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Lord Inglewood: I agree with my noble friend that one of the reasons for introducing the statutory licence in 1990 was to enable new broadcasters to start transmissions quickly, where necessary before copyright royalty rates for the inclusion of sound recordings had been agreed. It is quite true that some important developments in broadcasting have emerged since 1990 and the effects of the statutory licence in these new areas would not have been easy to foresee. In some new areas it is possible that a statutory licence is difficult to justify, and limited changes to the provisions should now be considered. However, the Government believe that there is not a convincing case for any major alteration of the statutory licence provisions to exclude, for example, all digital broadcasts. These will, I believe, before long be the only type of broadcast and the previous arguments in favour of a statutory licence remain applicable.

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My noble friend's amendment is, though, much more limited, attempting to exclude three distinct categories of broadcaster or cable programme service provider from the statutory licence provisions. In the first category are the providers of on-demand transmissions; that is, transmissions where the person receiving a broadcast can send signals to the broadcaster and so control what is actually received. The DTI's recent response to the Multimedia Industry Advisory Group's report announced a willingness to consider removal of on-demand broadcasts from the statutory licence. I am therefore happy to agree that the Government should consider further the first element of my noble friend's amendment.

The second aspect of my noble friend's amendment seeks to exclude what may be called the providers of "muzak" from the statutory licence provisions. I accept that there are differences between broadcasters or cable programme service operators providing a transmission which members of the public can receive in their own homes and those whose transmission is received only by, say, retail stores to provide the background music played to customers. Although my noble friend did draw my attention to this issue at Second Reading, I must confess that I have not yet reached a firm view on the matter. However, like the first part of the amendment, I am prepared to agree that the Government should give further consideration to the issues raised. Before reaching any decision on either this or the first part of the amendment, though, I know that my colleagues at the DTI are anxious to hear the views of all interested parties.

The final element of my noble friend's amendment is, I understand, put forward as a change that is necessary in order to comply with the Satellite and Cable Directive. The Government are currently in the process of implementing this directive into UK law. Further consideration is being given to the issues raised here and any necessary changes to the statutory licence will be incorporated into the UK implementing regulations.

I am grateful to my noble friend for drawing the issues raised by this amendment to our attention. However, I trust that on the basis of my agreement to consider the first two parts of the amendment, my noble friend will agree to withdraw it. I hope that the Government will be in a position to respond to the issues raised in another place, and bring forward an amendment to the Bill if appropriate.

6 p.m.

Lord Lyell: I am grateful for everything that my noble friend has said, and particularly for the final part of his reply. Indeed, I must advise both my noble friend and the Committee that I am stunned and delighted by his response, particularly in view of the effort, clarity and excellence with which he has presented his case over long days in Committee. I thank my noble friend very much for that. I shall certainly take up his offer to pursue any further discussions in due course with both my noble friend and his officials. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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The Earl of Arran moved Amendment No. 195B:

After Clause 66, insert the following new clause

Changes to the contributions of regional ITV Companies to the cost of the network budget to be subject to approval of the Secretary of State

(".--(1) section 39 of the 1990 Act is amended as follows.
(2) For subsection (8) there is substituted--
"(8) Where any arrangements have been approved by the Commission under subsection (4) or (7)(b)--
(a) no modification of those arrangements shall be made by the holders of regional Channel 3 licences unless it too has been so approved; and
(b) the Commission shall not approve any such modification to the extent that such modification modifies the arrangements in respect of the contributions made by the holder of each regional Channel 3 licence to the cost of programmes acquired or commissioned pursuant to those arrangements unless such modification has been approved by the Secretary of State."."

The noble Earl said: This amendment is about money, quality and the preservation of real regional television. The objective is simple: to ensure that ITV's smallest regional companies continue to pay a fair price for programmes which they buy from the network. The ITC is already involved in that process. I am simply asking that the Secretary of State should be the final judge. That is hardly a dramatic suggestion, but it could be a vital lifeline for five vulnerable ITV operators.

I make no apology for returning to the importance of regional television, upon which significant matter very many of your Lordships have spoken at frequent intervals during this Committee stage. On Second Reading, I questioned the logic of "big is beautiful". Indeed, that doubt was forcefully voiced by the noble Lord, Lord Thomson, on Tuesday. I wondered how the growth of big companies into world markets could possibly be assisted by swallowing the minnows of ITV like plankton. I have since received an illuminating letter from Carlton Television which bears repetition. It comes from the head of corporate affairs, who puts it this way:

    "You are quite right to say that a large ITV company taking over one of the smallest is not going to lead to global success".

