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Lord Donoughue: All the figures are arbitrary, but the 20 per cent. was chosen arbitrarily by the Government. I have heard nothing to explain that other than that it is a mechanism which happens to exclude two newspaper groups. However, one of those already has a strong presence in television but the other one does not. Therefore the impact is differential in that sense. I listened to the Minister's reply but I still did not detect

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any basis for this discrimination. I understood that if an organisation does not pass the 20 per cent. threshold it is excluded from the measure. However, I did not hear an argument for maintaining this discrimination.

I heard that the Minister had not taken legal advice. I do not propose to let him see the legal judgment because, as he will be aware, something like one-third of Members of another place comprise lawyers. We in this place are led by lawyers in all directions. Therefore I feel it is prudent on my part to generate as much business for the trade as possible. I suggest to the Minister that by the time we reach Report stage he and the department should have taken their own legal advice. I hope he will then tell us whether what I believe to be true is the case; namely, that what he has mentioned is legally unsustainable. That is of great significance. If it is legally unsustainable, we should not be spending parliamentary time enacting a measure which will be shown, after a long and expensive process, to have no legal basis. It is important for us to make sure that what we are doing is proper. My amendments should be grouped logically together. In the meantime I beg leave to withdraw the amendment.

Lord Inglewood: I am grateful that the noble Lord, Lord Donoughue, is as solicitous for the interests of lawyers as he is for the Mirror Group.

Amendment, by leave, withdrawn.

[Amendment No. 156D had been withdrawn from the Marshalled List.]

Lord Harris of High Cross moved Amendment No. 156DA:

Page 89, line 19, at beginning insert ("Subject to sub-paragraph (4) below").

The noble Lord said: I propose, with the Committee's indulgence, to speak also to Amendment No. 156GD which is grouped with Amendment No. 156DA. Amendment No. 156GD seeks to insert the following new subsection:

    "Sub-paragraphs (1) to (3) shall not apply to prevent any newspaper proprietor controlling a body corporate which holds any licence unless a reference of that newspaper proprietor's control of that licence holder has been made under paragraph 9 below and the Monopolies and Mergers Commission has found that that control operates or may be expected to operate against the public interest".
Some of this argument repeats what we have discussed on previous issues. I was rather disappointed by the Minister's bearing this afternoon. I hope that he will not be off colour for too long. I remind him that in last Thursday's debate--at cols. 349 to 350 of Hansard--he described his standpoint as deregulatory. There was a splendid purple passage where he urged the importance of stability and consistency in regulation, not least to encourage continued investment. We are expecting billions of pounds to be shovelled into this fast moving industry. We are confronted with a cable, satellite and digital revolution. The Minister talks of stability; but this is a second effort in barely five years of Parliament to regulate such a rapidly changing industry. I look at this complex and, for me, largely incomprehensible Bill and I cannot help wondering what would have happened to the first Industrial Revolution if well-meaning

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politicians had spun and respun a comparable web of restriction around developments in textiles, coal mining, iron and steel, shipbuilding, canals, railways, roadways and the rest of it.

This group of amendments seeks to remove another 20 per cent. arbitrary restriction--this time not as regards the circulation of newspapers but the ownership by a newspaper of a satellite; namely, BSkyB. It is part of the deregulatory feature of this Bill that it would now allow satellite and cable companies to control Channel 3 and Channel 5 licences, which in turn are free to move into satellite broadcasting, as the Minister has explained. That gives a welcome green light to cross-media or cross-sectoral growth so that companies can take advantage of internal and external economies in developing a structure which we cannot at the moment even begin to predict. Yet once again BSkyB is cast as the Cinderella at the feast. It is to be excluded from the general rejoicing. In Schedule 2, in the provisions relating to restrictions on proprietors of newspapers, a new formula is conjured up which deliberately excludes BSkyB from that otherwise welcome liberalising process.

Under that formula a satellite company can control a commercial terrestrial television company, but it may not do so if it is more than 20 per cent. owned by a newspaper company with more than 20 per cent. of the total national newspaper circulation. It could do so if it was owned by a duff company which does not have a large circulation. News International, alas, since taking over the ailing Sun and the threatened Times, has built up their circulations. News International is guilty of building up a total diversified newspaper circulation in excess of 20 per cent. of the national circulation. That is naughty. The mathematical application of the rule concerning 20 per cent. control and more than 20 per cent. of newspaper circulation succeeds in singling out Sky for punishment.

