SCHEDULES

Section 181.

[F1SCHEDULE 16U.K. Broadcasting: Additional Payments by Programme Contractors

Textual Amendments

Part IU.K. Amendments of the Principal Sections

1(1)Section 32 of the M1Broadcasting Act 1981 (rentalpayments by programme contractors) shall be amended as follows.U.K.

(2)In subsection (1)(b), after the word “amounts” there shall beinserted the words “in respect of profits and in respect of advertisingrevenue”.

(3)In subsection (2)(b), after the word “amounts” there shall beinserted the words “in respect of profits”.

(4)In subsection (4), for the word “Table”, where it first occurs, thereshall be substituted the word “Tables” and the following Tables shall besubstituted for the Table in that subsection—

“TABLE A

RATES OF ADDITIONAL PAYMENTS IN RESPECT OF ADVERTISING REVENUE

Rate for determining amount of additional payments
For so much of the advertising revenue for the accounting period as does not exceed the free slice for advertising revenue.Nil
For so much of the advertising revenue for the accounting period as exceedsthe free slice for advertising revenue.The relevant revenue rate except where the rate is nil

For the purposes of this Table—

(a)a nil rate, instead of the relevant revenue rate, is applicable in thecase of persons who are DBS programme contractors or DBS teletext contractors;

(b)the relevant revenue rate is 10 per cent; and

(c)the free slice for advertising revenue is £15 million or, in thecase of a TV programme contractor, that amount with the addition of thepayments payable by him in pursuance of section 13(2).

TABLE B

RATES OF ADDITIONAL PAYMENTS IN RESPECT OF PROFITS

For so much of the profits for the accounting period after deducting anyamount payable under Table A as does not exceed the free slice for profits.Nil
For so much of the profits for the accounting period after deducting anyamount payable under Table A as exceeds the free slice for profits.The relevant profits rate except where the rate is nil.

For the purposes of this Table—

(a)a nil rate, instead of the relevant profits rate, is applicable in thecase of—

(i)programme contractors who provide local sound broadcasts, and

(ii)DBS programme contractors or DBS teletext contractors;

(b)the relevant profits rate is 25 per cent; and

(c)the free slice for profits is £2 million.”

(5)Subsection (4A) shall be omitted.

(6)In subsection (5), for the words “relevant sum mentioned in subsection(4A)” there shall be substituted the words “relevant sum mentioned in theTables above”.

(7)In subsection (7), after the words “additional payments” there shallbe inserted the words “in respect of profits”.

(8)In subsection (8), for the words “any of the provisions of subsections(4), (4A)” there shall be substituted the words “any of the provisionsof subsections (4)”.

(9)For subsection (9) there shall be substituted the followingsubsections—

“(9)The power of the Secretary of State under subsection (8) shall includepower to amend the provisions in question as there mentioned—

(a)only in their application in relation to the additional payments mentionedin subsection (1)(b); or

(b)only in their application in relation to the additional payments mentionedin subsection (2)(b); or

(c)differently in their application as mentioned in paragraphs (a) and (b)respectively; or

(d)only in their application in relation to additional payments in respectof advertising revenue; or

(e)only in their application in relation to additional payments in respectof profits; or

(f)differently in their application as mentioned in paragraphs (d) and (e)respectively.

(9A)In the application of the provisions mentioned in subsection (8) inrelation to the additional payments mentioned in subsection (1)(b), the powerof the Secretary of State under subsection (8) shall also include power toamend those provisions as mentioned in subsection (8)—

(a)only in relation to persons who are TV programme contractors (includingpersons who are both TV programme contractors and teletext contractors); or

(b)only in relation to persons who are DBS programme contractors (includingpersons who are both DBS programme contractors and teletext contractors); or

(c)only in relation to persons who are teletext contractors (other than DBSteletext contractors) but are not TV or DBS programme contractors; or

(d)only in relation to persons who are DBS teletext contractors but are notTV or DBS programme contractors; or

(e)differently in relation to persons within paragraphs (a), (b), (c) and (d)respectively.”

