§ The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone)
My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Cornmittee.—(Baroness Blackstone.)
On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The CHAIRMAN OF COMMITTEES in the Chair.]
§ Lord Puttnam
moved Amendment No. 280A:Before Clause 340, insert the following new clause—"MEDIA PLURALITY PUBLIC INTEREST CONSIDERATION
(1) Section 58 of the Enterprise Act 2002 (c. 40) (specified considerations) shall be amended as follows.(2) After subsection (2) there shall be inserted—(2C) The public interest in—
- (a) the maintenance of a range of media owners and voices sufficient to satisfy a variety of tastes and interests;
- (b) the promotion and maintenance of a plurality of broadcast media owners, each of whom demonstrates a commitment to the impartial presentation of news and factual broadcast programming; and
- (c) the promotion and maintenance, in all media including newspapers, of a balanced and accurate presentation of news, the free expression of opinion and a clear differentiation between the two;is specified in this section.(3) In subsection (3), after the words "any consideration", there shall be inserted "(other than the consideration specified in subsection (2C))".The noble Lord said: In moving Amendment No. 280A, I shall also speak to Amendments Nos. 281, 282 and 283. The Government wish to deregulate ownership of the broadcasting industry. This reflects the way in which the technology has developed, with digital broadcasting making many more channels possible within the spectrum previously used for analogue broadcasting, and satellite and cable offering additional ways of getting channels and stations to audiences. The old system, in which a scarcity of spectrum meant controls were needed to determine who could run a limited number of channels, is no longer relevant. The case has also been made that deregulation reduces the constraints on business and allows the consumer to take the prime position in shaping and influencing the way choices and services are developed.
1432 So far, so good. I think we can all agree on where we do not want deregulation to take us. In fact, in Committee in another place, Dr Howells summed it up quite neatly:Our key aim is to ensure that there is a range of competing voices readily available to citizens so that they are free to form their own opinions… If we allow the largest newspaper companies, which are already influential, to buy up Channel 3—the only commercial public service broadcaster that currently—I stress "currently"—has universal access to a mass audience—we risk a significant reduction in the number of voices in play in the media, and there would be a risk that one voice could become much louder than the others. That would represent an unacceptable concentration of the influence in the current circumstances".The Minister went on to say:I believe that such a concentration in one voice would also be harmful to politics, because it could create a media owner so powerful that they could exercise direct influence over political decisions".—[Official Report, Commons Standing Committee E, 30/1/03; col. 860.]We might not yet agree on the means to avoid this outcome, but we need no reminding that it is a situation we all wish to avoid. Here is the problem—it is the word "currently". The Bill, as the Government have repeatedly stressed, needs to be future-proof.
In a period of rapid economic, technological and ownership change, the one thing we cannot do is even begin to guess at who might or might not attempt to control this or that element of the media. What we can do, however, is refuse to contemplate any broadly unacceptable level of media concentration where each of the component parts is of significant size and reach in its own right.
What we need, therefore, is the ability to identify these concentrations as and when they occur, examine them in an analytical, fact-based way and ask whether they fit our definition of "unacceptable". The drawback of relying on cross-media ownership rules is that they can all too easily be overtaken by changes in market circumstances, as Dr Howells acknowledged in response to a question from Andrew Lansley, the MP for South Cambridgeshire, during the Committee stage. We must also dispel the current fantasy that should unacceptable levels of ownership emerge, regulators can move swiftly to put the genie back in the bottle.
There are two ways of accomplishing what we propose, and we need both of them. One looks from the viewpoint of the consumer; the other from the viewpoint of the citizen. For the consumer, we have competition policy, and that is already built into the Bill. For the citizen, we have the public interest plurality test. Together, they represent a formidable duo, and they are both flexible and future-proof.
Batting for the consumer, we have the Competition Act and the Enterprise Act, and the Bill allows Ofcom to apply both to the broadcasting market. The Competition Act identifies dominant players in markets and looks for abuse of that dominance. The Enterprise Act comes at the issue from a slightly different perspective and aims to prevent unacceptable concentrations of ownership. It is brand-new 1433 legislation that introduces a new approach to mergers and takeovers. What is attractive is that expert independent bodies will take decisions in a nonpolitical, transparent and predictable manner.
Under both the Competition Act and the Enterprise Act, once the case is proven the remedies available are significant. So you might argue that those powers are all we need to address unacceptable concentrations of media power. But they are designed to look at competition from a purely economic standpoint by asking, for example, whether consumer choice is reduced or too much economic power is given to one supplier. They cannot take account of the very special role the media plays in an informed society. Ofcom might see a problem and wish to address it but competition law simply does not provide the tools to allow it to do so.
So the tools are a part of the solution but not the whole solution. We also need a powerful player on behalf of the citizen, a powerful player already available to us in the Bill—the public interest test. In the case of this amendment, we see a clear public interest in "media plurality", which is defined in three ways: the maintenance of a range of media owners and voices sufficient to satisfy a variety of tastes and interests—that is, many speaking to many; the promotion and maintenance of a plurality of broadcast media owners, each of whom demonstrates a commitment to the impartial presentation of news and factual programming—that is, many broadcasters all abiding by the important impartiality requirements that this Bill and its predecessors set out; and the promotion and maintenance in all media, including newspapers, of a balanced and accurate presentation of the news, the free expression of opinion and a clear differentiation between the two.
There are several things going for this public interest test. The first is that it allows Ofcom and the OFT to carry out a proper analysis of the likely impact of any cross-media merger or take-over, an evidence-based approach that examines the sort of problems that could arise rather than simply asserting that there will not be any. The second is that it already exists in the Bill, as it forms part of the newspaper merger regime, updated from the Fair Trading Act 1973 in order to sit within the new Enterprise Act.
The third aspect, which is very important, is that it could be used to address the knotty issue of religious ownership. Rather than banning all religious bodies from owning licences and then giving them exceptional leave to do so when there is no longer any evidence of spectrum scarcity, each case could be examined on its merits. We might ask the fundamental question, "Would this prejudice the accurate and impartial presentation of news and factual programming or the free expression of opinion?"
1434 For those competition policy aficionados in the Chamber, adding a media plurality public interest test would align our legislation with the European merger regime, which recognises that individual member states have a special and legitimate interest in mergers that affect public security, prudential rules or the plurality of the media.
The other appealing thing about the media plurality public interest test is that, once included in the Bill and combined with Ofcom's review of the media ownership rules, it could be used as a safety net for a staged withdrawal from those ownership rules that have over time become unnecessary, either because the market has moved on, or because they relate to any channel or service which has become much bigger or smaller, or because Ofcom has carried out the necessary risk analysis to show that it is no longer applicable. I am quite deliberately trailing an impact analysis of Channel 5's cross-media ownership change.
In addition, if there are specific problems associated with any concentration of media ownership—perhaps cross-promotion or editorial influence—especially from the unregulated world of newspapers into the licensed world of broadcasting, this regime would enable the Secretary of State to attach very specific conditions to her approval. Those conditions would otherwise be difficult to apply to unlicensed bodies and certainly could not be applied in advance of agreeing a merger or takeover.
In another place, the Government have argued that this would place a greater degree of uncertainty, or new and unnecessary hurdles, in the face of broadcast media owners. That argument was made in Standing Committee E, on Thursday 6th February (at col. 1004 of the Official Report). If that is the case, it will be so only for that very small number of potential purchasers of newspapers, television channels or radio stations which are already major players in this market. So, not only is it flexible, but it is also targeted at what is clearly the point of greatest need.
I refer Members of the Committee to the entirely unanimous recommendation of the Joint Select Committee and its reasoning, as set out in paragraphs 218 to 224, on pages 59 and 60 of our report. I beg to move.
§ Lord Thomson of Monifieth
I must begin by apologising for the absence of my noble friend Lord McNally. One consequence of our newfangled family-friendly arrangements in the House is that those Members who have families to be friendly about, by sustaining them through work outside the House, sometimes find that difficult to combine with duties here. Sadly, I must take the place of my noble friend this morning.
I was not a member of the pre-scrutiny committee that did such great work, but I read with great interest the rather Socratic dialogue between the committee and the Government on the important issues of which the noble Lord, Lord Puttnam, has given us such an impressive analysis. The committee reports clearly and 1435 admirably the Government's starting point on these very big issues. Paragraph 218 of the Joint Committee report states that,competition law alone is not sufficient. It can address issues of concentration, efficiency and choice, but it cannot guarantee that a significant number of different media voices will continue to be heard, and it cannot address concerns over editorial freedom or community voice".The Government repeated their commitment to the principle of plurality in their reply to the committee, and assured us that they considered carefully the committee's recommendation, which is now reflected in the series of amendments that the noble Lord, Lord Puttnam, has moved. As he said, the Government emphasised the unanimous view from business interests, particularly, that they wish the kind of certainty and precision that goes with normal competition law arrangements.
Well, businesses would say that, would they not— and they are right to say that, in their own interests. However, the difficulty that we face with the Bill is that the business of the media is a special kind of business and requires special legislative treatment. Purely mechanistic judgments of market share are not enough. They may he appropriate for baked beans or motor cars or the business, departmentally, of the DTI, but they are not enough for a business so closely associated with an influence on the quality of civil life. That is the business of the DCMS.
We believe and support the amendments on the basis that Ofcom should have a statutory right to intervention on a qualitative basis in terms of merger proposals. The Government have gone some way, I think, to recognising the special case of the media in their commentary on page 26 of their response. However, in our view they should now have second thoughts and should be ready to accept the spirit of this group of amendments tabled by the noble Lord, Lord Puttnam.
§ Lord Crickhowell
In supporting the noble Lord, Lord Puttnam, I want to make only two points. When we met in the Joint Committee, the guru on competition policy was Mr Andrew Lansley. He was our acknowledged expert. Indeed, he seems to have an almost encyclopaedic knowledge of the subject. With that knowledge he has a great faith in the effectiveness of competition policy. He believes that with the new legislation now in place most of the anxieties voiced in this Committee about possible takeovers and mergers can be covered by competition policy. However, I remain to be completely convinced that it is all going to work out quite like that. I think that we need to see how it works.
I think it worth noting that Mr Lansley, speaking on 30th January in Standing Committee E, actually acknowledged:Some of us are in the awkward position of not yet being able to say what the final outcome on how competition policy will be exercised".1436 He said that he therefore perfectly understood if there were those who argued that we should leave the current constraints in place and,let Ofcom take its first review of media ownership rules, look at the changing scene and bring forward recommendations if it wishes to".—[Official Report, Commons Standing Committee E, 30/1/03; col. 871.]But he then said:My strong personal preference is not to put in ex ante rules, but to have a proper competition test, properly buttressed".by the kind of proposals that are being put to the Committee by the noble Lord, Lord Puttnam.
In an earlier Standing Committee sitting on the subject, Mr Lansley had said:Essentially the Government have said that we do not need a plurality test because we have clear rules. However, in terms of future-proofing, flexibility and requiring businesses to justify themselves within the marketplace and, in the event of mergers, in a fashion that is responsive to whatever circumstances might arrive in years to come, and to respond to a public interest test, it is quite obvious that it would be far better to shift towards the exceptional public interest test and competition policy and, by extension, not keep specific rules".—[Official Report, Commons Standing Committee E, 30/1/03; col. 858.]So those of us in the Joint Committee who differed on the issue of the total effectiveness of competition policy were absolutely at one on this particular issue.
The other point is simply this. During our discussion, when the noble Lord, Lord Puttnam, sought the views of the committee, I said that I was not an expert in any way about the newspaper business and that I would like to hear the views of the noble Lord, Lord Hussey of North Bradley, who I know cannot be with us in Committee today but supports this amendment. He, after all, knows more about the newspaper business than most of us put together. He came out very strongly in favour of the particular recommendation of the Joint Committee. I took his advice and followed. Afterwards, he told me that he believed that this was one of the most important single recommendations made by the Joint Committee in the whole of its report. So this is an issue that I think unites very different points of view. I therefore warmly support the amendments tabled by the noble Lord, Lord Puttnam.
§ Lord Borrie
We have heard a most powerful and eloquent speech by the noble Lord, Lord Puttnam, and two further eloquent speeches by the noble Lords, Lord Thomson of Monifieth and Lord Crickhowell. They are all sponsors—the noble Lord, Lord Thomson, by way of being a delegate of the noble Lord, Lord McNally—of the amendment. I do not know how they feel about this, but I feel in a way that it is rather unfortunate that we are debating this matter somewhat prior to debating provisions that come just a little further on in the Bill—we shall get to them later today—dealing with newspaper mergers.
In those provisions dealing with mergers between newspapers, the Bill continues the very longstanding public interest concern in relation to newspaper mergers that have found expression in the law since the 1960s. Concentration of the press into too few hands was of course, before the more significant days of 1437 television and radio, the important issue for public interest connected with democracy, because concentration of the press into too few hands can of course stifle expression of opinion and argument and distort the presentation of news. It was the Royal Commission on the Press, in 1963, that put it in that way. Since the 1960s newspaper mergers have been subject to a stricter form of control than other mergers and takeovers in this country, with the Monopolies and Mergers Commission, now called the Competition Commission, required to take account not just of economic considerations but of whether a merger would bring about a serious public interest concern relating to the presentation of news and the adequate free expression of opinion.
I believe that the same sort of consideration which influenced people concerned with democracy in the 1960s in relation to the press now justifies a stricter control over cross-media mergers than is applicable to other goods and services. Amendment No. 280A proposes a reporting role by the Office of Fair Trading. It proposes that by amending the Enterprise Act, the Competition Commission, when faced with a reference concerning cross-media ownership, would be concerned not just with economic matters but with the much wider concern for plurality and diversity in the media.
