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Lord Dixon-Smith: My Lords, I am reassured by the detailed reply given by my noble friend. While he avoids giving any commitment to do anything, I hope that he will forgive me if I continue to press him for a commitment to do something.

Perhaps I may answer to some degree the point raised by the noble Lord, Lord Thomson of Monifieth, on the question of dominance in advertising. It must be said that the reason for that apparent dominance is the successful organisation of MSM by Capital Radio which handles a very great deal of advertising on behalf of other independent local radio stations. It happens to find that that is the best way to deal with its business.

In all the circumstances and in the light of the debate, I am happy to withdraw the amendment; but in doing so, I look forward to some action rather than no action by the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Thomson of Monifieth moved Amendment No. 85:

After Clause 65, insert the following new clause--
(" . At the end of section 45(2) of the 1990 Act there is inserted "and section 16(2)(g)".").

The noble Lord said: My Lords, this is a modest but not unimportant amendment which, to judge from my mailbag, seems to have caused excessive alarm in some quarters.

The amendment is intended to ensure simply that non-domestic satellite services should be encouraged to do more original programming than they have so far been able to do. Non-domestic satellite services cover a wide variety of activities. Some of them are specialist services like 24-hour news services where there is no opportunity for original programming. But BSkyB, by its own enterprise, has been very successful and is now an extremely profitable business. It does some original programming but it should do a good deal more.

There have been fears that my amendment intends to impose some sort of quota. I should like to put on record that I am opposed to quota in that aspect of broadcasting policy and have been over many years. The wording of the Broadcasting Act 1990, which we seek to insert into this Act, is simply that non-domestic satellite services should ensure that a proper proportion of the matter included in their programmes is of European origin. "European origin" is a term of art for original programming in this country. It is in that spirit that the amendment is tabled. That is a perfectly legitimate demand to make, particularly on BSkyB. I beg to move.

Lord Donoughue: My Lords, my name is to the amendment and I support everything which my noble

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friend Lord Thomson said. I have a further question for the Minister. As I understand it, under the European directive the Government--in this case, the Department of National Heritage--have the responsibility for monitoring the extent to which licensees meet the targets of the directive.

Can the Minister tell us what his reaction would be were we to suggest that those targets should be monitored by the ITC, which seems a much more appropriate body than a heavily overworked and deeply understaffed Whitehall department? In my view, it is not appropriate that those in the department should be wasting their time monitoring the matter in detail. In attempting to do so, it may be the case--as is so often suggested--that they are perhaps a little more accommodating and slack towards Sky's meeting of those targets. Does the Minister agree that it might be more appropriate if the ITC monitored the matter and reported it to the department? The department could in turn report to the Europeans on the extent to which those targets had been met.

There are two points for the Minister to consider. First, I support the noble Lord in all he said about European origin programmes. Secondly, there is the question of whether the department would actually be best employed in monitoring such matters.

10.15 p.m.

Lord Inglewood: My Lords, the noble Lords, Lord Thomson and Lord Donoughue, have raised a number of important points. It may appear to be an apparently modest amendment, but it is one that would have significant implications. I hope that your Lordships will bear with me while I talk to the amendment at some length. I do so because, as I said, it is an important matter.

Noble Lords will be aware of the obligations laid on all European member states in the 1989 Broadcasting directive. That is the directive we spoke about in Committee under which,

    "Member States shall ensure where practicable and by appropriate means that broadcasters reserve for European works, within the meaning of Article 6, a majority proportion of their transmission time, excluding the time appointed to news, sports events, games, advertising and teletext services. This proportion, having regard to the broadcaster's informational, educational, cultural and entertainment responsibilities to its viewing public, should be achieved progressively, on the basis of suitable criteria".
The UK has implemented the directive administratively and my department is in regular communication with individual non-domestic satellite broadcasters to discuss the degree of practicability and the targets and timescales for implementation of agreed percentages. We have deliberately not made an order under Section 188 of the 1990 Act directing the Independent Television Commission to act on our behalf.

The amendment, if your Lordships were to agree to it, would achieve the same result and oblige the ITC to make "a proper proportion" of European content a condition of a licence for non-domestic satellite broadcasters. So I ask your Lordships to consider most carefully what I say and the reasons why the Government cannot accept the amendment which, on the

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face of it, would merely transfer the existing government-broadcaster dialogue to one between the ITC and the broadcaster.

The provision in Section 16(2)(g) of the 1990 Act places a requirement on Channel 3 licence applicants to reflect "a proper proportion" of European works in their programming. Similar obligations are placed on Channel 4 and on Channel 5 applicants in Sections 25(2)(e) and 29(2)(b). They are terrestrial free to air channels with a guaranteed audience base of many millions. This particular public service obligation, as well as complying with the majority quota laid down in Article 4 of the directive, must also be seen in the wider public service context of Section 16(2) which requires such licence applicants to provide high quality and diversity in programme material. That must especially reflect adequate news and current affairs coverage, regional interest material where appropriate, religious and children's programmes, and programmes to appeal to a wide variety of tastes and interests. Clearly, much of that will properly and inevitably be of British origin. We in this House easily translate it also to mean European and vice versa. So the ITV and Channel 4 terrestrial commercial channels carry over 70 per cent. of works of European origin, demand led by their audiences which, in turn, attract a solid advertising base to fund those channels.

