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Baroness Jay of Paddington: My noble friend has very kindly referred to the point, on which I think that we will have to disagree. The problem that I was trying to raise was that the interests of the American broadcast companies would be very different from the public interest concerns that she has very rightly said are important in our regulation.

However, perhaps I may go back. I hope that she completed that point—I did not want to interrupt her in the middle of it. It is not correct that the Federal Communications Commission in the United States

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has no control over the quality of programmes in its licence regulation. It does have a public interest requirement. The problem and the issue to which the noble Lord, Lord Phillips, referred—perhaps incorrectly, referring to a congressional committee when in fact it was the Federal Communications Commission that ruled this week on cross-media ownership—is that the enforcement by the FCC of that public interest requirement in the licence operation has diminished vastly over the years and is now in practice almost abrogated. That is the problem that we foresee.

Baroness Blackstone: I know that my noble friend is absolutely right in what she says about the FCC. The point that I was trying to make and which I think she has just endorsed is that the US system does not have the same degree of control over content as we have in the UK. ITV has a quota of 65 per cent original production. It actually achieved 81 per cent. Channel 4 and Channel 5 also exceeded their quotas in original production. Those channels are surpassing their targets because it makes commercial sense to do so, because high-quality original production aimed at UK audiences is quite rightly what viewers want to see.

Any non-European company that fails to take note of those facts and fails to deliver high quality original UK productions will suffer in terms of ratings and therefore advertising revenues. UK viewers want high-quality original production. There is no reason why American companies would be more likely to ignore that fact than the big European companies that are already entitled to buy into our market. Many European countries already have no restrictions on foreign ownership. The arrival or threat of arrival of non-European investors in those countries has not had an apparently detrimental effect. For example, in Germany, RTL, like the BBC and ITV, shows about 30 per cent non-European content.

There are those who say that it will be in the economic interest of large—particularly US—companies to buy UK companies and run them as cheaply as possible. It is true that it will be in the interest of any inward investor to run his or her operations as efficiently as possible, but that does not necessarily mean the same as running them as cheaply as possible. "Cheaply" implies for the lowest input cost possible. "Efficiently" means maximising profit. However, that can mean significant up-front investment in order to attract large audiences. Channels that have tried to treat broadcasting as just another commodity have had to change their business plans to reflect local demand.

Let us not forget that other huge differences between the American market and the UK market—the BBC. A well-resourced BBC will continue to be a tough competitor to commercial broadcasters, offering audiences alternatives if those broadcasters do not get it right.

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It is not just the Government who think that it makes sense to remove the foreign ownership rules. The ITC's independent review of programme supply, which reported in November, stated that most contributors to its review,

    "felt that the combined forces of audience preference, economic logic and strong regulation would ensure that any American owner of broadcasting and production assets would focus on investment within the local market for the local market".

We share that conclusion.

I turn to Amendment No. 284, which we do not think is necessary. We are convinced of the robustness of the regulatory and public service provisions set out in the Bill regardless of who owns broadcasting licences. We think that the potential benefits of foreign ownership are worthwhile, and the ITC's independent review of programme supply generally agrees with the proposed changes. The report said that,

    "the balance of analysis we have seen supports the Government's proposed change to the non EEA ownership rules, which would create an environment in which more expertise and capital could be attracted to the UK".

We therefore do not want to delay the benefits of investment, skills and management which we expect foreign ownership to bring.

Amendment No. 285A, tabled by my noble friend Lord Gordon, proposes that we open up broadcasting licences to foreign ownership only where we secure reciprocal arrangements with the country concerned. Noble Lords will remember that the committee of the noble Lord, Lord Puttnam, concluded that reciprocity was "not pivotal"—a point that I do not think the noble Lord, Lord Thomson of Monifieth, mentioned when referring to the committee.

We in the UK are not alone in this respect. As I have already mentioned, a number of other countries have already taken the same step, including Germany, the Netherlands, Portugal, Spain, Denmark, Ireland, Finland, Belgium and Luxembourg. Moreover, we believe that the removal of foreign ownership restrictions in the UK are beneficial in their own right. I say to the noble Lord, Lord Fowler, that that is the key point here. We have changed our position on reciprocity because we have assessed our position and looked at the ITC's report. We believe that the benefits of allowing foreign ownership are considerable and that they outweigh any advantages to be derived from pursuing reciprocity.

