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Lord McNally had given notice of his intention to move Amendment No. 200:

Ban on newspaper proprietors holding a Channel 5 licence

6A (1) A person is not to hold a Channel 5 licence if—
(a) he runs a national newspaper which for the time being has a national market share of 20 per cent. or more; or
(b) he runs national newspapers which for the time being together have a national market share of 20 per cent. or more.
(2) For the purposes of this paragraph, each of the following shall be treated as holding a Channel 5 licence—
(a) the actual licence holder; and
(b) every person connected with the actual licence holder.
(3) The provisions of paragraphs 2 to 4 of this Schedule shall apply for the purposes of this Part of this Schedule insofar as they relate to national newspapers as if a Channel 5 licence were a licence to provide a Channel 3 service."

The noble Lord said: My Lords, in the light of the very important statement made by the Minister today about plurality and its effect on the Bill, I shall not move this amendment.

[Amendment No. 200 not moved.]

Lord Eatwell moved Amendment No. 201:

    Page 430, line 30, at beginning insert "Subject to sub-paragraph (1A),"

The noble Lord said: My Lords, in moving the amendment, I remind noble Lords of the declaration of interest that I made some time ago. I retabled the amendments that I first tabled in Committee because, sadly, there has been no response from the Government to the arguments made at that time.

Perhaps I may place the amendments in context. They concern the ownership of local digital multiplexes—the transmission platforms for the new local digital radio stations. Noble Lords will be aware that the Government regard digital radio as the medium of the future and have encouraged the commercial sector to invest heavily in transmission facilities, new stations and new programming. The commercial radio industry has responded by investing more than 100 million in those facilities, covering 85 per cent of the country. In contrast, the BBC's digital radio system covers only 65 per cent of the country.

Now that the industry has fulfilled the Government's policy goals, the Government have decided to kick it in the teeth by imposing a tighter regulatory regime than was the case when those investments were made. At present, there are no numerical limits on the number of multiplex licences that any one person may hold. The Government have produced no evidence whatever to suggest that that has been in any way against the public interest, yet they propose that a person may own only one local multiplex in a local coverage area.

As was pointed out in Committee, that fails to take account of an existing overlap between the multiplex serving Kent and the multiplex in London, which

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could prevent Capital Radio owning the multiplex in Kent, where it owns the heritage local radio service. The noble Lord, Lord Davies of Oldham, dismissed that case as "an anomaly" and, indeed, rested most of his argument on that. He declared that it was a,

    "unique situation [that only affects London] . . . and is unlikely to be repeated".—[Official Report, 5/6/03; col. 1527.]

I regret to say that the noble Lord was wrong. Exactly the same situation holds in Scotland. The multiplexes in Ayr and Glasgow—both owned by the same company, which is also the heritage local radio company—also overlap. What does the noble Lord intend to do about this Scottish anomaly and any further anomalies that will occur once one looks far more carefully at the structure of the industry and, indeed, as more local multiplexes are licensed?

However, it is not the noble Lord's mistake in Committee on which this case rests. The questions relating to anomalies are not really the issue; it is the logic of the noble Lord's argument that is faulty. He argued that the Government sought to sustain plurality by restricting the ownership of transmission systems, in particular, in London. Referring to London, with our three local multiplexes, he declared:

    "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".—[Official Report, 5/6/03; col. 1527.]

That was the noble Lord's argument. But he seems to have forgotten that the Government have already agreed that the restriction on local radio station ownership will obey the formula of 2 plus 1—that is, a minimum of two commercial owners in any one area, the "plus 1" being the BBC. Thus, the Government have accepted that there could be two providers of local programming and that that would ensure plurality. Yet the noble Lord wants three owners of transmission mechanisms; I repeat: two stations producing the programmes and three owners of transmission mechanisms. Why? That is a nonsense. It is the programming that matters and not the transmission systems, but the noble Lord wants more transmission systems than local owners.

