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Resolved in the negative, and amendment disagreed to accordingly.
The Parliamentary Under-Secretary of State, Department of National Heritage (Viscount Astor): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for National Heritage.
"Because of the extreme market sensitivity of this issue, I arranged for the substance of the Government's decisions to be announced by my department before the Stock Exchange opened for business this morning. I am making this Statement at the earliest opportunity thereafter. I hope that the House will accept this way of proceeding, for which there are clear precedents, and which I discussed last week with the honourable Member for Islington South and Finsbury, as well as the honourable Member for Caithness and Sutherland and the right honourable Member for Manchester Gorton.
"Following the relaxation of some of the restraints on the ownership of ITV companies in December 1993, the Government announced in January 1994 that they were to review the existing rules governing media ownership. I am now in a position to announce the Government's conclusions on this issue. I am today publishing a policy document which sets out our proposals. Copies are available in the Vote Office. In developing these proposals, we have taken account of advice, ideas and comments from a wide variety of sources. I am grateful to all those who wrote to us and participated in the constructive debate on this issue.
"Technological convergence is not only bringing together functions that have traditionally been separated, but it is also creating an enormous variety of new products and markets. It is inevitably difficult to predict the exact nature and pace of this change. But, as different media sectors converge, media ownership regulation needs to look at the media market as a whole if its core objectives are to be delivered.
"The importance of developing a new approach will be reinforced by the introduction of digital broadcasting over the next few years. This will lead to more channels, more choice for viewers and listeners, and more opportunities for media companies. The Government will be following up my announcement today by publishing their proposals for digital broadcasting later in the summer.
"Against the background of these changes, I am putting forward for consultation a long-term proposal for the future regulation of media ownership which has three main features. First, the media market would be treated as a whole. Secondly, market share thresholds would be established below which media ownership would be regulated only by normal competition law. Thirdly, a regulator would be established who would be empowered to restrict concentration above the thresholds where he or she deemed such concentration to be contrary to the public interest.
"For the purposes of consultation, I propose total media market share thresholds at 10 per cent. of the national media market; 20 per cent. of a regional market; and 20 per cent. of the individual press, radio or television sectors.
"Such a model would provide a flexible and durable framework which would better accommodate the dynamics of the media industry, while continuing to safeguard the public interest in diversity and plurality. I also believe, however, that the substitution of the existing structure by an entirely new framework of rules must be based on full consultation and widespread acceptance that the new structure is fair. I shall therefore welcome views from all interested parties on this proposal.
"In the meantime, action is required now. The Government therefore propose to introduce a package of immediate measures to remove unnecessary restrictions on the growth of media businesses. This will contain two elements.
"First, I am today introducing a package of proposals for change through secondary legislation. I am laying before the House an amendment to the Broadcasting (Restrictions on the Holding of Licences) Order 1991, which, subject to the
"I am also consulting the ITC and BBC with a view to amending the Broadcasting (Independent Productions) Order 1991. I propose to raise the equity ceiling between independent producers and broadcasters from 15 per cent. to 25 per cent.; and to amend the definition of an independent producer so that the ownership of any broadcasting interests outside the European Union do not disqualify an EU company from independent status within the United Kingdom.
"In addition, my right honourable friend the President of the Board of Trade has agreed to amend the newspaper merger provisions of the Fair Trading Act by doubling the threshold for automatic reference to the MMC from a circulation of 25,000 to a circulation of 50,000.
"These changes will allow greater consolidation within the radio industry; encourage greater investment and stability within the independent production sector; and reduce the costs of small mergers within the newspaper industry.
"Subject to two important safeguards, the Government propose that newspaper companies with under 20 per cent. of national newspaper circulation will be able to control up to 15 per cent. of the television market, including up to two regional ITV licences, or one regional ITV licence and the Channel 5 licence. Newspaper companies with more than 20 per cent. of circulation share will be free to expand in satellite and cable up to 15 per cent. of the total television market, but regulation will continue to prevent them from owning more than 20 per cent. of any terrestrial ITV or Channel 5 licence.
"Proposals for cross-control between television and newspaper companies will be subject to two safeguards. First, any such investment will require the consent of the Independent Television Commission, which will have power to restrict transactions which they deem to be contrary to the public interest. Secondly, no cross-control will be allowed between newspaper and television companies where the newspaper company's regional titles account for more than 30 per cent. of regional newspaper circulation in the relevant ITV region.
"The Government also propose that these arrangements to liberalise cross-investment between newspaper and television companies should be replicated for cross-investment in the radio sector. In addition, the Government will take the opportunity to remove the numerical limits on the holding of local
"The Government will also abolish the rules which limit ownership between terrestrial television, satellite and cable. Terrestrial broadcasters will therefore be allowed to have controlling interests in satellite and cable companies, provided their total interests do not exceed 15 per cent. of the total television market. Satellite and cable companies will also be able to have outright ownership of ITV or Channel 5 licences, subject to the 15 per cent. market limit and the two licence limit.
