We all want a piece of the action

The House of Lords will today begin its second reading of the controversial Broadcasting Bill, and the intense lobbying for which the media industry has become famous is poised to move into high gear.

The Bill, which features radically new rules on cross-media ownership and a framework for the introduction of digital terrestrial television (DTT) later this decade, has already been the target of major lobbying campaigns, ever since two White Papers were produced by the Department of National Heritage last year. Key changes were made to the original draft.

Much has already been made of the continuing battle between Michael Grade, controller of Channel 4, and the ITV companies over the funding formula for Channel 4, and both sides will continue to press for advantage. But two crucial issues, ownership limits and DTT, have received far less attention outside industry circles, and could be the major target of lobbying efforts. Several senior media executives have already secured one-to- one meetings with the Heritage Secretary, Virginia Bottomley, and plan to lobby the Lords intensively this week.

"We feel there is a lot greater understanding of the issues involved in the Lords than in the Commons," says one leading television executive, echoing the widely held industry view.

Peter van Gelder, chief executive of Teletext, will meet Mrs Bottomley on 1 February to push his case for greater guaranteed capacity in the digital age. Mirror Group senior executives are also scheduled to see the Heritage Secretary.

Mirror Group, which owns 43 per cent of the Independent, has some special pleading to do. It has been shackled by the Bill's infamous "Murdoch clause" - the 20 per cent limit on stakes in commercial terrestrial television placed on any national newspaper group with a greater than 20 per cent share of the total market. Only Mirror Group and News International are caught by the clause.

David Montgomery, chief executive of Mirror Group, is expected to argue that the 20 per cent cross-ownership rule is unnecessary, now that the Government has set a limit of 15 per cent of the total television audience. He will say that Murdoch has no interest in buying a terrestrial television channel if it means his lucrative cable and satellite business would be capped.

BSkyB, 40 per cent owned by Murdoch's News Corporation, is climbing towards the 5 per cent audience-share level, and buying one of the big three ITV companies would take him perilously close to the 15 per cent ceiling, stopping him from growing further in the subscription TV market.

Understandably quiet on the lobbying front are the next biggest newspaper groups, Associated (the Daily Mail, the Evening Standard) and United (the Express newspapers), which can grow into television and radio with relative impunity. "They are the really big winners in all this," laments a commercial radio executive whose company is a likely takeover target.

Some of the lobbying of Mrs Bottomley has been done on a far more informal basis. "I had tea with the Secretary just this week," Gwyn Ward Thomas, chairman of the ITV company Yorkshire-Tyne Tees, said late last week.

"The Broadcasting Bill is really just about carving up the ITV sector," he says. "As such, there is still some work to be done to ensure it is workable and has the desired effect."

Mr Ward Thomas is particularly concerned about the way the Government intends to define the television audience in the UK for the purposes of setting new ownership limits. Unless the Bill is changed in Parliament, the result will be a scrapping of the existing two-licence limit for ITV companies, putting in its place the 15 per cent of total television audience, including terrestrial, cable and satellite.

The change was given a cautious welcome by most ITV companies, as it would lead to consolidation and economies of scale in the commercial TV sector. By removing the licence limit, the Government has freed even the biggest ITV companies, including the Carlton-Central combine and Granada- LWT, to buy other ITV companies.

The problem for Mr Ward Thomas is that the Government has lumped together commercial and public-service broadcasting. The BBC, he argues, which has a 34 per cent share of the total, has nothing to do with the advertising- funded ITV sector, and should be considered separately. He, and indeed many other ITV executives, would rather see a "total homes" (ie: based on the number of homes in a licence-holder's region) limit of 30 per cent for the ITV, Channel 4 and the new Channel 5 broadcasters. On that basis, there would still be plenty of scope for the biggest ITV companies to grow and consolidate.

In the ITV consolidation, regional programming could be threatened, the Government's critics say. The Independent Television Commission, the TV regulator, appears to share that view, and is expected to do some lobbying of its own. Informed sources say the ITC is to ask for additional powers to ensure the Govern- ment's commitment to regional programming.

