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7.56 pm
Mr. Roger Stott (Wigan): I realise that my hon. Friend the Member for Bassetlaw (Mr. Ashton) was not being discourteous in not giving way because he was short of time. I, too, applaud Sky's coverage of all sports, especially my sport of rugby league. My hon. Friend talked about high wage and salary costs. The start of the rugby super-league this year means that next year all clubs participating in it will have to implement a salary cap for players. Perhaps the football authorities could take a lesson from rugby league next year.
Unlike the Secretary of State, I am concerned by the Government's plans to privatise the BBC's transmission network, especially given the recent decision not to secure the licence fee for the tenure of the new charter. Having been a great supporter of the BBC's World Service and its services generally over the many years during which I have watched and listened to them, I am extremely concerned about the provisions in part VI to sell the fundamental asset of the transmission network. I believe that the proposal needs to be examined in far more detail in Committee, as my right hon. Friend the Member for Copeland (Dr. Cunningham) said.
Two major risks are involved. First, who will own the transmission service? The second risk is that the BBC will be vulnerable if the network is sold to a commercially driven transmission operator. Investment in infrastructure could be limited to serving those reached at the lowest cost. It is estimated that only 12 digital transmitters would be needed to reach 60 per cent. of the population, but that a further 68 transmitters would be needed to reach 90 per cent. of the population. The cost differential between those two options reveals the fact that the cost of reaching 90 per cent. of the population will be more than three times that of reaching 60 per cent. of the population. The risk is self-evident.
The second risk of leaving this public service in the hands of a commercially driven organisation is the BBC's subsequent ability to honour what will become an increasingly inflated transmission price. After investing its windfall in digital terrestrial television and digital audio broadcasting, how will it afford the costs of transmission without putting additional pressure on a licence fee that is vulnerable to public opinion and, I emphasise, guaranteed for only five years of the new BBC charter? The corporation argues that it has been given--or it has given us, anyway--important guarantees on the future cost of the transmission service, and what the cost will require. I am sure that the whole House would agree that those guarantees should come under close scrutiny in Committee. If they
should prove to be inadequate, as I suspect that they probably will, an alternative must be provided--perhaps by offering the network as an operating franchise while retaining the hardware in the public sector.
I wish to concentrate on two critical issues. The first is that of the controversial Channel 4 funding. To arrive at a sensible and balanced compromise, it is important to assert that the formula is designed not only as a measure of protection, but as a complex revenue equation with implications across the broadcasting scale. Any intention to abolish the formula without careful examination of the facts and figures affecting all parts of the industry might have disastrous results.
The arguments for abolition are manifold. Channel 4 is obviously subsidising a shareholder network; it has paid out more than £100 million since 1994, which might have been invested in original programming and its highly successful promotion of the British film industry. Moreover, the formula is totally unpredictable and although ITV is indemnified against paying more than 2 per cent. of total qualifying revenue, Channel 4 has the unfavourable obligation of paying 50 per cent. of any profit made above 14 per cent. of the TQR threshold. That is manifestly unfair, and makes the channel's revenue forecasts and capital planning very difficult--worrying in an age of technological revolution.
Nevertheless, the arguments against abolition are equally convincing, not least because any change to the formula before 1997 would represent retrospective legislation and would undermine vital confidence in the Bill. We should, and must, wait until 1997, the year delegated for the formula's fundamental review, and not allow the detailed issues informing the debate to be given a premature delivery amidst the complex environment of the Bill.
It is crucial to remember that ITV paid more than £430 million before 1990 to protect and establish Channel 4. Moreover, at least six of the smaller ITV companies depend for their existence on the revenue contributions from the formula--contributions that were forecast and planned for in the confidential business plans that accompanied their licence bids. To restrict that flow before the planned review might have a serious impact not only on the individual television companies, but on the whole regional character of the ITV network. The subsidy is crucial to ITV's programming budget, allowing Granada in my area, for instance, to pay for "Granada Tonight", which airs five days a week, every week of the year, while maintaining the regional news operation in Liverpool, in addition to sustaining its entire regional current affairs output.
When put into perspective against Channel 4's 60 per cent. increase in United States imports and its failure to maintain the ITC's recommended 50 per cent. of original programming, the arguments begin to balance out. The threat to regional programming and regional programme making is significant, and an ill-considered abolition of the revenue stream supporting it would have very serious repercussions, not only on the quality and the quantity of regionally based programmes, but on employment, especially in those regions and especially in the north-west. It would be foolish and irresponsible to tamper with that formula before its intended termination date.
Secondly, and finally, I shall discuss the radio industry. I was unclear in my mind about what the Secretary of State said in her opening remarks this afternoon about the issuing of licences to potential bidders for radio licences. I note, however, that a report in Broadcast magazine of 22 March 1996 claims that the Government propose to drop the current bar on one radio company owning more than one FM and one AM licence in the same local market. I feel very strongly that the proposed lifting of ownership restrictions is contrary to the public interest and is not in the interest of smaller independent radio companies. The proposed change would serve further to strengthen the growing monopolies that already exist in the local market and stifle innovation and diversity.
