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Lord Henley: My Lords, I am grateful to the noble Lord for agreeing to take this order tonight rather than on Thursday, which might have caused both myself and, I suspect, the noble Lord a little more inconvenience.

There are one or two questions that I wish to put to the noble Lord. He has dealt with some of them in his admirable opening remarks about this order. They are particularly my concerns about delays and the timescales in dealing with claims. Perhaps he will elaborate a little on where we are precisely at the moment in terms of how long it is taking to deal with particular claims. The noble Lord seemed to imply that as regards claims being dealt with under Options A and B there were relatively few problems. It was cases under Option C where matters were more complicated.

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Having said that, would it be worth considering leaving Option A and B payments to simple across-the-counter payments, to be dealt with presumably by the police, rather than coming to the FCS and therefore taking up Home Office time, thereby leaving its officials more time to deal with Option C cases? It may be too late in the day to move to such a system, but it might have been an approach considered earlier on.

In the light of the fact that there are delays, about which we have heard anecdotal evidence, and more than that, will the Government consider whether there is a case for paying interest on late payments, particularly those where the delay is more than the 30 days (which we suggested as a maximum when the Bill was going through Parliament), let alone the 30 days which the Government have always put forward as the proper limit for business to observe?

I make that point because, as I believe will be the case in the Bill coming before another place relatively soon, business late payments will be subject to interest, as is the case with those of us who occasionally manage to pay our income tax late. It is possible to be charged a level of interest, just as the Revenue occasionally pays a degree of interest on its late payments when making refunds for overpayments. There is quite a strong case for the Government to consider whether interest ought to be paid, particularly as regards those cases where through no fault of the applicant there are delays in the department. I do not want to criticise the department because it has had to deal with a great number of applications coming through the system, some of which have been complicated. But it is a case that the Government should consider seriously.

I have one further question. I do not know whether the noble Lord will be able to answer it at the moment. He kindly wrote to me on 4th December and told me that about 26,000 small calibre pistols had been handed in and another 10,000 were due to come forward. Of those 26,000, I shall be interested to know how many claims have come through to the FCS already and how many are still at the different police stations throughout the country. I would like to know whether there are delays there before the claims are reaching the Firearms Compensation Section. That might be a process that can be speeded up. If the noble Lord does not have the answer at the moment, I shall be more than happy for him to write to me in due course.

Lord Williams of Mostyn: My Lords, I am most grateful to the noble Lord, as always, for his courteous approach. I shall obtain the up-to-date figure for the 26,000 and I shall write to the noble Lord as he invited me to do. I try to keep him fully in the picture. But the figure I have is the one that I gave him up to 4th December. I shall write to him as regards his last question.

The Option A and B claims have already been submitted to the FCS and therefore there would be a further delay if they were then sent back to the police. As the noble Lord implied, and I believe, understands, the scheme has been specifically set up in the way that

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the FCS is operating it. Therefore, it would be a waste of its time and a hopelessly inefficient use of police time if we went that way.

On the question of interest, I must point out that these are not ordinary business transactions. We cannot make payment immediately on receipt of a claim. Claims have to be fully considered. We do not take the view that adding interest to the compensation payment is appropriate. Indeed, one takes the view--perhaps this is not susceptible to argument because it is simply the view that has been taken--that we do not believe that it would be a justifiable further drain on public funds because we do not think that we have been unreasonable about the level of compensation.

I thank the noble Lord generally for his approach. I have tried to reciprocate it by, for instance, conceding the amendment that he put forward, having taken on, as it were, the baton of civilisation from the noble Baroness, Lady Blatch, in respect of the nature of the compensation scheme. I cannot stress enough that I appreciate the way in which he deals with such matters.

On Question, Motion agreed to.

Independent Television Commission Codes

9.40 p.m.

Viscount Astor rose to ask Her Majesty's Government what changes are necessary to the Independent Television Commission Codes to allow publishers and television companies to produce programmes for terrestrial television based on magazine titles in the same way as currently allowed on the BBC, satellite and cable.

The noble Viscount said: My Lords, there are two main reasons why I feel it important to introduce this topic. First, I believe that the Government and the Independent Television Commission have a fundamental misunderstanding of what is known in the industry as "masthead programming." I believe that the current policy is unfair to ITV and to Channels 4 and 5. Secondly, there seems to be no clear view at the ITC of what its policy will be for the proposed terrestrial digital broadcaster, BDB, when it comes into play.