Why do the Government not wish to place a similar direct obligation, as an ITC licence condition, on non-domestic satellite channels? I believe that that question lies at the heart of the amendment. Noble Lords suggesting the amendment have agreed that their proposals reflect the flexibility allowed for in the 1989 directive with "a proper proportion" giving adequate scope for individual satellite channels to establish the amount appropriate to the individual themes and commercial viability. But the amendment does more than that. It would place an obligation on the ITC to assess, when a licence is first applied for, what amount of European programming would be "proper" for that channel. At present a licence applicant needs to satisfy the commission that he understands and will comply with the general conditions in section 6 relating to impartiality, taste and decency. Interpretation of these matters is never black and white; there are no clear cut boundaries beyond which a broadcaster may not step. Alleged breaches of these conditions are always looked at very carefully, in the overall context of the programme and of the nature of the channel itself.

But this contrasts with a pre-licence condition relating to quantity. A satellite broadcaster, before he has even had the opportunity to test the market for his product, would be asked to give firm projections of how much European programme content he intends to include, and to convince the ITC of the reasonableness of his assessment at that point. We consider this to be onerous, and potentially counter-productive. Why is the kind of protection inbuilt in the amendment helpful to the European production industry? Why should it not produce what the viewer wants like everyone else in the market place? Knowing that sanctions are available against him, an individual broadcaster will be inclined

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to make cautious and conservative assessments. That is likely to act as a brake on the development of new channels, because broadcasters are not able to predict exactly how things may develop. Indeed, it might even kill off potential channels before they are born.

The regime which the Government presently operate, where it discusses with individual channels the quantity of European programming practicable to a channel and over what period with the aim of achieving as much as possible, preferably a majority, is a satisfactory regime. It has led to the United Kingdom being in the forefront of satellite broadcasting, with today 100 channels licensed by the ITC.

This administrative regime is delivering what the subscriber wants. I am pleased to say that it is also beginning to deliver what noble Lords wish to achieve by statutory means in their amendment. Just as UK viewers on terrestrial channels demand recognisable and largely home produced programmes, alongside--it has to be said--a preference for American movies, so, too, are these same consumer demands being reflected in the content of some of the satellite channels. The oldest of these, BSkyB, is now making a significant investment in original programming.

In the fiscal year 1995, Sky spent some £328 million in total on programming, which represents 62 per cent. of operating costs; £150 million of this was spent on original programming. Sky still has only 4.5 per cent. of the total audience share, compared with the 90 per cent. of the four terrestrial channels. Therefore, the £30 million per audience percentage point spent on original works compares favourably with, for example, Channel 4, with 11 per cent. audience share, spending £19 million per percentage point. Another, much newer entrant, Turner Broadcasting, also is steadily building up European programming and original production. In 1996 it will spend £70 million in the United Kingdom, with about £55 million of that in original production, which is not bad for a channel with an audience base of well under a million in this country.

We should do nothing in this Bill to affect adversely this healthy industry. We should particularly bear in mind that that figure of 100 today could, with the advent of digital satellite as well as terrestrial channels, easily become 1,000. A regime which encourages European-origin programme content, by means of quotas or quantity, regardless of quality, as in the broadcasting directive, will become as increasingly irrelevant as it would be in a bookshop. This is why the majority of member states in the European Union would prefer abolition of the quota provisions.

We would be swimming against the tide of developments in the broadcasting industry if we were to place an onerous and, in our view, an increasingly unworkable and irrelevant statutory obligation on the ITC in relation to satellite broadcasting. Far better, we believe, to leave matters as they stand. Administrative implementation of our European quota obligations can more easily reflect new developments and changes in Brussels legislation. It is correct that we should continue to expect our existing terrestrial broadcasters to include a proper proportion--much of that is British

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programming--demanded by their large viewing audience. Even if there was no such statutory requirement, they would produce what their audience expected in order to maintain their commercial viability, and attractiveness to advertisers, and in the case of the BBC, to meet licence fee obligations.

Largely subscription channels are quite different, looking to satisfy particular interests or hobbies to maintain their viability. For that sort of reason, the proper proportion may be zero. It may be, as with some existing channels, as high as 100 per cent. We must look forward to the days of real consumer choice and not backwards to the days of a few monopoly channels where legislation sought to provide the viewer with a varied and quality menu. Provided that proper standards of impartiality, taste, decency and consumer protection in advertising are maintained, we should be less and less concerned with the origin of programme material. Why should not the viewer have what he wants rather than what someone else thinks is good for him or her?

The amendment would seek to make us more and more concerned, and suggest that we are immobilised like rabbits in a car's headlights by the prospect of the future. I urge your Lordships not to go down that path. We believe that the right way to encourage domestic programme making is to have as many channels as possible wanting domestic programmes for their own commercial reasons. I very much hope that this response will explain to the proposers of the amendment the thinking behind the Government's position in these matters.

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