House of Commons Hansard Debates for 9 May 1990

Previous Section

Home Page

Column 225

Woodcock, Dr. Mike

Young, Sir George (Acton)

Tellers for the Noes :

Mr. Alastair Goodlad and

Mr. John M. Taylor.

Question accordingly negatived.

Amendments made : No. 319, in page 143, line 34, after participant', insert --

(a)'.

No. 320, in page 143, line 35, at end insert

, or

(b) in two or more such bodies corporate.'.-- [Mr. Mellor.] Mr. Mellor : I beg to move amendment No. 321, in page 144, line 16, after (2)', inset Subject to subsection (2A),'.

Mr. Deputy Speaker : With this it will be convenient to take also the following amendments : Government amendments Nos. 322 to 332. No. 110, in page 146, line 35, at end insert or

No. 8, in page 146, line 35, at end insert--

(1A) A service shall be a designated service for the purposes of sub- paragraph (1)(c) and paragraph 3(1)(c) if the Secretary of State so directs by order and the Secretary of State shall so direct if it appears to him that the service is intended primarily for reception in the United Kingdom and is broadcast for reception in three million or more dwelling-houses in the United Kingdom.

(1B) Any order made under sub-paragraph (1A) shall be so framed as to provide that the service shall not be a designated service until the expiry of twelve months after the making of the order.'. Government amendments Nos. 333 to 335.

No. 9, in page 147, line 8, leave out or (b)' and insert (b) or (c)',

Government amendment No. 336.

No. 10, in page 147, line 17, leave out 1(2)(b) or (c) or'. No. 111, in page 147, line 26, at end insert

No. 11, in page 147, line 26, at end insert--

No. 36, in page 147, line 28, at end add

or may hold more than a twenty per cent. interest in another Channel 3 licensee'.

Government amendments Nos. 337 to 339.

No. 13, in page 148, line 6, leave out 1(2)(b) or (c) or'. No. 12, in page 148, line 6, after schedule', insert

or within sub-paragraph (1)(c)'.'

Government amendments Nos. 340 to 342.

Mr. Mellor : The amendments reflect a further trawl through schedule 2 and deal either with commitments entered into in Committee or with further thoughts that we have had about the framing of schedule 2--a highly technical one--to make it clearer what are the arrangements in it.

The principal controversy in the debate will, I suspect, centre around not the Government amendments, but the amendments in the name of my hon. Friend the Member for Slough (Mr. Watts) and others. I believe that it would be best if I listened to what he and others had to say and perhaps had the opportunity to catch your eye later, Mr. Deputy Speaker.

Column 226

5.45 pm

Mr. John Watts (Slough) : My hon. Friends and I have tabled amendments Nos. 8 to 13 to try to address a loophole in the Bill's safeguards against excessive cross-media control. I followed the progress of the Bill through Committee, although I was not a member of it, and I decided to raise this problem on Report because I believe that not all the issues and options available to the Government have been fully considered.

The debate should not be dominated by an argument centring on Sky Television and News International newspapers, as I believe that the public interest arguments go a long way beyond that. I have no wish to be involved in any vendetta against a particular newspaper group and one which has done a great service to the newspaper industry by its introduction of modern technology. The amendments could apply equally, now or in the future, to other non-domestic satellite broadcasters.

Should my hon. and learned Friend see fit to accept the amendments, they will provide consistent safeguards against the cross-control of the media that covers all broadcasting outlets directed at a United Kingdom audience. They will also ensure that the current state of the new and developing market of satellite broadcasting is allowed to flourish and, where successful, to provide just rewards for those who have made the investment in that high-risk area.

Satellite television services broadcasting to the United Kingdom are unchecked by the safeguards that apply to terrestrial broadcasters or to the national direct broadcasting by satellite services through their contract with the Independent Broadcasting Authority. As the Bill stands, there are no safeguards against a foreign satellite user broadcasting to the United Kingdom population while owning a powerful and significant proportion of the national daily press and having a 20 per cent. stake in the Channel 3 franchise. I believe that that loophole undermines the basis of the present controls and the integrity of the long-established separation between newspapers and television.