I am aware that the commercial radio companies' trade body, the Association of Independent Radio Companies Ltd., has pronounced in favour of such a change. It may not have made it clear to the Government that a significant minority of radio companies and their management think otherwise.
United Kingdom commercial radio is already dominated by a small number of principal groups, which account for 69 per cent.--463 out of 671--of the total points currently allocated under the Radio Authority's scoring system. The figure will presumably be increased by GWR Group's takeover of East Anglian Radio, which is currently being finalised. Individual companies are allowed to have up to 15 per cent. of the points allocated. Further, I would argue that the way in which the points system is structured--
Mr. Deputy Speaker:
Order. Time is up.
Sir Wyn Roberts (Conwy):
I shall follow the hon. Member for Wigan (Mr. Stott) early in my speech, in that I shall emphasise the immensity of the transition that we are contemplating from analogue to digital broadcasting. It will be a major change, requiring considerable investment, not only on the part of the broadcasters--that we know--but on the part of viewers and listeners. For viewers, not only is the set-top box to be purchased but ideally there should be a wide-screen set.
The transition also means a great deal of investment for television and radio set manufacturers. They will have to adapt to the new system and we have heard very little about their plans to meet the demand which will, one hopes, develop because a higher quality of sound and picture is available. There is no guarantee of success, but there never has been a guarantee in broadcasting. When ITV and Channel 4 were started, there was concern about whether they would succeed; but to date most of our broadcasting ventures in this country have proved successful.
My right hon. Friend the Secretary of State is to be congratulated on introducing the Bill, which allocates multiplexes to terrestrial broadcasters and provides a basic shape for things to come. There is some dissatisfaction among the non-terrestrial competitors about the prior and superior access given to the terrestrials, but I cannot see how my right hon. Friend could have done otherwise in all the circumstances confronting her.
It is only fair to say, without being patronising, that their Lordships have been pretty thorough in their examination of the Bill; they touched on most of the points that I wanted to raise. On the sports issue, I find myself in sympathy with the hon. Member for Bassetlaw (Mr. Ashton): I am not sure that we pay sufficient attention to the fact that broadcasting rights, like rights of entry to sports grounds, belong to the sporting organisations, which must ultimately decide how the rights are to be disposed of. Arguably, the only rights that belong to all of us are news rights, which are different from highlights. News rights are not in dispute, so there is much to be said for unbundling. I am sure that the day will come when sporting organisations will simply use the media as an extra gateway to their events, and charge accordingly.
The argument about cross-media ownership is clearly very much alive. As I have said in earlier debates, I am firmly on the side of those who are likely to promote the richness of our regional life and character--the nurturing ground of so much that is good in this country and an antidote to our somewhat ruthless and arrogant metropolitanism.
Our regional and local newspapers have a case for being allowed to participate in the development of broadcasting, especially at a time when broadcasting needs investment on a significant scale--they must certainly not be disadvantaged by comparison with their national competitors. The Newspaper Society is right to argue that BBC local radio should also be taken into account in any calculations regarding density of coverage, and so on. But my right hon. Friend the Member for Wokingham (Mr. Redwood) is right in saying that other forms of coverage will also have to be taken into account. I also support the points made by my right hon. Friends the Members for South Norfolk (Mr. MacGregor) and for Sutton Coldfield (Sir N. Fowler).
I also support the ITV regional companies, which have given valuable service and provided diversity. HTV has done well in Wales and the west country, despite its heavy licence fee. It receives about £3 million per year from Channel 4 under the perverse formula established under the 1990 Act. So far as I can gather, the formula has few supporters other than those who benefit from it. It should be phased out, but probably at the time suggested--1997--which coincides with the renegotiation of the ITV licences.
Under the digital arrangements, Channel 4 will achieve coverage in Wales independent of the Welsh language channel S4C, which is to share half a multiplex and to be given some additional powers which will enable it to complement its Welsh language output with other, mainly English, programmes, preferably produced in Wales. The Welsh language programmes would be ring fenced financially so that no subsidy could find its way into the English output--just as the BBC's licence-financed programming is ring fenced against sponsored or advertising-financed programming permitted under the 1990 Act. I strongly support that development in the role of S4C, not only because the statutory body will thus be enabled to replace the programmes lost to it by the independence gained by Channel 4, but because there is a strong demand in Wales for English programmes of Welsh origin and such productions will provide a challenging stimulus to achieve high quality all round. I gather that there is some concern in the BBC at the
thought that S4C might produce English language programmes, but that matter can be sorted out through co-operation at an all-Wales level.
8.6 pm
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