I know that there are those who differ on this issue, but we believe that we have the balance right. Across the Bill, we are trying wherever possible to remove the specific regulatory barriers to investment—I think that my noble friend Lord Lipsey pointed that out very clearly—while at the same time enhancing our protection for content.

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Lord Fowler: Does it therefore remain the Government's policy that they want to get reciprocal arrangements with the United States? If it does, do they think that the action they have taken strengthens or weakens their hand?

Baroness Blackstone: If we were able to obtain reciprocity it would of course be an advantage, although I am not sure—as again my noble friend Lord Lipsey pointed out—how many British companies would in fact wish or be able to buy into the American market.

I think that I have answered most of the issues raised in the debate. We are certainly not prepared to do anything to risk either quality or content. Where safeguards are in place they are being strengthened. In the light of what I have said I hope that the noble Lord, Lord Crickhowell, will withdraw his amendment.

Lord Crickhowell: I should like, first, to thank all those who have taken part in this long and important debate. I am extremely sorry and upset that my noble friend on the Front Bench, Lady Buscombe, was angered by my opening remarks. I am so innocent and naive about a huge range of matters discussed in this House, in relation to which I bow in awe to the expertise of others, that it never occurred to me that my words could cause offence. Clearly she was brought up in a much gentler world than that in which I have pursued my political career. But I shall try to do better on another occasion.

My noble friend has at least given one of a number of reasons why we have to come back to this matter on Report. As she has not explained the reason for my Front Bench's policy, clearly there has to be an opportunity on Report for her to do so.

Baroness Buscombe: I hate to intervene as we all wish to have something to eat. However, I made my position very clear on Second Reading. We have had an awful lot of Second Reading debates this morning, somewhat repetitiously. May I also say that the noble Lord knows little about my career before I came to this House, not least my involvement in the media?

2 p.m.

Lord Crickhowell: Clearly, we will have to return to the issue, first, because some of us—those behind the noble Baroness, at least—want the position of our Front Bench to be set out and secondly, because, as the noble Lord, Lord Ashley of Stoke, and others said, there is very strong feeling across the Chamber about this issue.

I need not give a lengthy response to the noble Baroness, if only because I anticipated in my opening speech almost all the points that she made. I say to the noble Lord, Lord Lipsey, that it is always a little irritating when one has just sat down to hear a noble Lord entirely ignore the words that one has just

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uttered, as he did on the question of European companies and the comparison with American companies. I pointed out that the real reason for the difference is that the Europeans do not have that American product that is so easily sold around the world. They do not have those large libraries of English language content.

The noble Lord's argument that we should ignore the remarks of Mark Thompson and Greg Dyke on the grounds that they have an interest was a little unworthy. I disagree with Greg Dyke on many issues, but I would bow to his experience in the American production market and take slightly more note of it than the views of the noble Lord, Lord Lipsey, on that subject. If the noble Lord, Lord Lipsey, is not prepared to listen to Greg Dyke, I hope that he will listen to his noble friend Lord Bernstein and to his noble friend Lady Jay, both of whom have experience and supported the arguments that I advanced in relation to the real reason why American companies would want to invest here.

The noble Baroness, Lady Howe, questioned the adequacy of the reasons given for the urgent need for inward investment. They were just touched on by the Minister. My noble friend Lord Fowler also referred to the value of inward investment. I do not need to be told of the value of inward investment. During my eight years as Secretary of State for Wales, I spent an immense amount of time in the Far East, America and Scandinavia. During that period, we in Wales attracted rather more than 20 per cent of all the inward investment to the UK year after year with 5 per cent of the population. Inward investment can be valuable, but the question is whether it will be valuable in this case or whether there is an urgent need for it.

It is clear that this issue causes considerable concern. We have had a long debate. The issues have been well aired and I will withdraw the amendment in the confident expectation that we will return to it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 340 [Modification of disqualification provisions]:

[Amendments Nos. 285 and 285A not moved.]

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