The Government claim, as the noble Lord, Lord Thomson of Monifieth, pointed out a few moments ago, that a Competition Commission involvement in such cross-media mergers would lead to uncertainty. Indeed it would. One cannot deny that during a period of a reference there must be uncertainty as to the outcome—otherwise what is the point of the reference? However, I would suggest that that is a small price to pay for ensuring a free and diverse media. Once ownership is changed, it is exceedingly difficult to revert to square one; the damage may have been done.
I have recently received a letter from News International; others may have received the same letter. The letter wanted to contradict what it called a number of "myths" that were gaining currency about News International. One "myth" the letter mentions is that if foreign and cross-media ownership rules are removed, Rupert Murdoch would be allowed to buy Channel 5. The answer given by News International to that so-called myth is that the competition authorities will still have to examine the issues, and an illustration of this is the ongoing investigation by the Competition Commission into the Carlton/Granada merger and the ownership of ITV. However, as we all know, and certainly News International knows, that investigation is limited to competition or economic matters—that is, will the merger substantially lessen competition? As I understand it, the particular emphasis in the inquiry is being put on the matter of whether it will unduly reduce competition in the advertising market if that merger goes ahead.
There is no power in the Competition Commission or indeed in any other body at present to deal with the matter of whether diversity and plurality in the media will be adversely affected by Granada and Carlton 1438 coming together, or indeed to consider the matter with which the noble Lord, Lord Puttnam, and the other proposers of the amendment are concerned—a balanced presentation of news and the free expression of opinion.
Further on in its letter to me, News International said that there is a myth that it dominates the newspaper market. Anyone interested in competition policy knows that definitions of market are absolutely vital. It is perfectly true, as News International pointed out, that Trinity Mirror is the biggest newspaper publisher in the UK. As I expect most of us know, that is because Trinity Mirror has a large share in the regional and local newspaper field. In the letter, News International admits that 33 per cent of the national newspaper market is in its hands. To my mind, and in any economic and common-sense judgment, the national newspaper market is the most significant market when it comes to free expression of opinion, accurate presentation of news and the ongoing running of democracy in this country.
I think that everybody agrees that News International has a significant position in the national newspaper market. If it is possible for a merger to take place across the media, whereby that newspaper interest is able to achieve or seek a position of dominance, that should surely be examined from a much broader point of view than purely that of whether it significantly reduces competition. There should be an examination of the wide and accurate presentation of news and the diversity and free expression of opinion. I support the amendment.
§ 11.30 a.m.
§ Lord Fowler
I agreed with a great deal of what the noble Lord, Lord Borrie, said—right until the end when he asserted the greater importance of the national press over the regional press. As the former chairman of the Birmingham Post group of newspapers and the Yorkshire Post group of newspapers, I strongly deny that. If the noble Lord, Lord Borrie, with his usual analytical method, refers to public opinion surveys, he will find that the regional press—this does not come as much of a surprise—is much more trusted by the public than is the national press. I say that in passing, because I agreed with so much else of what he said.
§ Lord Borrie
I do not wish to interrupt the noble Lord. The exceptional examples he mentioned may deal with matters of national and political importance in a way that the great run of local newspapers virtually never does, except presumably at election time.
§ Lord Fowler
We must not pursue the matter, but I profoundly disagree with that point as well. The noble Lord will find that many millions of people in this country regard local and regional news as being of the greatest importance to their lives and place the greatest importance on accurate reporting. The great distinction of the regional and local press is that they live and go back to their public, whereas the national 1439 press—I too speak as an ex-national press man—comes in, goes out and is not seen again. Perhaps we might have that debate on another occasion.
I strongly support the amendment of the noble Lord, Lord Puttnam. The essential question is whether the media are different from other industries and therefore deserving of any kind of extra provision over and above competition law.
Some people say that the media industry is just like any other industry. That is probably the position of my honourable friend Mr Whittingdale in another place, but it is not one with which I agree. I agree strongly with the view of the noble Lord, Lord Borrie, that newspapers and the media in general raise special issues.
Any additional restriction should be scrutinised very carefully. But the fact that a free-market country such as the United States retains a prohibition on some forms of foreign control of the media—we will shortly come to that issue—at least indicates that there is a case to consider.
The noble Lord, Lord Puttnam, is right in his assessment. That does not mean that media industries are more important than other industries. It certainly does not mean that they are better or worse managed than other industries. News International was mentioned. Mr Murdoch deserves a great deal of credit for what he did to reform the newspaper industry and for taking on some very reactionary forces within it. Without that intervention, I fear that we would not have quite the strength and breadth of newspapers we have today.
Media industries have an impact on the democratic debate that other industries, however important they may be, simply do not have. Most people believe that it would he wrong for any one organisation to have an over-powerful voice in the democratic debate by virtue of owning a disproportionate part of the newspaper industry. or television and radio, or a combination of them. I agree with the noble Lord, Lord Puttnam, that one needs an extra provision to preserve media plurality in some way. I agree with him that the trouble with the current situation is that we rely on existing powers that are designed to look at competition from a purely economic standpoint.
Perhaps I may give an analogy, which is not totally exact but which illustrates my point. I am the chairman of a pharmacy group. We have 1,500 community pharmacies across the country. Some months ago, the Office of Fair Trading published a report on deregulation. I was invited to the meeting just before publication. I asked what consideration had been given not just to the competition issue, but to health policy, given that it is the Government's policy, which I strongly support, that pharmacy and health policy are fully integrated. The reply, in précis, was that no consideration was given to that issue at all because that was not the remit. One needs therefore to spell out exactly what one wants of the competition authorities, and I would suggest that media plurality is part of that.
1440 The amendment enables us to spell out plainly that when the public interest is being assessed, the question of media plurality should not merely be addressed: there should be a requirement that it must be addressed. If that is the input of the amendment, I am strongly in support of it and I think that the public would be strongly in support of it.
§ Baroness Jay of Paddington
I, too, support the amendment. The whole Committee will be grateful to the noble Lords, Lord Fowler and Lord Borrie, who got to the nub of the issue. I am particularly grateful to the noble Lord, Lord Borrie, for his forensic analysis of the letter from News International, which I, too, received. The noble Lord, Lord Fowler, put his finger on the point that our discussion about competition law and the media is about a special industrial matter, which is not subject to the same kind of regulation that others may be.
I am grateful to my noble friend Lord Puttnam for drawing attention to the need for an evidence base in looking at the issue. I would add one other requirement to the list of those he defined as being necessary to achieve public interest and media plurality. If I could, I would add that to Amendment No. 280A. I would also add a requirement for broadcast and investment quotas for domestic original production to the public interest consideration. That investment obligation is imposed statutorily in other OECD countries. That has been widely shown by very authoritative studies. I quoted from one review of public broadcast legislation published by the Social Market Foundation when we were last in Committee. I shall not do so again in order to speed proceedings, which I think is in the interests of Members of the Committee today. But I just tell the Committee that after a wide review of the strict regulation of public interest through broadcast investment quotas, this report and others conclude that Britain should be inspired by the examples of other legislatures.
§ Lord Gordon of Strathblane
I rise to strike a somewhat discordant note. It is not often that I take issue with the conclusions of the committee of my noble friend Lord Puttnam. However, since I have already done so in print on this issue, he will riot be surprised that I do so now. I am slightly concerned that we are making plurality a litmus test of the public interest. I am worried that noble Lords are quoting plurality and diversity as though they go hand in hand. In my view they are frequently in direct opposition to each other.
I confine my remarks solely to the field of broadcasting, not because I do not think that the issue is important in the press, but because in broadcasting we are dealing with organisations which are already bound by rules of impartiality. Therefore, the issue of plurality is not important in ensuring impartiality. That is done by regulation. I fully concede that that is not true in the press and so a different argument applies.
The reason we have Ofcom and are bringing all these different fields together is precisely because regulation of programme content, technical means of delivering 1441 programmes, finance and sources of funding and ownership converge and intertwine. I sometimes feel that there has almost been a naïve assumption in some of our earlier debates about regulation that, provided we put it in an Act of Parliament that is great; it will happen.
I take a reductio ab absurdum: if one halves the BBC licence fee, it will not produce such good programmes. That might be accepted. Let us transfer that to the commercial sector: if one wants a Granada company that can produce "Jewel in the Crown" and "Brideshead Revisited", frankly, one will not do it with this kind of legislation because market forces dictate that resources are less available for the making of programmes than they were previously. Some of that is due to a decline in advertising. No one can do anything about that matter; hopefully it will return. Furthermore, I do not say that there should be no competition. That would be a backward step, which is not to be welcomed.
However, I do say that if we place Ofcom in a situation where a television or radio owner wishes to introduce a new service and a new entrant also wants to introduce a service, there should not be an automaticity of decision-making in favour of the new entrant. This will become a box-ticking exercise, rather like the Higgs committee report on non-executive directors. There is a very real danger here. I realise that if one has the same owner one will undoubtedly have more diversity because it is in his own self-interests to produce diversity. Not only that, but he will save the overheads of administration, sales and so on and therefore have more money for programming. He will also not be spending money marketing against his opposition.
I do not go in for marketing a great deal, but the amount of money that has been spent marketing rival radio services in London could have gone into programming. It is having to be spent fighting competition for the same territory. I do not say that there should be no competition but that one should not always assume that competition is a good thing. So I wholeheartedly agree with speakers such as the noble Lord, Lord Fowler, who say that media are different. I also agree that we need an extra provision other than simply competition law, but I argue that that extra provision may lead us away from plurality if the public interest looks for diversity. That is a more important consideration than ownership from the viewer's point of view.
§ 11.45 a.m.
§ Baroness Oppenheim-Barnes
I intervene very briefly. I apologise for having missed the first 50 seconds of the opening remarks of the noble Lord, Lord Puttnam. I wholeheartedly support these amendments. However, even if they are agreed there will still be difficulties.
The noble Lord, Lord Gordon, with whom I do not entirely agree, has raised an important point. Interpretation of public interest has always been one of 1442 the most difficult aspects of competition policy. As the noble Lord, Lord Borrie, said, the Competition Commission at present would not have those powers in judging the kind of case that the amendment addresses. But it is very important to consider the question of quality, which is the point that I believe the noble Lord, Lord Gordon, was making: that the public interest test in cases in particular with broadcasting are very much more difficult to make than in any other sector. I do not know to what extent quality would even enter into them. However, the fact remains that I believe these amendments are extremely necessary.
I should just like to tweak the nose of the noble Lord, Lord Bragg, who is in his place. A number of years ago he and I appeared on one of these "Any Question?" programmes at South Hampstead High School where his children were, I believe, educated, as were my grandchildren. The question was put as to whether it would be fair to allow newspapers to produce magazines in competition with the Radio Times. He was greatly alarmed at that thought. He said that it could not possibly be anything other than most dangerous to allow the Radio Times to be undermined in that way; that it would not be able to plan its programming in competition with other magazines; and that all the aspects of it would be extremely dangerous.
So we have moved on. We have made progress. Evolution has taken place. I hope that with the passage of these amendments it will go even further.
§ Lord Bragg
Perhaps I may rise to say that with the greatest of respect the noble Baroness has the wrong man. I am very sorry indeed, but I am afraid she will have to produce better evidence than that. There is no way in which I could possibly have said anything like that on any occasion. However, that is life. We get quoted and sometimes we get misquoted. I am quite happy to take both.
I shall be brief. I support the amendments of my noble friend Lord Puttnam. I have found common ground with many speakers, in particular my noble friend Lord Borrie and the noble Lords, Lord Thomson and Lord Crickhowell. The amendment anchors the Bill to public service and public interest. As I, and many other noble Lords, said at the beginning of the debates in Committee, that is where a lot of us start from and to where we want to return. It is the core of, we hope, this excellent Bill, which many of us are trying to make just a little bit better and—to borrow an expression, correctly quoted—to "tweak" it a little. That is what we seek to do. The amendments help that task massively.
I find myself in the strange position of disagreeing with my noble friend Lord Gordon. I think that plurality is different from diversity, but that diversity depends upon plurality. We can discuss that issue much further. We can play the matter either way, depending on the size of the groups concerned. We have seen that plurality can come in very small areas, such as the regionality which has been referred to. It can come from single owners because of the inevitable 1443 effect—as the noble Lord said—of one owner having to be divergent in order to maintain his position. Plurality can also come from competition.
I do not think the issue is clear cut. I think that plurality will do. The wording in the amendment would meet the noble Lord's case. Proposed new subsection (2C)(a) requires,the maintenance of a range of media owners and voices sufficient to satisfy a variety of tastes and interests".I think that meets the noble Lord's case.
Plurality is the key to this entire Bill and to our broadcasting. It is why we have the broadcasting we have. We must keep returning to that point. It is why the other day several of us strongly made the point that ITN should be allowed to be as powerful as other news services—to have that kind of plurality which is also diversity. There is also the plurality in our constitution, over which many people have fought very hard for a long time. That should be reflected in the Bill, because, as has been said, we are talking about matters which affect our lives very deeply. They affect what influences our lives, what forms our lives and the way in which we challenge other people in our lives. The matter goes to the heart of our society and our daily exchange of views and opinions in that society. It is a difficult and cumbersome democratic society but one which is, many of us think, better than any other around and worth not only keeping but improving. The amendment would go some way to improving it.
