ Nowhere does the Bill fall further short of this high promise than in Schedule 2, pages 93 to 96, before us now. As I am instructed, this legal gobbledegook has the effect of constructing a wholly artificial barrier to obstruct BSkyB as pioneers of satellite broadcasting—and much else—from enjoying the new freedoms in cross-media ownership conferred on others by the Bill. It achieves that wretched exclusion by a wholly contrived device which I believe mocks common sense and legal logic. In a Gilbertian twist worthy of the hard-pressed Lord Chancellor in "Iolanthe", ownership of more than 20 per cent. of the shares of a satellite by a newspaper group is deftly defined as "control" and used to exclude the offending party from acquiring one of the multiplying terrestrial TV licences.

§ I really do regard this part of the Bill as an abomination. It is a not very cunning device, aimed like a sniper's rifle at News International, which owns 40 per cent. of BSkyB. We should thank heavens for Sky's pioneering enterprise in all kinds of ways, and even give a nod—which I have heard from the noble Lord, Lord Thomson, and others—in the direction of Murdoch's enterprise for gambling his firm (in American parlance, "betting the farm") on satellite broadcasting when he had not sold a single dish or signed up a single subscriber. Instead of any kind of gratitude, the Bill defines 20 per cent. as "control" in order to ostracise this most galvanising, enterprising force in the television revolution.

289

§ We have been over this, and I shall be very brief. It is understood that News International does not, and cannot, control Sky. It is understood that the other main shareholders are Granada, Pearsons and BSB and 25 per cent. are traded in the open market. Stock Exchange rules, etc., require that the company should operate independently of any shareholder with 30 per cent. or more of the voting rights. There is a whole rigmarole like that on which I could keep the House awake about the careful rules and defined issues that should be brought before a quorum at which a majority are non-News International directors. There are 18 directors, and only five are appointed by News International. One could hardly secure News International, in the person of Rupert Murdoch, more from dominating this situation without putting him into a straitjacket or putting him in irons. There is no substance to the fear that there is control. Yet it is used, uniquely, to exclude BSkyB.

§ I ask the Minister, even at this late hour, whether he will reconsider this excess of regulatory zeal, and think of the benefits that have been derived from this great satellite development—in employment, technical innovation and foreign earnings; in opportunities for new, independent programme makers; although not enough, according to the noble Lord, Lord Thomson—in unrivalled support for the British film industry, the consumer electronic sector, with PACE, the de-crypter, providing one in three satellite receivers in Europe; and not least in the marketing of dishes and the management of subscribers.

§ All of this is very innovative. My advocacy, I hope noble Lords will accept straightforwardly, is not based on the petty interests of a director of Times Newspapers, but rather on my experience as a lifelong, independent economist—winning adherents, I may say, in all parties for Mr. Blair's new-found enthusiasm "for a dynamic market economy". My conviction is that economic and technical progress throughout history owes more than is commonly understood to a combination of exceptional talent, dedication and courage of a rare order. So far—it may be ripe for a fall—BSkyB has turned out to be a conspicuously successful examplar of those qualities. I believe that we should have more confidence in shaping the future by market forces, which is only another way of saying that we should allow the future to be shaped by the free play of consumer choice in both programmes and the means of delivery. I beg to move.

§ Lord Inglewood
My Lords, if I understood him, the gist of the noble Lord's argument was that certain barriers had been put in the way of BSkyB controlling the Channel 3 licence because BSkyB itself was controlled by News. I understood that that was not in fact the case, along the lines which the noble Lord described.
The point about the relationship between BSkyB and Channel 3 licence holding is that, for the reasons I described earlier (which I accept that the noble Lord, Lord Harris, does not accept) we have stipulated that where a newspaper group has more than 20 per cent. of national newspaper circulation it may not have more than a 20 per cent. interest in the Channel 3 licence holder. That reads across through other organisations in which it has more than a 20 per cent. share.
290 The point about BSkyB and Channel 3 licences is not that News controls BSkyB. As I explained, I understand that BSkyB is not controlled by News. The point is that BSkyB is 40 per cent. owned by News. That is the reason whereby it falls foul of the thresholds that we have put into the Bill.

§ Lord Harris of High Cross
My Lords, I withdraw the amendment.
Amendment, by leave, withdrawn.

§ Lord Inglewood moved Amendment No. 106: Page 92, leave out line 25.

§ The noble Lord said: My Lords, as the Bill currently stands, a newspaper proprietor with 20 per cent. or more of the national market is restricted to a 20 per cent. stake in a corporate body which holds a licence to provide a domestic satellite service. A reciprocal restriction is applied to the stakes that such a licence holder may have in national newspapers. These amendments remove an unnecessary barrier to the potential development of domestic satellite services. I beg to move.

§ On Question, amendment agreed to.

§ [Amendments Nos. 107 to 112 not moved.]

§ Lord Inglewood moved Amendments Nos. 113 to 115: Page 93, line 7, leave out from second ("a") to end of line 9 and insert ("local radio service"). Page 93, leave out lines 10 to 13. Page 93, leave out line 26.

§ On Question, amendments agreed to.

§ [Amendment No. 116 not moved.]

§ Lord Inglewood moved Amendment No. 117: Page 93, leave out lines 34 to 38.

§ On Question, amendment agreed to.

§ [Amendments Nos. 118 to 121 not moved.]

§ Lord Inglewood moved Amendment No. 122: Page 93, leave out lines 47 to 51. On Question, amendment agreed to.

§ [Amendments Nos. 123 to 126 not moved.]

§ Lord Inglewood moved Amendments Nos. 127 to 129: Page 94, line 45, leave out from ("a") to ("may") in line 46 and insert ("local radio service"). Page 94, line 47, leave out from ("newspaper") to end of line 48. Page 94, leave out lines 49 to 51. On Question, amendments agreed to.

§ [Amendments Nos. 130 to 138 not moved.]

§ Baroness Trumpington
My Lords, I beg to move that further consideration on Report be now adjourned.

§ Moved accordingly and, on Question, Motion agreed to.

§ House adjourned at a quarter before midnight.