Keeping the control of broadcasting and the press separate has been the cardinal principle of British media policy and was firmly established to be in the public interest after the Pilkington committee report of 1962. On the question of public interest, the committee noted :

"The threat is thought to reside in the fact that, because two of the media of mass communication are owned in some measure by the same people, there is an excessive concentration of power to influence and persuade public opinion, and that if those same people are too few or have broadly the same political affiliations there will be an increasing one-sided presentation of affairs of public concern. There might, too, be a failure to present some of these affairs sufficiently or at all."

The report concluded :

"The concern expressed was at the threat to democracy."

The Television Act 1963, following that report, established the current framework for ownership restrictions. That framework has been endorsed by successive Governments of both political parties in the Television Act 1964, the Independent Broadcasting Authority Act 1973 and the Broadcasting Act 1981. The framework was extended to include the then new United Kingdom direct broadcasting by satellite franchise in the Cable and Broadcasting Act 1984.

In 1977, the Royal Commission on the press stated :

Column 227

"We believe that it is right to maintain policies to ensure that the newspaper companies do not control broadcasting companies." The Royal Commission recommended :

"The existing policy of ensuring that no broadcasting company is effectively controlled by a newspaper company should be maintained and strengthened to exclude effective control by newspaper companies in combination."

In June 1988, the third report of the Home Affairs Select Committee, entitled "The Future of Broadcasting", contained the following conclusions :

"It is an important democratic safeguard that no one should be able to control more than one major means of public information. We have no wish to stifle international investment but we can see the danger of over- concentration of ownership, both nationally and internationally We consider that the reasons for restrictions on ownership remain valid and recommend that the provisions of the Broadcasting Act 1981, appropriately updated, should be included in the forthcoming legislation."

In the section on ownership, the Government's 1988 White Paper on broadcasting said :

"clear rules will also be needed which impose limits on concentration of ownership and on excessive cross-media ownership, in order to keep the market open for newcomers and to prevent any tendency towards editorial uniformity or domination by a few groups."

My right hon. Friend the Foreign Secretary, when Home Secretary, said on 18 January 1989 :

"We will propose extensive and effective rules to prevent concentration of broadcasting ownership and unhealthy cross media ownership. It is crucially important that we should have such rules. Real choice could be undermined if British broadcasting were allowed to be dominated by a handful of tycoons or international conglomerates."

In a paper that it recently circulated to hon. Members, the IBA stated :

"The IBA believes that the case for restrictions on newspaper interests in non-DBS satellite operations is as strong in principle as it is on BDS services, since these services will be in direct competition with each other, although we see the difficulty of applying ownership controls retrospectively. We therefore support the thrust of Amendment No. 8 which proposes that the Secretary of State should be required to apply the 20 per cent. limitation on newspaper ownership of a non-DBS satellite service once the service achieves significant market share."

Mr. Austin Mitchell : The hon. Gentleman has rightly disavowed vindictiveness against any particular newspaper or group. Was the amendment, as worded, suggested or in any way influenced by BSB?

Mr. Watts : I have made it clear in speaking to a number of newspaper correspondents that the structure of the amendment standing in my name was suggested to me by BSB. As I shall continue to argue, I believe that the approach that I have adopted, and that I am suggesting to the House, is a valid and sensible solution to the problem facing the House and the Government.

Mr. Buchan : Does the hon. Gentleman accept that most people who are concerned with the issue are quite prepared to look at evidence put forward by any side, including BSB, if it helps to get more liberty on television, despite the points made a moment ago?

Mr. Watts : Yes, of course, I hope that right hon. and hon. Members would approach the issue with fairly open minds. I have discussed my proposals with representatives from Sky Television, as I felt that it was proper that I should listen to the arguments they put to me directly, not merely by using their influence through certain hon. Members.

Column 228

In a paper on competition, diversity and cross-media ownership, News International plc said :

"excessive concentration of media ownership is undesirable for economic and political reasons."

Diversity in the provision of information must be ensured to avoid the concentration of too much power in too few hands. Limited cross-media investment has existed for many years, and I am not suggesting that a limited stake by a newspaper in a television company will necessarily lead to mischief. Limited cross-investment does not threaten the public interest --it is cross-control that is the cause for concern.

