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Lord Thomson of Monifieth: My Lords, since our debate in Committee, developments have reinforced my view about the risks of excessive monopoly arising out of the proposals in the amendment. I am not sure that I fully understand all the complexities of the amendment. If there is room for manoeuvre in less populous areas of the country in the direction proposed, I am ready to look at it. In terms of the great centres of population, I must say--

Lord Dixon-Smith: My Lords, the purpose of the amendment as now drafted is to ensure that the less populous areas of the country would not be areas where it would be possible for a local station to have two FM channels.

Lord Thomson of Monifieth: My Lords, I am ready to look at that before coming to a conclusion. I note from the media press since we last discussed this matter that, for example, the degree of sales monopoly that is

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developing in independent commercial radio is very worrying indeed. There is now a sales group in independent local radio that, together, controls almost 90 per cent. of total advertising sales. The advertising industry has a legitimate point of view in this matter which has not been much heard in the debate. If the great stations--I welcome their success--were to be allowed to expand further, the reality is that there are no frequencies for them and they would expand by further mergers and takeovers. One would have a greater degree of concentration and of monopoly. I am reluctant to see that happen.

Baroness O'Cathain: My Lords, when a similar amendment was discussed in Committee my noble friend the Minister raised some interesting points that I should like to address in an attempt to allay the Government's fears relating to diversity of output and market domination in any particular area.

The principle of market forces undermines any rationale for a company that owns more than one station on a similar waveband to replicate its broadcasting output. No company would establish a direct rival with itself. My noble friend the Minister appeared especially worried about the convergence of news output. I understand from a leading independent radio operator who owns 28 licences that it has always produced different news items on its AM and FM channels. For example, on its AM channel it might deal with the Budget, whereas on its FM channel, which is mainly music, it might deal with the latest developments in the life of Michael Jackson.

That common practice would extend to companies owning more than one licence on the same waveband. My noble friend the Minister was also worried that in a certain area there was not enough existing competition to allow one company to own more than one station. However, we should consider the listener and the diversity of output. Without the shared resources that would enable one company to offer two stations, a second service might not be economically viable. Therefore, the local listening population may not have the opportunity of diversity to benefit from a second service.

There are two key issues on market domination. The first is that the BBC already dominates the FM market in any area with Radio 1, Radio 2 and the local radio network. All three stations broadcast on the better frequency; that is, the one which has fewer reception problems. Some may say that the independent sector, however, has domination in some localities by way of population reached. We cannot legislate against those organisations that use the same resource more successfully than another. That happens to be business.

Secondly, the Bill provides the Radio Authority with increased powers to scrutinise changes of shareholding and corporate structure. In addition, the Bill allows for the Radio Authority to impose conditions as a result of those changes. The interpretation of such powers can be far-reaching, and would ensure that diversity and listener choice are preserved through revising the promise of performance or other licence requirements.

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To conclude, the key reason for my support of the amendment is that I believe we have a strong Radio Authority that, with its additional powers as proposed in the Bill, will regulate the industry effectively to preserve diversity and equity.

We honestly do not need to make decisions on behalf of the Radio Authority imposing prescription legislation on an industry which is developing very fast. I am sure that we all agree that legislating for broadcasting is extremely difficult. That has been proved during today's debate. Simple solutions do not reflect the diverse nature of the industry across the country. The Radio Authority is strong and active. Let it have the freedom to examine each case on its merits, as it has done so effectively since the introduction of the 1990 Act. We must allow for flexibility. I am sure that this Bill is the Bill for the future.

10 p.m.

Lord Colwyn: My Lords, I too support the amendment. In Committee I spoke in favour of allowing a station to run two different services on the same waveband in a single area. Nothing I heard the Minister say then persuaded me to change my mind, but I hope that he will be able to offer some encouragement tonight.

