CONFIDENTIAL
XCC(72)14
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10
The working party holds the view that Rediffusion's service is at least as satisfactory as TVB's and that in normal circumstances it could expect a re-grant of the existing licence on its expiry in April 1973. A re-grant would not, however, be practicable where two wireless television licen- sees were in operation. The selection of an applicant other than Redif- fusion would, in the opinion of the working party, lead to the collapse of Rediffusion's service which would not be in the public interest.
42
The working party considers that the first step should be to provide for competition on an equal basis between both television licen- sees and for their services to be made freely available to the same audi- ence. It accordingly recommends that the second wireless television licence should be granted to Rediffusion by negotiation subject to the same terms and conditions as would be applied to TVB (recommendation 61). Transmissions would commence on the expiry of the existing licence on 30th April 1973. In this way exactly the same television service would continue to be provided except that the means of transmission would be changed (thus taking account of technological advances since the grant of the original licence) and the service would be available to a wider audience.
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The working party does not consider that such a course of action would cause adverse public comment or that it could be con- strued as a favour towards a British company to the exclusion of other applicants. Firstly 25% of Rediffusion's wireless television company's equity would be owned by local interests on the grant of the licence, and this proportion would be increased to 51% within four years of the 15 year licence. Secondly new applicants would be able to compete for the third wireless television licence in 1975. It is also pointed out that the grant of a licence to Rediffusion by negotiation will achieve competition in wireless television by 1st May 1973. Experience gained from the tender for the first wireless television licence shows that about one year is re- quired to complete tender procedures. If the franchise were to be put out to tender and Rediffusion were to be successful, therefore, trans- missions could not commence until about March 1974. If another appli- cant were to be successful transmissions could not commence until the first quarter of 1975 as additional facilities would have to be established.
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One member of the working party, however, dissents from the majority recommendation. His reservation is at page 187 of the report. He considers that the reasons for a private treaty grant must substantially outweigh the established reasons for going out to public tender and feels unable to agree that the arguments of the majority accord with this principle. His arguments are based essentially on his view that a private treaty grant to Rediffusion could not be considered as a mere extension or renewal of its existing licence: Rediffusion's licence to provide television by wire differs completely from TVB's licence in terms of quality and the scale and magnitude of operations. Further- more, Rediffusion obtained its wired television licence without competi- tion and without royalty because the existing wired sound licence was exclusive. Government was, therefore, precluded from inviting tenders for a wired television service. The dissenting member considers, there- fore, that Rediffusion has no claim to a private treaty grant of a wireless television licence which, in its method of operation, is entirely different from the wired licence.
CONFIDENTIAL