Research Note 20 1998-99

Convergence and the Cross-Media Rules

Kim Jackson
Social Policy Group
28 April 1999

Over the last decade or so developments in information technology have enabled the digitisation and transmission of video, image, sound and text. Television, telecommunications and computer services are becoming integrated, or converging. This process is said to affect the cross-media laws by:

• increasing the number of media outlets to such an extent that ownership limits are no longer required to preserve media diversity, and
• blurring the boundaries between services, so that regulatory distinctions become meaningless.

The major effect of the cross-media provisions of the Broadcasting Services Act 1992 is to prevent the common ownership of newspapers, television or radio broadcasting licences that serve the same region. The purpose of the legislation is to encourage diversity in the ownership of the most influential forms of the commercial media: the daily press and free-to-air television and radio. The justification for the rules is that the effective functioning of a democracy requires a diverse ownership of the daily mass media to ensure that public life be reported in a fair and open manner.

New Media Influence and Diversity

Table 1(1) compares household access for the traditional mass media with that of the 'new media'-pay TV and the Internet.

While new media penetration is still well below that of radio and television, it is increasing rapidly. The number of households with access to the Internet increased by 49 per cent between February and November 1998. After levelling off in early 1998, pay TV subscriptions also appear to have increased sharply.(2)

Table 1 Media Reach/Circulation

Has this rapid growth in pay TV and Internet households weakened the case for cross-media controls by providing a greater diversity of media outlets that report on Australian current affairs? The three pay TV companies offer 56 channels, but only one of these is an Australian news channel-Sky News Australia. Sky News is jointly owned by News Ltd (Murdoch), PBL Ltd (Packer) and the Seven Network (Stokes). The situation is similar with Australian Internet content. The only daily news sites are those controlled by the traditional mass media. Table 2(3) provides a breakdown of the 100 most popular Australian Internet sites.

Table 2 Australian Internet Content - Most Popular 100 Sites April 1999

Theoretically, the Internet should have added to media diversity by eliminating the need for large capital outlays by new entrants. However, the operating costs of maintaining a news organisation together with the lack of Internet advertising revenue have ensured that no new competitor has emerged to challenge the traditional mass media, which can transfer its existing content to the Internet at little extra cost. The Internet's main contribution to media diversity has been to increase the possible influence of the print media by improving its household access. This could be seen as a reason for retaining the cross-media rules, rather than abandoning them.

Blurring the Boundaries

It has been claimed that convergence will blur the boundaries between the different forms of media: TV programs will be viewable on the computer, while Internet style services will be displayed on the television. The distinction between television programs and 'datacasting' services combining text, image and sound may become difficult to define. While these effects are not yet a reality, the transition to digital television will soon provide the capacity for the broadcasting of these services to Australian households. However, it is unlikely that this will significantly alter the nature of the household data market in the short to medium term, as it is now dominated by the computer. The digital transition commences on 1 January 2001 in metropolitan areas and 1 January 2004 in regional areas, but it will not be until eight years after those dates that digital equipment is required in order to continue watching television. In contrast, computers are frequently used in 35.8 per cent of Australian households and 18.6 per cent of households are already connected to the Internet. The connection rate for upper income earners, who would most likely be the first to buy digital television, is 41.5 per cent.(4) The distinctions between current Internet services and broadcasting are still quite clear: the former are delivered interactively through a unique connection to an individual household while the latter are broadcast to anyone who has the necessary receiving equipment. The fact that television broadcasters may gradually move into the household data market is not in itself a reason for abandoning the cross-media rules.

Impact of the Repeal of the Cross-Media Rules

As the cross media provisions of the Broadcasting Services Act 1992 are not yet obsolete, it might be argued that they should not be repealed on the basis of a putative future when the practical consequences of their abolition could be a significant reduction in media diversity.