The current ITC position is to allow masthead on satellite and cable but not on terrestrial stations. I believe that that is an anomaly and I find the reasons for the decision unconvincing. In commercial television the ITC has traditionally regarded publishers in the same category as advertisers and has seen masthead as just a way of promoting print titles rather than as a way of providing new material for television.

I should perhaps say something about what masthead broadcasting actually is. Masthead programming is not just a way of offering free promotion to a magazine; it is much more. It is the development of intellectual property by those who have the resources and the editorial expertise. It is production supported by magazines, using their expert knowledge. It is a way of re-creating a magazine--or, indeed, part of a

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magazine--as a programme in the format that suits the viewer. It is not an extended commercial and it is not a direct promotion for sales or sponsorship.

Sponsorship is done in other ways. In fact, viewers of ITV will find it hard this Christmas to escape sponsored programmes. Toyota, for example, has signed up a five-year £18 million sponsorship deal for New Year. Sponsorship currently brings in £40 million to ITV: it is a growing but, I stress, separate market.

The BBC is currently allowed masthead programming and, as your Lordships know, it does not come under the ITC. The BBC has launched successful magazines off the back of its most popular programmes. It has also developed programmes from magazines. Good Food began as a BBC publication and is now a hugely popular programme with full brand visibility throughout the show. The BBC's "Gardener's World" is now a very successful programme and, indeed, a major event at the Birmingham National Exhibition Centre.

The BBC has another advantage. It can commission a long series of programmes linked to a magazine which address a specialist audience. ITV and Channels 4 and 5 do not have the freedom or opportunity to reach such audiences. Although under an agreement with the Office of Fair Trading no programme on the BBC may mention a BBC magazine in the course of that programme as an encouragement to buy, so-called "legitimate editorial reference" to the magazine is allowed.

Cable and satellite are also exempted from the rules. They were regarded as almost extra and have no public service remit. The past two years have seen consolidation among the cable operators to the point that 65 per cent. of the UK's cable systems are now controlled by two groups.

It is interesting to compare our approach with that of Europe and the rest of the world. There are only two countries in Europe which have not taken a more progressive approach, France and Sweden. They are the only countries that regard print publications as a special category and therefore subject to different rules. In France, as with many regulations, I am afraid that only lip service is paid to the rules. In neither America, our main competitor, nor Australia are there any restrictions.

Soon we shall see the launch in this country of BDB. This will provide a huge proliferation of channels, choice for the viewer and a need for programmes. It will mean interactive dialogue through the system. The interactive capacity will make it possible for publishers, if allowed, to recreate the magazine experience in television. Viewers will be able to view masthead programmes at a time that suits them. Perhaps even more remarkable is that digital will enable viewers to select pages of a magazine or different camera angles while watching a sporting event. For example, in France, Germany and Italy one can now watch Formula One grand prix from several vantage points. As I understand it, the ITC sees no logical reason why BDB should not be in the same category as cable and satellite, but has not finally decided.

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BSkyB is to launch its own satellite digital channels next year. BSkyB already receives a huge amount of promotion from its newspapers and gives promotion to its newspapers that are part of the Murdoch empire. This is at a time when its non-sport and movie channels have small audiences.

What is the Government's view on terrestrial digital? In order for BDB to plan for its launch it must have an answer from the ITC. I understand the position to be that ITC intends to allow masthead on BDB. Can the Minister confirm that this evening? If so, it begs the question: why not ITV? I understand the concern of the ITC that it does not want peak hours dominated by masthead programmes, but there are many off-peak hours that would be suitable. Much more importantly, there are regional slots in each of the 15 ITV regions that need good programming. Relaxation of the rules would improve programmes for these markets. The more spent on production, the better the schedule for the viewer.

Regional programming is important. Do the Government really believe that if Farmers Weekly produced a programme on sheep farming for Border Television that would not be beneficial for Border viewers? There is already a control system. The ITC has an advertising and sponsorship directorate and the terms for cable and satellite for masthead are found in its code of programme sponsorship.

There is no evidence that viewers have so far had any reservations about masthead programmes that they have seen on the television; quite the reverse. Viewers enjoy this new relationship between television and text. Quality can be maintained. The experience from America I believe proves the point. For example, National Geographic Television is masthead's first global brand. It is high quality and very successful.