I said that I would be brief, so I conclude on this note. If the amendment is adopted it will send a clear signal that the core of the Bill is public service; it is gathered around the way in which we have done broadcasting. We are pleased to have done it, and we wish to continue doing it.
I heartily support the amendments.
§ Baroness O'Neill of Bengarve
I wish to speak briefly, not to plurality and diversity, on which Members of the Committee have been so eloquent, but to the proposed subsection (2C), which goes beyond plurality and diversity, requiring,the promotion and maintenance, in all media including newspapers, of a balanced and accurate presentation of news, the free expression of opinion and a clear differentiation between the two".Too frequently people imagine that freedom of the press is to be equated with freedom of expression. I know of no argument in the long tradition of political philosophy which suggests that freedom of expression is for corporations, let alone conglomerates. Freedom of expression is for individuals.
What individuals also need if they are citizens is a balanced and accurate presentation of news. We know from the regular MORI polls that there is a great differentiation between the way in which the public view newspapers and the way in which they view the broadcast media. The trust of newspaper journalists is generally very much lower. In fact, they are less trusted than the politicians. On the other hand, the television news is trusted much more than politicians.
1444 The proposed clause would do a great deal to support democracy by securing not only the requirement that there be diversity and plurality in our media, but in particular that there be an obligation to provide balanced and accurate representation of the news, as is already required of broadcast media. That would be splendid.
We have not yet succeeded in writing into Clause 3 any public interest duty upon Ofcom. The proposed clause would go some way to remedying that deficiency. The noble Lord, Lord Crickhowell, spoke very eloquently to the insufficiencies of competition policy alone to deal with this matter. Sometimes there is a very good case for having a belt and braces. If competition law will riot be sufficient to secure these other objectives, we would do well to accept the new clause.
§ The Lord Bishop of Chester
When the Committee discussed possible appeal procedures on earlier amendments, the inability of competition law to cover satisfactorily complaints about, for example, content was raised several times. Clearly, competition law offers strong protection for the consumer, but it cannot always protect the interests of the citizen.
A media plurality public interest test of the kind proposed by the noble Lord, Lord Puttnam, would offer a similar degree of protection for the citizen and hence support Ofcom's principal duty to protect the interests of both the consumer and the citizen.
I am grateful to the noble Lord for his interesting point about religious ownership, which is very helpful as the Committee approaches the debate on Amendments Nos. 287 to 289.
§ Lord Phillips of Sudbury
I take up the point argued by Lord Gordon of Strathblane. It is interesting that he quoted "The Jewel in the Crown" as one of the finest examples of what commercial television has done I have been discussing the main strands of the Bill with Sir Denis Forman, who, I am sure, the noble Lord will accept is one of the jewels in our broadcasting crown. He is fiercely in favour of this set of amendments, largely because he believes that the economic imperatives of media ownership these days tend to work inexorably more in the direction of profit than anything else, that there are tendencies in the mass media market place for standards to fall rather than rise, and that a great deal of leadership, courage and determination is required of owners and their chief executives to pull standards up.
As several speakers have said, this set of amendments supports that latter strand, balancing the brute economic one. It is a question of the cultural rather than the economic, of values rather than prices, or, as the noble Lord, Lord Puttnam, and the right reverend Prelate said, of the citizen rather than the consumer.
I am not at all convinced by the argument that the noble Lord advanced, which is part of the Government's case, quoted in paragraph 223 of the Puttnam report, that liberalisation canprovide a more diverse output in order to avoid competition for audiences with other stations that they own.1445 That is a wonderfully head-over-heels argument. Taken to its conclusion, there would be one newspaper owner, so that there could be fierce competition within its ranks between all the thousands of stations and papers that it owned. That argument must be rubbish.
For that reason, I conclude with an extraordinarily premonitory quotation from Abraham Lincoln, speaking in the 1850s:The legitimate object of government is to do for the people what needs to be done but which they cannot by individual effort do at all—or so well—for themselves.Surely that is exactly what this is about.
§ Lord Harris of High Cross
I was hesitant to intervene and would normally persist in my disciplined silence. I was for 12 years an independent national director of The Times, which ensured that ears were closed against anything I said. But, behold, I stand before the Committee as a new man. I resigned from The Times and am now two years into recovery, so I can draw on my experience during that period.
I stand in awe in the presence of so many self-appointed experts and authorities on competition, taste, truth, balance and all the rest. If one is involved in a newspaper one is reading other newspapers and also watching the media. I find astounding and hilarious the notion that the fearsome hand of Rupert Murdoch reaches out from Australia, America, China or wherever he currently is to regulate, rule and influence. It is a complete myth. Even within The Times, his flagship paper, there is great diversity and variety of presentation—infuriating diversity—on politics, art and all the other matters that papers deal with.
Therefore, I am very uneasy about the notion of a public interest clause to be administered in the way that the noble Lord, Lord Puttnam, thinks appropriate. The public interest, I was taught as an economist at Cambridge some decades ago, is frequently a refuge for every kind of special interest that can present itself with a fine face by a well appointed PR machine.
I am particularly anxious that we do not get Ofcom embroiled in the matter. Ofcom has no experience or knowledge of newspapers. It brings together regulators in the electronic media. I have great confidence in the noble Lord, Lord Currie of Marylebone, who is building up his team partly of former regulators and partly of quite new brooms. But the notion that we can go on loading Ofcom with ever more detailed interventionist responsibilities is misguided. It is also unnecessary.
I am very depressed to find here so little confidence in the work of our variety of newspapers, which is far better than in America or on the Continent, based upon consumer preference, the consumers voting with their money and changing their minds when they wish to do so. We have a press to be proud of and should not go poking around all the time looking for some pretext to close in and tighten regulation.
§ Baroness Buscombe
I have listened to the very good debate on these amendments with considerable care. Although we really want to see our media ownership rules liberalised to encourage market entry and to promote competition and diversity of ownership, I see also the merit of having some form of public interest test to act as a backstop to ensure a plurality of voices and, as the noble Lord, Lord Puttnam, said, voices sufficient to satisfy a variety of tastes and interests, with many speaking to many. The noble Lord referred to the remarks of the Minister Kim Howells in another place, who said we know what we do not want. But it is how we achieve that.
I also hear what the noble Lord, Lord Puttnam, says when he talks about letting the genie out of the bottle. Liberalisation of ownership, which, I stress, we wholly support, may lead to consolidation, or ownership may venture in the opposite direction, and a thousand flowers may bloom. But, in any event, a plurality of voices, with many speaking to many, is what matters. It is about real choice for the viewer and the listener. That said, I am reluctant to support any move that adds a layer or a further barrier to entry to the market for commercial operators in this already extremely tough environment, particularly given the existence of an already very dominant player—the BBC.
Members of the Committee have expressed concern as to whether competition rules would be sufficient. As the noble Lord, Lord Thomson, said, we are not talking about a can of beans; we are debating the future of a very precious, unpredictable commodity. It is no more important than any other industry, as my noble friend Lord Fowler said, but it is an unpredictable, living thing. I see what the noble Lord, Lord Puttnam, is saying when he talks about future-proofing the Bill. That is a good point. I worry about the lifeline of the Bill.
I was fortunate enough to come into your Lordships' House to listen to a debate yesterday on a Motion to take note of the report of the Select Committee on Economic Affairs on globalisation. Although the Select Committee concluded that the opportunities created by globalisation outweigh the dangers, my ears also pricked up at the quote of Ken Tynan, who was concerned that we should not,sell our souls for a pot of message".We want to be sure that, whatever the future, we want to protect the multiplicity of messages. I hear what the noble Lord, Lord Gordon of Strathblane, says. Plurality of providers is not necessarily the panacea; it is a plurality of voices that we want to protect, to encourage and to enhance.
I am concerned with particular amendments, including the reference in the proposed subsection (2C)(c) of Amendment No. 280A to the presentation of news and,the free expression of opinion and a clear differentiation between the two".1447 It sounds too much like editorial instruction, which we could not support. But I am in serious listening mode on this matter and I look forward to the Government's response.
§ Lord McIntosh of Haringey
I agree with so much of what has been said in the past hour. I agree entirely about the importance of media and how the industry is different from other markets, such as baked beans, as the noble Lord, Lord Thomson, said. I could put up quite a good case for the importance of baked beans, actually, but let that pass. There is a great deal of common ground on all these issues. The maintenance of plurality and the public interest test is essential to the consideration of the Bill.
But it is my unpleasant duty to bring the debate back to the actual amendments, the effect that they would have on the Bill and what the legislation does. I am sorry to say that much of what has been said seems to assume that the Government are determined to demolish the public interest test and plurality rules. The noble Lord, Lord Puttnam, quoted Kim Howells speaking in the Commons with approval about plurality. I echo what Kim Howells said—it would be more than my job's worth to disagree, would it not? Surely, it is clear from what is said, and from a study of the Bill, that our policy is to set clear, specific limits on ownership through key rules. We set media ownership rules. We see that as the best method of guaranteeing adequate plurality.
The amendment would allow a new public interest consideration relating to media plurality, including newspapers, to be included in the Enterprise Act. It would enable the Secretary of State to intervene in mergers that raise that consideration. That means that, where there is a merger of television or radio companies and the Secretary of State thinks that it gives rise to public interest considerations, she could give an intervention notice and call the OFT and Ofcom to make a report. In the light of that report, she could refer the merger to the Competition Commission for consideration both of competition aspects and the plurality issues. The amendments are applying to broadcast media the same rules as apply to newspapers now.
I suggest to the Committee that we are in no way weakening the rules as they apply to newspapers. Any comments about newspaper variety, plurality, diversity and all those aspects are legitimate, but they do not relate to the Bill as it does not change provision for newspaper mergers. We have not provided what the amendments would provide because the broadcast media are different from newspapers. Newspapers are free in this country; no licence is required to publish a newspaper. But, because of spectrum scarcity over many years, there has been in place a system of licensing for broadcast media. It is under that system, ever since plurality of broadcasting started—with Radio Luxembourg before the war and ITV in 1995—that governments have exercised the public interest criterion through the licensing procedure. That is what the Bill provides to continue. There is no 1448 abandonment of public interest in the Bill; it is just that in broadcast media it is to be exercised through licensing rather than through the Enterprise Act procedures.
Of course I acknowledge that that may not be the case in future. With technological change and the potential for the abolition of spectrum scarcity, licensing may no longer become necessary. That is why the Bill provides that, at such a time, the Government can, without primary legislation, under the Enterprise Act, extend the public interest criterion in competition law to the broadcast media.
There has been reference to belt and braces. We have such provision. We have a protection of the test in addition to economic tests, and we have protection of the public interest in broadcasting through the licensing procedure. If, and when, that no longer applies, we have the capability, which we will assuredly use, to implement the public interest test through merger law into the broadcast media.
My noble friend Lord Puttnam raised the serious issue of cross-media rules. He pointed out that there is always a difficulty with them, as there is with all merger legislation. That can be triggered only by a merger. In other words, if there is a change in market share by some newspapers or some channels becoming more popular and having a larger audience, there is no way in which the existing restrictions can be triggered. However, that is also true of the amendment of my noble friend Lord Puttnam, because he does not seek to introduce a regime whereby media owners will be required to divest themselves of assets because they are being successful. That is the only way in which one can deal with that progressive change, that creeping change, as it were. So I am sorry, but the amendments do not solve the problem that he identifies.
The other issue is over who should be responsible for protecting the interests of the citizen. The amendments provide that the Secretary of State and Ofcom should be responsible for doing that. We provide in the Bill, and the existing regime provides, a licensing regime which allows the certainty and stability which is not possible in the newspaper industry. Parliament can agree the licence-based limits for media ownership and will have to agree to any changes of the rules. That is how the interests of the citizen are protected. They are not protected in the same way in the amendments.
There was scepticism about the industry's dislike for uncertainty. My noble friend Lord Borrie in particular, and the noble Lord, Lord Thomson, dismissed that consideration by saying "well, they would say that wouldn't they?" However, I hope that I have shown that if we can protect the public interest without uncertainty, surely it is better not to have that uncertainty. It is not the uncertainty to which the noble Lord, Lord Borrie, was referring of what happens when a reference is made. The uncertainty that would arise if the amendments were agreed to is that two parallel regimes would exist at the same time for broadcast media. One would be for licensing and one of competition policy. That might not last forever, but to propose that change would be an unnecessary addition to regulation.
1449 In summary, the amendments would be more regulatory. They would be an additional requirement to the existing provisions for protecting the public interests. They are not wanted. They are not wanted by the broadcasting industry for legitimate reasons, not just to protect its own interest. The amendments also are not necessary. We have a plurality test for newspapers because there are no licences, and we have to ensure the accurate expression of news and the free expression of opinion—although not within a single newspaper. I disagree with the noble Baroness, Lady O'Neill, about that. If we started to say that individual newspapers had to be balanced we would be transforming our view of the relationships between Government and a free press. In broadcasting the licensing regime makes it possible to set simple rules, based on licence holdings, and there are already statutory requirements for accurate and impartial news and the prominence that can be given to any particular viewpoint. I believe that, although the motivation behind the amendments is admirable, and although the opinions expressed in their favour all around the Committee are sincere and given with the highest motives, they are based on a profound misconception.
§ 12.15 p.m.
§ Lord Puttnam
I thank all noble Lords who have spoken. I do not think that 11–2 is a bad result, although my noble friend Lord Gordon would concede that that is something they are more used to in Scotland than we are in England when one is on the losing side.
