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Lord Eatwell moved Amendment No. 292A:

The noble Lord said: In moving the amendment, I shall speak also to Amendment No. 292B. Before doing so, I declare an interest as chairman of the Commercial Radio Companies Association. The amendments are of a more technical nature than the important debate to which we have listened. However, they correct what I am sure is a mistake in Schedule 14, in so far as it refers to the ownership of local radio digital multiplexes.

It is worth reflecting that commercial radio, urged on by the Government, has invested over 100 million of shareholders' funds in the development of the digital radio network. These funds are not expected to yield a return in the near future. They are an expression of confidence in the future and in the Government's commitment to digital broadcasting.

Unfortunately, the schedule as drafted would introduce investment controls on digital multiplexes that are far more restrictive than is currently the case, making a mockery of the Government's commitment.

The schedule would prevent a company from owning two overlapping digital multiplex services. The problem arises because that fails to take account of what in the trade are deemed to be "accidental overlaps". For example, if the schedule were to stand, Capital Radio would be prohibited from co-owning digital radio multiplexes in London and in Kent because the Kent and the London multiplexes overlap. I am sure that everyone would agree, when looking at the case in hand, that that would impact negatively on the provision of digital radio in Kent, where Capital Radio owns the heritage commercial radio service.

My amendment corrects this anomaly, which I am sure is a mistake, while still preventing undesirable concentrations of multiplex ownership. The simple consequence of my amendment would be that in an area with two or more overlapping digital multiplexes, there should be at least two multiplex owners. I stress that. This would not create monopolies because there should be at least two multiplex owners.

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Not only would the amendment remove the new restrictions inherent in the current schedule, it would also be consistent with the two-plus-one approach to local radio ownership elsewhere in the Bill. I beg to move.

Baroness Buscombe: I rise briefly to support the amendment tabled by the noble Lord, Lord Eatwell. As the noble Lord has said, the amendments aim to provide a more practical framework within which the requirements for restrictions on holding national multiplex licences can operate. The Bill provides that:

    "A person may not hold any two multiplex licences at the same time where the coverage area of one . . . overlaps with . . . the other in a way that means that the potential audience for one of them is or includes at least half the potential audience of the other".

As drafted, the paragraph disallows any company from holding two overlapping digital multiplex services. This would implement a more restrictive regime for the future of digital radio than exists in current legislation. The amendments therefore take account of any accidental overlap while ensuring that no detrimental concentration of ownership could occur.

This can be illustrated by example. If the Bill were enacted now, Capital Radio would be prohibited from co-owning digital radio multiplexes in London and Kent because the London and Kent multiplex coverage areas overlap. But in a Bill that purportedly future-proofs the development of multimedia and claims to be largely deregulatory in nature, is it not inappropriate to implement a measure that would discourage much-needed investment in this sector? The amendment provides the appropriate balance needed to prevent ownership concentration while allowing continued industry growth.

Viscount Falkland: I rise simply to say that we on these Benches agree with the amendments. I have nothing further to add because they have been so admirably explained by both the noble Lord, Lord Eatwell, and the noble Baroness, Lady Buscombe.

Lord Davies of Oldham: It would be easier to respond if I could agree with my noble friend that this is a mistake in Schedule 14, but unfortunately that is not the case for the reasons that I shall seek to explain. The amendments would change the proposed ownership rules on local radio multiplex licences. The present rules set out in the schedule provide that no person would be able to hold any two local radio multiplexes where the coverage area of one of the services overlaps with the other by 50 per cent or more of the potential audience. The amendment would provide that where there are three such overlapping licences, the proposed rules should be relaxed so that, instead of three separate owners, one owner could hold two of those licences.

Local radio multiplexes are the means by which terrestrial digital radio services are delivered to a locality. Each multiplex holds eight to 10 programme

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services, and therefore the multiplex owner plays a crucial gatekeeping role. The multiplex holder is entirely responsible for which services the multiplex carries, subject only to the requirement not to discriminate between service providers. As noble Lords will recognise, that provides the multiplex holder with considerable influence.

The media ownership rules are concerned with plurality and the need to avoid too much influence falling into too few hands. Nevertheless, we have taken the view that there should no limit to the number of multiplexes that anyone can hold, subject to the single restriction that they cannot hold two overlapping multiplexes, an overlap being where one multiplex includes at least half the potential audience of the other.

My noble friend clearly identified Kent as an area of difficulty, where the situation in London has created an anomaly. We do neither expect nor intend that anomaly to repeat itself and appear elsewhere.