Marginal Citations

2(1)Section 33 of the M2Broadcasting Act 1981 (supplementalprovisions) shall be amended as follows.U.K.

(2)In subsection (1), for the words “advertising receipts” there shallbe substituted the words “advertising revenue”.

(3)In subsection (2), for the words “advertising receipts” there shallbe substituted the words “advertising revenue” and for the words “thosereceipts derive” there shall be substituted the words “the revenuederives”.

(4)In subsection (3)(c), for the words “advertising receipts” thereshall be substituted the words “advertising revenue” and for the word “derive” there shall be substituted the word “derives”.

Marginal Citations

3(1)Section 34 of the Broadcasting Act 1981 (instalments payable on accountby programme contractors for their accounting periods) shall be amended asfollows.U.K.

(2)In subsection (3)(c), for the words “receipts are” there shall besubstituted the words “revenue is”.

4(1)Section 35 of the M3Broadcasting Act 1981 (provision forsupplementing additional payments) shall be amended as follows.U.K.

(2)In subsection (1)—

(a)in paragraph (a), after the words “additional payments” there shallbe inserted the words “in respect of profits”;

(b)in paragraph (b)(ii), the words “in the case of second categoryprofits,” shall be omitted; and

(c)at the end, there shall be added the words “in respect of profits of hisfor that period”.

Marginal Citations

Part IIU.K. Provisions Inserted as Schedule 4 to the Broadcasting Act 1981

“Schedule 4U.K. Rental Payments
Advertising revenueU.K.

1(1)The advertising revenue of a programme contractor for an accounting periodshall be computed in accordance with this paragraph.

(2)Advertising revenue shall consist of the payments received or to bereceived by the programme contractor in consideration of the insertion ofadvertisements in programmes provided by the programme contractor andbroadcast in the United Kingdom by the Authority.

(3)In the application of this Schedule in relation to the additional paymentsmentioned in section 32(1)(b), the advertising revenue of a programmecontractor other than a teletext contractor who is not a TV programmecontractor includes payments received or to be received by him inconsideration of the insertion of programmes consisting of advertisementsprovided by him for broadcasting on the Fourth Channel and so broadcast.

(4)If, in connection with the insertion of advertisements which are paid forby payments constituting advertising revenue, any payments are made to theprogramme contractor to meet any additional payments, those payments shall beregarded as made in consideration of the insertion of the advertisements inquestion.

(5)In the case of an advertisement inserted in a programme under arrangementsmade between a programme contractor and a person acting as advertising agent,the amount of any receipt by the programme contractor which represents apayment by the advertiser from which the advertising agent has deducted anyamount by way of commission shall, except in a case falling withinsub-paragraph (6), be the amount of the payment by the advertiser after thededuction of the commission.

(6)If the amount deducted by way of commission as mentioned in sub-paragraph(5) exceeds 15 per cent. of the payment by the advertiser, the amount of thereceipt shall be the amount of that payment less 15 per cent.

(7)Any contract shall provide that where for any insertion of anadvertisement a programme contractor receives or is entitled to an entireconsideration not solely referable to that insertion, the advertising revenueshall be calculated by reference to so much only of the consideration as isreferable to that insertion according to an apportionment made in such manneras the contract may provide.

ProfitsU.K.

2(1)The profits of a programme contractor for an accounting period shall becomputed in accordance with this paragraph.

(2)The profits shall consist of the excess of relevant income over relevantexpenditure.