§ Lord Puttnam
Never bring soccer into the Chamber. I shall run through one or two points. I listened to the Minster with great interest. His arguments were very wide-ranging. I did not think that he laid a glove on the amendment—not a glove. I shall also take up one point. I thought that it was wrong of him deliberately to misinterpret the reference to plurality by the noble Baroness, Lady O'Neill. It does not do the Government much justice deliberately to attempt to inflate her sensible and thoughtful position. I was enormously influenced, as I am sure that many other noble Lords have been, by her Reith Lectures 18 months ago. Maybe the Minister could do himself a favour by sitting down and listening to them. They were extraordinarily instructive.
§ Lord Puttnam
Clearly, I was much more influenced by them than was my noble friend. I am grateful for the position taken by my noble friend Lord Borrie. There is an absolute need—I wrote down "need" at first and then crossed it out—an obligation in the 21st century to look right across the issue of media ownership—to look across the whole of the media. It is absurd in the 21st century to attempt to segment the media and to imagine that one could come to correct judgments regarding influence and plurality of voice.
1450 I was also grateful to the noble Baroness, Lady Buscombe. I agree with her. Optimising the media voice is at the core of the issue. I look forward to sitting down with her, because I have no intention of wrecking the amendment by one or two items of wording with which she is not happy. They shall go, but I am sure that we shall march happily through any Lobby together.
My noble friend Lord Gordon mentioned concentration of ownership. I suggest to him that concentration does not result in diversity. Every scrap of evidence that I have been able to adduce suggests that in the vast majority of cases the exact reverse is true.
The noble Lord, Lord Harris, of High Cross, is a reformed character. My heart leapt when I heard him begin to speak. I suggest that as part of his cure he chats to the EU Commissioner Chris Patten about the circumstances under which Harper Collins withdrew from his book on China, and whether the proprietor had any say in that extraordinarily aberrant decision. The noble Lord might also like to circle the world and find out why 274 out of 275 editors of Newscorp newspapers came to exactly the same conclusion as their proprietor on the war in Iraq. Interestingly, the only one that did not was I believe in Borneo, where that opinion would have resulted in a catastrophic drop in circulation in a Muslim country. Presumably that editor was given leave to desist. The noble Lord, Lord Harris, seems to have made more of an impact on the Government's position than all the rest of us put together. That is interesting.
My noble friend Lord Bragg was right to say that our lives are affected by the legislation. I would say that not only our lives are affected, but our children's lives and in my case our grandchildren's lives. The issues go far, far beyond this Chamber, and far, far beyond the interest that the Government appear to be taking in their breadth and seriousness. We shall undoubtedly return to this at Report stage when, unless the Government are prepared seriously to reconsider their position, I cannot imagine us not dividing on the issue. For now, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 281 to 283 not moved.]
§ Before Clause 340. insert the following new clause—
§ "INTERIM RETENTION OF CERTAIN RESTRICTIONS ON NON-EEA OWNERSHIP
§ (1) For paragraph 1(2) and (3) of Part 2 of Schedule 2 to the 1990 Act, there shall be substituted—
§ "(2) Sub-paragraph (1) shall apply in relation to any Broadcasting Act licence other than a licence to provide a Channel 3 service and a Channel 5 licence as if paragraphs (a) and (b) (and the reference to those paragraphs in paragraph (i)) were omitted."
§ (2) OFCOM shall, within a year of the coming into force of this section and from time to time thereafter, carry out a review for the purposes of this section.1451
§ (3) Such a review shall consider whether, in the opinion of OFCOM—
- (a) the provisions of sections 273, 274 and 280 to 284 are operating in such a manner as to provide for a fair and transparent programme supply market with respect to Channels 3 and 5;
- (b) the relevant provisions of Chapter 4 of this Part are operating in such a manner as to provide for effective content regulation of Channel 3 and Channel 5 services;
- (c) the provisions of sections 260 to 267 are operating in such a manner as to provide for a continuing significant contribution by Channel 3 and Channel 5 services towards the achievement of the purposes of public service television broadcasting in the United Kingdom specified in section 260;
- (d) the provisions of sections 344 to 349 provide adequate additional safeguards in case of change of control of Channel 3 services or Channel 5; and
- (e) the powers available to OFCOM under the Competition Act 1998 (c. 41), Part 4 of the Enterprise Act 2002 (c. 40) and sections 309 to 311 of this Act are adequate to promote effective competition in the broadcasting market in the United Kingdom.
§ (4) When, as a result of a review carried out in accordance with subsection (2), OFCOM considers that each condition specified in subsection (3) has been met, it shall make a report to that effect to the Secretary of State, giving reasons.
§ (5) The Secretary of State shall lay any report made to him under subsection (4) before Parliament.
§ (6) When a report has been laid before Parliament in accordance with subsection (5), the Secretary of State may by order repeal paragraph 1(1)(a) and (b) of Part 2 of Schedule 2 to the 1990 Act and make such consequential amendments to that Part of that Schedule and to this Act as he thinks fit.
§ (7) No order is to be made containing provision authorised by subsection ( 6) unless a draft of the order has been laid before Parliament and approved by a resolution of each House."
§ The noble Lord said: The purpose of this group of amendments is to provide an opportunity to debate Recommendation 86 of the Joint Committee, relating to non-EEA ownership of certain broadcast licences. Amendments Nos. 308, 322A and 322B remove the existing provisions to repeal such ownership restrictions. Amendment No. 284 permits removal of those restrictions by means of secondary legislation, but makes such removal contingent upon Ofcom expressing satisfaction with the effectiveness of the controls introduced under the Bill. The amendment therefore seeks to reflect the additional controls proposed in the Bill compared with the draft Bill, and the Government's desire for flexibility, while reflecting the Joint Committee's concern about the timing of the removal of the restrictions.
§ I have to say to those who favour the opening up of the market in certain broadcast licences to non-EEA ownership—they include my own Front Bench—that they sometimes display charming innocence and naivety in which the splendid principles that they espouse of open competitive markets and free trade, bear little relationship with the real and sometimes nasty world 1452 outside described in evidence given to the Joint Scrutiny Committee by, among others, Mark Thompson, the chief executive—
§ Baroness Buscombe
I take great exception to being referred to as naive and innocent. I hope that my noble friend will withdraw that remark.
§ Lord Crickhowell
I hate to upset my noble friend, but I am going to continue with my speech. Innocence is perhaps the word. I believe that the evidence I shall put to the Committee rather justifies the comments that I make. But I was going much wider than my own Front Bench. I was addressing my remarks to a far wider group of people and indeed to some of the Ministers who take this view.
I turn to the evidence given to the Joint Scrutiny Committee by, among others, Mark Thompson, the chief executive at Channel 4, and Greg Dyke. Mark Thompson did not think that there would be new factories of British production paid for by US majors. He thought it much more likely that they would see ways of exploiting US-created, globally valuable intellectual content in this market. In its written evidence Channel 4 told us:It is difficult to imagine a scenario in which consolidation and foreign ownership would not lead to a reduction in employment in the production industry unless there were specific safeguards with regard to content originated by UK producers".The trouble is that at best quotas will only give partial protection. I again quote from the Channel 4 evidence:The UK production focus of US parents is also likely to change, with greater priority being placed on formats which can be exploited globally, rather than simply in the UK. The potential loss of content with local relevance and diversity, let alone the loss of minority interest programmes, is therefore also of real concern".Greg Dyke said that he failed,to understand why Britain would want to allow American media companies to own our largest commercial broadcasters, while no European one is going to own a station in Cincinnati".Referring to his own experience at Pearson, building up what was probably the biggest independent production company in the world, he found that,there are only two sorts of television products around the world, American and indigenous, and American dominates the world, and what you were always trying to do in America was to find some guaranteed markets because the deposits on production in America being sold to NBC or ABC are so large that what you wanted was some guaranteed markets, and therefore the real danger is that you will get a significant amount of dumping if you allow large American broadcasters who are also production companies having a studio… So I am not at all convinced of the arguments for changing the ownership rules in the way that is proposed".Nor am I.
All this evidence demolishes, if I may use the phrase without causing offence, another naivety that because European companies do not move into our markets in this way, there is no reason to believe that Americans will. The Europeans do not have the American product so easily sold around the world; they do not have the very substantial libraries of audio visual content in English which they can place in the UK to drive down 1453 costs as well as increasing their value in secondary markets such as video, DVD, merchandising and publishing.
During a discussion meeting held by the Joint Committee on 4th July—covered in Annex 4—one witness who had been employed for many years by Disney confirmed the Greg Dyke view that the economics of the television business in the US necessitates the exploitation of content across as many international distribution points as possible. Where distribution points are owned and operated by a US major, the pattern is for an increasing percentage of content to be sourced in-house. Production quotas would be an inadequate protection because they would safeguard the quantity of independent productions shown but not the quality of them. There was a strong probability that independents would be granted access for cheaper programme slots, but would lose access relating to more valuable forms of programming, with these slots being preserved for in-house productions from a US studio.
The US majors have to be seen as huge international production and distribution machines in which the US market is critical and all other markets are peripheral. In the face of the argument that US investors would bring inward investment, expansion and job creation, we heard how when Disney brought ABC it quickly cut costs and merged operations. ABC's international programme sales operation was quickly reduced from 200 to two. The same would happen, I suggest, to the sales operations of UK companies.
We summed up much of this evidence in paragraph 243 of our report, and in particular we drew attention to the,cultural loss, with greater priority given to American programmes and less regard being had to the genuine commitment to public service broadcasting that had informed content production and made effective content regulation possible".It is argued that the system of regulation being established by this Bill and the regulatory measures that have already been put in place will prevent all this. I have to say that my confidence that this might be so was considerably undermined by some agreeable homework that I gave myself while we were gathering our evidence. I read the remarkable history of the film industry by the noble Lord, Lord Puttnam. There is one overwhelming message that emerges from that history which is that for almost 100 years the countries of Europe have attempted by regulation to protect and preserve their own film industries from domination or, worse, destruction by the American giants and they have completely failed.
I have spoken of naivety and I am sorry that it has caused offence. I believe that there is naivety in the oft-repeated claim that there is no need to worry because British audiences, particularly regional audiences, will want familiar British programmes and American owners will not risk losing their advertising revenue by changing the character of what they place in the British market. The claim is made that they will maintain UK production and regional production, not because they are told to, but in their own self-interest.
1454 I admit that I would never call my friend and former colleague, Clive Jones of Carlton, naive about anything, but in perfectly properly considering the commercial interests of his company, I think that, like others before him in similar situations, he may have misjudged what is the likely outcome. In his evidence he said that he was relaxed about possible take-over, that regulation would be safeguard enough and that American companies would not come and destroy the business that they had just bought. His co-witness, Mr Mick Desmond, added:I think anyone coming in and fundamentally changing that shape and mix of programming would have a huge financial horror show".As they gave their evidence, I was reminded of so many who were employed in the City at the time of the "Big Bang" who made very similar comments and whose complacency was quickly dissipated. In many cases they were very soon out of their jobs.
Paul Farrelly MP put it to Clive Jones that perhaps he was relaxed because the owners of existing companies could see an opportunity to realise their investments. Certainly, there are owners and those holding underwater options who might welcome a foreign take-over in current conditions. For my part I simply ask the question: would a US company buy with the object of acquiring declining advertising revenue or might it not be that the real motives would be those described by Channel 4 and by Greg Dyke to which I have already referred?
I am deeply sceptical of the view that audiences would fade away confronted by more US material. The American experience provides a stark warning. I suggest that those members who have not yet done so to read two recent contributions to the debate: the first was published on 1st February this year by Professor Michael Tracey; the second is Barry Diller's keynote speech to the National Association of Broadcasters in Las Vegas on 7th April.
Barry Diller is one of the great pros of the industry. He argues that what happened in America was an unintended consequence of the US Administration's programme of deregulation:Five corporations, with their broadcast and cable networks, are now on the verge of controlling the same number of households as the big three did 40 years ago. We didn't think that was such a healthy situation back then, but back then there was this real, scary regulation—they may have controlled 90% of what people saw, but they operated with a sense of public responsibility that simply doesn't exist for these vertically integrated giant media conglomerates, driven only to fit the next piece in their puzzle for world media dominance".He asks, "Why should we care?" and answers that we should care for the same three reasons that the head of the federal communication commission cares. He quotes the chairman:the public interest is about promoting diversity, localism and competition".Should we not care about the risk involved in selling control of British companies with a sense of public responsibility to those seeking world media dominance and in the process losing diversity, localism and competition? I suppose I shall be told that that is all in 1455 America, but it is the American conglomerates and practices that the Government seem to be eager to have here.
Professor Tracey is British, but he has lived for many years in America. Since 1988 he has been professor at the University of Colorado, where he is director of the Centre for Mass Media Research. He makes an eloquent plea for the values of public sector broadcasting: quality, integrity, democratic purpose, creativity, education and diversity. He believes that the legislation we are discussing threatens all of them. So back to the naïve belief that the British public will reject what is put before them or that American owners of British television will not risk putting it before them for fear of losing advertising or respect from the regulators.
Fear of losing advertising! It is the demand of the advertisers always to maximise audiences that is driving what is happening in the US with a huge reduction in real news broadcasting, the decimation of children's broadcasting, the extraordinary success of reality TV and the inexorable conclusion reached by executives that the audience is never wrong.