The House is well aware of the problems that can arise if cross-media control is tolerated. Many of my hon. Friends will recall that, in 1989, early-day motion 434 called for ownership safeguards to apply to those broadcasting from outside the United Kingdom. That early-day motion attracted 87 signatures, of which 67 were from my hon. Friends. More recently, between 3 and 30 November last year, 141 hon. Members were contacted by Gallup--I know what great faith all of us have in opinion polls--and of those Members, 80 were Conservative, 52 were Labour and nine were from other parties. Of the Members polled, 83 per cent.--and more than 70 per cent. of Conservative Members polled--believed that the maintenance of the separation between the control of newspaper and television services was an important principle.

Significant concentrations of interest in national newspapers and national broadcasting services carries a risk of distortion and the promotion of self interest. In May 1989, the Broadcasting Research Unit carried out a case study on cross-media ownership and its impact on public opinion. The survey was supported by the IBA and noted in its report on page 2 :

"Analysis of a recent major study on broadcasting, however, does suggest that a systematic pursuit of particular editorial themes may have a marked and measurable effect on public opinion which goes beyond the acceptable boundaries of promoting the commercial interests of proprietors"

As hon. Members will be aware, the possible promotion of self-interest through biased editorial coverage or subsidised advertising and selective coverage has become a matter of concern, and the Government have instigated the Sadler inquiry to report on those concerns. However, that inquiry will not be completed until after this Bill has become law, and its terms of reference specifically exclude the ownership issues covered by the Bill. Currently, the Bill rightly provides that a national newspaper proprietor may not have more than a 20 per cent. stake in a company that provides a Channel 3 or Channel 5 service, and vice versa. However, those safeguards in the Bill do not automatically apply to services provided by satellite. I understand that Ministers have made clear their intention that they should, quite rightly, apply to a domestic service provider.

The Bill provides the Home Secretary with powers to prescribe restrictions on users of foreign satellites by order. I welcome the principle that underlies the Government's proposals, but I also recognise that, by refusing to extend the ownership safeguards in the Bill to include foreign satellite users, which may be exclusively directed at this country, the provision's integrity is seriously undermined.

Mr. Gale : Will my hon. Friend tell the House, first, whether he supports the principles of the Council of Europe transfrontier broadcasting convention, of which

Column 229

the Government are a signatory and behind which the former Home Office Minister, now the Patronage Secretary, was the driving force? If he does support it, will he say how his proposals will be compatible with the convention when the jobs that he seeks to destroy in this country are moved to, for example, Luxembourg?

Mr. Watts : I am not seeking to destroy any jobs in this country. I am anxious to ensure that the principles on cross-media control, which the Government clearly consider are still important because they are to be applied to terrestrial broadcasters and the domestic satellite service provider--

Mr. Gale : That would be outside the terms of the convention.

Mr. Watts : I am not sure that my hon Friend is always so enthusiastic in his support for European initiatives. If the effect of the arrangement to which he refers is that we have to give up the important principle of controlling cross-media ownership, I am against that European initiative.

Mr. Norman Tebbit (Chingford) : I hardly need remind my hon. Friend that, like the hon. Member for Great Grimsby (Mr. Mitchell), I have the privilege and pleasure of working for Sky Television, in the same way that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has the privilege of working for The Times.

Will my hon. Friend answer two queries that worry me and with which he has not yet dealt? First, have there yet been any abuses of the kind that he fears? Secondly, will he describe the mechanism by which he envisages this Government having the authority to control satellite broadcasting by companies not based in this kingdom, operating through satellites not controlled from this kingdom, with the uplift to the satellite not within our sovereign control? 6 pm

Mr. Watts : On the first point, I am not suggesting that there is any proven abuse as yet, or indeed that there is likely to be abuse. Surely the principle which has always applied is not that abuse has to be proven before action is taken, but that control over the ownership of the broadcasting media is established, so that the possibility of abuse through excessive concentrations of control and cross-media control cannot arise. That principle is being carried forward in the body of the Bill and will be applied to all other means of broadcasting television services into this country. Curiously, it is not being applied to non-domestic satellite services. I look forward to hearing later from my hon. and learned Friend why such application is not intended.