(3)“Relevant income” means—

(a)in relation to a programme contractor other than a DBS programmecontractor or a DBS teletext contractor, income which accrues to thecontractor in connection (directly or indirectly) with—

(i)the provision by the contractor of programmes for broadcasting on ITV, theFourth Channel or a local sound broadcasting service, or

(ii)the provision by the contractor, for broadcasting, distribution or showingin the United Kingdom, of programmes provided by him for broadcasting on ITV,the Fourth Channel or a local sound broadcasting service;

(b)in relation to a DBS programme contractor or DBS teletext contractor,income which accrues to the contractor in connection (directly or indirectly)with—

(i)the provision by the contractor to the Authority, in accordance with theterms of his contract as a DBS programme contractor or (as the case may be)DBS teletext contractor, of programmes for broadcasting in the Authority’s DBSservice to which his contract with the Authority relates, or

(ii)the provision by the contractor, for broadcasting, distribution or showingin the United Kingdom, of programmes broadcast in the Authority’s DBS service.

(4)Without prejudice to the generality of sub-paragraph (3), “relevant income” includes—

(a)all revenue which is advertising revenue for the purposes of thisparagraph; and

(b)such part of any income which—

(i)accrues to any subsidiary of or company related to the programmecontractor or to the contractor’s holding company, and

(ii)would be relevant income of that contractor if he and the subsidiary orrelated company or his holding company were a single programme contractor,

as, in the opinion of the Authority, should be attributed to thecontractor as reflecting his financial interest in the subsidiary or therespective financial interests of the holding company in the contractor andthe company related to the contractor or the financial interest of the holdingcompany in the contractor, as the case may be.

(5)For the purposes of this paragraph advertising revenue includes—

(a)in relation to a DBS programme contractor, payments received or to bereceived by him in respect of charges made for the reception of programmesprovided by him and broadcast in a DBS service;

(b)in relation to a teletext contractor, payments received or to be receivedby him in respect of charges made for the reception of programmes provided byhim and broadcast in a DBS or additional teletext service.

(6)“Relevant expenditure” means any expenditure of the programmecontractor which is properly chargeable to revenue account and which isincurred in connection with the provision by him of programmes of a kindmentioned in sub-paragraph (3).

(7)Without prejudice to the generality of sub-paragraph (6), “relevant expenditure” includes—

(a)expenditure in connection with the sale of rights to insert advertisementsin programmes; and

(b)such part of any expenditure which—

(i)is incurred by any subsidiary of or company related to the programmecontractor or by the contractor’s holding company, and

(ii)would be relevant expenditure of that contractor if he and the subsidiaryor related company or his holding company were a single programme contractor,

as, in the opinion of the Authority, should be attributed to thecontractor as reflecting his financial interest in the subsidiary or therespective financial interests of the holding company in the contractor andthe company related to the contractor or the financial interest of the holdingcompany in the contractor, as the case may be;

(c)in the case of a DBS programme contractor or a teletext contractor, anyexpenditure incurred in connection with the collection of charges for thereception of programmes provided by him and broadcast in a DBS service or ina DBS or additional teletext service, as the case may be; and

(d)in the case of a DBS programme or DBS teletext contractor, any expenditureincurred in connection with the provision of the satellite transponder.

(8)In ascertaining relevant income or relevant expenditure no account shallbe taken of interest on any loan.

(9)Items of relevant income and items of relevant expenditure shall beattributed to accounting periods in accordance with the foregoing provisionsof this Schedule.

(10)In this paragraph “programme” means—

(a)in the application of this Schedule in relation to the additional paymentsmentioned in section 32(1)(b), a television programme; and

(b)in the application of this Schedule in relation to the additional paymentsmentioned in section 32(2)(b), a local sound broadcast.

Carry forward of lossesU.K.

3(1)Where, in any accounting period, the relevant expenditure of a programmecontractor exceeds his relevant income, the excess shall be carried forwardto the following accounting period and treated as relevant expenditure forthat period for the purpose of computing his profits for that period.

(2)When a programme contractor’s contract with the Authority comes to an end,no losses incurred at any time during the currency of that contract may becarried forward under this paragraph and set against income attributable toany subsequent contract between him and the Authority.

Computation of profits of programme contractorsU.K.