The remarkable collapse of quality news and comment programmes in the US, which Professor Tracey analyses in much detail, with its uncomfortable implications for democracy, is leading, he says, to,a crisis of journalism, nurtured and sustained by the dominance of the market".He suggests that,the basic problem lies in treating communications as commerce rather than as an essential and necessary aspect of the public realm, that space in which exists public discourse, civic and democratic values, and in seeing audiences as consumers rather than citizens".We have a situation where it is proposed that casually we should open up our industry to that quantitative change with just a few huge players that now co-direct all of America's media, which has brought about enormous qualitative changes. It has led Ted Turner, the legendary founder of CNN and former deputy chairman of AOL Time Warner to say,It's sad we're losing so much diversity of thought".Professor Tracey observes,The assumption inside the Blair Government's proposals for, in effect, a free market in ownership should therefore be troubling because of the delusion, or is it a lie, that lurks at the heart of the policy".He suggests that the policy does not adequately allow for,the fact that it is the natural instinct of corporate capital, left to its own devices, to control the market… and to cut costs whatever the price".Against those warnings and the background of the American experience, the question that confronts us as we consider the amendments is: first, can we be confident that we can protect the crown jewels of British television by regulation? Secondly, is there any need to endanger the crown jewels by rushing the decision? In moving the amendment I am not taking a final and irrevocable stand on the arguments any more than we did in the Joint Committee. Our stance then and my stance now is rational and reasonable. It is 1456 based on the one unarguable fact: if we are to protect what is best in British commercial television there has to be effective regulation.
The Joint Scrutiny Committee was worried about the enormous range of challenges that Ofcom will face after it assumes its regulatory functions. We thought that it should be allowed to establish itself as an authoritative regulator of commercial public sector broadcasting before taking on the tasks that would arise from the lifting of restrictions on non-EEA ownership. Ofcom would then be able to facilitate a decision by Parliament based on evidence rather than on expectations.
The Joint Committee recommended that legislation to lift the restrictions on non-EEA ownership should not be brought forward until Ofcom recommended such a change, should it do so, following any of its formal periodic reviews of media ownership. Our parallel recommendation that there should he a review of the programme supply market in British broadcasting produced a two-and-a-half month review carried out by the ITC. That goes some way to giving comfort to those who support the change now proposed in that it notes majority support among the submissions received for it and recommends further regulations to provide what it calls an "insurance policy" to cover the supply risks associated with the change.
It also mentions the downside that I have addressed. By no means does it represent the comprehensive analysis that is surely needed of the likely impact on the strength and quality of public sector broadcasting in this country—what I referred to as the crown jewels. Some new investment and skills and additional worldwide sales of some types of production will be no substitute if the price is the destruction of one of the great glories of British television. I do not in that respect want to follow the American example because British public sector broadcasting must be defended. I beg to move.
§ Lord Lipsey
That sounded pretty final and irrevocable to me. I rise with great temerity, because if the noble Lord can call the noble Baroness, Lady Buscombe, naïve, I hesitate to think what he will say to me after my remarks. If we are talking about naivety, it is strange to cite in evidence of the horrors of this proposal Mr Mark Thompson and Mr Greg Dyke, who, great though their skills and talents are, are of course competitors of the people about whom we are talking. So, unsurprisingly, they do not want them strengthened. But we will let that pass.
I want to make some brief points, because I do not support the amendment. First, we must separate issues concerned with cross-media ownership from those concerned with foreign ownership per se. I have grave concerns about cross-media ownership, to which we shall come. Foreign ownership is a different matter altogether. It does not raise, for example, questions of cross-promotion distorting policy. One can he for foreign ownership and against cross-media ownership.
1457 Secondly—this is such a naïve point I hardly dare make it—if we were just Britain and we could just have British television and companies could be owned only by the British I could support the noble Lord's point. But European companies under the EU can own companies. I am no raving Eurosceptic, but why is it fine for European companies to own them and not for American companies? We will come to one of the reasons cited in a minute. It is not in America that the head of the government owns and controls the broadcasting in this country. However strong the American broadcasters are, they are not yet Prime Minister or President. That argument has to be weighed.
§ Lord Fowler
Is not one of the points that the noble Lord should address that there should be some form of reciprocal arrangement? Is not that exactly the distinction that he is seeking? Members of the European Union do have that right. What the United States is doing is refusing to make reciprocal arrangements.
§ Lord Lipsey
I take the point made by the noble Lord. I should like to see reciprocity. However, the noble Lord will forgive me for saying that that is a rather plausible red herring, so to speak, because there is not the least possibility that Granada and Carlton are going to go to the United States and take over NBC; it is not conceivable to put that on the list. No British company would want to do it. While of course I should like to see reciprocity, I am not sure whether that would be advanced by keeping this restriction.
I turn now to what I think is the nub of the argument, which is the one advanced on dumping. It is said that they will send over all their lousy programmes on the cheap. Murdoch tried that in Asia and it failed. His take-over in Asia was in extreme danger until he introduced local presenters, local programming, and stopped dumping, whereupon he has enjoyed enormous success. That is the final and conclusive response to the argument.
Finally, if you want to deal with these issues, the right way to do so is through competition law. If competition law seems inadequate for the media—in some ways I think that it is, and I agree with my noble friend Lord Puttnam here—then competition law should be changed. But an arbitrary, anti-American ban, which is what is being proposed in the amendment moved by the noble Lord, Lord Crickhowell, then it seems to be a gross error in terms of finding a way of dealing with the matter. I think that we can find better ways and I hope that the Government and this House will do so.
§ Lord Gordon of Strathblane
I rise to speak to Amendment No. 285A, tabled in my name, which is much more modest and addresses the simple issue of reciprocity. Regrettably I disagree with what has been said by both the noble Lord, Lord Crickhowell, and my noble friend Lord Lipsey. I shall not give a full answer to the noble Lord, Lord Crickhowell, except briefly to refer him to Clause 260 of the Bill. If Ofcom 1458 implements that clause, none of the things he fears could possibly come about. My noble friend Lord Lipsey thinks that competition policy would sort this out; it would not. Competition policy will not sort out anything. Regulation will deal with it, and we have very strong regulation.
I have already indicated that I am broadly agnostic about ownership; therefore I am not anti-American. I do not think that the Americans should be kept out for ever. In fact, they cannot be kept out for ever. Let us be realistic. Quite a number of the most popular programmes in this country are made in Australia and the United States. It is programmes that influence people, not the chief executive's office. I repeat, the programmes matter. So we are already receiving that input and, to be frank, with the increase in satellite traffic, programmes will come from all over the globe whether we like it or not. If they are popular then people will watch them.
This reminds me of the days of my youth when I listened to the American Forces Network to hear "big band" music at a time when the BBC thought it was far too jazzy for us. Today, satellite is the equivalent. We can access programmes from all over the world, so I am certainly not anti-American.
However, I do argue that we should have reciprocity. For my noble friend Lord Lipsey to dismiss that as a red herring is, if I may say, to fly in the face of a normal principle of trade. Some misleading statements have been made, I am sure unintentionally, by certain Ministers in another place. In rising order of objectionableness, the phrase, "It makes no sense that French, Italian or German companies can own television and radio stations when American companies cannot do so". The noble Lord, Lord Fowler, made the point: it is at the least relevant that there is reciprocity in the EU.
I shall quote from the Independent Broadcasting Authority Act 1973. At that point, a "disqualified person" was anyone who wasnot ordinarily resident in the United Kingdom",and was not a British citizen. Everyone was banned bar Britons. By the time of the 1981 Act, that had been changed to a "national of a member state", because we were bound by treaty not to keep EU nationals out. Using reciprocity is the way in which we have dealt with this.
I hope that the Government will accept my amendment. It is fully in keeping with the traditions of British broadcasting. What the Government are currently proposing in the Bill marks a major departure from the traditions of British broadcasting.
The next mistake—I say that because, to be frank, it is not simply misleading, it is plain wrong—was made by the Secretary of State for Trade and Industry in giving evidence to the committee chaired by my noble friend Lord Puttnam. She said that there was no restriction on the foreign ownership of radio. Since no one in the committee picked her up on that point, she warmed to the task and said that we would not have had Classic FM if we had placed any restrictions on foreign ownership. However, while Warner was 1459 allowed to make a minority investment in Classic FM, it would not have been allowed to make a majority investment. The Secretary of State was wrong, there is a restriction on the foreign ownership of radio stations in this country, and rightly so.
Undoubtedly things will change, but let us be clear about this. If the most powerful nation in the world, with a huge internal market and a dominant position in the wider international English-speaking market, will not allow any nation to own more than 20 per cent of an American media enterprise, why should we unilaterally give in and say, "Oh, please, you can come into our house. It may be ridiculous that we are not allowed inside your house, but do come into ours". That is nonsense and it is not the correct way to protect British interests. Furthermore, to say that no British company could possibly move into the United States is equally nonsensical.
§ 12.45 p.m.
§ Lord Lipsey
Could my noble friend explain why we should forgo the advantages of having American investment over here just because the Americans choose to forgo the advantages they would enjoy by having British programming and investment there?
§ Lord Gordon of Strathblane
I heard that argument raised when my noble friend and I attended the same Westminster Media Forum. The response to that is that just because they are behaving stupidly does not mean that we should behave stupidly.
Let us return to the principle of reciprocity. I take it that noble Lords think that reciprocity is a good idea. However, this could he a close call, so would noble Lords please concentrate closely: Do noble Lords think that we are more liable to get the Americans to agree to reciprocity if unilaterally we give in first, or—this is the tricky one—if we say, "Only if you let us in".? Answers on a postcard, please.
I repeat, let us be realistic. At present the Americans are saying no. I think that the Secretary of State was pessimistic when she said that there was no likelihood of it happening in the near future. I understand that the matter is presently under consideration in the United States because, like everyone else, the US recognises that people can receive services by satellite and that much of the regulation is out of date. All I can say is that I think the British national interest would be best served if we secured reciprocity and the ability, not for British companies to acquire ABC, but for them to be able to set up a service in Chicago or wherever. At the moment, that is not allowed.
Do not let us forget that one of our most distinguished Commonwealth citizens in the media field was forced to go through the humiliation of having to renounce his Australian citizenship, take a primary school test in American history, and apply for American citizenship in order to own anything in the United States. I do not think that he should have been put through that humiliation; I happen to admire Mr Rupert Murdoch a great deal. All I say is that if 1460 the Americans will not let us in over there, I see no reason for letting them in over here until they offer to change.
§ Lord Thomson of Monifieth
Noble Lords on these Benches support the amendment moved by the noble Lord, Lord Crickhowell, although I cannot hope to match him in his Welsh eloquence. I want to begin by taking up the points made on EC companies which have been raised by a number of noble Lords. The Government's position on this—stated baldly hut, I hesitate to say, also naïvely—makes no sense at all. It is set out in paragraph 239 of the Joint Committee report:The Government considers that 'it makes no sense that a French, German or Italian company can buy any TV or radio licence in the United Kingdom, but that American, Australian or Canadian companies, for example, cannot do so".That point was taken up by the noble Lord, Lord Lipsey.
There is a distinction to be made between European investment in British broadcasting and American investment. Broadcasting is very much more than a commercial business. It is in a real sense a reflection of national culture and the character of our society. The influence of broadcasting on the whole climate of opinion in our society is beyond argument. In that sense, the character of British broadcasting has infinitely more in common, in important ways, with the broadcasting systems of our partners and neighbours in the European Union than with our American neighbours. In Europe, Britain has one of the best broadcasting systems and it is so regarded around the world.
I have a vivid recollection of arranging, when I was chairman of the Independent Broadcasting Authority, a dinner for the chief of one of the great American networks to meet ITV chairmen and managing directors. It was an interesting dinner because, although we shared a common language and had some common interests, we were deeply divided by our fundamentally different broadcasting cultures—which is not to say that American broadcasters do not produce very high-quality programmes that we all enjoy. I totally agree with the noble Lord, Lord Gordon, that high-quality programmes are produced all over the world. However, the Bill deals with something much more fundamental than simply buying good programmes from anywhere in the world in a global market place. It deals with the character, quality and organisation of our broadcasting system; the purposes for which it is organised; and the ethos that lies behind it.
At the dinner to which I have referred, the distinguished American executive responsible for many highly entertaining programmes considered himself first and foremost a business man who had become a programme maker, whereas the ITV executives saw themselves as programme makers who had become business men. For our American guest, ratings ruled. Although the ITV executives needed to pay due regard 1461 to their companies' shareholders, dividends and commercial success, they equally paid due regard to the great regulator in those days—the IBA. That is the big difference between the broadcasting culture in this country and Europe, in the main, and that of the United States. As the noble Lord, Lord Crickhowell, pointed out, that difference is vividly set out in the book by Professor Michael Tracey.
The globalisation of communications has a major impact on national broadcasting systems, to which all have to adapt in one way or another, but the Government are being over-optimistic about the benefits of foreign—mainly American—ownership and investment and underestimate the dangers. The Government should pause for thought and he ready for a review of the balance of considerations by Ofcom once it has settled in. The Government seriously underestimate the difficulties that Ofcom will face in preserving programme quality simply by regulation, in the face of pressure from the great American corporations—especially when the going gets tough.
Does anyone seriously believe that if Mr. Rupert Murdoch, a major newspaper owner in this country, becomes the owner of Channel 5, Ofcom and its admirable regulators will, in the last resort, be able to prevent the kind of influence that would be brought to bear on a British national television channel by a man who is famous for defining public service broadcasting in terms of such contempt that he is alien to the broadcasting ethos in this country?