Just as I thought. If a big ITV group ever seeks to buy up a small one, we know now that that will have nothing at all to do with world markets and digital television and everything to do with old-fashioned consolidation and economies of scale. I am indebted to Carlton for its candour.

Lest I be accused of special pleading for the sake of small ITV companies, perhaps I may remind the Committee that they are already considered to have a special case under broadcasting legislation. The 1990 Broadcasting Act recognised their regional responsibility when applications for franchise bids were originally invited.

My new clause addresses one fundamental aspect of that complicated process. I shall spell it out as straightforwardly as I can. The ITC issued invitations to apply for licences. Those invitations contained a sliding scale for the purchase of mainstream network programmes. The structure was designed to ensure that

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viewers could receive "Coronation Street" or "The Bill" in whichever region they happened to live, no matter how big or how small the ITV company delivering the signal. If necessary, that meant that the small five--Border, Channel, Grampian, Ulster and my own, West Country--would contribute proportionately less than their big brothers in London, Birmingham or Manchester for the same programmes. It was, and is, a thoroughly fair arrangement and of particular benefit to viewers in those oft-forgotten, far-flung corners of the United Kingdom.

It was also assumed to be a lasting arrangement. After all, the small five were obliged to calculate their cash bids partly on the basis of what it would cost to buy network programmes. It is a substantial part of any ITV company's budget. They were embarking on a commercial risk licensed to last into the new millennium--in fact, until the year 2002. I am a great believer in lasting arrangements actually lasting. For that reason I wholeheartedly support the resolve of my noble friend the Minister to adhere to the present arrangements for funding Channel 4. Any premature change on the Channel 4 question would be a breach of trust. Any radical change of network programme prices could be calamitous for the small companies. Their financial viability, not to mention the excellent local programmes in which they invest and which they produce, depend on the very survival of that simple equitable pricing mechanism.

My noble friend the Minister may think that none of this is any of his or the Government's business, but let us dally a while. It is quite true that the mechanism is controlled by ITV. Indeed, the Independent Television Association, to which all such companies belong, governs programme prices. Inevitably, the bigger companies have a bigger say, but at the moment the mechanism works and it works well.

However, we now come to the crunch. The Bill allows the big to get bigger. In the Independent Television Association all that it takes to alter the present pricing agreement is a simple majority vote. Think of it: are not the signs already on the wall? Scottish Television is said to be bracing itself for a takeover by the Daily Mirror and HTV is reportedly in talks with Carlton. The biggest independent production house in the UK, Select TV, is being broken up and sold in parts to Carlton, Pearson and Meridian. The noble Lord, Lord Hollick, has lately come to the rescue of Beaverbrook's famous crusader. The big are already getting bigger, and we are still only at Committee stage.

It is no wild hypothesis to say that soon there may be just two huge corporate entities controlling over half of the ITV that we know now. Imagine it: two conglomerates with the power to alter programme prices and, in doing so, to drain the lifeblood from regional TV. Just suppose that those giants, acting purely in the interests of their shareholders, fancied a little more consolidation. In my doomsday scenario, the best way to get the small companies on the cheap would be to scrap the pricing mechanism altogether. The Bill could

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allow that to happen--unintentionally, needless to say, but too late to save some of the best local television in Great Britain.

The amendment should not be interpreted as a criticism of the regulator. It is quite true that the ITC already has the power of veto over changes in programme price. I simply seek to enhance that power. Nor will my amendment set a precedent for directly involving Ministers. My noble friend will be well aware that the Secretary of State is already expected to act as the court of last resort when ITV transmitter costs are proportioned. What I propose merely adds ministerial muscle to the regulatory arm. Why? Because the TV giants of tomorrow may not walk in sufficient dread of the ITC alone. The new clause puts the extra weight of the Secretary of State behind any dispute about programme pricing. It is very little to ask, but it is very important indeed, and for Border, Channel, Grampian, Ulster and West Country, not forgetting their loyal and appreciative audiences, it might mean the difference between a first-class local service and impersonal mogul vision. I know which I would prefer.

During our deliberations on Tuesday, my noble friend displayed some sympathy with the cause which I and many other noble Lords are now arguing. He said:

    "there is need ... to ensure that we entrench all the best qualities of regional broadcasting and, where we can, enhance them".--[Official Report, 13/2/96; col. 568.]

On this issue my noble friend certainly can, and I most earnestly hope that he will. I beg to move.

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