This is an industry where the old divisions between newspapers, publishers and television are being broken down. You can read a newspaper on the television, read a book on the Internet and watch television on a computer. To compete with the rest of the world and multimedia conglomerates rules that hinder the development of our media industry must go. They have gone in nearly all of our competitor countries. At the moment the only multimedia company in this country is in effect the BBC, which is allowed to do what ITV, Channel 4 and Channel 5 are not allowed to do. If the Government care about the ability of the industry to export its product and prevent the dominance of the industry by US material that has happened so often in the past in broadcasting, they must act.

I know that the Government care about the independent production sector in this country. Relaxation of these artificial rules would give the independent sector an enormous boost. They are the ones with the expertise to make programmes. The industry will also be able to cut costs and be more competitive. Your Lordships will also remember that payments from Channel 4 to the ITV companies are being phased out and the ITV companies are being asked to renew their franchises. The Treasury currently extracts £450 million a year from ITV. If the Treasury

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wants the maximum revenue, ITV must be competitive, so a change of the rules is necessary for it to compete on equal terms.

The current rules are an anomaly. For example, they allow Channel 5 to air features produced in conjunction with magazines and newspapers in its news programmes. The rules are not all the same.

Perhaps I may return briefly to the public service remit. I do not believe that there is a difficulty for channels which have a public service remit and those which do not. The situation for the BBC proves that that is not a problem. Television viewers in this country have a right to quality and choice. I believe that magazine publishers have a great deal to offer terrestrial television which could be new and exciting for the viewers. Earlier this year the ITC agreed to review the case for allowing masthead programmes on terrestrial channels next year. I hope that tonight the Minister will be able to announce that the review will take place sooner rather than later. I look forward to her reply.

9.50 p.m.

Lord Gordon of Strathblane: My Lords, I have no wish to detain the House from the pleasure of hearing my noble friend Lady Ramsay of Cartvale replying to the debate and speaking for the first time at the Dispatch Box. Therefore, I shall be brief.

Two issues are involved. First, broadcasters, particularly those in television, should not abuse the considerable promotional power which they enjoy as a result of having exclusive access to that medium. I can fairly say that I approach the question neutrally and can see both sides of the argument. The truth is that I have been on both sides during my short career in broadcasting.

In the early days of Radio Clyde, the commercial radio station which I started in Glasgow, we were aware that our presenters were running discotheques in the evenings, quietly mentioning on air, "To those of you I met at the XYZ discotheque, thank you for a lovely evening and I will play this record for you." It occurred to me that it was entirely appropriate that we should run the discotheques and derive the benefits.

That seemed fine and I did it in all innocence. There was then a complaint to the Independent Broadcasting Authority from discotheque owners in Glasgow stating, "These chaps on Radio Clyde have the benefit of free advertising and that is an unfair advantage." There was a great deal of merit in the case and rules were introduced which stopped our promoting on air discotheques we were running unless we were actually broadcasting them.

On the other side of the coin, I may have approached the noble Viscount, Lord Astor, when he was a Minister at the Department of National Heritage and I was chairman of the Commercial Radio Companies Association asking for some curbing of the BBC's tremendous power to cross-promote radio and television, which the commercial sector does not enjoy. Even if we were able to strike a deal with the commercial television companies in our areas, recent changes prohibit an ITV company giving free

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promotional time to a commercial radio station. It must take that out of its advertising time, which is distinctly unattractive.

I am aware of the distinct benefits conferred on great works of literature by their serialisation on television, commercial or the BBC. It may shock the House to know that I welcome that. If the only thing that brings people to Jane Austen or Evelyn Waugh is the serialisation of Pride and Prejudice or Brideshead Revisited, so be it; it is part of the educational process and it is one of the good aspects about public service television in this country.

Furthermore, the BBC inevitably promotes certain programmes in magazines. That was the subject of an OFT reference which I believe went to the European Court. Rules were drawn up to ensure that the BBC could not steal a march over other commercial magazine publishers by promoting its own magazines. The BBC is a large magazine publisher. The main difference in all that and masthead programming is that in the former the magazine follows the programme. The idea is to allow the programme to come from the magazine publishers. I have no objection to that in principle, provided certain points are observed.

The noble Viscount slighted overstated the case when he assumed that there would be a great creative explosion. Magazine publishers do not have the technical resources to make television programmes. They would go either to the terrestrial broadcasters or to independent producers, which might be welcome. Therefore, their infusion is not likely to be creative but rather financial. It is none the less welcome for that.

