§ 12.49 a. m
§ Lord McIntosh of Haringey rose to move, That the draft order laid before the House on 8th March be approved [12th Report from the Joint Committee].
§ The noble Lord said: My Lords, the order revises the limits in relation to licences to provide radio multiplex services set out paragraph 11.4 of Part III of Schedule 2 to the Broadcasting Act 1990, as amended. Multiplexing—the management of a frequency block on which a range of digital programmes can, using compression techniques, be transmitted—is an essential function in digital radio. It is the expensive part of digital radio and the capital investment necessary before individual programmes can exist.
§ The Government are committed to the success of digital radio. We agree with the industry and the Radio Authority that the current restrictions on ownership may harm its development. Apart from the national multiplex licence already awarded, there will be 26 local licences starting in Birmingham and staged over two years.
§ The current restrictions are as follows. No one company may at any time hold more than one licence to provide a national radio multiplex service. A company which is a participant with more than a 20 per cent. interest in a company which holds a licence to provide a radio multiplex service but does not control that company shall be treated as holding the licence held by that company.
§ No one company may hold a licence to provide a radio multiplex service and be a participant with more than 10 per cent. interest in more than one company which holds any other such licence. No one company may be a participant with more than a 10 per cent. interest in each of three or more companies which hold such licences. So a company may directly apply for as many local multiplex licences as it wishes, but it cannot hide its interest by controlling a range of consortia applying for multiplex licences. In theory, a single company or consortium could hold most or even all of the local multiplex licences, but that should not happen as the Radio Authority has a duty to ensure fair competition in awarding licences.
§ The ownership restrictions included in paragraph 11 prevent companies from trying to circumvent the licensing process by acquiring a controlling interest in companies or in consortia after the licences have been awarded by the Radio Authority. The control of ownership in this way was one means of achieving the objective of plurality of ownership without making digital radio unattractive to potential participants and investors.
§ The amended limits correct certain assumptions made in 1996 about the shape of investment in digital radio. We now know more about the extent of interest in local multiplex licences and the scale of the necessary investment. It is now clear that in the early stages of digital radio companies will have to form consortia in order to run multiplexes. The present restrictions will severely constrain the formation of such partnerships.1108
§ Without some amendment we might see one or two powerful consortia bidding for local licences across the country. It could be argued that the current limits would have the effect of forcing the big players into a very small number of bidding consortia. We believe that smaller, more locally based radio companies might be excluded from participation. If even the larger groups find themselves obliged to form consortia the smaller companies can be expected to find it almost impossible to fund and run a local multiplex alone. We believe that that is the opposite of the original intention of the legislation, which was the encouragement of plurality of ownership and diversity of content. It is therefore sensible to revise the limits now. There is a greater likelihood of local interests and tastes being adequately served if regional radio groups and local stations are given encouragement to join consortia bidding for multiplex licences. But there is still a need for some restriction on shareholdings in consortia holding licences. It would not be desirable to have a very small number of companies controlling most or all of the local multiplexes through networks of consortia.
§ Following extensive consultation, we therefore propose a cautious measure of relaxation. The order revises the limit so that no company may hold a licence to provide a radio multiplex service and have a shareholding with more than a 20 per cent. interest in more than four companies which hold any such licences. No company may be a participant with a more than 20 per cent. interest in each of six or more companies which hold such licences.
§ Raising the number of consortia in which companies may have controlling investments would give all parts of the industry the opportunity to get involved in partnerships to bid for local licences. Raising the maximum investment allowed in companies or consortia should allow smaller radio groups the opportunity to make a number of meaningful investments in several local multiplexes.
§ We are confident that digital radio will become an important communications medium in years to come. We want to see a financially healthy digital radio industry with a diverse output which reflects local tastes and interests. The Radio Authority shares our belief that multiplex consortia between large radio groups and local firms should work for the benefit of the digital radio listener. Such partnerships are not guaranteed, but the new limits allow the opportunity for their formation while continuing to guard against undue concentration of ownership. I commend the order to the House. I beg to move.
§ Moved, That the draft order laid before the House on 8th March be approved [12th Report from the Joint Committee]. —(Lord McIntosh of Haringey.)
§ Baroness Anelay of St. Johns
My Lords, I am more than usually grateful to the Minister for his explanation. When I was appointed to this brief three-and-a-half months ago, one of the first things I did was try to get to grips with some of the vocabulary surrounding broadcasting orders. I have to say that I have struggled ever since, despite the assistance of the vocabulary guide in the fourth report of the Select Committee of another place.
1109 We on these Benches agree that digital must be a success for the future of communications business in this country and that, if it is to be a success, then large groups must be allowed more freedom to invest across the country. On the other hand, it is important to make sure that local companies have the opportunity to be involved and I appreciate the explanation the Minister gave as to how the Government weighed up the pros and cons of how that is to be achieved.
I understand that the Radio Authority is supportive of this measure. Although others have said that they would like it to go further, the order tonight represents a reasonable way forward and we on these Benches support it.
My Lords, we on these Benches welcome this order. We also agree with the remarks both of the Minister and the noble Baroness, Lady Anelay of St. Johns, in relation to the desirability of the success of digital. It is one of the great technical advances in broadcasting of recent times. It is expensive, and it is curious how this is one area in which technology has leapt ahead of public demand. I congratulate the Government on seeing that the situation is different from that which existed when they made their original arrangements and so relaxed the constraints on corporate bodies in the way that they have.
I do not know what timescale the Government envisage for acceptance generally of digital broadcasting. At this moment in time even buying a receiver is an expensive business. But one hopes that by these relaxations and the activity that that will generate, the economies of scale will be created which will accelerate acceptance into the domestic market and bring all the benefits to which he alluded; that is, the plurality of ownership and diversity of content. We agree with that. Having said that, I congratulate the Government and hope that this works. I am sure that it is going in the right direction.
§ Lord McIntosh of Haringey
My Lords, I am grateful to both noble Lords for their reception of this order. It is fiendishly complicated and took me through several official drafts before I was satisfied that I understood them, let alone was capable of putting forward any coherent explanation to your Lordships.
The noble Baroness is right that the Radio Authority supports the amendments. It would have gone a bit further but accepts that this is a realistic compromise. In relation to the response to the question of the noble Viscount, the timescale it will be slower than original anticipated. The equipment is still quite expensive. I have never heard digital radio so I have no idea about the improved quality which it is supposed to offer. It will be a considerable time before digital radio is widespread, but we hope the order will at least remove some possible obstacles to that process.
§ On Question, Motion agreed to.