With permission, Madam Speaker, I should like to make a statement about media ownership.
Because of the extreme market sensitivity of this issue, I arranged for the substance of the Government's decisions to be announced by my Department before the stock exchange opened for business this morning. I am making this statement at the earliest opportunity thereafter. I hope that the House will accept this way of proceeding, for which there are clear precedents and which I discussed last week with the hon. Member for Islington, South and Finsbury (Mr. Smith), as well as the hon. Member for Caithness and Sutherland (Mr. Maclennan) and the right hon. Member for Manchester, Gorton (Mr. Kaufman)
Following the relaxation of some of the restraints on the ownership of ITV companies in December 1993, the Government announced in January 1994 that they were to review the existing rules governing media ownership. Today I have published a policy document which sets out our proposals, copies of which are available in the Vote Office. In developing the proposals, we have taken account of advice, ideas and comments from a wide variety of sources. I am grateful to all those who wrote to us and participated in the constructive debate on the issue.
Media ownership policy must balance two key objectives. First, it must underpin the diversity of viewpoint that is necessary in any healthy democracy. The Government believe that that requires additional safeguards on plurality of ownership beyond those required by competition law alone. Secondly, it must ensure that the media industry is able to respond to the changing demands of the marketplace and, in particular, that it is able to take advantage of the market opportunities which flow from accelerating technological change.
Technological convergence is not only bringing together functions that have traditionally been separated, but creating an enormous variety of new products and markets. It is inevitably difficult to predict the exact nature and pace of that change, but as different media sectors converge, media ownership regulation needs to look at the media market as a whole, if its core objectives are to be delivered.
The importance of developing a new approach will be reinforced by the introduction of digital broadcasting over the next few years. That will lead to more channels, more choice for viewers and listeners and more opportunities for media companies. The Government will follow up my announcement today by publishing their proposals for digital broadcasting later in the summer.
Against the background of those changes, I am putting forward for consultation a long-term proposal for the future regulation of media ownership which has three main features. First, the media market would be treated as a whole. Secondly, market share thresholds would be established, below which media ownership would be regulated only by normal competition law. Thirdly, a regulator would be established, who would be empowered to restrict concentration above the thresholds where he or she deemed such concentration to be contrary to the public interest.
For the purposes of consultation, I propose total media market share thresholds at 10 per cent. of the national media market, 20 per cent. of a regional market and 20 per cent. of the individual press, radio or television sectors.
Such a model would provide a flexible and durable framework, which would better accommodate the dynamic of the media industry, while continuing to safeguard the public interest in diversity and plurality. I also believe, however, that the substitution of the existing structure by an entirely new framework of rules must be based on full consultation and widespread acceptance that the new structure is fair. I shall therefore welcome views from all interested parties on the proposal.
In the meantime, however, action is required now. The Government therefore propose to introduce a package of immediate measures to remove unnecessary restrictions on the growth of media businesses. It will contain two elements.
First, I am today introducing a package of proposals for change through secondary legislation. I am laying before the House an amendment to the Broadcasting (Restrictions on the Holding of Licences) Order 1991, which, subject to the overarching 15 per cent. threshold set by the points system set out in part IV of that order, will raise the number of local radio licences that may be held by a single person from 20 to 35 and relax the subsidiary limits on the holdings of radio licences in urban areas with a population of between 1 and 4.5 million.
I am also consulting the Independent Television Commission and the BBC with a view to amending the Broadcasting (Independent Productions) Order 1991. I propose to raise the equity ceiling between independent producers and broadcasters from 15 per cent. to 25 per cent. and to amend the definition of an independent producer, so that the ownership of any broadcasting interests outside the European Union does not disqualify an EU company from independent status within the United Kingdom.
In addition, my right hon. Friend the President of the Board of Trade has agreed to amend the newspaper merger provisions of the Fair Trading Act 1973 by doubling the threshold for automatic reference to the Monopolies and Mergers Commission from a circulation of 25,000 to a circulation of 50,000.
The changes will allow greater consolidation within the radio industry, encourage greater investment and stability within the independent production sector and reduce the costs of small mergers within the newspaper industry. The remaining short-term changes that I am proposing today will require primary legislation, which will be brought forward at the earliest available opportunity.
Subject to two important safeguards, the Government propose that newspaper companies with under 20 per cent. of national newspaper circulation will be able to control up to 15 per cent. of the television market, including up to two regional ITV licences or one regional ITV licence and the Channel 5 licence. Newspaper companies with more than 20 per cent. of circulation share will be free to expand in satellite and cable up to 15 per cent. of the total television market, but regulation will continue to prevent them from owning more than 20 per cent. of any terrestrial ITV or Channel 5 licence.
The new rules will also apply reciprocally, allowing television companies to acquire interests in newspapers on the same basis.
Proposals for cross-control between television and newspaper companies will be subject to safeguards. First, any such investment will require the consent of the ITC, which will have the power to restrict transactions which it deems to be contrary to the public interest. Secondly, no cross-control will be allowed between newspaper and television companies where the newspaper company's regional titles account for more than 30 per cent. of regional newspaper circulation in the relevant ITV region.
The Government also propose that the arrangements to liberalise cross-investment between newspaper and television companies should be replicated for cross-investment in the radio sector. In addition, the Government will take the opportunity to remove the numerical limits on the holding of local radio licences, but retain the overall 15 per cent. limit on the number of points in the radio ownership system.
The Government will also abolish the rules that limit ownership between terrestrial television, satellite and cable. Terrestrial broadcasters will therefore be allowed to have controlling interests in satellite and cable companies, provided that their total interests do not exceed 15 per cent. of the total television market. Satellite and cable companies will also be able to have outright ownership of ITV or Channel 5 licences, subject to the 15 per cent. market limit and the two-licence limit.
These principles will apply subject to one condition. The current rules for ownership of non-domestic satellite broadcasters and cable operators have already allowed for a much higher level of investment by newspapers in those sectors than in terrestrial television. The Government therefore propose that satellite and cable companies that are more than 20 per cent. owned by a newspaper group with a national circulation share of more than 20 per cent. should continue to be restricted to a 20 per cent. holding in one ITV or Channel 5 licence, and 5 per cent. in any further ITV or Channel 5 licence.
Finally, as part of the review, the Government have looked again at the ownership arrangements for ITN. We have decided that the principles underpinning the Broadcasting Act 1990 remain sound, and that the 20 per cent. limit on individual stakes in ITN should remain. However, in order to give more ITV companies the opportunity to invest in ITN, we shall remove the 50 per cent. limit on total ITV holdings.
Our media industry is on the threshold of a new era. We cannot pretend that the changes in technology, and their impact on the marketplace, are not happening. We have an obligation to create the legislative framework that will allow the industry to respond to those changes. At the same time, we must protect the diversity of our media, which is an essential element of our democracy.
The approach that I have outlined today does two things. First, it suggests a fundamental long-term reform of media ownership in Britain, and allows time for the implications of this proposal to be properly considered. Secondly, it proposes some more immediate changes which balance more liberal ownership regulation with the introduction of a new provision for public interest scrutiny of the growth of media businesses. I commend it to the House.