The problem is that control, both editorial and otherwise, must remain with the broadcasters. I am one of those who did not welcome the Broadcasting Act 1990. The only thing that could be said for it was that it might have been a good deal worse had it not been for a considerable rearguard action by the Home Office team under the noble Lord, Lord Hurd. If there is to be any quality in broadcasting, then clearly the broadcaster is answerable for the content. The broadcaster can also be sued for any libel that occurs in a programme.

We are talking about something which could be the same difference, as it were. The theory in broadcasting before 1990 was that none of us was allowed to broadcast a programme suggested by an advertiser. Let us all admit that that was probably honoured in the breach in that it was very simple to say, "We are doing such and such a programme" or for an advertiser to mention, "If you were to do such and such a programme, we would certainly support it or sponsor it." Nevertheless it is an important distinction that the broadcaster must remain in charge of the programme and its editorial content.

There is another issue involved, however, which, in its own way, is rather more important. I refer to the whole basis on which we regulate broadcasting. I have sympathy with one part of what the noble Viscount said but I am slightly worried about the other. I shall deal with the bit that I am worried about first.

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I do not believe that there will be an explosion of channels on digital--or there will be, but they will last about 18 months. Half the cable channels at the moment are losing money; most are hanging in there hoping that they will survive longer than their neighbours and therefore benefit from a smaller market.

It is important that we do not allow ourselves to be dictated to by the technological imperative and end up, if we stand the old adage on its head, in a position where invention becomes the mother of necessity and, just because there is the capacity for more channels, we feel that there must be more channels. There can only be more channels worth watching if they have the necessary resources, both creative and financial. The fact that digital broadcasting makes more frequencies available does not reduce the cost of making good programmes. If many cable channels are failing at the moment, they are not suddenly going to become wealthy enough to make even more programmes and produce even more channels. We need to be careful about that.

I join the noble Viscount in asking the noble Baroness gently to nudge the Government in the direction of drawing the ITC's attention to the fact that there are anomalies.

I hope people will not think that I have gone native after only two months in this place if I express nostalgia for things. It is a nostalgia I have felt for a long time. Prior to 1990 all broadcasting in this country operated under the same public service rules. They were enshrined in the BBC's Royal Charter and, in the case of the independent broadcasting sector, in an Act of Parliament, if anything even more tightly drawn.

Six out of seven of the public service obligations were repeated in the 1990 Act and apply to cable and satellite as well. It is important that public service does still apply to them. The notable exception is the famous "inform, educate and entertain" which, instead of being a universal obligation, is now enforced with varying degrees of rigour by the ITC through individual licences with terrestrial broadcasters, Channel 3, Channel 4, satellite and cable. There is even a disparity of treatment between Channel 3 and Channel 4, let alone between terrestrial broadcasters and satellite and cable.

A viewer sits watching a television set. Whether it is delivered by satellite, cable or terrestrial broadcasting is immaterial to him. If we are to have a level playing field and fair competition between them, we should have the same rules. I tend to agree with the noble Viscount that if masthead programming were to be a good thing, we should all be allowed to do it. If, on the other hand, it is a bad thing, then nobody should be allowed to do it. It is patronising and disparaging of the ITC to say, "We are a bit worried about this, but not many people watch cable and satellite so we will try it out on that." It is like decriminalising cannabis for redheads to see if it works and what effect it has.

I believe that there is a case for creating a level playing field. To that extent, I join the noble Viscount in suggesting that the ITC may feel that the year is up and that it is time to bring everyone into line, wherever that line is drawn. For my part, I do not care whether

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they are all allowed to do masthead programming or none is allowed to do so, but there should not be one law for cable and satellite and another for terrestrial.

10 p.m.

Baroness Wharton: My Lords, I thank the noble Viscount, Lord Astor, for introducing this debate this evening. Over the weekend, reading a critique of the new James Bond film, I was struck by the reference to various brand names of the equipment seen on the screen, down to a Brioni suit, an Omega watch, a BMW motorbike and so on. Of course, that is all very European for our rather special British secret agent.

It is commonly believed that product placement provided part of the funding for "Tomorrow Never Dies" and we, the viewers, cannot help but notice all that advertising which is now on the screen. But I was not aware of it in past films. That may be because it was not very noticeable. I guess that it is a sign of the times, because the costs of TV drama and film are spiralling upwards with no sign of stopping. Therefore, it is not surprising that sponsors are now able to place their products on screen in addition to being included prominently in screen credits. I suppose that is fair enough.