On the second point--

Mr. Graham Riddick (Colne Valley) rose--

Mr. Tim Devlin (Stockton, South) rose--

Mr. Watts : May I deal with the second point raised by my right hon. Friend the Member for Chingford (Mr. Tebbit) before I give way? I shall deal later with the way in which my amendment would operate once the trigger point was reached. The

Column 230

connection arises when someone who owns a British newspaper also has a controlling interest in a service which is directed to the United Kingdom. Although my right hon. Friend may argue that we are not in a position to control the ownership of a foreign company which may own the television service, we certainly are in a position to control the ownership of a British newspaper company or group. Indeed, my right hon. and hon. Friends on the Front Bench must believe that such controls are feasible, or there would be no point in including in the Bill the power which enables them to give directions, by order laid before the House, as to the ownership of such services. So there cannot be, at least in the minds of Ministers and their officials, any practical problem of application of the principle.

Mr. Tebbit : It appears that my hon. Friend would favour Ministers taking action against a British company in this country in respect of the actions of an allied company outside British jurisdiction. Is that not a slightly odd proposal?

Mr. Watts : No, not at all. We are dealing with the position in which one media company or group controls certain national newspapers and also has a controlling interest in a broadcasting service which is directed to this country. Whether one of the companies is registered abroad is irrelevant. Indeed, as I have already said, Ministers and their officials must have concluded that there is no practical obstacle to applying such controls, or it would make nonsense of one of the powers which they have included in the Bill.

Mr. Riddick : Is not my hon. Friend a little out of date? He referred to the Pilkington committee of 1962. Is it not the case that there were only two television stations in existence then, and that to stop cross -ownership was an important principle at that time? Is it not now the case that there are 17 television channels, that such cross-ownership controls as are necessary are already in the Bill, and that the controls suggested by my hon. Friend are unnecessary and go against all the principles of the free market in which Conservative Members believe?

Mr. Watts : My hon. Friend advances a respectable argument. If the Government, through the Bill, were advancing the argument that, with the development of technology, particularly satellite broadcasting, there would be such diversity and competition between broadcasters that controls over ownership and over cross-media control were no longer necessary, that would lead to another very interesting philosophical debate. If that were to be the argument, surely it would apply not just to a non-domestic satellite service but also to the domestic satellite service, to the Channel 3 franchisees, and to Channels 5 and 4. If we are dealing with the principle, as I am trying to do, I suggest that the principle should be applied across the board and that there should not be just one convenient exception.

My hon. Friend the Member for Stockton, South (Mr. Devlin) also wished to intervene.

Mr. Devlin : I wanted to intervene earlier to ask my hon. Friend whether it would not protect the media owner if he were not to be put in the position where, because of his interest in newspapers and in broadcasting, an accusation might be made that he was a monopolist in the media

Column 231

generally. Whether or not there had been an abuse in the past, the suspicion would arise among the consuming public that these practices might occur in future, or may even be happening now but are well concealed.

My second point concerns the longevity of the Bill. When we are framing legislation, surely it is designed to last for a considerable time, and we cannot merely take cognisance of the circumstances as they exist on the ground at the moment, and say that for these reasons we shall do something which we may change in a few years. Surely, in a Bill to cover broadcasting for the next 20 years, we should seek to establish general principles which will take us through the entire period.

Mr. Watts : On the first point, there could be protection for newspaper owners, although I have not seen them beating a path to my door, urging me to press hard proposals to give them protection. My suggestion would give them certainty about the way in which restrictions might be imposed upon them. As I understand it, the power now in the Bill could be exercised by the Home Secretary as he wished, subject to the consent of the House, without any guidelines for the operation of the powers being laid down in primary legislation. I believe that primary legislation is the right place to set out the rules.

As to my hon. Friend's second point, the whole thrust of the Bill and of Government policy is that controls over concentrations of media ownership and cross-media control are still important for British broadcasting. If that is the case, that principle should be applied to all who operate in the broadcasting services.