It seems to me that we may be in danger of trying to do the Radio Authority's job for it. We cannot know in advance what circumstances will prevail in, for example, Liverpool, Newcastle or Worcester. It may well be that a minority service of great value is proposed which can be best supported from within a company already broadcasting in the area whose credentials and ability to serve the community concerned have been well established. Let the authority make up its mind in the circumstances that prevail at the time rather than those that prevail at present. Let us free our regulators to regulate in a way that can reflect future circumstances rather than shield them behind legislation based on yesterday's experiences. I support the amendment.

Lord Inglewood: My Lords, we have once again had an interesting debate on this question. It is an important one for local radio. Moreover, my noble friend Lord Dixon-Smith has done me the kindness and courtesy of seeking in his amendment to address some of the points that I made in debating the similar amendment put down in Committee. So I hope the House will forgive me if I seek in responding now to set out the Government's position in a little detail. However, I wish to avoid going over the ground already covered at some length on the previous occasion.

As my noble friend made clear, his amendment is designed to respond to the reservations about plurality which I expressed in responding to earlier suggestions that the current limit should be generally removed. Let us examine a little further, however, exactly what benefit would accrue from accepting the amendment before us. There is not really appreciable potential gain in terms of the diversity of services offered to the listener. That is separately guaranteed by the Radio Authority, which has a duty to develop it and seeks to

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secure it by licensing new services, both on AM and FM, which are commercially sustainable and extend choice. Diversity, then, is not primarily in the hands of the programme service provider or at the mercy of that provider's choice. Of course greater diversity might well indeed be promoted were existing licence holders in an area free to take up new FM licences awarded by the authority; that is, licences to which they could bring existing local expertise and a ready-made incentive to cultivate a different audience. But frequency scarcity dictates that there are likely to be very few further FM licences awarded for category A or B areas. Once a further Greater London licence has been awarded--and that process is likely to begin as soon as next month--there are only three further category A or B licences for which frequencies are likely to be found. Ironically, the case for removing for the existing one FM licence limit to promote diversity is in fact strongest in category C and D licence areas, where the same frequency scarcity considerations do not apply, and allowing what is often the only existing operator to open a further station might be the only way of providing a further commercially viable choice. But, of course, this goes flatly against the purpose of promoting plurality.

Much the likeliest way, then, of companies actually using the freedom they would gain from the relaxation of the current limit in category A and B areas is in fact to take over other existing licence holders. This would facilitate greater consolidation within the radio sector, given that it is usually easier to expand from an existing base in a given area. It is indeed this facilitating of consolidation within radio that is the real benefit which might in practice obtain from relaxing the limit. As the noble Lord, Lord Desai, put it when we debated these matters in Committee, the future will not be mainly to the cuddly local radio station, and arguably only the larger consolidated business emerging from expedited rationalisation will be able to launch the improved service for the listener which digital broadcasting offers.

I confess also to aspiring to a future where there is a place both for strong cross-country conglomerates and for smaller, genuinely local, radio stations. That is certainly what the Radio Authority is seeking to achieve. We should also bear in mind that, as I mentioned in Committee, the Bill removes any limit on the number of radio licences a company may control, subject only to a maximum of 15 per cent. of the total points in the radio system. That represents substantial room for growth, albeit across the country rather than in particular areas.

The Government therefore have various conflicting considerations to assess in deciding whether to amend the existing local radio licence limits. I hope that I have sufficiently indicated in the debates we have had that I have a reasonably open mind on the issue and am aware of the various cross-currents surrounding it. I propose to discuss this matter further with the Radio Authority to see whether the current arrangements can be improved. However, in doing that I hope that no Member of your Lordships' House will take that as being a commitment to do anything.

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I assure the House that in their further considerations, the Government will have the overall interests of the viewer primarily in mind while recognising that the continued development of strong and successful players within the radio sector is by no means necessarily opposed to those interests. I hope that that explanation of the Government's position has been helpful to your Lordships, especially to my noble friend Lord Dixon-Smith. In the light of that explanation, I hope that he will not seek to press the amendment this evening.

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