House of Lords - Explanatory Note
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Clause 330: Promotion of equal opportunities and training

684.     OFCOM are to include in the licence for every service to which this clause applies (as defined in subsections (5) and (6)) conditions to promote equality of opportunity in relation to employment with the licence holder. The conditions must promote equality between men and women and between different races. Licensees must also be required to promote the fair treatment of disabled persons.

685.     OFCOM must also impose on licensees any conditions necessary to ensure that licensees make such arrangements for the training and retraining of their employees (employed both in the provision of the service and in the making of programmes to be included in the service) as OFCOM consider appropriate.

686.     The conditions imposed by OFCOM must require licensees to ensure that the arrangements put in place by the licensees to meet equal opportunities and training requirements are notified to those affected by them. Also the licensee must review the arrangements from time to time and publish annually his observations on their operation.

687.     Those licensees that employ no more than 20 people, or broadcast for no more than 31 days per year, are not covered by these provisions.

Clause 331: Corresponding rules for the BBC and the Welsh Authority

688.     This clause provides that Schedule 12 shall have effect. Schedule 12 provides for the imposition on the BBC and the Welsh Authority of obligations that correspond to those described above in the regulatory regime for licensed providers and is described in more detail below.

Clause 332: Review of fulfilment by Welsh Authority of public service remits

689.     The Welsh Authority is under a duty to ensure that that S4C, S4C Digital and services approved by the Secretary of State under clause 202 fulfil their public service remits. The Secretary of State may review the Welsh Authority's performance in this regard, but not within five years of the passage of the Act. Any subsequent review must not be undertaken within a further five-year period. The Secretary of State must consult the National Assembly for Wales and the Welsh Authority on the matters under review, must have regard to their opinions when reaching her conclusions and must publish a report of those conclusions after each review.

Clause 333: Directions to Welsh Authority to take remedial action

690.     If the review described in the notes to clause 332 above reveals that, without reasonable excuse, the Welsh Authority has not properly performed their duty to fulfil their public service remits, the Secretary of State may, having consulted the Welsh Authority, direct the Welsh Authority to take remedial action. Any such direction must first be approved, in draft, by both Houses of Parliament.

Clause 334: Imposition of penalties on the Welsh Authority

691.     This clause gives OFCOM the power to fine the Welsh Authority where they are satisfied that a contravention of any requirement listed in subsection (1) has occurred. Broadly, these include Tier 1 or Tier 2 obligations relating to programme quotas, news and current affairs, programming standards, advertising or sponsorship, complaints procedure publicity, international obligations, assistance for disabled people and fairness. The maximum fine is £250,000. Under subsection (6), the Secretary of State may vary the maximum penalty by order. Subsection (4) states that OFCOM may not fine the Welsh Authority without giving it a chance to make representations in its defence. Subsection (5) makes clear that the imposition of a fine would not prevent OFCOM from issuing a direction to the Welsh Authority, under paragraph 15 of Schedule 12, to broadcast a correction or a finding by OFCOM of a breach of the standards code issued under clause 312.

Clause 335: Contraventions recorded in Welsh Authority's annual report

692.     This clause amends Schedule 6 to the Broadcasting Act 1990 to ensure that any notifications given to the Welsh Authority by OFCOM about contraventions by the Authority of either of the Broadcasting Acts or Part 3 of this Bill are recorded in the Welsh Authority's annual report.

Clause 336: Provision of information by Welsh Authority

693.     This clause imposes a duty on the Welsh Authority to provide such information as OFCOM reasonably request in order that OFCOM may fulfil their functions, under this Bill and the Broadcasting Acts, as regards the Welsh Authority.

Clause 337: Transmission of statement of findings

694.     This clause amends sections 40 and 109 of the Broadcasting Act 1990 (power to direct licensee to broadcast correction of apology). To require instead that OFCOM may direct the broadcast of a correction or a statement of OFCOM's findings in relation to a contravention of licence conditions, for example failure to comply with OFCOM's standards code. This change arises from a recommendation of the Joint Committee on Human Rights.