Those are the realities, so I regard reciprocity in a slightly different light from the noble Lord, Lord Gordon. His is a principled position. Mine is more tactical. I regard it as very unsatisfactory and a little humiliating that we should not approach this aspect of international trade relations on the normal basis of reciprocity. But I am keen on preserving reciprocity on the basis that it will be an additional barrier to allowing the domination of American investment in the UK. As there is a total imbalance and not the same appeal, there are fewer chances of Britain being able to enjoy equal opportunities in America.
I am genuinely puzzled by the Government's position on reciprocity. Paragraph 244 of the Joint Committee's report shows that in November 2001, the Government were very robust:Without reciprocal arrangements with other nations that would allow our own companies to expand into their markets, we do not feel that we could justify lifting our ban at the present time".At paragraph 245, the Secretary of State is quoted as characterising reciprocity asa negotiation in train".In the same sentence, she is also reported as saying that she sawno case for holding out for reciprocal agreement"—in part, because no change in US policy appeared in prospect. Against that background, I fail to understand the Government's reasons for abandoning their 1462 November 2001 position and flying in the face of the all-party unanimity that was declared in a particularly forceful way in the report of the pre-legislative scrutiny committee.
Ownership is one of the Bill's biggest issues. If we do not have a positive response from the Government today, I shall echo the noble Lord, Lord Puttnam, when speaking to a previous amendment, in saying that we shall need to return to the matter on Report. Your Lordships have an all-party view that has resonance in the nation.
§ Baroness Jay of Paddington
In the context of everyone declaring their personal position. I hope that I am not being naive or innocent. I certainly declare that I am not anti-American but have worked happily in the United States for public broadcasters and commercial television networks.
It is worth making two simple economic points in response to my noble friend Lord Lipsey because they may also be deployed by my noble friend the Minister. The first is whether ownership should be confused with investment. In my view, it is extremely likely that in any ownership decisions about the takeover of ITV, over-the-top market prices would probably be paid for ITV companies. Simple economics would suggest that the owners would probably be more likely to wish to take money out of those companies than invest in them.
The second economic point concerns the so-called dumping of programmes. This is not an issue about the quality of imported programmes; it is about economics and the supply of those programmes. I am sure my noble friend Lord Lipsey is right. Most people viewing television in this country would prefer to see home-grown programmes rather than what they might see as low-quality American ones. The dumping issue is not about quality. US broadcasters would be able to screen their American products in this country at marginal cost. This would be greatly advantageous to them, particularly in the situation where they might find themselves making an initial investment beyond inflation.
That might lead to audience share loss but it would generate an increase in profits. My concern is one that has been expressed by Members on all sides of the Committee. American companies would see this investment as an investment in an industry they would equate with baked beans. We discussed this on the previous amendment about the particular qualities of the media. Their interest would be maximising their profits. Their share of audience in this country would be less important than that. They would maximise their profits by using the opportunity to show, at marginal cost, programmes originating in America. This brings the debate back to the question that I raised on the previous group of amendments about trying to ensure the quality of television through domestic origination of programmes and original programming. The noble Lord, Lord Fowler, and other noble Lords raised fundamental points on the previous group about the special nature of the media industry, global or not.
§ 1 p.m.
§ Baroness Howe of Idlicote
I commend particularly the way that the noble Lord, Lord Crickhowell, expressed very important views that need to be decided today. I support this group of amendments for three reasons. The first is that, like many Members of the Committee who have spoken, I cannot see any justification for the United Kingdom to open up opportunities for the media barons of the United States or any other country to buy into the British communications industry on a non-reciprocal basis. If what has been said today is correct and the intention of the US is to drop its own barriers to foreign ownership, we should wait until that has happened. Even then, the conditions and regulations under which such change in ownership would take place need to be stringent. I share the doubts already expressed about the stringency of existing conditions.
Although that would he my own approach, like many other noble Lords who have spoken I would support a logical compromise suggestion by the pre-legislative committee that any decision on foreign ownership be delayed until Ofcom was in place. Ofcom will he a very large organisation. It will have wide, possibly conflicting, responsibilities. We should give it time to settle in before expecting it to take on board this potential Trojan horse.
The second reason—even more important—is the short or long-term effect that opening up our broadcasting industry may well have on the public service broadcasting requirement expected from all British terrestrial broadcasters. The debate on the previous group of amendments pointed to the worries that existed when aspects of cross-media ownership come to the fore. The worst case scenario is having one media baron, possibly Murdoch, owning a near monopoly of local and national radio, television and print media. There has been rather gloomy news this week that the United States plans to go even further down this particular liberalising free-market media ownership road. The effect on plurality, the range, the quality and possibly impartiality of what the average citizen would be able to see or hear, would be worrying. Diversity of thought was mentioned. I believe that to be crucial.
Many speakers have mentioned recent research by Professor Michael Tracey. He is someone versed in the broadcasting cultures of both the UK and the US. His findings show how little attention is given to programming unlikely to make money for American shareholders. Public service broadcasting does exist in the States and the small amount of it is sometimes better than in this country. However, there the market reigns supreme. Broadcasting is not seen as a public good. The warnings that have been given are stark indeed. One Commonwealth country, New Zealand, which started with a UK public service broadcasting regulated model, changed to a US liberal market model when new technology came in. It is now so dismayed by low-quality programmes that it is seriously considering a return to the current UK approach.
1464 My third reason is that my experience, when chairman of the Broadcasting Standards Commission, confirms the ruthlessness of approach described so graphically by Professor Tracey. While I was in the United States, I had a number of meetings over some years with media academics at Stanford and other universities. They briefed me on how their industry operated. I asked about the weight given to research on issues such as the portrayal of violence and the reactions when this research was shared with broadcasters. Unlike in the UK, where broadcasters, academics and regulators take a keen interest in such findings, American broadcasters do not even bother to attend. They send their public relations people to rubbish such findings.
I hope therefore that the Minister will accept the proposed amendment. If our regulation ensures that high standards and quality of broadcasting are maintained, we should wait until Ofcom has settled down and America has removed its own restrictions on ownership by non-Americans.
§ Lord Fowler
I should like to speak briefly to the amendment of the noble Lord, Lord Gordon of Strathblane, of which I am a co-signatory. I agree strongly with everything the noble Lord said. I make my position clear. I am not opposed to foreign ownership in the media or in other areas. We take some pride in inward investment. Both Front Benches and political parties compete on how much inward investment has been brought into the United Kingdom. One benefit in the media area was the entry of Mr Murdoch into newspapers. He took on the reactionary practices of the then print unions. Therefore, I am not opposed to foreign ownership. Sometimes it has done some good. The noble Lord, Lord Gordon of Strathblane, and I have one requirement. If we are to have free competition without restriction, then the competition has to be free. One country should have the same rules as the other. Access to one market should be matched with access to the other. We are talking about a level playing field. With great respect to the noble Lord, Lord Lipsey, it has nothing to do with anti-Americanism; that is an absurd point to make. It is a sensible question of trade negotiation.
However, the proposals of this Government have nothing whatever to do with a level playing field. In future, they propose that United States companies will be able to take over ITV, but that British companies will be excluded from doing the same in the United States—and that applies not just to NBC but also to all the other American television companies.
I find it both strange, and, frankly, unacceptable that the position that I have just been putting was the position of Her Majesty's Government a few months ago. It is not a position that has suddenly been invented on the Back Benches on both sides of the Chamber. As the noble Lord, Lord Thomson, rightly said, it was the Government's position in November 2001, when they said:Without reciprocal arrangements with other nations that would allow our own companies to expand into their markets, we do not feel we could justify lifting our ban at the present lime".1465 Therefore, the Government have a certain amount of explaining to do in this regard. They have conducted what I can only describe as a most amazing U-turn on their policy. We want to know why they have done so. Why have they changed their policy?
I have listened to quite a few debates on the issue and have taken note of several ministerial replies. But, so far, I have not heard any sensible explanation of why the Government have changed their policy from what it was 18 months ago to the one that they hold today. There is no mystery about the view of those like my honourable friend Mr Whittingdale in another place who simply want the destruction of any barriers. That is a perfectly consistent case, although I do not happen to agree with it. However, the position of the Government is not remotely consistent with the position that they have held up until this time.
Can the Minister tell the Committee how the Government got from where they once were to where they are today? Why has the policy gone from where it was to where it is today? What is the motivation? I notice that the Secretary of State, Tessa Jowell, says that the Government are opening negotiations to secure reciprocal arrangements with the Americans, but this is after the policy has changed. Like the noble Lord, Lord Gordon, I find that statement pretty astonishing. It seems to be the strangest form of negotiation to give away your main negotiating card before such negotiations begin. I do not see the sense in the Government's proposals.
If the Government were saying, "We don't want reciprocal arrangements-, that would be fine. I could then at least understand the case that they were making. However, that is not the case that they are making. The Government are saying, "We do want reciprocal arrangements; and, incidentally, just to encourage the negotiation along, we are giving away our position at the start". I do not believe that they will get very far with that approach.
Alternatively, are we to be told that it was the force of public argument and public debate, together with the pressure of public opinion, that forced the Government into this change of policy? I imagine that the boards of the ITV companies may well support the move because, self-evidently, it will increase the value of their companies. It would mean a bigger market for their companies and. therefore, the price of such companies would increase—provided that they are sold. Judging by the letters and telephone calls that I have received on the matter, it does not seem to me that there is a great deal of evidence of general public opinion to the effect that the Government must take this step. Indeed, I suggest that it is rather the reverse.
Frankly, as I said, the Minister has some explaining to do. The very least that the noble Baroness can do at the end of the debate will be to tell us why the policy has changed in such a dramatic way. Further, given that the Government's aim is still to get those reciprocal arrangements, can she say how that change of policy at this stage will help the Government in their negotiations? That is what the Government have to explain.
§ 1.15 p.m.
§ Lord Ashley of Stoke
I have been greatly impressed by the speeches and the writing of the noble Lord, Lord Puttnam, on these issues. I am especially glad that he has tabled Amendment No. 285. I do not have the noble Lord's breadth of experience, but I was a BBC television producer for some eight years. Therefore, in a sense, I have been brought up on the public service broadcasting ethic. Frankly, in the face of the opposition expressed throughout the country, I am staggered that the Government intend to go ahead with these proposals.
The fact that they are trying to push through these proposals by way of the Bill means that this Chamber is faced with a very serious issue. We, and we alone—another place has not really inspected the Bill—can do something about the situation. I am sure that the amendment will not be put to the vote today, but it is most important that it should be carried when it comes to the proper stage. If we create the opportunity for News International to dominate, and to do so even more than is the case at present, such proposals will allow this vast corporation to take even more power. I am absolutely convinced that it could become a media octopus, spreading its tentacles all over television, including the take-over of Channel 5. This would mean repercussions for all the channels, especially for the BBC.
We are talking about grave perils for British broadcasting that will emerge as a result of the enactment of this Bill. The Government may say, "All right, if such perils emerge, we can deal with the problem: we shall impose a requirement on Ofcom to review the situation". If that is the case, what will happen? Ofcom will be directed to look at regional broadcasting, news, and so on. But those concerned will simply patch things up. Patching of any kind is, by definition, second rate: it cannot be as good as the original. It would be disastrous to allow this situation to develop.
A few days ago, in the Guardian, Tessa Jowell accused the sponsors of these amendments of "demonisation". It is actually a good word, but that represents yet another error on the part of Ministers, especially Tessa Jowell, for whom I have a very high regard. If anything characterises the noble Lord, Lord Puttnam, apart from his brilliance of presentation, it is his moderation. Throughout all of these debates, his moderation has been the key note of his proposals. It beats me how anyone could accuse him of demonisation. The fact that they would seek to denigrate the sponsors of these amendments shows the level and the measure of the Government's concern, though I am sure that my noble friend the Minister on the Front Bench today will not indulge in anything of the sort. I believe that move to be both foolish and unjustified. Indeed, I should like to see that word withdrawn. One can use the word "naive", and so on, but "demonisation" is in a different category.
I have tried to be brief because I know that other noble Lords wish to speak, and I wish to hear again from the noble Lord, Lord Puttnam. I support this group of amendments, especially Amendment No. 285. I know 1467 that my noble friend the Minister on the Front Bench will do all that she can to ensure that careful consideration is given to all the comments made during the debate. I hope that she will be able to do something about the situation at a later stage.
§ Lord Bernstein of Craigweil
I do not regard television companies in the United States as bogeymen. When I worked for Granada Television, we embarked upon a number of co-productions with American companies. On the whole, we had a very constructive relationship with them. Indeed, we sold "Brideshead Revisited" and "Jewel in the Crown" to the US, which were extremely successful. However, that does not mean that we should give ownership to American companies.
The point of an American television company buying an English company is not to invest in it. American companies have two very valuable/ expensive assets—the first is their production facilities, and the second is their programme library. It is important for them to maximise the revenue from those two facilities.
In the television world, the whole point of acquiring another company is distribution. If it increases distribution, it increases profit, as my noble friend Lady Jay of Paddington pointed out. If American companies bought English companies, we would get not greater inward investment but the sale of American programmes in this country.
§ Lord Brooke of Sutton Mandeville
Four of my family's six Members of Parliament in the past 170 years were Liberal MPs, so I have a strong genetic prejudice in favour of free trade. We are a maritime nation, and we should have an open seas policy. I recall getting into trouble with constituents in central London for arguing against legislation to prevent foreigners from buying houses and flats there, so I have suffered for my principles.