My amendments would allow any one owner to own up to two multiplexes in one area. In other words, I entirely accept a restriction in the currently unrestricted environment, but it is one that applies to two owners in one area. Remarkably, this simple amendment solves at one stroke both the anomaly in Kent and London and that north of the Tweed, and it makes the regulation of transmission ownership consistent with the regulation of station ownership. Acceptance of my amendments would also suggest that the Government are not reneging on their previous commitment to invest in digital services.

I hope that the noble Lord will now see the logic of accepting my amendments or, at the very least, that he will agree to meet me before Third Reading to discuss these matters. I beg to move.

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7.30 p.m.

Lord Davies of Oldham: My Lords, it goes without saying that if I fail to persuade my noble friend to agree with the argument I am about to present—and I start in a non-too-optimistic vein—I shall be delighted to meet him after the completion of this stage of the Bill in order to see if we can make further progress. However, I hope that I can explain to him and to the House better than I appear to have done in Committee why the Government take the position they do.

I readily acknowledge the strength of my noble friend's case in stating that there has been a significant investment in the industry; 100 million to date. I paid due tribute on the previous occasion and I agree that with that investment the UK leads the world in this area. That is a real achievement and we would not want in any way, shape or form to put that investment in jeopardy or to deter further investment.

We support further investment in digital radio in the UK. With his great knowledge of the industry, my noble friend will have recognised that we have amended the Bill so as to extend by four years the period during which a multiplex licence can be automatically renewed. That is a recognition of the investment that has been made. But the main support has been through the significant changes we are introducing to the analogue radio market. The industry has frequently, and rightly, pointed out that it can only support the development of digital radio through its profits from its analogue services. As everyone is aware, we have taken enormous steps to liberalise the ownership rules for local and national radio. This should enable consolidation, better services, greater efficiencies and greater profits. This, in turn, enables the industry to increase the necessary digital investment.

However, the support for further development must also be balanced with the need to ensure that there are adequate ownership rules, so as to encourage plurality. This is as important for multiplexes as it is for the radio services themselves.

A local radio multiplex is the means by which terrestrial digital radio services are broadcast to an area and can carry up to 10 programme services. The multiplex owner is the gatekeeper. He plays a crucial role, as he is entirely responsible for selecting which services the multiplex carries, subject to the requirement not to discriminate between service providers. It is a position of considerable influence.

In addition to this, we propose to bring forward an order made under Schedule 14 to the Bill under which the multiplex operator would be able to own up to 55 per cent of the services broadcast on a multiplex—five services on a multiplex of 10—regardless of whether he owned the multiplex in question.

The media ownership rules are concerned with plurality, and a need to avoid too much influence falling into too few hands. We clearly need some plurality rules in this area. The question—and it is the issue between us—is what is an appropriate level of intervention. We have aimed to make the rules as light as possible consistent with the need to maintain a

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minimum level of plurality. We have therefore decided that there should be no limits to the total number of local radio multiplexes in the United Kingdom that any one person can hold. There is only one restriction on local multiplex ownership—that no one can hold two overlapping multiplexes, although I recognise the point which my noble friend made in respect of the Kent and London overlap.

The licences in Scotland have already been awarded under the existing rules and we are introducing those rules for the future and can amend them by order in the future. The situation will not arise again under the current rollout of digital. I acknowledge that on the previous occasion I quoted the single English exception to the position. My noble friend has rightly drawn to my attention that, in all honesty, I ought to have mentioned the fact that it was an exception in Scotland.

As regards intervention, we are making the rules as light as possible. We therefore maintain that if circumstances change the Bill allows us to change the ownership rules. My noble friend will recognise that we are in the early phase of the digital rollout. I can assure him that in no other case will three multiplexes be licensed to one owner. If more spectrum is made available for digital radio, it is unlikely to be earlier than 2007. I believe that the introduction of new spectrum would be the appropriate time to consider relaxing the multiplex ownership rules, but not now.

My noble friend, with his usual eloquence, has made a powerful case. I realise that he still has points of difference with the Government over this matter. I am merely saying that, within the framework of the Bill, we will have flexibility to adjust the situation in future, but we are striking a balance between the need for the necessary investment and the needs of the wider community for proper plurality.

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