Clause 338: Financial penalties imposable on licence holders

695.     Schedule 13, which modifies the maximum penalties that may be imposed on the holders of Broadcasting Act licences, shall have effect. Further detail on this Schedule is set out below.

Clause 339: Broadcasting Act licence fees and penalties

696.     Under the provisions of subsection (2), where OFCOM receive a payment of the kind listed in subsection (1), it is recoverable by them as a debt due from the person who must pay it. These payments include amounts paid under licences granted under the Broadcasting Acts 1990 and 1996 and fines imposed by OFCOM on licence holders for contraventions of Parts 1 or 3 of the Broadcasting Act 1990, Part 1 or 2 of the Broadcasting Act 1996 and Part 3 of this Bill.

Chapter 5: Media Ownership and Control

Clause 340: Modification of disqualification provisions

697.     This clause amends Part 2 of Schedule 2 to the Broadcasting Act 1990. Under subsection (1) persons not resident or established in the EEA are no longer disqualified from holding Broadcasting Act licences. The disqualification of advertising agencies under paragraph 6 of that Part is also lifted. Subsection (3) allows OFCOM to give consideration to applications from religious organisations for the following licences granted under the Broadcasting Acts 1990 and 1996:

  • restricted service licences;

  • digital programme licences;

  • digital additional services licences;

  • licences to provide television licensable content services;

  • licences under Part 3 of the 1990 Act (other than a national licence) - meaning local analogue radio licences, licences to provide radio licensable content services, and licences to provide additional services;

  • national and local digital sound programme licences.

698.     OFCOM are required to publish guidance for persons wishing to make such applications.

699.     Subsections (5), (6) and (7) allow the Secretary of State, following consultation with OFCOM and with Parliament's approval, to make an order amending or repealing the provisions of paragraph 2 or 2A of Part 2 of Schedule 2 to the 1990 Act (those that deal with the remaining disqualifications relating to religious bodies).

Clause 341: Licence holding by local authorities

700.     This clause inserts a new provision into Part 2 of Schedule 2 to the Broadcasting Act 1990, the effect of which is that local authorities will no longer be disqualified from holding a licence where the service in question is provided solely in order to comply with the functions of local authorities under section 142 of the Local Government Act 1972.

701.     The function referred to in section 142 relates to the provision by a local authority of information concerning the services available within the area of that authority and that are provided by the authority, another local authority, or any authority, board or committee which discharges similar functions. Subsection (2) provides for the insertion into section 142 of provisions allowing a local authority to broadcast such information, or information generally relating to the functions of the authority, by way of an electronic communications network or electronic communications service.

*electronic communications network and electronic communications services are defined in clause 29.

702.     Subsection (3) amends section 2(1) of the Local Government Act 1986 in order to widen the prohibition on a local authority from publishing any material which appears to be designed to affect public support for a political party, to a local authority arranging for such a publication.

Clause 342: Relaxation of licence-holding restrictions

703.     Subsection (1) repeals the rules in Parts 3, 4 and 5 of Schedule 2 to the 1990 Broadcasting Act relating to restrictions on accumulations of interests and on licence holding by newspapers and telecommunications providers, some of which are replaced by Schedule 14 of this Bill. Rules relating to licences for local sound broadcasting and local digital sound programme service licences are to be replaced by provisions made by order under paragraphs 11 and 12 of Schedule 14. Subsections (4), (5) and (6) ensure that these rules will not lapse before the relevant orders come into force.

704.     Part 1 of Schedule 14 establishes the new rules relating to the ownership of television services, replacing the rules repealed by clause 342. These apply only to Channel 3 services and not, as before, to Channel 5.

705.     Paragraph 1 sets out the circumstances in which a person may not hold a licence for a Channel 3 service. A person may not hold any such licence if he runs national newspapers with more than a 20 per cent of the total national market share. No one may own a regional Channel 3 licence if he runs local newspapers which together have more than a 20 per cent of the local market share in the coverage area of the service. In calculating the relevant market share of any proposed licensee, he is to be treated as though he and every person connected with him are one person.