In principle, therefore, I support my Front Bench in both Houses on their general thesis, but on American ownership of the media, which is the subject of the amendments tabled by my noble friend Lord Crickhowell, and on the issue of reciprocity, which is the subject of the amendment tabled by the noble Lord, Lord Gordon of Strathblane, I am influenced by experience in two other areas of the communications industries. The first is the film industry, with which the noble Lord, Lord Puttnam, is very familiar. Any Minister who has wrestled with the problem of the future of the British film industry is ineluctably brought back to the control of distribution by the Americans—that control was surrendered in past years—and the consequences that that has. He will find himself persistently in the position of the Irishman who, on being asked the way, said, "If I wanted to get there, I wouldn't start from here".
The second example from the communications industries is air transportation. I recently read the biography of the first Earl Swinton, for reasons that are not relevant to the debate. I followed him through the series of conferences that he held with the 1468 Americans before and after the war on the subject of transatlantic air transportation. Reciprocity played a crucial role in those negotiations.
I conclude with a decent relative scepticism about American ownership of our media and an absolute attachment to the principle of reciprocity.
§ Lord Bragg
I support the amendment tabled by the noble Lord, Lord Crickhowell. Until the past three or four weeks, when more evidence came to light and I thought harder about it, I used to think that foreign ownership could be accepted and protected in this country and in our industry. I speak as someone who, as has been pointed out, is part of a company—Granada—that could, perhaps, benefit commercially from foreign ownership.
My views have been modified for three reasons. The first is the forceful representations made over the weeks—expressed privately, publicly and in the House—about reciprocity. I take the argument made by my noble friend Lord Gordon of Strathblane and by the noble Lord, Lord Thomson of Monifieth. They made powerful arguments, as did anyone else who talked about reciprocity. To go in without some sort of reciprocal agreement would be foolish, in the sense that we would have to fight for it—if we were to get it at all—for years afterwards.
The word that I have picked out most from what was said so eloquently by other noble Lords is "dignity". It would be deeply undignified for a massive broadcasting country such as ours, which is still tremendous on the world stage, to roll over. That is how it would be seen, and it would, in that way, be rolling over. That has become a powerful issue for me.
I can express the same admiration for a great deal of American television as my noble friend Lady Jay of Paddington expressed. I have worked with American television, and I have co-produced programmes with American television. I used to co-produce arts programmes with the American PSB television station. When I started, it did about 21 hours of arts programmes a year, as did ITV1. It now does six arts programmes a year, and they must all be American. They do not always fit our bill, so the co-productions have ceased. That is a digression, but it is not irrelevant.
Two other things have also made me change my mind. The first is the quotas that are supposed to protect the British interest, when foreign investment comes in. I am disturbed by the fact that there do not seem to be any ways of measurement laid out. How do we decide about the quotas? Do the companies that supply programmes for, say, ITV, have to be staffed by British people? Must those people be British-born? Must they be British residents? What percentage must be British? Must the companies do British subjects? Must they use British locations? Must they use British back-up in all the infrastructure? How are the quotas measured? Are quotas of people really involved?
What about the quotas in regulation? What regulation can we bring to bear, for instance. on areas of television that matter throughout the world? We can 1469 take news as an example. As has been said in the House several times, the ITN coverage of the war in Iraq was exemplary. It was very expensive. Had an American company been in charge of ITV and owned that news company, would it have doubled up and used its own people? That would have saved a lot of money. They had some good people out there and some good cameras. I was in America filming for three weeks while the war was on. I was filming for "The Adventure of English"—there is a bit of a paradox there. I watched American television news coverage every night for at least two or three hours. It is wholly different from ours. I do not want to go any further than that at the moment, but it is completely different from ours. If we doubled up with them, they could make a tremendous case. They have Pulitzer prizewinning reporters and wonderful cameramen, and I intend no irony in that. But, it is nothing like the way in which we do it. How do we judge that?
In ITV, for instance, we do programmes in drama, which is the mainstay of British television. Recently, there was "Dr Zhivago", which was very expensive. Why should anyone do that, unless he has come from a tradition that believes that, having had "The Jewel in the Crown" and "Brideshead Revisited", that is what he should do, because his peers—peers outside the House, that is—did it? That is the way that we went on. ITV took risks on major television with "Queer as Folk". That was an advanced, difficult drama. Such programmes would never have got on to American television. Why should anyone take such huge financial risks? "Dr Zhivago" was never going to get a mega-audience; it was going to get about half as much as "Coronation Street", if it was lucky. Why should anyone take a risk with subject matter, as with "Queer as Folk"? Who judges? How do we regulate for that sort of quality?
I can give personal examples. I could do arts programmes for about a fifth of the price that I do them now. Eventually, we would be found out, but we could toddle along for a while. I could buy from the mass of arts programmes circulating the world or the mass of cheap concerts. I could pull them down any time that I wanted. I could do cheap arts programmes any time that I wanted. They would look all right in the brochure, but they would not be what we have been doing for so many years. Such things worry me very much. There are benefits to be had from inward investment. I would welcome it but under the right terms.
I also think that Ofcom is heavily burdened. That matter could wait. It could be examined. Some of the questions that I have raised—they are only a beginning—could be answered. In that spirit, I support the amendment.
§ Lord Harris of High Cross
I hope that, even at this late hour, the Committee will be patient. There has been a well developed and orchestrated campaign in favour of the amendments. I can see some force in some parts of the argument. Emotionally, I often feel drawn, in the words of the noble Lord, Lord Bragg, to 1470 reconsider my position, although that is largely theatrical. Essentially, the amendments are born of fear. They are negative and nationalistic, and they end up being restrictionist. That is my view of them. The noble Lord, Lord Lipsey, would come some way with me on that, but we are opposed by a mighty army of unreason.
It is regrettable and deplorable that the Americans perpetuate restrictions on the ownership of television and so forth by foreign nationals. It is unforgivable. However, we should not indulge in what. in student days, was called beggar-my-neighbour restrictionism. People think that because they are doing us down, we must try to do them down and that good will emerge from that. Reciprocity is, of course, an ideal to be aimed at, but, in the last resort, we must decide which way to go. Traditionally, the way that we have gone, in goods and services, has been in the direction of freedom of commerce and so on. There are down-to-earth, practical reasons for that, as well as reasons of high principle.
The case against following the Americans, if they will not agree with us, is that we would be denying ourselves access to some parts of the trade that would be in our favour. We would be excluding investment, know-how, challenge, stimulus and the other consequences of a competitive regime.
The anxious tendency—the nervous tendency—that we detect around the House ignores the two safeguards that foreign companies will still be subject to the same content control and other programme requirements as British broadcasters. Secondly, whatever the noble Baroness, Lady Jay, says, all experience confirms that local content is generally the best way to win and retain audience interest.
If we come to lofty principle, I simply assert that the maximum freedom of trade in goods, services and capital is the universal, global route to interdependence, mutual understanding, peace and prosperity in the long run. The noble Lord, Lord Crickhowell, quoted examples of American companies coming in and sacking various people. He referred to the big bang that led to sackings and redundancies in the City. That may be the short-term impact, but the inevitable long-term consequences of this global spread of interests and investment is the expansion of competition, output and choice.
I wish the Americans would open up their market; I think in the long run—not the very long run—they will be compelled to open up their broadcasting frontiers. Unlike many other speakers who are nervous, I believe that now is the time to set an example and display confidence in our own culture and industry to stand up to competition from all corners. To talk about it being undignified to continue to accept rival competition from abroad seems to be stretching it a good deal.
Despite the absence of the noble Lord, Lord McNally, whom I miss very much, I repeat my appeal to the Liberal Democrat Benches. So much of their view on these issues is restrictionist, backward-looking and conservative—it is actually Tory. This is restrictionism, protectionist—it is nothing to do with liberalism and not an awful lot to do with democracy.
§ 1.30 p.m.
§ Lord Puttnam
I support the amendment put down by my noble friend Lord Crickhowell, of which I am a co-sponsor. I shall try to be brief. There is not a little Englander bone in my body. I spent 22 very happy years of my 30 years in the film industry contracted to the largest media organisation in the world—Time Warner. So I certainly do not come to this from the perspective of a little Englander's sense of what is right. But I have two things to say. To my noble friend Lord Lipsey, I say this is not a rejectionist amendment. Were I the Secretary of State, I think I would be looking back 10 months to the time when our Joint Scrutiny Committee report first came out and thinking, "Why on earth didn't I embrace its sensible suggestion to pause, to think, to gather evidence and to ask Ofcom for a sensible recommendation?". It is pretty galling for us. The sub-theme from the Front Bench is, "We're not allowing Ofcom to get on with things". Yet here we are asking Ofcom to get cracking. In a number of amendments coming up, we suggest leaving it to Ofcom, taking its advice and allowing it to gather evidence. The Government, in this sense, appear to want it both ways.
Let me add a little factual background to the excellent amendment put down by the noble Lords, Lord Gordon and Lord Fowler. I believe that 2001 was a very bizarre year for the Government to change their mind, for it was the year in which the first intimations came out of the United States that with the on-rush of the next round of GATT talks, the Americans would have to start making some concessions if they were to win the concessions they sought. I agree with all noble Lords who have said that entering negotiations knowing the other side has already decided that it has to move a bit to get a bit, and hobbling our negotiators with the sense that we have already given up, is pretty bizarre. I get the sense that the left hand may not know what the right hand is doing. Right now, some poor devil at the DTI is engaged in the detail of the next round of GATT negotiations and we are pulling the rug from under his chair. This is not a particularly sensible position for the Government to be in.
I sincerely support the amendment despite the fact that the Government's initial response to content regulation as a way of dealing with much of the problem was admirable, prompt and entirely satisfactory. I commend them on that, but I do not think their present position is sustainable.
§ Lord Phillips of Sudbury
One reason that the debate on this amendment has gone on for over an hour is because the matter was not debated at all in the House of Commons. To give this crucial issue a good airing is our duty rather than merely our choice.
I associate myself entirely with those who have looked at this from a cultural point of view. I believe that one cannot emphasise too strongly that in talking about broadcasting and the media, it is wholly different, as "Monty Python" said, from looking at cans of beans, to use the example of my noble friend Lord Thomson. I would say the same if we were 1472 talking about not allowing in European control of our media, but that pass has been sold. En passant, it might waken us all up if Signor Berlusconi's empire were suddenly to become hyperactive in taking over the jewels of our own broadcasting empire. How many of us then would be sanguine and share with the good and noble Lord, Lord Harris, that absolute faith in the long-term beneficence of indiscriminate capitalism that is so much a hallmark of his position? I would not.
There are particular dangers in confining the debate to the United States, for which I have the greatest admiration and against which I have not the slightest innate anti feeling. But there are dangers in allowing the massive purchasing power of a comparable culture to come into our own much smaller patch without let or hindrance. An owner from California will not have the same cultural commitment and identification with our great television presences, and that is already weak, as we have. The tyros of American media are not influencable in the same way as our own leaders. They are beyond touch or reach, personally and socially, to a high degree. They do not breathe the same cultural and geographical air.
Ownership is wholly different from regulation. Some may be tempted to believe that it is a matter of indifference to have regulation in the Bill. I think the noble Lord, Lord Gordon of Strathblane, referred to the public sector remit requirements of Clause 260, which we debated on Tuesday. The Government assurance, then given, that Clause 260 would apply to Channels 3, 4 and 5 was inaccurate and incorrect. It is not the case that if any of the great American beasts came into our small wood they would be subject to all the controls of Clause 260. But regulation, in any event, is a much weaker vessel. Regulation on the page is often very different from regulation on the street. That is partly a function of the complexity of the regulation we are talking about, partly of the legalisation of regulation and the fact that the privateer will always have at its beck and call a much greater army of legal power than ever the bureaucrats will.
I had one direct example of this when I was legal adviser to the independent directors of the Observer when it was owned by Tiny Rowland of Lonrho. Subsequently, I became a proprietor when the Scott Trust purchased the Observer from Lonrho. I have therefore seen this from both sides of the fence.
Those who are not used to dealing with such situations might take too much solace from the protections supposedly afforded by such as the independent director arrangements that prevailed for the Observer. Those arrangements did very little to restrict the rather sad effects of Tiny Rowland's influence on the paper that he owned—his influence via his appointments of the chief of staff, the editor, control of remunerations, control of funding for the paper and the rest of it. I beg those who are relatively indifferent to Amendment No. 285, on the grounds that there is plenty of regulation, to think again.
1473 Lastly, I refer again to Sir Denis Forman, because I believe his views to be of interest to the Committee. It was very interesting and warming to hear the noble Lord, Lord Bernstein, refer to his long partnership and experience with Sir Denis in Granada. He has absolutely no doubt about the importance of the amendment, and nor does Sir Jeremy Isaacs, with whom I have spoken. Sir Denis Forman said that,the impact of the United States on British television has been minimal and yet our television services have acquired the reputation of 'the least worst in the world'. Would it be sensible to open the one field in which we have international supremacy to the risk of a takeover by Hollywood, which already, God knows, has power enough?I close by reminding the Committee that at the beginning of this week the relevant Congress committee decided to dismantle the already weak cross-ownership controls within the United States, so that the four big groups will shortly have even greater and titanic force.
§ Baroness Buscombe
I have, after a lot of consideration, decided that I will, unusually, support the Government on this issue.
