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Lord Thomson of Monifieth: The noble Earl is absolutely right to say that at the heart of the matter is the question of monopoly and how one handles monopolistic tendencies. For my part, I do not know what the other Opposition Front Bench will say on the amendment. Indeed, the noble Earl should not give a blanket assertion about the Opposition because, from these Benches, we have given most careful consideration to the matter. I did not get a glass of water from Capital Radio; indeed, I gave them a cup of tea.

We considered the pros and cons of the matter most carefully and came to the conclusion that the danger of a monopoly was such that the amendment should not be accepted. I believe that it is fair to say that it is supported by some of the most successful and powerful groups of independent local radio stations in the country. If the amendment were accepted, my fear is that such groups would become even more powerful. Of course I wish them every success, but I do not wish to see them become so powerful that they reduce the plurality of ownership of independent local radio stations.

The Earl of Onslow: I should like briefly to take up that exact point. I, too, was worried about that aspect. That is why, over my lovely glass of water which I enjoyed in the headquarters of Capital Radio, I pressed those concerned very strongly. They told me that the smaller London radio stations agreed with the relaxation of the ban on dual ownership. Therefore, it is not fair to say that it is a matter only for big radio stations. It was only when I had been persuaded on that point that I was prepared to speak in favour of the amendment.

4.15 p.m.

Lord Chalfont: As a former chairman of the Radio Authority, perhaps I may offer a few words of comment on the amendment. I have a natural sympathy for the amendment moved by the noble Lord, Lord Desai, but, unfortunately, the amendment would not achieve the desired effect. I believe it is true to say that the radio companies would like, as the noble Lord says, to put their "gold" output (their easy-listening output) on to FM because it has a better transmission quality. It does not, I fear, improve the music at all; but it does improve the quality of the transmission and, therefore, of the reception.

However, if that is what radio companies wish to do, the amendment would not achieve that aim. I say that because there are no spare FM channels at present. Moreover, even if there were, it would certainly not make sense that existing holders of licences should have a prescriptive right to receive them. Therefore, in most cases, the amendment would not necessarily mean that people who wished to transfer their gold service to FM would be able to do so. Indeed, as the noble Lord,

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Lord Thomson of Monifieth suggested, it would enable stations to take over other stations and thereby reduce the plurality and diversity which the Radio Authority as the regulator is meant to ensure.

The noble Earl said that it should be a matter either for the Monopolies and Mergers Commission or for the regulator. It is indeed a matter for the regulator. When I was chairman of the Radio Authority, one of the tasks that we sought constantly to undertake was to ensure that, in the issue of licences, diversity of ownership and plurality in local conditions was maintained. That is what is at issue. The amendment would not allow people to move their gold format on to FM; it would enable powerful, big radio stations to take over small ones in the same area.

I have one further point to make. The noble Baroness mentioned the implications of DAB--digital audio broadcasting. I believe that there is a contrary argument here. If people were allowed to achieve two analogue FM frequencies in the same area, it is possible that they would cease to have much interest in pursuing digital audio broadcasting which is what, I believe, we are all inclined and intending to do. Therefore, with the greatest respect to the noble Lord, Lord Desai, and with every sympathy for what he is trying to achieve, I must suggest that the amendment would not achieve the desired effect. Instead, it would remove a good deal of the diversity and plurality from local broadcasting.

Lord Colwyn: We are having a most interesting debate. I am sympathetic to the thoughts behind the amendments. Newspapers and new radio players can find much to encourage their aspirations in the Bill, but perhaps it does less than it should to help those who wish to concentrate their skills and investment in radio only. There is no good reason to have rules which entirely close the door on a radio company owning more than one service on a single waveband in a single geographical area. I believe that the Radio Authority should at least have to consider proposals on their merits rather than ruling them out completely.

