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Viscount Chelmsford: I thank the Minister for his reply, which was a long and detailed response on double counting. That was a side issue to my amendment, which was effectively asking the Government to look at delivery operators rather than service providers. I still hope that we may find some way to exclude cable companies from the restrictions that are put on service providers. I shall study what the Minister said. It may well be that I shall want to come back to this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 154 not moved.]

Baroness Dean of Thornton-le-Fylde moved Amendment No. 155:

Page 80, line 39, leave out ("three") and insert ("two").

The noble Baroness said: This part of the Bill deals with multiplexes. At present we suggest that it provides for an in-built potential monopoly situation if one person bids and receives licences for all three. At the moment, in the first stage of development of digital television and radio, six multiplexes will be available. One of those will go to the BBC, one to the independent companies such as ITV, including Channel 4 and S4C, and half to Channel 5, leaving three-and-a-half multiplexes.

We suggest that enables one person to develop immediately a monopoly situation. Against the background that we want pluralism and diversity, we suggest that the Bill as it stands is flawed. The amendment will reduce the number of multiplexes not from three to one but from three to two because we do not want to discourage digital television getting off the ground.

There is another factor. We are not yet clear about the strategic importance of multiplexes within broadcasting in this new digital age. We believe that we know the direction in which it is going but we are not absolutely sure. The Government's proposals in the White Paper did not refer to three multiplexes being able to go to one purchaser. In fact, the Government probably

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had it right originally in the White Paper when they spoke about establishing a maximum below three. I beg to move.

Lord Inglewood: I am most grateful to the noble Baroness who has clearly set out her concerns and explained why she is proposing that the maximum number of television multiplex licences that one person might hold at one time be reduced from three to two. The launch of digital terrestrial television will carry with it significant long-term investment. There will be six multiplexes initially and more may become available, perhaps with more restrictive coverage. Our original proposals were, as the noble Baroness said, to restrict companies to the ownership of two television multiplexes, ensuring thereby competition between at least three companies. However, consultation produced significant feedback from the industry that it would be necessary to allow companies to reap the maximum possible economies of scale from rolling out infrastructure from more than one multiplex. Many in the industry also argued that companies would only consider entering the market if they could see a prospect of controlling three licences. Indeed, many actually argued for a monopoly.

A higher ownership threshold would also allow multiplexes to develop a sufficient base of subscription television to enable them to make a reasonable return on their investment. We have taken these arguments on board. The revised limit of three multiplexes helps to make digital terrestrial television a better business proposition while continuing to ensure that there is some competition in provision to the benefit of broadcasters.

There is one point I should like to emphasise. There is no requirement under our proposals that there be only two providers altogether. However, our proposals allow the ITC the flexibility to bundle multiplexes in a way that might best result in the successful launch of digital terrestrial television. We have also taken powers in paragraph 5(3), which will allow the Government to respond to future developments in the market and to amend the position should that prove sensible, particularly as more multiplexes come on stream.

I am sure that we are in agreement on both sides of the Committee that it is important to ensure that digital terrestrial television is given every opportunity to succeed. I very much hope that the noble Baroness will now understand the thinking behind the change that we effected between the White Paper and the introduction of the Bill.

Baroness Dean of Thornton-le-Fylde: I appreciate what the Minister says. We want to see digital television get off the ground. One must bear in mind that one multiplex can provide between two and 10 programmes. The Bill as it stands will put multiplexes out for licence and there will be criteria which the ITC will apply such as the area covered, the timetable, programme variety and fair competition. We have difficulty reconciling fair competition, on the one hand, with a company having a potential monopoly on the other, bearing in mind that licences for programmes are automatically awarded and do not have to meet a criteria as such in the Bill as it

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stands. We believe that there is a danger here of a monopoly developing and that this amendment would avoid that. I heard what the Minister said and at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 156 not moved.]

The Deputy Chairman of Committees (Baroness Serota): If Amendment No. 156A is agreed to, I shall not be able to call Amendments Nos. 156C to 161ZG.