706.     Paragraph 2 establishes further restrictions on participation in companies holding Channel 3 licences. No one may hold more than a 20 per cent share in such a company if he runs national newspapers with more than a 20 per cent share of the total national market share. A company in which such a newspaper proprietor holds more than a 20 per cent share cannot be a participant with more than a 20 per cent share of a company that holds a licence. No licence-holder may own more than a 20 per cent share of any national newspaper company.

707.     Paragraph 3 explains how 'national newspaper', 'local newspaper' and 'market share' are to be defined for the purposes of the above rules. References to national or local newspapers are references to newspapers that circulate wholly or mainly in the United Kingdom (national) or in a part of the United Kingdom (local). Where there is any difficulty with this definition (for example if a newspaper is published in different regional editions) OFCOM have the power to define whether the newspaper in question is national, local or both. Market share is defined as the percentage of total newspaper sales in the relevant area (either the UK or a Channel 3 licence region) represented by sales of the newspaper in question over the previous six months. If a newspaper is distributed free of charge, 'sales' are taken to include the number of copies distributed.

708.     Paragraph 4 identifies a person as running a newspaper if he is either the proprietor of the newspaper or controls a body which is the proprietor. The definition of 'control' is that of the Broadcasting Act 1990, Schedule 2, Part 1, paragraph 1(3).

709.     Paragraph 6 gives the Secretary of State power to repeal or modify any of the rules in Part 1 by order.

710.     Part 2 of Schedule 14 establishes the rules relating to the ownership of radio multiplex licences, again replacing the rules repealed by clause 342. Paragraph 7 prevents one person from owning more than one national radio multiplex licence at the same time.

711.     Paragraph 8 deals with the ownership of local radio multiplex licences. It establishes a limit of one multiplex licence per owner in areas where there is overlap of services so that the potential audience of one service includes at least half the potential audience of another. OFCOM are to lay down the technical standards by which 'coverage area' can be determined. If a person is in contravention of this rule when it is enacted, but is not in contravention of the existing rules on multiplex ownership, the contravention will be ignored and no divestment will be required until another person becomes the holder of the licences in question.

712.     Under Paragraph 10, the Secretary of State is given power to repeal or modify any of the rules in Part 2 by order.

713.     Part 3 of Schedule 14 outlines the scope for the Secretary of State to impose by order new rules on the holding of local sound broadcasting licences and local digital sound programme services. Such rules would replace those repealed by clause 339.

714.     That Part allows the Secretary of State to impose limits on the number of licences that any person owns, or to prevent a person owning any licences at all in certain circumstances. The factors that would be considered in establishing rules of this sort include:

  • the degree of overlap of the different services involved;

  • the size of the potential audience for those services and the times when they would be made available;

  • the extent to which there would be other persons with licences to broadcast to the same potential audience, the number of those persons and the audience size and coverage area of their stations;

  • whether that person runs national newspapers, and the national market share of those newspapers;

  • whether that person runs local newspapers that serve any part of the coverage area for which they would hold a radio licence, and the newspapers' local market share;

  • whether and to what extent the coverage area of the licence in question overlaps with the coverage area of a regional Channel 3 service for which he also owns the licence.

715.     Paragraph 12 gives the Secretary of State the same powers to impose limits on local digital sound programme services, with the exception that the newspaper and Channel 3 assets held by a person are not included in the list of factors that may be considered when establishing rules.

716.     Paragraph 13 explains that definitions of the different forms of licence-holding, and of national and local newspapers and their market share, may be made under the order-making powers in paragraphs 11 and 12. Paragraph 14 contains transitional provisions for orders made under paragraphs 11 and 12. If a person is in contravention of any rule established by such an order when it is enacted, but is not in contravention of the rules that preceded it, then the contravention will be ignored and no divestment will be required until there is a relevant change of circumstances in the licence-holding arrangements.

