CONFIDENTAL
proposed Order in Council or to the Ordinance, provided that (i) Section 4(2) of the latter is amended by restricting it to broadcasts made from a place in Hong Kong, end (ii) Section (4) is omitted, since it purports to permit the Governor to do by Order what Section 31(3) of the 1956 Act permits the Legislative Council of the Colony to do.
7. For the reasons given below, however, it is not possible to give approval to proceed with the Bill as drafted without further careful consideration of the implications, of Clause 4 and of your intention, in the public interest, to rovoke Rediffusion's current licence and grant a new one. If, however, you wish to expedito the enactment of this legislation for reasons not connected with copyright in broadcast television it would be possible to proceed to its enactment without delay with the mission of Clause 4 which could be enacted Inter. No legal objection is seen to this course.
8. The combined impact of the measures you propose on the interests of Rediffusion are such that it seems unlikely that further exchanges with the company could lead to their agreement; and accordingly it is anticipated that there will be questions in Parliament, attention being concentrated on the difference between the positions of the Company in Hong Kong and in the U.K. It is therefore necessary to examine very carefully and establish:
9.
(a) what justification there is for the measures, particularly the grounds
for revoking Rediffusion's licence in the public interest:
(b) any grounds the Company might have for claiming that it has been
inequitably treated.
As we understand the position Rediffusion is in competition with Hong Kong Television Broadcasts Limited as an origin.tor of programmes. If there is no copyright in broadcast television, Rediffusion is placed in a very favourable position vis-à-vis Television Broadcasts Limited whose programmes it can relay at will; for obvious technical reasons Television Broadcasts Limited is in no position to tap Rediffusion's programmes without the latter's co-operation and agreement. Rediffusion can relay, without restriction and without contributing to the cost of production, the whole service of Television Broadcasts Limited; it can presumably substitute its own advertising material and thereby derive considerable profit. The position is different in the United Kingdom where wired Rediffusion services do not originate programmes but merely relay the services of B.B.C. and I.T.A.; they do not compete with the broadcasting services and exist only to facilitate the reception of those services in people's homes. As noted in paragraph 3 of our departmental letter of 22 May, these would appear to be the reasons why the broadcasting services in this country sought no copyright protection vis-d-vis wired diffusion services.
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10. Furthermore the terms of Rediffusion's licence, as they are construed by our legal advisers, give the Company the exclusive right to maintain a wired Rediffusion service; this right extends to wired distribution from community antenna and aerials. Unless this exclusive right is modified the Company will be able to prevent Television Broadcasts Limited and members of the public from setting up any communal aerials for the better reception of broadcest signals in e.g., large multi-story residential buildings. If the Company is unwilling to carry out this development or refrains from doing so, it would be contrary to the public interest that it should be able to inhibit the development of this important new public service.
CONFIDENTIAL
/11.