4(1)It shall be the duty of the Authority—

(a)to draw up, and from time to time review, a statement setting out theprinciples to be followed in ascertaining, for any accounting period, aprogramme contractor’s—

(i)advertising revenue, and

(ii)relevant income and relevant expenditure for the purpose of computing hisprofits;

(b)in computing the advertising revenue and the profits of a programmecontractor for any accounting period, to take account of that statement(including any revision thereof which has taken effect before the end of thatperiod).

(2)A statement under this paragraph may set out different principles for TVprogramme contractors, DBS programme contractors, programme contractors forthe provision of local sound broadcasting and teletext contractors.

(3)Before drawing up or revising a statement under this paragraph theAuthority shall consult the Secretary of State and the Treasury.

(4)The Authority shall—

(a)publish the statement drawn up under this paragraph and every revision ofthat statement; and

(b)transmit a copy of the statement, and of every revision of it, to theSecretary of State;

and the Secretary of State shall lay copies of the statement and of everysuch revision before each House of Parliament.

(5)The principles relating to advertising revenue and to profits may be setout in separate statements under this paragraph; and where this is done itsprovisions apply to each statement.

DisputesU.K.

5(1)For the purposes of the principal sections and this Schedule—

(a)the amount of any advertising revenue, or

(b)the amount of any profits, or

(c)the amount of any additional payments, or of an instalment of additionalpayments,

shall, in the event of a disagreement between the Authority and theprogramme contractor, be the amount determined by the Authority.

(2)No determination of the Authority under this paragraph shall be called inquestion in any court of law, or be the subject of any arbitration; butnothing in this sub-paragraph shall prevent the bringing of proceedings forjudicial review.

Accounting periodsU.K.

6(1)Subject to the provisions of this Schedule, each period for which a bodycorporate which is a programme contractor makes up a profit and loss accountwhich is laid before the body corporate in general meeting shall be anaccounting period, whether that period is a year or not.

(2)If part of the said period for which a profit and loss account is made upfalls before, and part after—

(a)the commencement of a relevant order under section 32, or

(b)the time when the programme contractor begins or ceases to provideprogrammes for broadcasting by the Authority,

the two parts shall be treated as separate accounting periods.

In paragraph (a) “relevant order” means, in theapplication of this Schedule in relation to the additional payments mentionedin subsection (1)(b) or (as the case may be) subsection (2)(b) of section 32,an order having effect in relation to those payments.

(3)Where two parts of such a period as is mentioned in sub-paragraph (1) fallto be divided from each other under sub-paragraph (2)(a), section 32(4) shallhave effect as if the profits and advertising revenue for each part were theprofits and advertising revenue for the whole multiplied by—

where X and Y are respectively the number of weeks in that part and thenumber of weeks in the other part, counting (in each case) an odd four daysor more as a week.

(4)If sub-paragraph (2)(b) would produce an accounting period of three monthsor less, that period shall be added on to the accounting period (if any) whichprecedes or succeeds it (and which does not fall to be divided from it undersub-paragraph (2)(b)).

(5)A contract which varies another contract may modify the precedingprovisions of this paragraph.

(6)Nothing in this paragraph shall create an accounting period during whichthe programme contractor is not providing programmes for broadcasting by theAuthority.

7If a programme contractor is not a body corporate the contractor’saccounting periods shall be such as the Authority may direct, or as may beprovided in the contract.

InformationU.K.

8(1)Every contract shall impose on the contractor such requirements withrespect to the furnishing of information to the Authority as appear to theAuthority, after consultation with the Secretary of State, to berequisite—

(a)for enabling the Authority to perform their functions under the provisionsof the principal sections and this Schedule, and

(b)for enabling the Authority to furnish to the Secretary of State suchinformation as he may require for the purpose of determining whether, and inwhat manner, to exercise his powers of making orders under the saidprovisions.

(2)Without prejudice to the generality of sub-paragraph (1), the duty imposedon the Authority by that sub-paragraph includes the duty to impose, so far asis reasonably practicable, such requirements as will enable the Authority todetermine the amounts (if any) which, in relation to any programme contractor,are to be treated as advertising revenue and relevant income and relevantexpenditure for the computation of profits by virtue, respectively, ofparagraphs 1 and 2.