I mention that only because it has a bearing on this evening's debate. Clearly there is a case to be argued for and against the expansion of masthead programming on free-to-air Channels 3, 4 and 5. The ITC first published its code on programme sponsorship in 1991, and a revised code was published earlier this year. Next spring will see another reassessment. Therefore, nothing is set in concrete. Reading the original code on programme sponsorship and now the reasons behind the latest review, I sense a move towards a relaxing of certain rules because the ITC accepts that the context has changed sufficiently to justify continuing a review of its position with regard to this form of programming. Will the 1989 EU "Television without Frontiers" directive on sponsorship have to be updated in order to take account of the new sources of funding that masthead programming offers?

The BBC, as we know, operates on guidelines which are somewhat different from those of the ITC in that they are only guidelines and not statutory. Being a publisher in its own right, there is a natural cross-over for specific programmes. I understood that both "Gardeners' World" and "Top Gear" were television programmes before being published in magazine form. I stand to be corrected on that by the noble Viscount. I have not seen any masthead programming involving an independent magazine title. One could argue that, ultimately, the BBC might be accused by the viewer of reaping rich rewards from advertising through the back door. In that case why are we paying it increased licence fees? At the moment, we all own a television and so are obliged to pay whether or not we watch BBC programmes.

I have sympathy with both sides of the argument because all three commercial channels have public service obligations which are enshrined in the Broadcasting Act. Air time, particularly in the case of

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Channel 3, is somewhat limited because several ITV companies are involved. Channel 4 was set up originally to devote a fair proportion of its programming to minority interests. Channel 5 is getting over teething problems and is still relatively new. Therefore, we shall have to see what happens in the future.

Digital terrestrial broadcasting is around the corner and, in view of the growth in cable and digital satellite stations, many more channels will have to compete for currently available and new material. Advertising revenue in itself cannot possibly hope to fund what the viewers want to see. I for one do not wish to see endless repeats.

Up until now, we have every reason to be proud of our high quality television. Other countries recognise that and we must not lose the advantage which we already have. Where do we draw the line in preventing the sponsor influencing the programme content in a way that might conflict with the broadcaster? Commercial TV is committed to showing a variety of programmes, as they are not themed channels. ITC licensing requirements insist on maintaining diversity. That must be right but, as I said before, the subject is under constant review. In the end market forces will prevail and there will be a compromise between both sides regarding masthead programming, but I, for one, hope that we proceed with caution and do not rush into it.

10.5 p.m.

Lord Newby: My Lords, we wish to support the noble Viscount, Lord Astor, in raising this issue, principally on three grounds. The first is the straightforward one of equity. As we have heard, the BBC has already allowed masthead broadcasting; satellite and cable channels have allowed masthead broadcasting; and given the increasingly competitive nature of the television network, I take the point made by the noble Lord, Lord Gordon, about the extent to which the digital channels may or may not proliferate in the longer run. It seems to us that to deny terrestrial TV the opportunity to schedule masthead programmes is to put it at a disadvantage which simply is not justified.

Secondly, looking at the question of diversity, creativity and quality, I was particularly interested to read in today's Financial Times a survey that Cable and Wireless has done of what its consumers want from their television programmes. An overwhelming majority said that they wanted better programming rather than more channels. It is hardly surprising, given the quality of many programmes already on television, that this should be the case. However, given that it is the case, there should be a prejudice on the part of all of us to support moves which will lead to better programming.

The question therefore is whether allowing TV programmes to be based on magazine titles will lead to better programmes. On balance we think that that is likely to be the case. The kind of magazine which is likely to become involved in making programmes is almost certainly operating in a highly competitive sector. It will almost certainly have a powerful brand already and will be concerned about maintaining the strength of that brand in the marketplace. It is, therefore,

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likely to want to make good quality programmes. As the BBC experience has already shown, the content of such programmes could be argued to strengthen rather than to dilute the public service ethos of the channel. The proposed change should lead to an increase in the production of UK programmes, or programmes in the UK, which we believe is to be welcomed.

I also share the hope of the noble Viscount, Lord Astor, that masthead programming could strengthen regional broadcasting--a matter which all of us, whichever region we are in, are always keen on.

My final argument for supporting the subject of the debate relates to the situation with ITC and the timetable for considering the issue. ITC has the difficult job of regulating an industry which is moving at breakneck speed. Whether you agree with the speed or direction it is going or not, there is no doubt that every day there are major changes in the technology, the regulatory framework and the international situation in which the industry is operating. While ITC has to move in a deliberative way, it also has to move with due pace, and in this whole area it has sometimes taken deliberation to an almost extreme level.

