Clampdown on media groups who bend rules

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The Government is to clamp down on the controversial "warehousing" schemes used by media companies to circumvent media ownership rules, it was confirmed yesterday.

In proposed legislation to be tabled next week as part of the Broadcasting Bill, the Secretary of State for Heritage, Virginia Bottomley, will give independent regulators greater flexibility in determining and defining "control" of broadcast licences, as well as broader powers to end warehousing and similar rule-dodging schemes.

Warehousing - the placing of shares in deadlocked companies over which no one is deemed to have control - was most recently used by Granada, the media and leisure company, to take a larger stake in Yorkshire-Tyne Tees than technically allowed under the current ownership limits.

Such schemes have been criticised by the Independent Television Commission, the commercial TV watchdog, which lobbied for greater discretion. The ITC was last night reviewing the proposed changes, and had no comment.

The Broadcasting Bill is aimed at deregulating the broadcasting sector, allowing companies to expand further. Under current rules, companies can own two ITV licences outright, but only up to 20 per cent of a third and up to 5 per cent of any additional franchises.

Earlier this year, DNH confirmed the numerical two-licence limit would be replaced by a total TV audience limit of 15 per cent. Yesterday, it provided further details of how the limits would be calculated.

Once the Bill comes into effect, probably this autumn, minority shareholdings in ITV companies of between 15 per cent and the level deemed to constitute control (probably 49.9 per cent) would attract one-half the audience share of the relevant licence. Anything higher would attract 100 per cent of the audience share.

In the case of other broadcast companies, for instance Channel 5, the audience attribution for minority shareholdings would kick in once the stake reached 20 per cent.

The changes mean that companies will be able to hold an unlimited number of ITV stakes up to 15 per cent. Thereafter, half the audience share of any additional franchise would count toward the overall 15 per cent ceiling, up to the point deemed by the ITC to constitute control.