Lord Thomson of Monifieth moved Amendment No. 156A:

Page 88, line 15, leave out from beginning to end of line 39 on page 93 and insert--
("Restrictions on links between newspaper proprietors and licence holders
2.--(1) A person who is the holder of a licence to provide a national or local service specified in sub-paragraph (2) below may not run, or become a participant in a body corporate which runs, a local or national newspaper--
(a) without the consent of the relevant authority, or
(b) if the Monopolies and Mergers Commission report that the running of the newspaper by the person who holds the licence or the participation (as the case may be) in question may be expected to operate against the public interest.
(1A) A person who runs a local or national newspaper may not become the holder of a licence to provide a national or local service specified in sub-paragraph (2) below or a participant in a body corporate which holds such a licence--
(a) without the consent of the relevant authority, or
(b) if the Monopolies and Mergers Commission report that the holding of the licence by the person who runs the newspaper or the participation (as the case may be) in question may be expected to operate against the public interest.
(1B) In any case--
(a) where--
(i) a person to whom sub-paragraph (1) above applies runs or is a participant in a body corporate which runs a local or national newspaper, or
(ii) a person to whom sub-paragraph (1A) above applies holds a licence to provide a national or local service specified in sub-paragraph (2) below or is a participant in a body corporate which holds such a licence; and
(b) there is an increase in any of the following--
(i) the level of that person's participation in that body corporate;
(ii) the aggregate market share of the newspapers in question;
(iii) the aggregate audience time attributable to the services in question (determined in accordance with paragraph 3 of Part III of this Schedule),
the relevant authority may refer that increase to the Monopolies and Mergers commission for investigation.
(1C) A reference may not be made under sub-paragraph (1B) above more than 3 months after the relevant authority first knew of the increase in question (or ought to have know from information available to it), but such a reference shall be made in anticipation of an increase within paragraph (b)(i) of that sub-paragraph if the participator makes a written request to the relevant authority for such a reference.
(1D) For the purposes of this paragraph the market share of a newspaper shall be determined in accordance with regulations made by the Secretary of State which shall be laid in draft and approved by resolution of each house of Parliament before being made.").

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The noble Lord said: In moving this amendment, with the leave of the Committee I shall speak to the two amendments grouped with it, Amendments Nos. 161A and 161B, because they go together.

These amendments deal with the arrangements for newspaper owners to seek ownership of television companies. They deal with what is now popularly called the "20 per cent. rule". In these amendments I am seeking to remove that rule and I shall explain why in a moment or two.

Currently, under Schedule 2 of the 1990 Act there is the general rule that newspaper companies of whatever size should not have more than a 20 per cent. interest in a terrestrial television broadcaster or radio station. The new Bill changes that to reflect changing circumstances. We all recognise and accept that. Perhaps I may say in parenthesis that I am perhaps less starry-eyed than some who believe that by encouraging greater cross-media ownership and larger units in the media field we are going to create world-class companies and compete with the Warner Brothers and the Disneys of the global economy. I believe that there is a good deal of exaggeration about that. Nevertheless, circumstances have changed and we accept that.

National or local newspaper owners who want to own a terrestrial television or radio licence are now simply to be subject to a case-by-case public interest inquiry by the ITC, but only where the newspaper group in question has a newspaper market share of under 20 per cent. That does not seem to be logical and forms the objection of principle which I and other Members of the Committee have as regards Schedule 2, paragraphs 4 and 5 on pages 89 to 92 of the Bill. They use arbitrary limits to prohibit participation in markets which ought to be open to all unless--and I emphasise this--the public interest is adversely affected by any particular participation.

The Bill as it stands provides that any national newspaper group with more than 20 per cent. of the market cannot have more than a 20 per cent. interest in a Channel 3 licence, a Channel 5 licence or a radio licence, but any other newspaper can. According to my sense of fairness, it does not make sense that a national newspaper group with, say, 19 per cent. of the market may fully own such a licence, subject to the public interest test, whereas a group with a 21 per cent. market share must be banned absolutely from owning it, regardless of its good or bad effect on the public interest. Equally, it is nonsense to suggest that a participation level of 19 per cent. by one larger newspaper group may be allowed but that a group with a level of 21 per cent. should be prohibited absolutely. I do not see how one could regard such a system as anything other than arbitrary. It is difficult to see how the public interest can be adequately served by such a system.

