that, in the interim, consideration be given
to the desirability of removing this limitation.
The Television Advisory Board, having noted that Rediffusion (Hong Kong) Limited is a locally based company with over 30 years' experience in sound and television broadcasting, has decided that Clause 22 should be removed from RTV's licence on the grounds that enforced transfer of control from known shareholders with demonstrated performance would be undesirable and that the restriction is inequitable vis a vis TVB. The Board's recommendation is supported by the Government.
Flotation of Shares (paragraph 15(i))
:
It is considered that approval should also be given by to the Board's proposal to remove from sections 11 and 11A of the Television Ordinance the (future) obligation of the licensees to make available to the public not less than 25% of their voting shares. This requirement was originally introduced into the legislation with the object of allowing the public to share in the large profits which it was generally believed would accrue to the television industry. However, as the Television Advisory Board has pointed out, several years working experience of competitive television has shown that the industry as a whole is only marginally profitable and this situation is unlikely to improve for some time. Furthermore, such a requirement, in obliging the companies to go public, greatly increases the possibility of control of the stations passing into hands which are unknown or unaccept able to the Government.
I
This is the question of whether the present legislation is adequate to prevent such a change in control taking place, bearing in mind that the licensees are free to float their shares if they so wish. The Attorney General has advised that, given the difficulties in general in regulating the control of companies and closing all the loopholes by which undesirable parties could be prevented from gaining de-facto control of a company, the Government should rest on powers under section 14(1) of the Televi- sion Ordinance. (This section provides that the Governor in Council, where he considers that there may be cause for revoking a licence, may order the Television Advisory Board to conduct an inquiry and may, after considering the Board's recommendations and such other information, matter and advice as he sees fit, revoke the licence). The Attorney General considers that, while this will always mean ex post facto action, the very use of the procedure in the case of Commercial Television Limited will have a significant deterrent effect on other licensees.
CONFIDENTIAL