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Treasury Chambers, Parliament Street. SW1P 3AG

The Rt Hon William Whitelaw CH MC MP

Home Secretary

Home Office

50 Queen Anne's Gate

LONDON

SW1H 9AT

2 November 1979


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INDEPENDENT BROADCASTING : LEGISLATIVE PROPOSALS

I understand that your officials, after consulting officials in the Treasury and other Departments, have issued instructions to Counsel to prepare legislation to implement H Committee decisions on the framework and administration of the Fourth TV Channel. The Committee agreed at the end of our discussion of this subject on 31 July that the Minister of State, Home Office would report back on the outstanding matters on which we did not reach a conclusion, including the proposals on finance and the treatment of the Welsh language.

Broadly speaking I am content with the proposed financial arrangements and the legislative framework to give effect to them. And we shall have an opportunity for a further collective discussion in due course. But I would like to raise with you now two matters on the financial aspects which concern me and on which you might reflect further.

First I am concerned about the future viability of the Channel. I am sure we all expect the Fourth Channel to be commercially successful. Most of us also believe that there is sufficient buoyancy in the advertising industry to provide revenue to ensure this. But this is essentially an act of faith. Advertising may be discouraged by the minority appeal of the Channel, particularly in Wales, and the revenue may not build up fast enough to sustain a successful new channel.

This may not matter. Under your proposals the programme contractors would be required by the IBA to provide whatever sums are necessary to meet the Fourth Channel expenditure. If they are not getting sufficient advertising revenue, they will no doubt demand that IBA restrict expenditure accordingly. But can we be sure that they will have sufficient clout to keep the Fourth Channel budget within bounds, particularly if the IBA has power to control their share of programmes on the Channel?