"These principles will apply subject to one condition. The current rules for ownership of non-domestic satellite broadcasters and cable operators have already allowed for a much higher level of investment by newspapers in those sectors than in terrestrial television. The Government therefore propose that those satellite and cable companies which are more than 20 per cent. owned by a newspaper group with a national circulation share of more than 20 per cent. should continue to be restricted to a 20 per cent. holding in one ITV or Channel 5 licence, and 5 per cent. in any further ITV or Channel 5 licence.
"Finally, as part of the review, the Government have looked again at the ownership arrangements for ITN. We have decided that the principles underpinning the Broadcasting Act remain sound and that the 20 per cent. limit on individual stakes in ITN should remain. However, in order to give more ITV companies the opportunity to invest in ITN, we shall remove the 50 per cent. limit on total ITV holdings.
"Madam Speaker, our media industry is on the threshold of a new era. We cannot pretend that the changes in technology, and their impact upon the marketplace, are not taking place. We have an obligation to create the legislative framework which allows the industry to respond to these changes. At the same time, we must protect the diversity of our media, which is an essential element of our democracy.
"The approach which I have outlined today does two things. First, it suggests a fundamental long-term reform of media ownership in Britain, and allows time for the implications of this proposal to be properly considered. Secondly, it proposes some more immediate changes which balance more liberal ownership regulation with the introduction of a new provision for public interest scrutiny of the growth of media businesses. I commend it to the House."
Lord Donoughue: My Lords, I thank the Minister for the production of this White Paper after long and almost elephantine gestation, and especially for the earlier than usual chance to read it. That was a great courtesy and very welcome. We as an opposition cautiously welcome itwhich I believe in political code means that we think it rather good. We like the long-term approach; we
In general, we welcome the retention of a system of modest regulation. The reality and the irony to economists is that an unregulated market in the media would actually promote monopoly, or certainly dominance. Regulation is therefore not state censorship, but is a means of ensuring pluralism, diversity and choice in the media market. The Government always have a duty to promote plurality of ownership in order to protect plurality of sources of information and comment, and a duty to prevent the emergence and dominance by over-mighty companies who could exercise excessive and unaccountable influence on the political process.
I must state categorically that to me the media is not just another market: it is crucial to the workings of democracy, and its power has significantly increased in recent years. It is perhaps now the First rather than the Fourth Estate. So ownership of the media operates centrally in both a political and also in a cultural context and is quite different from any other industry.
Of course, we accept the need for change, which is well set out in this paper. Technological change makes regulatory change inevitable. The advent of cable and satellite TV, the development of digital technology, meaning no longer a spectrum scarcity, and the convergence of the various media sectors, means that we have a multi-channel environment without the traditional sector boundaries. That means that we must revise how and what we regulate. But full technological revolution will not happen overnight, so it is correct that this regulatory adjustment should be gradual. The technological convergence which is taking place means a potential convergence of control of the common carriers of information and comment. So the questions of media dominance and media accessand indeed of individual privacybecome more and not less important.
Looking at the suggested points system, we must assess whether it does deal with that critical issue of monopoly or market dominance. What is suggested is sophisticated and complex, but it has the advantages of flexibility and future modification. I do not wish today to get involved in a discussion of the micro-mechanics of the points system although we are sympathetic to the broad approach. We particularly welcome the 20 per cent. newspaper circulation ceiling on TV ownership, which appears to prevent the existing giants from expanding further into television. We are also pleased that the proposals seemI should like the Minister's help on thisto be based on an audience percentage, since if it were based on the share of the advertising market we would have to question that, since that is not in any way central to the burgeoning satellite broadcasting where subscription and not advertising provides up to 80 per cent. of revenue.
The central point in these new proposals is the suggestion of a regulator with powers to govern media ownership. That is a very interesting and critical suggestion. The White Paper appears open-minded on whether that person is a new creation or whether, say, the existing Director-General of Fair Trading is used. We shall look at that. But we must avoid the danger of using a normal industry regulator who might view the media as a normal industry, which it is certainly not. The definition of public interest criteria will also be very important and not easy. The regulator will have great power. We shall need to know who appoints him; from where; and to whom he or she is accountable. We must make sure that such a regulator understands the special characteristics of this industry. He must be full time and of great authority.
As regards the relationship between newspapers and television, I ask the Minister to confirm whether any national newspaper, except the top two groups, can buy any two regional TV stationsnot London stations. Our worry is that that might erode the regional character so valuable in the smaller ITV franchises. Perhaps the Minister will comment on that. Perhaps he will also say something about foreign ownership. I did not spot that. Of course, at present Disney owns 25 per cent. of GM-TV, and predatory Europeans could own 100 per cent; but no British company is allowed to do so. Does the Minister have any comment on foreign ownership?