717.     Part 4 of Schedule 14 contains supplementary provisions relating to its implementation and interpretation. There is a requirement for the Secretary of State to consult OFCOM before making an order under any provision in the Schedule. There is also a stipulation that Part 1 of Schedule 2 to the 1990 Act should apply to Schedule 14 in the same way as it does to Part 2 of that Schedule. An overlapping area is defined as including any area that is the same as, or lies wholly inside, another area.

Clause 343: Restrictions relating to nominated news providers

718.     Subsection (1) allows for a person to hold up to a 40 per cent interest in the nominated news provider, replacing the existing limit of 20 per cent.

719.     Subsection (2) explains that the 40 per cent limit applies to a participant who holds a regional Channel 3 licence as if all such licence-holders, together with the persons connected with each of them, were one person. The effect is that ITV licence holders between them can hold no more than a 40 per cent share. Other participants are also considered to represent the same person as those connected with them.

720.      Subsection (3) gives the Secretary of State order-making powers to repeal or modify any of the restrictions on ownership of the nominated news provider. Any order must be made either on the recommendation of OFCOM or after consulting OFCOM.

Clause 344: Changes of control of Channel 3 services

721.     OFCOM are to include in the licence for every Channel 3 service conditions to ensure that any body corporate holding such a licence notifies OFCOM in advance of any proposals that may result in a change of control of the licensee, or of a person connected with the licensee who is, actually or potentially, involved in providing programmes for inclusion in the licensed service.

722.     Where such a change of control may result, or has resulted, over a body corporate holding a Channel 3 licence, OFCOM shall review and publish a report on the effects or likely effects, and their proposed response. OFCOM must review the impact of the change of control on the quality and range of regional programmes and the effect on the regional character of the service (subsection (6)), as well as the amount of time given in the service to regional programmes, the proportion of regional programmes made in the relevant region and the extent to which persons are employed in and decisions are made in the relevant region in connection with the service (subsection (7)). They must also review the effect on the time allocated in the service to original productions and news and current affairs programmes (subsection (4)); and the extent to which Channel 3 programmes in the service are made in the UK outside the M25 area, the range of such programmes, the extent to which expenditure by the Channel 3 provider on Channel 3 programmes is referable to programme production at different production centres outside the M25, and the range of such production centres to which the expenditure is referable (subsection (5)).

723.     In the case of a national Channel 3 service, OFCOM will only review the effect on programme production and production expenditure outside the M25 area where a national Channel 3 service is subject to relevant conditions under clause 281 (programme production) or OFCOM otherwise consider it would be appropriate.

Clause 345: Action following review under s. 344

724.     If, following a review under clause 344, OFCOM consider that the effect of the change of control is prejudicial to any of the matters they have reviewed, then under clause 345 they must vary the licence, the only exception being where the matter in issue relates to subsection (7) of clause 344, in which case they have a discretion whether to vary the licence. Any such variation may lead to the inclusion in the licence of conditions that are more burdensome than those included prior to the variation. However, they must be conditions that would have been fulfilled throughout the twelve months immediately before the relevant change of control.

725.     The licensee must be given a reasonable opportunity to comment on the report before OFCOM vary the licence. The variation shall not be effective until the change of control actually occurs.

Clause 346: Changes of control of Channel 5

726.     OFCOM are to include in the licence for Channel 5 conditions to ensure that any body corporate holding such a licence notifies OFCOM in advance of any proposals that may result in a change of control of the licensee, or of a person connected with the licensee who is, actually or potentially, involved in providing programmes for inclusion in the licensed service.

727.     Where such a change of control may result, or has resulted, over a body corporate holding the Channel 5 licence, OFCOM shall review and publish a report on the effects or likely effects, and their proposed response. OFCOM must review the effect of the change of control on the time allocated in the service to original productions and news and current affairs programmes; and the extent to which Channel 5 programmes in the service are made in the UK outside the M25 area, the range of such programmes, the extent to which expenditure by the Channel 5 provider on Channel 5 programmes is referable to programme production at different production centres outside the M25, and the range of such production centres to which the expenditure is referable.

