Joint Committee on The Draft Communications Bill Appendices to the Minutes of Evidence


Supplementary memorandum submitted by Lord Lipsey

  I have noted in several hearings that the committee appears to be attracted to the notion of reciprocity: that is to say, we shouldn't let the Americans buy broadcast assets over here unless and until they allow us to buy broadcast assets over there.

  This is a perfectly logical position. Unfortunately it is of no practical relevance. First, there is really no evidence that British broadcast companies have any strong desire to enter the American market, where they would be pigmies against giants. That was made very clear by the commercial radio companies when they appeared before the committee on 24 June. Secondly, reciprocity is not negotiable, or at least, certainly not negotiable on any timetable relevant to the Joint Committee's inquiries. A demand for reciprocity as a condition of lifting restrictions on American ownership here is, therefore, in practice, equivalent to saying that present restrictions should remain in force—or at least, according to informed insiders, the next 10-12 years.

  Of course there is a perfectly good case for doing this. We may believe that if American companies were allowed to own British broadcast outlets they would use this ownership to fill the stations with American output. We may believe, as say the French might believe, that American content is culturally corrupting in a way that European content is not.

  I do not myself find these arguments convincing: firstly because an American-own channel that majored on American-made trash would soon lose its audience; secondly, because I find it hard to believe that material in our own language is more culturally diluting than material in another European language; and, thirdly, any American company would be subject to the same regulation as other commercial companies under OFCOM, including, potentially, rules on local content and origination. Be that as it may, if the committee is to recommend restrictions on American ownership it should do so on these grounds, and not use the backdoor way of preventing it by insisting on reciprocity as a condition of access.

  For myself, I believe such cultural arguments are outweighed by the investment arguments for derestricting access. It is a fundamental of free-trade theory that you shouldn't take action against others just because they are taking actions against you. In any case, I do not think that the performance of Britain's commercial TV and radio sector is such as to encourage us to believe that it will provide everything we need without external investment. Indeed, our failure to build a world-class communications company despite our protected home market, and the fiasco of ITV Digital suggests our companies, despite their strengths, do not have an impeccable record.

  Size is important in all media enterprises, for example, to spread the cost of talent over a wide range of outlets. This explains the trend to merger in recent years (and, incidentally, is one of the reasons why a strong BBC is necessary to preserve competition). The bill recognises that by allowing a merger, if one emerges, of Granada and Carlton. European law, of course, allows takeover by European companies. I can see no logical reason whatsoever for the argument that Vivendi is good where Viacom is bad. Restricting ownership both diminishes shareholder value and the prospect for programme investment; consumers and shareholders lose out.

June 2002

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