We understand the need to avoid taking steps which could reduce either the quality or diversity of programming. But, as I said, the balance of probability is that allowing masthead broadcasting on terrestrial television would enhance rather than reduce quality and diversity. We would therefore urge ITC to move on this issue without delay. It is for those three reasons that we strongly support the thrust of the Question of the noble Viscount, Lord Astor.

10.10 p.m.

Baroness Ramsay of Cartvale: My Lords, I, too, am grateful to the noble Viscount for raising in this House an interesting Question in which many complex issues of concern about broadcasting are involved. That has been shown in the valuable contributions to this rather short debate.

I shall endeavour to satisfy as many of the points that were raised as I can. I thank the noble Viscount for his courtesy in giving me notice of his main questions. Before I begin my general replies, I welcome the contribution of the noble Lord, Lord Gordon of Strathblane, who speaks not, as he modestly said, from short experience but from rather long professional experience in the field of broadcasting. He mentioned some interesting issues of principle and outlined the problems of achieving some kind of level playing field among the various contending interests.

I am also grateful for the contribution of the noble Baroness, Lady Wharton. In answer to a direct question which she addressed to me, I do not believe that the ITC will need to amend its code on advertising sponsorship to take account of the EC television without frontiers directive. I do not think that is necessary. However, I stand to be corrected on that and I shall write to her if that is not the case. I also agree with her that nothing is set in concrete. She pointed out that last spring it was decided that the review would take one year; in other words, the review will be completed this spring. I do

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not think it is reasonable to demand an outcome of that review a month or two earlier than that. The noble Baroness is right in that programmes must come first and that we should all exercise caution before we rush into this particular minefield.

I am also grateful to the noble Lord, Lord Newby, for his contribution. He made the important point that what consumers want is quality and not quantity. I am not quite so sure that I go along with his case for "masthead programming" as being quite so clear cut in terms of improving quality. However, it is important to bear in mind that it is quality not quantity that viewers and listeners want.

The Independent Television Commission is responsible for regulating commercial television. It is its decision as to whether "masthead programming" should be allowed, and not the Government's. Nevertheless I am sure that the ITC will take due account of what has been said tonight in your Lordships' House. I do not think that I need--in the words of the noble Lord, Lord Gordon--to nudge it to do so. I am sure that the ITC will watch and will read what has been said here tonight.

The ITC published a revised Code of Programme Sponsorship this spring. Paragraph 10.6 of that code deals with "masthead programming", which it defines as programming made or funded by periodical, newspaper or informational software publishers which incorporates the name of the publisher's product in its title and which has editorial content similar to that of the publisher's product. Such programming is not allowed on the terrestrial television channels; namely, Channels 3, 4 and 5.

However, as a result of the revised code, "masthead programming" is permitted on cable and satellite channels. In announcing the revised code, the ITC said it would review the arrangements for such programming after one year--that will be done this spring--taking into account any issues which emerge in connection with "masthead programmes" which are broadcast on satellite and cable. Although the ITC has not used the phrase, it seems to me that in some ways this is a kind of pilot scheme. I understand that since the new code was introduced, BSkyB has launched programmes based on Good Housekeeping and Zest magazines and Carlton Select has launched one related to Ideal Home magazine. UKTV, a joint venture between Flextech and the BBC, also carries a preview programme called Radio Times on one of its cable channels.

I should, however, like to clarify the precise nature of the restriction on masthead programming, and in particular deal with the perceived disparity between the arrangements applying to BBC public service channels and those applying to Channels 3, 4 and 5. Under its Charter and Licence Agreement the BBC is not permitted to take advertising or accept programme sponsorship for its public service channels without the express permission of the Secretary of State. The BBC could not, therefore, base its public service programmes on an existing publisher's product, but can, and does, use its resources to launch its own magazine titles to complement its programmes. The BBC therefore

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engages in masthead publishing, using programmes to promote magazines, as opposed to masthead programming.

The BBC has been very successful in this area, enabling it to become the UK's third largest periodicals publisher, with a turnover in excess of £100 million per annum. This provides a valuable source of additional income to supplement the licence fee. Like other BBC commercial ventures, publication of magazines is subject to the BBC's fair trading commitment, which places a duty on it to compete fairly and openly in commercial markets, at no risk to the licence-payer. BBC magazines are not therefore subsidised by the licence fee.