I argue that both of the 20 per cent. rules collapse on close examination. News International owns more than 20 per cent. of Sky. Indeed, it owns 40 per cent. However, that 40 per cent. does not give News International a controlling interest. There are two reasons for that, which the Minister can verify. First, Stock Exchange rules require that a company is capable of operating independently of any shareholder owning 30 per cent. or more of the voting rights. Secondly, the board of BSkyB numbers 18 directors, of whom only five are News International appointees. Therefore, the 20 per cent. control by News International is a phantom. It is frightening Ministers needlessly when there are many other things for them to be frightened of.

In the same way the 20 per cent. control of national newspaper circulation has already been exposed to a good deal of criticism by the Committee, in particular by the noble Lords, Lord Thomson of Monifieth, Lord Desai and Lord Donoughue. We are not faced with News International as a unique mixed-media giant. Together with Carlton, Granada, Pearson, the Daily Mail, or the proposed United News/MAI merger, it is one of a number of strong, powerful, mixed-media companies. The Mirror Group has other titles. It is naughty that its circulation is now 22 per cent. or 23 per cent. of total

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circulation, but it is allowed to have part of Scottish Television, a bit of cable channel and to become involved in satellite television if that takes its fancy.

I return to the study which I mentioned earlier, towards which I believe the noble Lord, Lord Desai, as a fellow professional economist, will be more sympathetic. The survey, by Arthur Andersen, sought to measure the influence of companies on public opinion. Instead of trying to compare the BBC's 40 per cent. share of television viewing and the Sun's 40 per cent. of newspaper readership, it drew on a whole range of sources relating to viewing and readership. It assessed the degree of concentration of attention by calculating for each of the media companies--Carlton, Granada and so on--the total amount of time that viewers, listeners and readers devoted respectively to its television programmes, radio broadcasts and newspapers.

Towering above all other influential forces in our society was the BBC. Of audience attention and the time people devoted to these activities, 44 per cent. was controlled by the fearsome BBC. Second was Carlton, that monstrous mixed-media corporation, with 6.9 per cent. of audience attention. Channel 4, another public interest company, had 6.2 per cent. Poor News International, with its newspapers and television stations, was sixth with a paltry 3.4 per cent. of audience attention. That is a degree of influence which has Ministers and former Ministers cowering in their tents for fear of the takeover of opinion by those powerful companies.

The success of News International in building up newspapers that attract growing readership, and launching, with enormous courage, risk and enterprise, the satellite television stations, has been turned against their creator by excluding it from more than a 20 per cent. share of Channel 3 or Channel 5 licences. Why should Sky's success be curbed simply because a minority shareholder also owns and runs a successful newspaper? I hesitate to say in front of the noble Baroness, Lady Dean, that it is a company which has contributed much to the multiplication of channels, including newspaper facilities. It is treated less favourably, even in my opinion grossly unfairly, in regard to terrestrial television. Channel 3 and Channel 5 companies can exploit BSkyB's pioneering enterprise by entering satellite broadcasting but BSkyB is not free to become involved in terrestrial television.

If we recall that the pretext for all that discrimination is to guard against undue influence, we need to remind ourselves that consumer protection and positive programme requirements are already in operation and are designed to protect the public against undue influence. The argument behind the amendments is that there is no need for that discrimination in the form of the 20 per cent. restrictions. The amendments seek to bring broadcasting more fully within the general framework of monopoly law and practice on which we rely elsewhere to maintain the vigour of competition. I beg to move.

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6.45 p.m.

Viscount Astor: I should like to take issue with the noble Lord, Lord Harris. As was said earlier, the broadcasting and newspaper industries are unique. They have a significant influence on life in this country.

The noble Lord approached his argument as though BSkyB and News International were somehow being excluded from this vast new growing industry. However, the share price of BSkyB shows that the company is worth over £6 billion. That is rather more than the individual ITV companies put together. News International has a circulation of 36 per cent. of national readership. The companies are huge and they are dominant in their industries in this country.

To go back one stage, the White Paper which was published earlier this year stated that the eventual goal should be overall market shares. That was welcomed. The noble Lord, Lord Desai, supports the logic and thrust of that. News International protested because it saw even that as a restriction on its growth. It should still be our goal in the long term, but in order for the industry to reach that point, we must allow everyone to grow and compete on a level playing field. That means allowing some of the smaller players in the industry the ability not immediately to be swallowed up. We must allow them the ability to control, to grow and to merge within their sector and with others so that they can then compete successfully with the vast organisations that exist.

I am not against those vast organisations, I admire them enormously. BSkyB is a wonderful British company, a leader in its field and it is hugely successful. I admire everything it has done. However, because it is so dominant we must not forget one of the reasons for its dominance. Under the 1990 Act the ITV companies were precluded from competing with it. That is an important reason. We are simply trying to give the companies an opportunity to catch up before they compete; otherwise, they will be swallowed up.

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