§ Lord Grocott
I am conscious of the fact that we are going beyond the time at which we would normally break on a Thursday. However, if I judge the mood of the Chamber correctly, we are having an extremely important debate on what everyone recognised right at the start was one of the key issues in the Bill. It would be sensible if, with the agreement of Members of the Committee, we completed this group of amendments, even if that means us running on longer than we normally would at this time on a Thursday. I hope that that is the feeling of the Committee.
§ Baroness Blackstone
I am very aware that noble Lords want their lunch. I am particularly grateful to the noble Baroness, Lady Buscombe, for simply saying, with short and sweet brevity, that she supports the Government. I shall try to be short, sweet and to the point as well, so that we can all have a break and have something to eat.
I begin by addressing Amendments Nos. 285, 308, 322A and 322B. The starting point of our policy is that we believe that the existing rules are inconsistent and outdated. As every speaker in the debate knows, there is nothing at present to prevent persons from EEA states from holding any type of UK licence. There are a number of different kinds of broadcasting licences that non-EEA states can already own.
For the record, I should say briefly to the noble Lord, Lord Crickhowell, that my right honourable friend the Secretary of State for Trade and Industry 1474 wrote to my noble friend Lord Puttnam to correct the comments that she made on this matter in July 2002. Perhaps he never saw that letter.
§ Lord Crickhowell
I do not know to what the noble Baroness is referring. I was not aware that I quoted the Minister in another place or took up that point, but perhaps I did.
§ Lord Gordon of Strathblane
I believe the reference may be to a remark that I made, rather than one made by the noble Lord, Lord Crickhowell.
§ Baroness Blackstone
I am so sorry—I meant to refer to the noble Lord, Lord Gordon. I do apologise. I hope that he takes the point, however. He may not have seen the letter to which I referred.
As a result of existing rules, American companies already have a presence in UK media markets. They have helped build our satellite, cable and magazine industries. However, the current rules mean that Bertelsmann, a huge German company, could buy anything that it wanted, but that similar global firms such as Disney or Viacom cannot. That distinction is inconsistent and has no clear justification. We believe that opening up the UK broadcasting industry to foreign ownership should lead to increased investment, productivity and efficiency, and the introduction of new management skills and ideas. That, in turn, should mean better programmes for viewers.
Inevitably, debates on this subject turn to the question of American ownership and the fear that content quality will be eroded. That is what Members of the Committee have said in the debate today. The Government wholeheartedly understand and sympathise with that view. It is an entirely proper concern to look at the experience of countries like the US and New Zealand and say, "Not here, thank you". I associate myself personally with that view. However, we are not the US or anyone else. It is not the Government's intention to introduce a US-type market in the UK, and that is not what this Bill does. One must not be tempted to draw misleading comparisons with American TV. The fact is that the UK has strong content regulations which will maintain the quality and impartiality of our programming. The United States have no such content rules. In television, the Bill sets out for the first time the overall public service broadcasting remit, which requires the broadcast of a wide range of programme forms and genres. US broadcasters have no comparable public service remits.
Let me outline how the regulatory and public service provisions work. There will be demanding obligations for EU production, original production for UK screens, regional production and independent production. Under Clause 274, which concerns original productions, the Secretary of State defines what is an original production. The definition can be amended and the quota itself can be increased. Ofcom will be able to review licence commitments for regional programming and production, original production and news and current affairs programmes on a change of control of a Channel 3 or Channel 5 licence, and to 1475 vary the new licence to ensure that the new owner does not cut back on what the old owner actually delivered. Ofcom can also amend licence requirements, including those regarding regional programming and production, original production and news and current affairs programmes.
In relation to local radio, Ofcom will be subject to a new duty to carry out its functions so as to protect and promote local content. When a local licence changes hands, Ofcom will he able to vary the licence conditions in order to maintain the existing local character of the service and the quality and range of programmes included in it.
There are strict rules to prevent anyone from using UK broadcasting companies to further their own political agenda. For example, all broadcast news must be presented and reported with due accuracy and impartiality, and owners are prevented from using radio or TV stations to broadcast their own views on matters of political or industrial controversy or relating to current public policy. These extensive provisions will act as a guarantee of quality and diversity, regardless of who owns the channels.
In the Second Reading debate, my noble friend Baroness Cohen of Pimlico expressed concern that the content provisions would be bulldozed over by the financial muscle of American broadcasting companies. However, I am confident that we have robust provisions in place to prevent any evasion of the content rules. Ofcom will have sufficient power to ensure that any change in ownership does not dilute the UK's strong production base, its heritage of regional production or the thriving independent production sector. Broadcasters could be fined or ultimately have their licences revoked if they do not abide by their licence conditions.
The market also has its role to play in programme quality. That point was raised—on this occasion I am sure—by the noble Lord, Lord Crickhowell. It would make no commercial sense for US companies simply to "dump" their content on UK screens even if they could. British viewers and listeners demand quality and British content, and if they do not get it they will simply go elsewhere.
I say to my noble friend Lady Jay that I find it rather hard to believe that a US owner would not care at all about audience figures. I believe that they would have to take them into account for the very reasons that I have suggested. In the end, it would make rather little commercial sense for them completely to ignore them.
§ Baroness Jay of Paddington
My noble friend has very kindly referred to the point, on which I think that we will have to disagree. The problem that I was trying to raise was that the interests of the American broadcast companies would be very different from the public interest concerns that she has very rightly said are important in our regulation.
However, perhaps I may go back. I hope that she completed that point—I did not want to interrupt her in the middle of it. It is not correct that the Federal Communications Commission in the United States 1476 has no control over the quality of programmes in its licence regulation. It does have a public interest requirement. The problem and the issue to which the noble Lord, Lord Phillips, referred—perhaps incorrectly, referring to a congressional committee when in fact it was the Federal Communications Commission that ruled this week on cross-media ownership—is that the enforcement by the FCC of that public interest requirement in the licence operation has diminished vastly over the years and is now in practice almost abrogated. That is the problem that we foresee.
§ Baroness Blackstone
I know that my noble friend is absolutely right in what she says about the FCC. The point that I was trying to make and which I think she has just endorsed is that the US system does not have the same degree of control over content as we have in the UK. ITV has a quota of 65 per cent original production. It actually achieved 81 per cent. Channel 4 and Channel 5 also exceeded their quotas in original production. Those channels are surpassing their targets because it makes commercial sense to do so, because high-quality original production aimed at UK audiences is quite rightly what viewers want to see.
Any non-European company that fails to take note of those facts and fails to deliver high quality original UK productions will suffer in terms of ratings and therefore advertising revenues. UK viewers want high-quality original production. There is no reason why American companies would be more likely to ignore that fact than the big European companies that are already entitled to buy into our market. Many European countries already have no restrictions on foreign ownership. The arrival or threat of arrival of non-European investors in those countries has not had an apparently detrimental effect. For example, in Germany, RTL, like the BBC and ITV, shows about 30 per cent non-European content.
There are those who say that it will he in the economic interest of large—particularly US—companies to buy UK companies and run them as cheaply as possible. It is true that it will be in the interest of any inward investor to run his or her operations as efficiently as possible, but that does not necessarily mean the same as running them as cheaply as possible. "Cheaply" implies for the lowest input cost possible. "Efficiently" means maximising profit. However, that can mean significant up-front investment in order to attract large audiences. Channels that have tried to treat broadcasting as just another commodity have had to change their business plans to reflect local demand.
Let us not forget that other huge differences between the American market and the UK market—the BBC. A well-resourced BBC will continue to be a tough competitor to commercial broadcasters, offering audiences alternatives if those broadcasters do not get it right.
1477 It is not just the Government who think that it makes sense to remove the foreign ownership rules. The ITC's independent review of programme supply, which reported in November, stated that most contributors to its review,felt that the combined forces of audience preference, economic logic and strong regulation would ensure that any American owner of broadcasting and production assets would focus on investment within the local market for the local market".We share that conclusion.
I turn to Amendment No. 284, which we do not think is necessary. We are convinced of the robustness of the regulatory and public service provisions set out in the Bill regardless of who owns broadcasting licences. We think that the potential benefits of foreign ownership are worthwhile, and the ITC's independent review of programme supply generally agrees with the proposed changes. The report said that,the balance of analysis we have seen supports the Government's proposed change to the non EEA ownership rules, which would create an environment in which more expertise and capital could be attracted to the UK".We therefore do not want to delay the benefits of investment, skills and management which we expect foreign ownership to bring.
Amendment No. 285A, tabled by my noble friend Lord Gordon, proposes that we open up broadcasting licences to foreign ownership only where we secure reciprocal arrangements with the country concerned. Noble Lords will remember that the committee of the noble Lord, Lord Puttnam, concluded that reciprocity was "not pivotal—a point that I do not think the noble Lord, Lord Thomson of Monifieth, mentioned when referring to the committee.
We in the UK are not alone in this respect. As I have already mentioned, a number of other countries have already taken the same step, including Germany, the Netherlands, Portugal, Spain, Denmark, Ireland, Finland, Belgium and Luxembourg. Moreover, we believe that the removal of foreign ownership restrictions in the UK are beneficial in their own right. I say to the noble Lord, Lord Fowler, that that is the key point here. We have changed our position on reciprocity because we have assessed our position and looked at the ITC's report. We believe that the benefits of allowing foreign ownership are considerable and that they outweigh any advantages to be derived from pursuing reciprocity.
I know that there are those who differ on this issue, but we believe that we have the balance right. Across the Bill, we are trying wherever possible to remove the specific regulatory barriers to investment—I think that my noble friend Lord Lipsey pointed that out very clearly—while at the same time enhancing our protection for content.
§ Lord Fowler
Does it therefore remain the Government's policy that they want to get reciprocal arrangements with the United States? If it does, do they think that the action they have taken strengthens or weakens their hand?
§ Baroness Blackstone
If we were able to obtain reciprocity it would of course be an advantage, although I am not sure—as again my noble friend Lord Lipsey pointed out—how many British companies would in fact wish or be able to buy into the American market.
I think that I have answered most of the issues raised in the debate. We are certainly not prepared to do anything to risk either quality or content. Where safeguards are in place they are being strengthened. In the light of what I have said I hope that the noble Lord, Lord Crickhowell, will withdraw his amendment.
§ Lord Crickhowell
I should like, first, to thank all those who have taken part in this long and important debate. I am extremely sorry and upset that my noble friend on the Front Bench, Lady Buscombe, was angered by my opening remarks. I am so innocent and naïve about a huge range of matters discussed in this House, in relation to which I bow in awe to the expertise of others, that it never occurred to me that my words could cause offence. Clearly she was brought up in a much gentler world than that in which I have pursued my political career. But I shall try to do better on another occasion.
My noble friend has at least given one of a number of reasons why we have to come back to this matter on Report. As she has not explained the reason for my Front Bench's policy, clearly there has to be an opportunity on Report for her to do so.
§ Baroness Buscombe
I hate to intervene as we all wish to have something to eat. However, I made my position very clear on Second Reading. We have had an awful lot of Second Reading debates this morning, somewhat repetitiously. May I also say that the noble Lord knows little about my career before I came to this House, not least my involvement in the media?
§ 2 p.m.
§ Lord Crickhowell
Clearly, we will have to return to the issue, first, because some of us—those behind the noble Baroness, at least—want the position of our Front Bench to be set out and secondly, because, as the noble Lord, Lord Ashley of Stoke, and others said, there is very strong feeling across the Chamber about this issue.
I need not give a lengthy response to the noble Baroness, if only because I anticipated in my opening speech almost all the points that she made. I say to the noble Lord, Lord Lipsey, that it is always a little irritating when one has just sat down to hear a noble Lord entirely ignore the words that one has just 1479 uttered, as he did on the question of European companies and the comparison with American companies. I pointed out that the real reason for the difference is that the Europeans do not have that American product that is so easily sold around the world. They do not have those large libraries of English language content.
The noble Lord's argument that we should ignore the remarks of Mark Thompson and Greg Dyke on the grounds that they have an interest was a little unworthy. I disagree with Greg Dyke on many issues, but I would bow to his experience in the American production market and take slightly more note of it than the views of the noble Lord, Lord Lipsey, on that subject. If the noble Lord, Lord Lipsey, is not prepared to listen to Greg Dyke, I hope that he will listen to his noble friend Lord Bernstein and to his noble friend Lady Jay, both of whom have experience and supported the arguments that I advanced in relation to the real reason why American companies would want to invest here.
The noble Baroness, Lady Howe, questioned the adequacy of the reasons given for the urgent need for inward investment. They were just touched on by the Minister. My noble friend Lord Fowler also referred to the value of inward investment. I do not need to be told of the value of inward investment. During my eight years as Secretary of State for Wales, I spent an immense amount of time in the Far East, America and Scandinavia. During that period, we in Wales attracted rather more than 20 per cent of all the inward investment to the UK year after year with 5 per cent of the population. Inward investment can be valuable, but the question is whether it will be valuable in this case or whether there is an urgent need for it.
It is clear that this issue causes considerable concern. We have had a long debate. The issues have been well aired and I will withdraw the amendment in the confident expectation that we will return to it on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ Clause 340 [Modification of disqualification provisions]:
§ [Amendments Nos. 285 and 285A not moved.]
§ Lord Davies of Oldham
I judge that this might be a convenient moment for the Committee to adjourn until after Starred Questions. I beg to move that the House do now resume.
Moved accordingly and, on Question, Motion agreed to.
§ House resumed.
§ Lord Davies of Oldham
My Lords, I beg to move that the House do now adjourn during pleasure until 3 p.m.
Moved accordingly and, on Question, Motion agreed to.
§ [The Sitting was suspended from 2.3 to 3 p.m.]