TNAG-0350-FCO40-386-Future-of-broadcasting-in-Hong-Kong-1972 — Page 148

CONFIDENTIAL

45

11 -

XCC(72)14

He points out that, while the working party has re- commended changes in the law that would force Rediffusion to adopt what is considered to be the right "character" for a wireless television licensee, the basic qualification for a private treaty grant is normally that it should be made to the same company that obtained the original licence. As to the majority view that it would not be in the public interest to cause the collapse of Rediffusion's production division he considers that using this argument to justify a private treaty grant is taking too liberal a view of what the public interest requires. In any case this collapse would not necessarily occur. Rediffusion, if it formed a company of the right character and transferred its production facilities to it, would be a strong contender for the new licence, and if it failed would presumably either continue its wired service or sell its facilities to the successful applicant.

46

He concludes that it is politically desirable to ensure that the selection of a licensee should be seen to be fair and that all those interested should be given an equal chance to compete. In his view it is sufficient that Rediffusion should be given an equal chance to compete.

47

It is suggested for consideration by Honourable Mem- bers that two factors need to be taken into account in considering whether or not the second wireless television licence should be granted only after a public tender. On the one hand, the recommendation that the licence should be granted to Rediffusion by negotiation (this recommen- dation is linked to other recommendations in the working party's report) was made by a high level working party whose members included the Director of Information Services (Television Authority), the Director of Broadcasting, the Postmaster General, representatives of the Finance and Policy Branches of the Colonial Secretariat and the two Unofficial Members of the Television Advisory Board. Of these mem- bers only one (the Deputy Financial Secretary) recommended the grant of the second licence by public tender. On the other hand, and notwith- standing the views put forward by the majority of the working party, the Colonial Secretariat generally and the Secretary for Home Affairs have serious misgivings over the proposal that tender procedures should not be followed in this instance. Even though the working party has recommended that the rate of royalty should be fixed by Government and should not be a matter for tender, they feel that tender' procedures should be followed. If this were not done, and this appears to be a very important factor, Government might seem to be unfairly denying organisations wishing to enter the television field the opportunity to compete for a licence and to be unduly favouring Rediffusion Limited. On balance, therefore, it is recommended for the consideration of Honourable Members that the second wireless television licence should be granted by public tender, royalty to be excluded for the reason explained in paragraph 34.

48

Although two members of the working party think that Commercial Radio has a strong claim to a grant of the third licence the majority consider the circumstances are entirely different from those which justify the grant of a licence to Rediffusion and recommend a public tender (recommendation 62).

CONFIDENTIAL