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Lord Donoughue moved Amendment No. 104:

Page 92, line 21, leave out ("20") and insert ("25").

The noble Lord said: My Lords, I sadly have to decline the kind offer of the noble Lord, Lord Harris, to rescue me from moving this embarrassing amendment. I am sorry about that as he and I have had much in common over the years. I have often felt that we both share dislikes. We are both on the liberal extreme wings of our respective parties; he is on the liberal extreme wing of the 19th century Liberal Party, and I of the 21st century Labour Party.

However, I shall continue as my amendment follows on from what went before; namely, dissatisfaction with the arbitrary limit that is imposed on national newspaper groups. My approach is to take the Government's arbitrary limit of 20 per cent. and to suggest my own arbitrary limit of 25 per cent., because if we are into arbitrary limits we might as well have a better arbitrary limit.

The reason behind this, as set out in Committee--there is no need to go over that in detail again--is that the Bill discriminates, ultimately, against one newspaper group. It appears to discriminate against two, but the largest newspaper group does, through its ownership, have a large television presence, whereas the Mirror Group, through an arbitrary limit, and an arbitrary definition of national newspapers--not including local content--is in practice excluded, certainly from terrestrial television in this country. We feel that that is wrong and unfair. It applies to the only major group that supports the Labour Party and so we feel it is doubly wrong. We suggest that that discrimination be removed.

I wonder whether the Minister has anything new to say on that since our exchanges at Committee stage, and any response to what I said about the legal situation. We

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are advised that this discrimination against the Mirror Group would not stand up in European law. I beg to move.

Lord Inglewood: My Lords, when the noble Lord, Lord Donoughue, first moved these amendments in Committee, he made it clear--as he has done this evening--that he was, above all, concerned about what he saw as discrimination against the Mirror Group. In withdrawing them then, he made it clear that he would return to this matter on Report, and has done so most eloquently.

On current circulation figures, the 20 per cent. national newspaper market threshold will, as the noble Lord said, prevent both the Mirror Group and News International, to which he alluded in passing, from applying to control licences to provide Channel 3, Channel 5, and national and local radio licences. National newspaper groups falling below the threshold will be permitted to control such services subject to the public interest test. As I said, our policy objective is to prevent those national newspaper groups which enjoy a dominant position in the market from also becoming dominant broadcasters and vice versa. National newspaper groups above the 20 per cent. threshold will be limited to a 20 per cent. stake in Channel 3 or 5 or radio licences because those are the most dominant forms of broadcasting currently available. Approximately 98 per cent. of all homes have access to free-to-air Channel 3 services whereas only 20 per cent. of homes have access to cable and satellite broadcasts.

Let us put this into perspective. I emphasise that the opportunity still exists for dominant newspapers to become broadcasters. All national newspaper groups will be free to control licences to provide domestic and non-domestic satellite services, local delivery services, licensable programme services, digital multiplex services and digital terrestrial television programme services. That is the current position. It may be helpful if I explain in some detail the thinking behind our decision to set the thresholds at 20 per cent. I believe that that is the question the noble Lord, Lord Donoughue, wished me to address.

The 20 per cent. national market share threshold for newspapers was set after careful consideration of the market. It is not a figure that has simply been plucked out of the air, nor has it been chosen with the deliberate intention of penalising the Mirror Group.

As a result of the consultation on our media ownership proposals, the Government concluded that there remains the need for separate media ownership controls, in addition to normal competition legislation, in order to protect plurality. A 25 per cent. threshold was judged to be too high, as that is the level at which competition law would normally bite. By contrast, 15 per cent., which is the level at which the market limits are set for television and radio, was judged to be too low, because while the opportunity to become a broadcaster is restricted by spectrum scarcity, no such hurdle faces those who wish to become newspaper proprietors.

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Analysis of newspaper market share figures shows that there is a wide difference in share of circulation between the larger newspaper groups and the medium-sized groups (some 9 per cent. in the case of the Mirror Group and United News and Media). We therefore set the threshold at a level which distinguished clearly between those groups with a large share of the newspaper market. Circulation and audience based measures are used in assessing market share because these best reflect plurality and the ability of individual media groups to influence opinion. No account is taken of revenue measures. These tend to reflect market power, which is subject to separate control through competition legislation.

Because national newspaper groups having 20 per cent. or more of the national market have such a significant share of the overall newspaper market (including both national and local newspapers) those publications tend to have a much higher circulation in the regions than many local papers, whose focus is on that specific region. In preparing our proposals, the Government commissioned independent research from National Economic Research Associates (NERA). This reveals that if the share of national press and share of regional press is calculated for each major newspaper group at national level and for the top four newspaper companies in each ITV region, both the Mirror Group and News International come out among the top four newspaper companies in every single ITV region. The only regional titles published by the Mirror Group are its Scottish titles, the Daily Record and Sunday Mail. News International does not publish any regional titles. Thus the respective shares of these two groups at regional level is made up almost exclusively of national titles. It is this degree of influence that caused us to decide that such dominant newspaper groups should not also be allowed to dominate the more influential areas of broadcasting.

It will be clear from what I have said that it is not just newspaper groups having 20 per cent. or more of national newspaper circulation that are prevented from owning Channel 3 companies; others are also caught by the provisions which are aimed at protecting plurality at local and regional level. It is an important point when considering the possibility of acquisition of Channel 3 licences. We do not consider that it is appropriate to rely on the public interest alone to regulate cross-ownership between newspapers and broadcasters. The Government believe--it is a point I made in response to an earlier amendment--that there must, as a matter of public policy which it is right for Parliament to decide, be a cut-off point beyond which a newspaper group is judged to be too large to be allowed to control Channels 3 or 5 or national or local radio licences.

Finally, the noble Lord returned to the point he made in Committee that the Mirror Group has been advised that the restrictions in the Bill could constitute an infringement of the group's right to freedom of expression under Article 10(1) of the European Convention on Human Rights. I should like to reassure the noble Lord that the Government are seeking legal advice on this point and I hope by the time of Third Reading to be able to let him know the outcome.

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I simply wish to say that the threshold was determined solely on market share considerations. I must emphasise that no account was taken of the editorial direction or nature of the products published by individual newspaper groups, not least because they may come and go. Other newspaper groups which may be regarded as being "opposition media", such as the Guardian, are not caught by the provisions because their market share is below the 20 per cent. threshold. But newspapers published by News International, for example, are caught because they are above the 20 per cent. threshold.

The Government have concluded--and this is the crux of our argument--that in order to protect plurality in the media there is a continuing need for specific regulations governing media ownership beyond those which are applied by general competition law. But there is a need to liberalise the current ownership regime. Our proposals will set market limits for holdings in television and radio. Holdings in television will be limited to 15 per cent. of the market, measured by audience share, and in radio to 15 per cent. of the available radio points.

There is no market share limit for newspapers, but we have decided that it is appropriate to set a threshold which will limit the ability of the most dominant newspaper groups to acquire holdings which would allow them to become dominant broadcasters. After careful consideration of the market, this threshold was set at 20 per cent. of national newspaper circulation. Similar controls apply at local level whereby local newspapers having more than 20 per cent. of circulation in the relevant area are limited to a 20 per cent. stake in regional Channel 3 licences and local radio licences. We believe that those thresholds strike the right balance and that is why we have adopted that policy.

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