Additionally, the BBC has given undertakings to the Office of Fair Trading concerning the on-air promotion of its publications to ensure fair trade. The BBC, like all other broadcasters, is subject to both domestic and European competition law and the Office of Fair Trading can intervene if it feels that the BBC is abusing its position. The BBC will also be subject to the prohibitions on anti-competitive behaviour and abuse of dominant position in the new Competition Bill.

Channels 3, 4 and 5 similarly could launch magazines, and indeed other products, to complement their programmes. I believe that fans of Channel 4's popular programme, "Brookside", can now purchase Brookside Magazine. There is no doubt considerable potential for licensees to emulate the success of the BBC in launching programme-related magazines, whether in their own right or in conjunction with existing periodicals publishers.

Where a commercial licensee seeks to promote a magazine or other publication based on its programmes, it is subject to restrictions in the ITC programme code. Paragraph 10.3 of that code states that the licensee must retain responsibility for the content of any material promoted. Promotions must be clearly distinguishable from commercial advertising and must not be included within a programme itself. Announcements about programme-related publications must be brief, and confined to the name of the publication, the price and details of its availability. Such announcements are in turn subject to the ITC's general rules in its Code of Advertising Standards and Practice. Those restrictions apply equally to the new category of masthead programming allowed on cable and satellite programmes.

The purpose behind the ITC's rules in this area is to provide protection for the consumer. Television is a uniquely powerful medium, and UK free-to-air terrestrial channels enjoy substantial audiences. Because of television's ability to influence opinion and engender debate, it is subject to a number of content regulations, including a requirement to be impartial. Hitherto, the ITC has ensured that programmes and advertising must be clearly separated and the content of programmes should not be influenced by an advertiser or programme sponsor. In permitting masthead programming on cable and satellite channels, the ITC recognised that the resources and editorial expertise which publishers could

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potentially offer to television are considerable and could enhance the choice and quality of programmes available to the viewer--a point made by the noble Viscount.

However, masthead programming is likely to have a strong and direct promotional effect on sales of parent publications, which is not consistent with rules applying to other sponsors or advertiser suppliers. Furthermore, titles which could benefit from masthead programming are not subject to the same rules as to content and impartiality as any programmes which might bear their name, and clearly there is a greater risk that the editorial independence of such programmes might be compromised.

While some 75 per cent. of homes still have access only to terrestrial channels, and those channels still command large audiences, it is understandable if the ITC proceeds cautiously on allowing masthead programming on Channels 3, 4 and 5. Developments in the media, including multi-channel terrestrial television and convergence between traditionally distinct areas such as publishing and broadcasting, will need to be reflected in rules on advertising and programme sponsorship as the market matures. For the time being, consumers make a clear distinction between broadcasting and publishing and I believe the current rules reflect the realities of the media market as it stands at present. As I have already indicated, the ITC will review the current arrangements for masthead programming next spring. Its task is to ensure that the regulatory framework remains up to date.

The BBC's public service channels do not enjoy an advantage over their commercial rivals in being able to provide masthead programming. Only cable and satellite channels can offer such programmes at present. As I

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said, the ITC will be reviewing this position in spring next year. As to masthead publishing, I believe that the BBC's fair trading commitment and its undertaking to the Office of Fair Trading regarding the on-air promotion of its publications put it on much the same footing as Channels 3, 4 and 5, which may develop programme-related magazines if they wish.

As to the specific question put to me by the noble Viscount, BDB is in the same category as cable and satellite for masthead programming. Under current regulations it will not be allowable on ITV simulcast on digital. But the ITC is reviewing the code next spring and that will be part of the review, as I understand it.

While I understand that periodical publishers believe it is unfair that the BBC has been able to become a major publisher while they are prevented from developing their magazines as television programmes, it is open to publishers to collaborate with broadcasters in the provision of programme-related magazines, subject to the rules set down by the ITC.

I hope my statement has clarified the position on masthead programming.

Baroness Farrington of Ribbleton: My Lords, prior to moving that the House do now adjourn, I would have wished to raise a comment about the temperature in the Chamber. However, I appreciate that if I were to go through the various draught ingresses into the Chamber, the maximum time I could take to do it would be five minutes. Therefore, I beg to move that the House do now adjourn.

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

        House adjourned at twenty-three minutes past ten o'clock.

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