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

However, I am far too sleepy tonight to wish to raise the temperature. In all the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Lord Thomson of Monifieth moved Amendment No. 86:

Page 79, line 31, at end insert--
("(3A) After sub-paragraph (3) there is inserted--

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"(3A) Notwithstanding the provisions of sub-paragraph (3) above the ITC may, where it considers that the purpose of an arrangement is to prevent disqualification arising or a breach occurring in any other provision of this Schedule, consider control to arise in that arrangement."").

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

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

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

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

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

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exists in certain quarters in the ITV system there is a mood that one can find clever people to get round the undoubted wishes of Parliament and the spirit of the law that the Independent Television Commission has to administer.

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

The Earl of Stockton: My Lords, I support the amendment. I vividly remember the discussions that took place during the passage of the 1990 Bill through your Lordships' House. I recall the noble Lord, Lord Thomson, and myself forecasting precisely the present possibility. My noble friend's predecessor at the Dispatch Box rejected it as not being the kind of thing that broadcasters would do--people would be fair and live within the spirit of the Act. Once again, we come to the problem. The track record of broadcasters, irrespective of the various topics which we are discussing, does not fill one with hope when it comes to people taking apart the carefully expressed wishes of Parliament and driving a coach and horses through them. That is what has happened on this occasion.

I urge my noble friend to listen carefully to what the noble Lord, Lord Thomson, said. If his amendment does not meet the situation--and I accept the noble Lord's reservations on the drafting which is very difficult-- I ask the Minister to come back at the next stage with a proposal which will lock the matter up tight.

Lord Inglewood: My Lords, the remarks of my noble friend Lord Stockton and the noble Lord, Lord Thomson, echo the Government's concerns. The amendment is concerned with the definition of "control" in the Bill and your Lordships are anxious that it should be adequate to deal with ownership structures which use devices such as deadlocking and warehousing arrangements in an attempt to get round the limits set out in Schedule 2. Since the 1990 Act, we have seen a number of instances where that has occurred within the letter of the law but contrary to the spirit of it. There is no need for me to enumerate them.

The new definition of control in the Bill is one which we believe will be effective in most instances. However, we recognise the concerns of the noble Lord, Lord Thomson, and others that the new definition of control may not catch all ownership permutations. Indeed, both the ITC and the Radio Authority remain concerned that the definition may not be adequate to deal with all circumstances.

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We do not as yet have proposals for amendments, but I assure all noble Lords that we are considering this matter very carefully. If we deem it necessary, we certainly shall bring forward proposals for amendments in due course.

I very much hope that my remarks will have provided noble Lords with some reassurance and explained just how seriously we regard this matter.

10.30 p.m.

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

Amendment, by leave, withdrawn.

Lord Inglewood moved Amendment No. 87:

Page 79, leave out lines 46 and 47.

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

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

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

On Question, amendment agreed to.

[Amendments Nos. 88 and 89 not moved.]

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

Lord Harris of High Cross moved Amendment No. 90:

Page 82, line 5, leave out from beginning to second ("a") in line 16 and insert--
(".--(1) Subject to the following provisions of this paragraph, the Secretary of State may at any time refer to the Monopolies and Mergers Commission the holding by any person of one or more licences to provide relevant services falling within one or more of the categories specified in paragraph 1(2)(a), (b), (c), (d), (f) or (h) in any case where during the relevant 12 months the audience time attributable to those services exceeded 15 per cent of total audience time for the same 12 month period.
(2) Paragraph 2A below shall have effect in relation to a reference under this paragraph.
(2A) In this paragraph "the relevant 12 months" means, in relation to any reference, any consecutive 12 months falling within the 15 months immediately preceding the date of the reference.
(3) For the purposes of this paragraph, "relevant service" also includes").

The noble Lord said: My Lords, these two groups of amendments are directed at the issue of imposing a 15 per cent. upper limit on television audience share.

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I am sorry to detain noble Lords at this late hour, but these amendments were due to be discussed in Committee, when I was "bushwhacked" and did not arrive here in time to move them.

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

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

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

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

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

More irksome than any other feature of the Bill is that the 15 per cent. limit on audience share entirely omits the BBC, which already enjoys 43 per cent. of the viewing audience. That gives me an opportunity to say that if we look back 40 years (which is still in the memory of some of those in the Chamber this evening)

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we may remember that commercial television was introduced in 1953 or 1954. Before then, the BBC enjoyed not 15 per cent. or 25 per cent. but 100 per cent. of television and radio audiences, with the exception, I believe, of Radio Luxembourg. Does that mean that our nation was dominated by the successors of Lord Reith? Did it mean that the BBC ran the country? Was 100 per cent. of television viewing so terrifying? Was that a black period? We had a diverse press and political debate. What is now going on that people should quake in their shoes and stay awake at night worrying about whether it should be 15 per cent. 16 per cent. or 20 per cent?

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

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

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

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

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with it in this exploding information market of television, radio, press, Internet and so forth. I beg to move.

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