Thoughts from the Legal Front
Broadcasting Ordinance: A Step in the Right Direction
Broadcasting Ordinance: A Step in the Right Direction

The Government is currently consulting the public on proposed changes to the Broadcasting Ordinance (BO). The first objective of this review is to remove restrictions on television and radio broadcasters that no longer serve any useful purpose. 

Although the removal of obsolete requirements on businesses is a worthy objective in itself (and something this Chamber has long advocated), it has been given added impetus by the advent of internet broadcasting, which has been competing with conventional broadcasting for the attention of advertisers and the viewing public. 

However, whereas conventional broadcasters are highly regulated, internet broadcasters are largely unregulated – and indeed this may have played a part in their success. A second objective of the Government’s review is therefore to try to level the playing field.

The problem is that the BO is only the “tip of the iceberg” as far as regulation of conventional broadcasters is concerned. The bulk of the regulation lies below the surface, in the form of the conditions that are attached to conventional broadcasters’ licences, and which are in many ways more intrusive than the BO itself. 

These conditions are not addressed in the Government’s consultation paper, and it is unclear whether they will be subject to a separate review. This article argues that they should.

Let’s start with what the Government is currently proposing. 

Arguably, the most significant change is the proposal to abolish the requirement that a conventional broadcaster, whether television or radio, cannot be a subsidiary of another company. In other words, no single company can control a conventional broadcaster. This may seem strange in this day and age, when businesses in other sectors have no such restriction, and indeed the Government has effectively conceded as much. 

The original rationale for this restriction was that it would allow the broadcaster to focus on broadcasting, without any interference from, or conflict of interest with, a parent company’s other businesses. However, the Government has now taken the view that competition in the market, particularly from the internet, is now sufficiently intense to ensure that the broadcaster will compete in its own interests anyway. Therefore, the restriction is no longer necessary. 

Moreover, the removal of the restriction will allow conventional broadcasters greater access to funds for investment and innovation, and avoid the need for artificial joint shareholding structures to be put into place.

The second major change will be the relaxation of some of the cross-media ownership restrictions. For example, a newspaper proprietor is not currently allowed to own a significant shareholding in a conventional broadcaster. The rationale of this restriction was to ensure a diversity of views, and to avoid a single media company becoming too powerful. 

Again, the Government is taking the view that the sources of information and views available today are so vast and diverse that this is no longer an issue, and this restriction can be removed.

So far, so good. But what about regulation in the form of the broadcasters’ licence conditions, which is not addressed in the consultation paper? To give just a few examples:

  • A broadcasting licensee (BL) must provide a forward-looking investment plan for each six-year period of its 12-year licence, which specifies “the licensee’s commitment of capital expenditure and operating expenditure (including programming costs).”
  • A BL is not permitted to deviate from the investment plan, but the Communications Authority (CA) may grant a waiver in certain cases.
  • A BL must submit a report to the CA within three months of each accounting year certifying the amount of capital and operating expenditure in the preceding year, and,  where there is any deviation from the projected expenditure, must explain this “to the satisfaction of” the CA.
  • A BL must “ensure good discipline and training” of its staff.

It may be surprising to many people how intrusive these conditions are, and how close an involvement the CA takes in overseeing the business of BLs – particularly given that the Government has said it is seeking to lighten the burden on conventional broadcasters and address the regulatory imbalance with internet broadcasters. 

It would also be surprising if these conditions were allowed to persist in a market which the Government said in the consultation paper is highly competitive. After all, it was the high level of competition that, at least in part, justified the Government’s proposal to relax the cross-media ownership and “no subsidiary” requirements, as noted above. Businesses in other competitive markets are not subject to requirements such as those contained in these licence conditions. 

We welcome the Government’s review of the BO, and its promise to review at least two other Ordinances later this year – the Telecommunications Ordinance and the Competition Ordinance. This is consistent with the Chief Executive’s stated intention that the Government should act as a “facilitator” for business. But in the case of broadcasting and telecommunications, it is not just the Ordinances that need to be reviewed. The conditions of the operators’ licences must also be re-examined to see if they are still fit for purpose, or can be removed or relaxed. 

Top