On the important question of the satellite encryption decoding system, the Minister will know that our concerns are that at present the encryption decoding system, which is the gateway to satellite distribution on Astra, is controlled by a body which is also the major programme supplier to that satellite television. It can therefore price the entryand indeed presumably refuse the entryto competitors offering competing programme channels. Has the Minister any proposals to ensure the freedom of entry there? I was not sure what the White Paper was saying. Do the Government incline towards a statutory code guaranteeing equal access?
As regards ITN, we accept that the combined ITV holdings can go above 50 per cent. and we welcome the re-statement of the 20 per cent. limit on individual stakes in ITN. We welcome the suggestion in relation to independent producers. We have been very concerned to maintain a British TV programme production industry. We do not wish to see it abandoned like the film industry. So the proposal for greater investment in individual producers seems to us immediately a sensible one. Has the Minister any more assurances on protection for British TV production? Has he any comment on the European proposals, quotas or guaranteed minimum UK content?
On this side of the House we approach this very important media ownership issue with certain basic principles, objectives and priorities in mind. We firmly believe in the desirability of plurality of ownership, and we oppose the concentration of ownership which threatens to produce dominance in any media. We believe in the need to protect and promote diversity in the sources of programming and writing. We believe in the prime importance of quality and also in the importance of regional strength.
This White Paper addresses those issues. It is interesting and challenging. Our final and measured response will depend on how far we ultimately believe that it satisfies those criteria and priorities. My first instinctive response is that it is encouraging.
Lord Thomson of Monifieth: My Lords, I join with the noble Lord, Lord Donoughue, in thanking the noble Viscount for repeating the Statement made in another place and particularly for the courtesy of giving us an advance copy of the paper which he has produced. That was immensely helpful.
The Department of National Heritage has been knocked a little over recent months as being the "Department of Nothing Happening". I am bound to say that it has lived down that reputation with this White Paper with its complex proposals for dealing with media monopoly.
The Statement is rightly based on the premise that the landscape of the media has changed out of all recognition over recent years. Within the nation state of the United Kingdom the old traditional frontiers between the print media and the broadcast media have been fast disappearing, as have the international boundaries. We are in a global marketplace. The Statement and the document that lies behind it are complex and will require more detailed study before we can come to a considered conclusion. Basically, however, I agree with what the noble Lord, Lord Donoughue, said.
The Government have been grappling in a serious and constructive way with some difficult problems. I should like to address one or two aspects of those problems and seek some response from the noble Viscount. I turn first to the question of regional monopoly, particularly in the areas of television and commercial radio. The regional aspect is of critical importance. As I understand the document, it suggests that if a regional newspaper owner has 30 per cent. of the newspaper circulation in his area, he would be entitled to move on to 100 per cent. ownership of a regional television station in the same area and to 100 per cent. ownership of local radio stations. The question of regional monopoly needs the most rigorous consideration. I know from my own experience how damaging regional monopoly could be to the interests of the viewers, listeners and readers. It could also damage the interests of the advertising industry in that area.
That point underlines the great importance of the arrangements with regard to regulation. I agree with the noble Lord, Lord Donoughue, about the importance of the regulator who will emerge from the second stage of the Government's proposals. However, I am not at all clear about who the current regulator is. I was happy to note that the Independent Television Commission will have a regulatory role in determining whether cross-ownership between television and the press is in the public interest, but I should be grateful for further amplification on that point.
I echo the words of the noble Lord, Lord Donoughue, that what lies at the heart of this is the fact that the media industry is a very special industry. It has tremendous economic importance and is now of some
I should like to mention two other matters in passing. I very much welcome the proposals about Independent Television News. We fought a long and hard battle in this HouseI believe that the same thing happened in another placeto persuade the Government of the wisdom of allowing the ITV companies to have a majority shareholding. There was the most stubborn resistance to that, so I warmly welcome the Government's repentance on the matter.
The problem of encryption of satellite and subscription broadcasting is also important. However, I do not see any mention of it in the papers that I have had the opportunity to read. Did the Minister notice that the chief executive of the Independent Television Commission, Mr. David Glencross, said the other day that the situation was now so serious that the voluntary arrangements were patently failing? He called explicitly for some statutory provision to ensure that the gatekeepers of the new subscription services should not at the same time be the programme providers and therefore in a dominating position where they could interfere with the reasonable prospects of new entrants to the industry.
I should also like to know about the arrangements in your Lordships' House for dealing with these matters. Many of the immediate proposals are to be the subject of secondary legislation. Can the Minister say something about the form of that? Will such legislation take the form of an order that requires affirmative resolution? Will we have an opportunity to scrutinise some of those arrangements? Is there the possibility of a general debate on these very important proposals?
Finally, I should like to say a word about the legislation which the Minister has promised for the autumn, I presume. Perhaps I may reiterate an earlier plea. Not only is the new charter for the BBC on the stocks, but we now have major new proposals for cross-media ownership. I think that that presents the opportunity for a really comprehensive piece of legislation which can deal with some of the major flaws in the present Broadcasting Act at the same time.
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