Schedule 2 to the Bill allows for the inclusion of two of a station's services on a multiplex, where available capacity allows, and for influential local newspapers to own local radio services. It seems inconsistent for the Bill to condone the merger of a leading local newspaper with a leading local radio station in the same geographical area, albeit subject to public interest criteria, when the expansion of radio interests beyond a single FM and a single AM service in the same area is prohibited.

It seems especially unfair when that restriction does not apply where there are only a few, if any, competing commercial radio services. Under current Radio Authority proposals I believe that the restriction is confined to highly competitive markets where many stations vie for revenue and listenership. It is worth thinking about again. I hope that my noble friend the Minister will give the matter serious consideration.

Lord Inglewood: As we have heard, radio companies are currently restricted to controlling one FM and one AM station in each local licence area under the so-called

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"overlapping areas" rule. The noble Lord, Lord Desai, comprehensively explained his argument as to why broadcasters should be allowed to run up to four radio stations, two on each waveband, in areas which overlap to a significant extent. My noble friend Lady O'Cathain would simply dispense altogether with the overlapping areas rule.

Perhaps I should first explain that the Government intend to revise the restrictions on secondary holdings, many of which are also contained in the 1991 order. The scope of those changes is substantial. I anticipate that we shall revoke the 1991 order in its entirety and replace it with a new one. I shall have more to say on this at Report stage. But, as I made clear at Second Reading, we do not plan to change the existing restrictions on the use of the AM and FM wavebands. The Radio Authority, which advises the Government on how best to promote a thriving plural and diverse independent radio sector, supports that view. I believe that we ought to think hard before rejecting its advice.

The companies lobbying for change are largely those which originally held franchises to simulcast their radio services on both FM and AM but were later allowed to split their services to provide different formats on each waveband. Typically, as was explained by my noble friend Lady O'Cathain, such companies offer complementary services--one on FM, based on current hits and a so-called "gold" service on AM, based on hits from the 1960s, the 1970s and the 1980s. Given the scarcity of FM channels, that splitting has represented both an efficient use of the scarce public resource of the spectrum and a broadening of choice.

The main arguments for reform are, as we have heard, that popular "gold" formats, broadcast on AM, would be able to provide better reception for listeners if they were switched to the FM waveband, and that the growth of successful companies should not be restricted. But let us just look a little more closely at the current position. In the metropolitan areas of Britain there are typically two or three companies in operation; in London there are more than a dozen. But across shire England and the non-metropolitan areas of Wales and Scotland there is often only one local independent radio licence-holding company which operates on both the AM and FM frequencies.

Across the country, then, the position in local radio is that there is often a single monopoly or heavily dominant player. This derives to a considerable extent from the Radio Authority's remit to promote diversity in the radio services available in a particular area. When it does advertise a further FM licence in a franchise area, it for that reason tends not to relate to a popular hits format, and the successful applicant for the further FM licence accordingly is unlikely to acquire a major share of the market, or in effect to compete directly for most purposes with the dominant station. Moving a popular current AM station onto an FM channel is not the only thing a strong player might do if the rule were relaxed. I refer to the points made by the noble Lords, Lord Thomson and Lord Chalfont. Indeed, the opportunity of bidding for new FM licences, or challenging renewals of existing ones,

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is much less frequent than that of simply taking over an existing competitor, with the result that, for example, separate news reporting facilities would be closed down, thereby diminishing local diversity of voice.

I should say to the noble Lord, Lord Desai, that we must focus here on voice. Diversity of service is guaranteed by the Radio Authority agreeing the differing formats applying to different FM licences. What we are aiming to ensure is a diversity of voice. Moreover, what may be reasonable in the crowded, diverse context of London radio is less obviously right elsewhere, where a relaxation of the one FM rule might simply consolidate the position of a monopolist or near-monopolist and prevent the development of a healthy diversity. My noble friend Lord Onslow referred to the Evening Standard acquiring a radio station. Of course the Evening Standard would have to pass the public interest test before it could acquire Capital Radio, if it wished to acquire it.

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