Australian Media Markets	Licence Area Pop. As a Percentage of Aust. Pop.	Ownership under Current Law					Min. Poss. Owners Without C-M Owner-ship Controls	% Reduction in Min. Poss. Owner-ship
		Media Outlets per Market			Owners per Market
		TV Stations	Daily Press	Radio Stations	Actual Owners	Min. Poss. Owners
Broken Hill, Darwin, Kalgoorlie, Mildura, Mt Gambier, Mt Isa	1.70	1	1	2	3	3	1	66.6
Melbourne	17.69	3	2	9	11	10	4	60.0
Hobart	1.21	2	1	3	6	5	2	60.0
Brisbane	8.37	3	1	6	8	7	3	57.1
Adelaide	6.09	3	1	5	7	7	3	57.1
Perth	6.96	3	1	5	6	7	3	57.1
Sydney	18.86	3	2	8	11	9	4	55.5
Newcastle, Maitland	2.66	3	1	4	6	6	3	50.0
Canberra	1.90	3	1	4	7	6	3	50.0
Toowoomba, Warwick	1.76	3	1	3	7	6	3	50.0
Launceston	0.62	2	1	2	5	4	2	50.0
Burnie	0.33	2	1	2	4	4	2	50.0
Wollongong	1.38	3	1	2	6	5	3	40.0
Bendigo	1.01	3	1	1	5	5	3	40.0
Gladstone, Rockhampton	0.84	3	1	2	6	5	3	40.0
Maryborough, Warrnambool	0.74	3	1	1	5	5	3	40.0
Albury, Ballarat, Bathurst, Bundaberg, Cairns, Dubbo, Geelong, Gold Coast, Goulburn, Grafton, Gympie, Lismore, Mackay, Orange, Shepparton, Sunshine Coast, Tamworth, Townsville, The Tweed, Wagga Wagga	14.03	3	1	2	5	5	3	40.0
ALL MARKETS	86.15							53.3

Table 3(5) details the possible effect of their repeal on those Australian media markets which have a daily newspaper. This constitutes around 86 per cent of the population. Smaller regional markets without newspapers could also experience a reduction in diversity, as it would be possible for television and radio licences to be controlled by the one entity. The table compares the minimum possible number of owners under the cross-media rules with the potential minimum ownership if the same markets were only subject to the competition law administered by the Australian Competition and Consumer Commission. It assumes that the ACCC would:

• continue to regard the newspaper, television and radio markets as separate
• not permit any one owner to control two television licences, or more than two radio licences in any one television or radio market.

The table indicates that the abolition of the rules would reduce possible media ownership diversity by an average of 53 per cent or, to put it in simpler terms, it could double the influence of the existing proprietors.

Endnotes

1. Newspaper circulation is the total of metro and regional dailies, 30/9/98. Pay TV subscriptions as at Nov 1998-Jan 1999. See Communications Update (Feb 1999). Household Internet access at November 1998, see ABS, Use of the Internet by Households (Mar 1999).
2. ABS Pay TV figures were 694 000 for Feb-May 1998 but subscription reports for late 1998 are much higher. See ABS, Household Use of Information Technology 1998 (Nov 1998) and Communications Update (Feb 1999).
3. Where did we go in Australia. The 100 Australian web sites most accessed by Australians, http://usrwww.mpx.com.au/~ianw/.
4. Those with household income in excess of $66 000 at November 1998. See ABS, Use of the Internet by Households.
5. Media markets according to the Associated Newspaper Register maintained by the Australian Broadcasting Authority for the purpose of administering the cross-media rules. Note that the figures refer only to daily newspapers and commercial free-to-air radio and television broadcasters. The Broadcasting Services Act 1992 permits an owner to control two radio licences in the one area, so the number of actual owners is sometimes greater than the minimum possible under the law. The 'Minimum Possible Owners Without Cross-Media Controls' figures assume that the number of broadcasting licences and newspapers remains unchanged.

Comments to: web.library@aph.gov.au
Last reviewed 17 October 2001 by the Parliamentary Library Web Manager
© Commonwealth of Australia
Parliament of Australia Web Site Privacy Statement
Images courtesy of AUSPIC