We all know what we are talking about in practical terms. Only Mirror Group Newspapers and News International are affected by the prohibition in the 20 per cent. rule as they are the only newspaper groups with more than 20 per cent. of the national newspaper market. All other newspaper companies are free to

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invest heavily in mainstream television, subject to the Bill's public interest test. Just two companies are being treated unequally. I hope the fact that I have tabled this and similar amendments will enable us to create a fairer situation all round. This is not a vendetta against Mr. Murdoch and all his works.

Returning to the specifics of the amendments, the first seeks to leave out the provisions which introduce the arbitrary 20 per cent. barrier, together with attendant definitions, and instead to make all licence holders and newspaper owners subject to a public interest inquiry. The requirement is that the ITC should first look at the situation and decide whether there should be a full MMC inquiry or whether it is plain that the public interest will not be adversely affected by the level of cross-media ownership in question. So where newspapers and television are involved, ownership changes would be reviewed on a case-by-case basis under the public interest and would be decided on their merits. It may be expected that where the level of participation is very low, the ITC will consent so that an MMC inquiry will not be required. Bringing all the players in the market within the public interest test will undoubtedly increase the level of the protection for the public interest, but it will also allow the industry to operate more fairly.

I can deal briefly with the second of my amendments. It is a technical amendment which seeks to replace the definition of "newspaper proprietor" although it is not intended to change the meaning from what is in the Bill at present.

The third amendment would allow participants or would-be participants to ask for clearance in advance so that they may know where they stand before investing large amounts of money in the business. Unlike the Government, I believe that the ITC should be required to come to a decision within a specified time. I have proposed a period of one month. I am not dogmatic about that, but I propose that there should be a time limit which provides just enough time to determine whether there is something which needs investigation. If investigation is needed, the matter is to be referred to the MMC within the one month allowed. The MMC will have three months to make its inquiry unless the Secretary of State allows an extension of time. I do not believe that the Government's attitude of allowing the ITC unlimited time to make its inquiry can be justified on any grounds.

The amendment also replaces some of the provisions in the Bill which provide for public interest inquiries. The replacement is necessary not because I disagree with the broad thrust of this part of the schedule, but because in my view the provisions are too narrow. I want to widen the scope of the inquiry to all players in the market and to have those inquiries carried out by the MMC.

On that point, perhaps I may deal with a slightly wider matter than the 20 per cent. rule and advise the Minister that I am concerned that the Government should make arrangements to have the public interest tests applied in the most rigorous and effective way. We were happy to hear the Minister confirm on Second

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Reading that the Bill would be subordinate to the Fair Trading Act and the normal workings of the Office of Fair Trading. However, the fact of the matter is that there is some confusion about the provisions in this sphere in both the television and advertising industries as well as among the general public. There is a feeling that the audience share limits proposed in the Bill imply a potentially higher level of ownership than is likely under the competitive rules of the OFT. In moving Amendment No. 156A, I have dealt with a slightly wider point, but I should like to press the Government for further reassurance that anti-competitive positions will not be permitted.

In conclusion, the amendments would broaden the use of the public interest test for cross-ownership and, in doing so, would treat all companies equally and on a case-by-case basis. I commend the amendments to the Committee. I beg to move.

5.30 p.m.

The Earl of Stockton: I should like to support the noble Lord, Lord Thomson of Monifieth, in this amendment. It seems to me that it makes perfect sense in a very fluid series of interlocking media industries to say that the public interest should be the primary criterion--in fact, the only criterion--by which such matters are judged.

We are now moving from broadcasting to narrowcasting. We are moving from being providers of newspapers to being providers of data bases which may or may not be supplied down cables or wires or on surplus frequencies in the multiplex. The situation is such that the previous definitions with which we have been working will no longer be applicable in a far more immediate future than I suspect many of us are prepared to grasp. It seems to me that the noble Lord's amendment meets exactly the repeated concerns of your Lordships in these discussions by a very simple, and I think elegant, formula.

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