(3)It shall be the duty of the Authority to furnish to the Secretary of Statesuch information (whether obtained from contractors or otherwise) as is intheir possession and is required by the Secretary of State for the purpose ofdetermining whether, and in what manner, to exercise his powers of makingorders under the said provisions.

9It shall be the duty of the Authority in framing any contract to includeterms ensuring that the Authority will have the right to inspect accounts andrecords—

(a)of the programme contractor, and

(b)of any subsidiary of the programme contractor,

for the purpose of discharging their functions under the principalsections and this Schedule.

InterpretationU.K.

10(1)In this Schedule, and in the principal sections, except where the contextotherwise requires—

(a)in the application of this Schedule and the principal sections in relationto the additional payments mentioned in section 32(1)(b), mean respectivelyadditional payments payable by virtue of that paragraph and a contract betweenthe Authority and a programme contractor under which television programmes areto be provided by the programme contractor, and

(b)in their application in relation to the additional payments mentioned insection 32(2)(b), mean respectively additional payments payable by virtue ofthat paragraph and a contract between the Authority and a programme contractorunder which local sound broadcasts are to be provided by the programmecontractor;

(2)In this Schedule “payment” includes any valuableconsideration, and references to revenue and receipts and expenditure shallbe construed accordingly.”

Part IIIU.K. Transitional Provisions

1(1)In this paragraph—U.K.

(2)Any contract between the Authority and a programme contractor which is inforce immediately before the day on which section 181 of this Act comes intoforce shall, until it is varied or superseded by a further contract betweenthem or expires or is otherwise terminated (whichever first occurs), be deemedto be modified by virtue of this Schedule so as—

(a)to substitute provisions in conformity with the new statutory provisionsfor so much of the contract as is in accordance with the existing statutoryprovisions and is not in conformity with the new statutory provisions, and

(b)to incorporate in the contract such additional provisions as a contractbetween the Authority and a programme contractor is required to include inaccordance with the new statutory provisions;

and (subject to paragraph 5 of Schedule 4 to the 1981 Act) any provisionsof the contract which provide for arbitration as to any matters contained inthe contract in accordance with the existing statutory provisions shall beconstrued as making the like provision for arbitration in relation to mattersdeemed to be included in the contract by virtue of this sub-paragraph.

(3)Where it appears to the Authority that the new statutory provisions callfor the inclusion of additional terms in any such contract, but do not affordsufficient particulars of what those terms should be, the Authority may, afterconsulting the programme contractor, decide what those terms are to be.

(4)This paragraph shall not be taken to have effect in relation to anycontract entered into by a programme contractor and any person other than theAuthority before the day on which section 181 of this Act comes into force.

Marginal Citations

2U.K.Where any accounting period of a programme contractor begins before 1stJanuary 1990 and ends after 31st December 1989, the additional paymentspayable by the programme contractor in relation to that accounting periodunder section 32 of the M5Broadcasting Act 1981 shall be theaggregate of—

(a)the amounts payable by him on the assumption that section 181 of this Actwas not in force at any time during the accounting period, multipliedby—

and

(b)the amounts payable by him on the assumption that that section was inforce throughout the accounting period, multiplied by—

where (taking any odd four days or more as a week)—

  • X is the number of weeks in the accounting period falling before 1stJanuary 1990, and

  • Y is the number of weeks in the accounting period falling after 31stDecember 1989.

Marginal Citations

3U.K.Where, under the existing statutory provisions, any excess of firstcategory expenditure over first category income of a programme contractorwould have been carried forward and treated as relevant first categoryexpenditure of his for an accounting period ending after 31st December 1989if those provisions had applied in relation to that period then the excessshall be carried forward and treated, under the new statutory provisions, asrelevant expenditure of the contractor for any accounting period which endsafter that date.

4U.K.In this Part of this Schedule, references to programme contractors shallbe read as including references to teletext contractors.]