As to the reasons for the exception, in May 1989 my right hon. Friend the Member for Mid-Sussex (Mr. Renton), who was Minister of State, said :

"No Government can stop British newspaper proprietors buying into overseas transmitters that have been linked to non-DBS services that are not controlled by this country."--[ Official Report, 19 May 1989 ; Vol. 153, c. 634.]

I went into that point in answer to my right hon. Friend the Member for Chingford. Clearly that is no longer the position of the Government, because they have taken powers which presumably they have the intention of exercising in certain circumstances.

The group of amendments that I have tabled would give much greater certainty to the provision which is already in the Bill. The hon. Member for Birmingham, Erdington (Mr. Corbett) made it clear in Committee that the Opposition wished to impose, at the earliest possible date, divestment regulations upon non-domestic satellite broadcasters with newspaper interests. My approach does not seek to bring the axe down so rapidly and perhaps precipitately : it seeks to restore the integrity and commercial certainty to cross-media ownership safeguards.

Under the amendments, if a domestic or foreign satellite service that was intended primarily for reception in the United Kingdom exceeded a penetration of 3 million households, it would be made subject to cross- media ownership rules. Those rules would apply to BSB as much as to any other satellite broadcaster, and would provide a level playing field for all satellite operators. The figure of 3 million households encompasses what I understand to be the industry's view, and the financial projections of both BSB and Sky Television. The view of the City is that, at

Column 232

that level of penetration, a satellite service becomes profitable. Some reports as recently as March have suggested that 2.5 million viewers might be a viable level.

I make it clear that I am not firmly wedded to one figure. If the principle of establishing a threshold of penetration at which satellite services would become subject to the same controls as terrestrial broadcasters were to be accepted, and if good and sound arguments could be adduced to show that another figure might be more appropriate, I would not argue at length that 3 million is necessarily the right figure.

I understand that Sky Television is only one third of the way towards the trigger point that I have suggested in my amendments. That means that there would be plenty of time for that service to continue to develop and to plan for the point at which my hon. and learned Friend the Minister of State would be required to lay an order requiring the divestment of 80 per cent. of the interest. I know that Sky Television disputes the 3 million threshold figure contained in my amendment. In a letter to one of my hon. Friends, Sky says :

"By the time we are received in three million homes, it is most likely that we will have recorded a cumulative deficit of some £400 million, while we may well remain unprofitable on an operating basis. You should know that the bulk of our income is from subscription fees, rather than advertising. At the time when three million homes can receive Sky, fewer than one million may in fact be subscribing to our film channel. Thus, your amendment would force us to divest ourselves of Sky at a distressed' price, depriving our investors of the legitimate rewards of their long standing financial support of Sky." That is certainly not my intention, and I am prepared to be flexible on the precise threshold. I intend it to be at such a level that the business is viable and profitable and divestment could take place at a profit rather than at a loss to those who have pioneered this substantial investment.

I am disappointed that the Bill fails to provide adequate safeguards against broadcasters who use foreign satellites and who also have considerable interests in the national daily press. The Minister of State's recognition of the need for safeguards is seriously undermined by this loophole. My amendments will permit the safeguards against cross-media ownership to be applied equitably and consistently without fear or favour and with due regard to this new market and its development to successful maturity. This is a proper and fair solution to a problem that the Government have apparently had difficulty in addressing.

My hon. and learned Friend the Minister of State has said that the Government have decided not to extend ownership controls to foreign satellite users, partly because they use a different frequency from that used by domestic satellite services. In Committee, my hon. and learned Friend said :

"There is a maximum of five DBS channels under international agreement, all of which have been allocated by the IBA to BSB, so giving it a monopoly."

Speaking about the non-DBS channels, he said :

"There is potentially open-ended scope for developments under diverse ownership the case for restricting entry to the market is not remotely the same as it is for the five DBS channels under a single owner."--[ Official Report, Standing Committee F , 30 January 1990 ; c. 383-4.]

6.15 pm

I did not think that the principle on which the Government's approach was founded was the principle of monopoly but that it related to the dangers implicit in

Next Section

Home Page