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Following the removal of the existing ban on advertising on pay TV, the Government proposed that pay TV and programme service licensees should be required to pay advertising and subscription royalties.

As regards licence fees, it remains government's policy that licensees should pay the full cost of preparing and administering their licences. The Government will take account of this when granting new programme service licences.

It will also take account of this policy in the mid-term reviews of existing licences and consider reintroducing to the Legislative Council proposals to charge full- cost licence fees in respect of those broadcasters, that is, ATV and TVB, whose mid- term reviews were concluded recently.

Concern about possible domination of the media by a few large companies has prompted calls for restrictions on cross media ownership.

There are already restrictions on cross ownership of radio and television licensees. The Consumer Council also recommended last month that newspaper owners be disqualified from owning television licences.

The Secretary said there were arguments on both sides of the case.

"But we have decided on balance to propose that newspaper owners be disqualified from exercising control over domestic television licensees, except with the permission of the Governor in Council," he said.

The proposed disqualification of newspaper owners would prevent one owner from exercising control over a licensee if he also exercised control over a newspaper.

"Subject to the approval of the Legislative Council, we intend that this restriction should apply from today (Thursday), with safeguards for the rights of existing shareholders," Mr Chau said.

"Those persons who currently exercise control of television licensees, who would as a result of the amendment become disqualified persons, would be allowed to continue exercising control of the relevant licensee, provided that they did not increase their holdings after the proposals are published.

"This would allow existing shareholders to retain their shareholdings, if they wish, but means that others who acquire an interest in more than 15 per cent of the voting shares of a licensee under the Television Ordinance after today may be required to reduce their shareholdings to 15 per cent if our proposals become law."