Curbs to be lifted on foreign ownership of TV companies

The Communications Bill will bring changes to the laws governing media ownership and the regulation of broadcasting, both of which are likely to provoke controversy.

The ownership changes will greatly help foreign entrepreneurs and companies to take big stakes in British broadcasting. A number of MPs and a scrutiny committee chaired by Lord Puttnam have asked for more safeguards in this area. When the Bill goes through, Rupert Murdoch could, for example, become the owner of Channel 5, even though he is currently denying interest.

The Department for Culture, Media and Sport said the changes on media ownership would involve "significant deregulation to promote competition and investment, but some core rules would be retained to ensure the existence of a range of media voices, safeguarding the vibrancy of democratic debate".

The Bill will transfer functions from existing regulators – the Broadcasting Standards Commission, the Independent Television Commission, the Office of Telecommunications, the Radio Authority and the Radiocommunications Agency – to the Office of Communications (Ofcom). But, crucially, the BBC will continue to be regulated by its board of governors. There will also be measures to allow radio spectrum trading, introduce a "more coherent" regulatory structure for broadcasters in the digital age and give public service broadcasters more freedom to regulate themselves.

Ofcom will ensure that the nature and quality of television and radio programming is monitored under its content board while a consumer panel will advise on policy matters.

The Bill is scheduled to become law within this parliamentary session, though there is the likelihood of fierce debate in both the Commons and the Lords over foreign ownership.

Tessa Jowell, the Culture Secretary, is due to appear at the Westminster Media Forum today to make a speech in which she is expected to outline the timetable for the Bill. She has indicated she will not drop the clause that allows US takeovers even though the prospect of a Disney-run ITV and a Rupert Murdoch-owned Channel 5 will give Labour backbenchers plenty of food for thought.

The Bill could also provoke friction between the Culture Department and the Department of Trade and Industry. Lord Puttnam has warned that joint control of Ofcom could be "catastrophic" for the sector.

Nick Harvey, the Liberal Democrats' culture and media spokesman, said: "We have major misgivings about the Government's plans to change TV ownership rules, at least until the new regulator has had time to prove itself and the legislation it will be using has had time to bed down properly."