The restrictions are not onerous and only affect London. From the point of view of plurality, London is such a large and important market that it is entirely reasonable to ensure that no one multiplex licence holder should be able to determine two thirds of London's digital radio stations, so the restrictions in Schedule 14 should be retained.

The Bill provides for the ownership rules to be revised as circumstances change. There will be no more clusters of three multiplexes licensed during the remainder of the first phase of the digital rollout. If more spectrum is made available for digital radio, that will not be until 2007 at the earliest. The introduction of the new spectrum will be the appropriate time to consider relaxing the multiplex ownership rules.

Meanwhile, with the proviso that I entered with regard to Kent, it is proper to preserve plurality. The issue affects the London situation overwhelmingly and there are good reasons for seeking plurality in those terms. I hope that my noble friend will feel able to withdraw his amendment.

Lord Gordon of Strathblane: Before my noble friend sits down, as he recognises the anomaly but does not accept the amendment, how does he intend to resolve the anomaly?

Lord Davies of Oldham: I am not in a position to resolve the matter directly. The Radio Authority is seeking to deal with the situation in Kent but there is the problem of overlap with London. That unique situation is a product of the times and is unlikely to be repeated. It is a genuine difficulty but it is not likely that it will be resolved in the short term. I seek to defend that which we want to see obtaining across the country and to prevent the Kent situation recurring.

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Lord Eatwell: I can advise my noble friend the Minister that the way to address the anomaly right away is to accept my amendment. I am astonished at my noble friend's reply. Over several years, the Government have encouraged the commercial radio industry to invest enormous sums of money in digital broadcasting. To kick that industry in the teeth when it has been encouraged to invest significantly in advance of any return is not the way for a Government decently to behave. I assure the Government that we shall return to this matter on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 292B not moved.]

Schedule 14 agreed to.

6 p.m.

Clause 343 [Restrictions relating to nominated news providers]:

[Amendment No. 293 not moved.]

Clause 343 agreed to.

Clause 344 [Changes of control of Channel 3 services]:

Lord Evans of Temple Guiting moved Amendment No. 294:

    Page 301, line 13, leave out from beginning to "in" in line 14 and insert—

"(ii) is involved, to a substantial extent, in the provision of the programmes included"

The noble Lord said: I wish also to speak to the other amendments in the group: Amendments Nos. 295 to 299 and 303 to 306.

This group of amendments narrows the definition of the "relevant change of control" that triggers a review by Ofcom of various public service broadcasting requirements of Channel 3, Channel 5 and local broadcasting licensees. The aim is to reduce burdens on Ofcom and licence holders and focus efforts on the changes of control that really matter.

Clauses 344 and 345 apply in cases where there is a change in the persons who have control over a company holding a licence to provide a Channel 3 service. The clauses require Ofcom to review the effect of a "relevant change of control" on various public service broadcasting requirements—including original and regional productions and news and current affairs programming—and to vary the Channel 3 licence if necessary to ensure that the new owner does not deliver less than the old.

Clauses 346, 347, 348 and 349 set out corresponding provisions for Channel 5 and local sound broadcasting services respectively.

A "relevant change of control" is defined in Clauses 344, 346 and 348. As drafted, the expression includes a change of control over any body which is "connected" with the licence holder and is involved to any extent in the provision of the programmes for inclusion in the

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relevant service. The circumstances in which one body is connected with another are in turn defined in Schedule 2 to the Broadcasting Act 1990. They include, for example, the case where a programme maker is controlled by the licence holder, or where both the licence holder and the programme maker are controlled by the same holding company.

We believe that the net effect of these provisions is that the definition of a relevant change of control is too widely drawn. As things stand, Ofcom would be required to undertake a review every time there was a change of control of a connected body—for example, a production company in shared ownership with the licence holder—involved in even the most minor way in the provision of programmes for inclusion in the licence holder's service. This would cause a burden both for Ofcom, in carrying out really unnecessary reviews, and licence holders, in notifying Ofcom of irrelevant changes of control.

We therefore propose amendments to Clauses 344, 346 and 348 to make it clear that connected bodies must be involved to a substantial extent in the provision of programmes for inclusion in the service. This will ensure that efforts are focused on those cases that really matter, where the change of control has a genuine potential to affect the existing quality of the service.

For consistency of approach, corresponding amendments are also proposed in Schedule 15 to make changes to Sections 21 and 103 of the Broadcasting Act 1990, where similar definitions are used in the context of changes of control over Channel 3 or Channel 5 licences or national analogue radio licences soon after they are awarded, or within a year of the service commencing.

I beg to move.

On Question, amendment agreed to.

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