Clause 347: Action following review under s. 346

728.      If, following a review under clause 346, OFCOM consider that the effect of the change of control is prejudicial to any of the matters they have reviewed, then under clause 347 they must vary the licence. Any such variation may lead to the inclusion in the licence of conditions that are more burdensome than those included prior to the variation. However, they must be conditions that would have been fulfilled throughout the twelve months immediately before the relevant change of control.

729.     The licensee must be given a reasonable opportunity to comment on the report before OFCOM vary the licence. The variation shall not be effective until the change of control actually occurs.

Clause 348: Variation of local licence following change of control

730.     OFCOM are to include in the licence for every local sound broadcasting service conditions to ensure that any body corporate holding such a licence notifies OFCOM in advance of any proposals that may result in a change of control of the licensee, or of a person connected with the licensee who is, actually or potentially, involved in providing programmes for inclusion in the licensed service. Where such a change of control may result, or has resulted, over a body corporate holding a relevant licence, OFCOM shall review the effects, or likely effects, of the change. The review will consider the possible impact of such a change on: the quality and range of programmes; the character of the service; OFCOM's duty in respect of the local content and character of services (set out in clause 307). OFCOM must publish a report of its review setting out its conclusions and any proposed action.

Clause 349: Action following review under section 348

731.     If, following a review under clause 348, OFCOM consider that the effect of the relevant change of control is prejudicial to the matters set out in clause 348(4), they must vary the relevant licence. Any such variation may lead to the inclusion in the licence of conditions that are more burdensome than those included prior to the variation. However, they must be conditions that would have been fulfilled during the three months prior to the change of control or, if those three months were atypical of the licensee's performance during the previous year, another three-month period during the preceding year. The licensee must always be given the opportunity to comment on the report before OFCOM vary the licence. The variation shall not be effective until the change of control actually occurs.

Clause 350: Meaning of "control"

732.     This clause amends the provisions relating to the control of a body corporate set out in paragraph 1 of Schedule 2 to the Broadcasting Act 1990 (circumstances where there is deemed to be control even though the person in question does not have a 50 per cent, or greater, interest in a company):

  • It is explained that a person will be treated as having de facto control of such a body if he would (if he chose to) be able in most cases or in significant respects to ensure that affairs of the company are conducted in accordance with his wishes;

  • There will be an assumption that anyone with an interest of 20 per cent or more in a body has de facto control of that body, unless it is shown otherwise;

  • OFCOM will be required to publish and update guidance on some, but not necessarily all, of the factors they will take into account when determining whether a person has "control" of a body, within the meaning of paragraph 1(3)(b) of Part 1 of Schedule 2 to the 1990 Act.

Chapter 6: Other provisions about television and radio services

Clause 351: Annual factual and statistical report

733.     OFCOM are under a duty to carry out a review of the provision of the television and radio programmes in the United Kingdom and to prepare (and publish their findings and conclusions) a factual and statistical report twelve months after the commencement of this clause and annually thereafter. In carrying out the review, OFCOM must consider each of the matters listed in subsection (3). These include: the extent to which television and radio services programmes are representative of the principal genres of such programmes; the extent to which OFCOM's codes relating to for example provision for the deaf and visually impaired, listed events and fairness have been complied with; trends in audience behaviour; the financial condition of the television and radio programme market(s); the operation of the independent productions quota in clause 273 and paragraphs 1 and 7 of Schedule 12; relevant intellectual property matters that have been significant during the period; technological developments; the availability of people with skills used to provide television and radio services and programmes; and the availability of facilities for the provision and training in such skills. OFCOM's duty under this clause is in addition to their duty to prepare a report on the current state of public service television broadcasting under clause 260.

 
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Prepared: 6 March 2003