The ITC has a long shopping list to present to the Lords this week. It also wants changes to the Bill's definition of "control" of television companies, to give it greater discretion to block fanciful shareholding structures of the sort used by Carlton and Granada for their disputed stake in ITN, the news provider.

And in a shot across the bows of Murdoch's Sky News, which has offered to supply news to ITV in competition to ITN, the ITC wants similar "anti- avoidance" mechanisms to enforce ownership limits on nominated news providers. More contentiously, the ITC wants the power to enforce quality thresholds for digital television services.

Above all, DTT is the target of sustained criticism from the television industry, which wants Mrs Bottomley to set a deadline for the switch from analogue to digital. Without a deadline, it fears, the new services will never get off the ground.

Nigel Walmsley

Chairman, Carlton UK TV

The Government deserves high marks for effort. The Bill offers broadcasters scope to grow and makes a valiant effort to kick-start digital terrestrial television. If this succeeds, it will put Britain ahead in TV technology.

But however well intended, special laws for the TV industry still mean a complicated web of regulations and our concern is in the detail. The raft of ownership restrictions on digital terrestrial services in Schedule 2 of the Bill appear more complex than those that regulate cable and satellite operators. Are they all necessary to encourage the start of the new market?

We support the powers that Clause 66 of the Bill gives the Government to manage the financial relationship between ITV and Channel 4 after 1997. Our concern is how this power will be used in the context of all the financial regulations for television. ITV pays government pounds 370m per annum for its licences. New satellite operators will pay peanuts. Channel 5 will pay only pounds 22m. Channel 4 pays nothing, but, above a certain income, shares its revenues with ITV.

Now Channel 4 wants to use the Bill to break its links with ITV and enjoy almost untrammelled financial freedom. This would upset the delicate balance in UK terrestrial television. Producers and viewers cannot be best served if ITV, our largest programme-producing channel, pays government so much while its competitor pays nothing. Why should one advertising-funded channel have greater freedom from regulation than another?

Chris Oakley

Chief executive of Midland Independent Newspapers

The Secretary of State for National Heritage, Virginia Bottomley, believes she has reflected the concerns of regional publishers in the changes she has made in the Bill to proposals in the White Paper. But in some cases, the proposals are more restrictive than the existing regime. If the Bill becomes law, hardly any regional newspapers will be able to own a local radio station in their circulation area. In contrast, national newspapers will be able to buy local radio stations. They could then launch local newspapers in the same area, providing these new publications do not account for more than 20 per cent of the total number of local newspapers sold or distributed in thestation's area. And local radio or TV stations - including cable - can for the first time launch their own newspapers to cross-promote and cross-sell advertising.

The Department of National Heritage believes that regional and national newspapers exist in separate universes. But regional dailies and nationals compete for sales and advertising revenue.

Mrs Bottomley says the Bill has been framed to protect standards and diversity. If unamended, it will have precisely the opposite effect. Regional publishers will find their revenues under attack from new competition against whom they will be powerless to respond. They will have to cut costs to survive, affecting the quantity and quality of regional coverage.

Huw Jones

Chief Executive of Midland S4C

S4C, the UK's second public service broadcaster and a dedicated channel for Welsh speakers, has put out a wide range of quality programmes for more than a decade. It is clearly branded, which is the prerequisite for audience recognition in the multi-channel future.

Digital offers S4C the opportunity to provide for the first time an all- day service but, as things stand, only at today's technical standards. The background briefing on the Bill makes it plain that S4C will receive only half the digital bandwidth of other terrestrial broadcasters. So the enhancements that will embellish the BBC and ITV's provision on digital - widescreen transmission, regional opt-outs and interactivity - will not be available to S4C viewers. We need a guarantee that, as more bandwidth becomes available, S4C will be granted as much digital capability as competitors.

We have proved adept at selling our programmes worldwide and maximising advertising revenue. We need flexibility, like the BBC, to take advantage of the commercial possibilities of the digital future and to invest in new ideas. This is not in the Bill for us yet.

Finally, we are concerned that our proposed funding formula should take fully into account the extra costs of digital broadcasting, and then be fixed for a specific period, like the BBC. Otherwise we face the prospect of becoming the only UK broadcaster directly subjected to the annual decrees of ministers.