Bills Digest no. 111 2015–16

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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Dr Rhonda Jolly
Social Policy Section
21 April 2016

 

Contents

The Bills Digest at a glance
Purpose of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Appendix A: major media interests snapshot: January 2016

 

Date introduced:  2 March 2016
House:  House of Representatives
Portfolio:  Communications
Commencement: Sections 1 to 3 the day the Act receives Royal Assent. Schedules 1 and 2 and Schedule 3, Part 1 the day after Royal Assent. Schedule 3, Part 2 six months after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at April 2016.

The Bills Digest at a glance

Purpose of the Bill

The purpose of the Broadcasting Legislation Amendment (Media Reform) Bill 2016 (the Bill) is to amend the Broadcasting Services Act 1992 (the BSA) to:

• repeal certain media ownership, control and diversity laws
• introduce new local programming obligations for regional commercial television broadcasting licensees when a change in control, known as a trigger event, results in a licence forming part of a group of commercial television broadcasting licences whose combined licence area populations exceed 75 per cent of the Australian population.

Structure of the Bill

• The Bill consists of three schedules.
  • Schedule 1 repeals the 75 per cent reach rule
  • Schedule 2 repeals what is called the two out of three rule
  • Schedule 3 inserts a new Division 5D in Part 5 of the BSA which introduces new local programming requirements for regional commercial television broadcasting licensees and revokes current programming requirements.

Background

The federal government has regulated the broadcasting industry since the 1930s. Almost from that time the industry has protested that media control rules have been too onerous, but objections to media regulations have intensified since the emergence of the Internet and new media technologies and the increasing convergence of various media platforms.

Sections of the broadcasting industry have been lobbying for the removal of certain rules which they consider outdated and which they argue prevent mergers and economies of scale which will assist them to remain economically viable in the modern media environment.

The Government has responded by introducing this legislation.

Key issues

There are two main areas of argument in the debate over this legislation. As noted in the point above, one is that certain media regulation is unnecessary and is preventing media entities from realising the economies of scale needed for them to survive in the modern media environment. This argument continues that it is possible to replace outdated regulations in regional areas with modifications that protect existing, and encourage greater local content, production.

The main opposing view is that, while broadcasters remain a primary source of news and information for audiences, it is not in the public interest to remove regulations which are likely to encourage mergers of existing media outlets and the consequential efficiencies that this will involve. According to this view, these efficiencies will lead to less, not more, media diversity in the long run. This is because one owner will be able to control radio, television and newspapers in local areas. Despite minimal local content requirements that may be in place, there will be larger companies, fewer independent voices and fewer local journalists employed to report on, and investigate, local issues.

Purpose of the Bill

The purpose of the Broadcasting Legislation Amendment (Media Reform) Bill 2016 (the Bill) is to amend the Broadcasting Services Act 1992 (the BSA) to:

• repeal certain media ownership, control and diversity laws.

The Bill also:

• introduces new local programming obligations for regional commercial television broadcasting licensees when a change in control, known as a trigger event, results in a licence forming part of a group of commercial television broadcasting licences whose combined licence area populations exceed 75 per cent of the Australian population.

The Bill lapsed on prorogation of the Parliament on 15 April 2016. A new session of Parliament commenced on 18 April 2016. As no election was held between the two Parliamentary sessions, the Bill may be proceeded with in this new session at the stage it had previously reached, if the House of Representatives passes a resolution restoring it to the Notice Paper.[1] This had not occurred at the date of publishing this Digest.

Structure of the Bill

The Bill consists of three schedules:

• Schedule 1 repeals the 75 per cent reach rule
• Schedule 2 repeals what has been labelled the ‘two out of three rule’
• Schedule 3 inserts a new Division 5D in Part 5 of the BSA to introduce new local programming requirements for regional commercial television broadcasting licensees and revokes current programming requirements.

Background

A trend towards media concentration in Australia first became noticeable in the 1930s. At that time, the federal government became concerned that the public interest would not be adequately served if this trend was allowed to continue without restraint.[2] Hence, it introduced the first media ownership and control regulations. These restricted the number of commercial broadcasting stations that could be owned by an individual or company—four in any one state and eight throughout the country and only one metropolitan station per state.[3]

From the 1930s to the present, various governments have continued to address what has become an ongoing trend towards media concentration. This has resulted in the strengthening of regulations by some governments and the relaxation of rules by other administrations. However, despite the various strategies employed to curb media concentration, Australia now has one of the most concentrated media environments in the world.[4]

What have now come to be called traditional media operators—television and radio broadcasters and the press—have protested that the majority of regulations governments have imposed have been onerous. Not only have restrictions been onerous, according to the media operators, regulation has stifled the development of their businesses.

Since the advent of new media technology — which has brought the Internet and its promises of greater diversity of sources, multiple news and information voices and innovative practices — traditional media operators have become so alarmed by what they maintain are the adverse effects of regulation that they have intensified advocacy for the removal of what they argue are outdated rules. Their message has been that removal of rules, such as those targeted in this Bill, is vital for their survival.

The current media ownership and control regulations are the result of legislation introduced by a Labor Government under Bob Hawke and a Coalition Government led by John Howard.

Hawke Government

One report commissioned by the Hawke Government into the broadcasting media recommended that the government encourage local ownership, control and presence and prohibit the ‘buying and selling of licences for purely investments purposes’.[5] Another report suggested that there was a need to strengthen the position of regional media owners in relation to their metropolitan counterparts, and that this could occur if a market reach limit was imposed and supplemented with a minimum number of owners rule.[6]

These reports were partly responsible for the introduction of legislation which changed media ownership rules in 1987. An ownership rule which prevented broadcasters from owning more than two television stations (introduced by the Menzies Coalition Government in 1956) was replaced by the audience reach rule.[7] This rule stated that a person was not to control commercial television licences reaching more than 60 per cent of the population; more than one commercial licence in the same licence area; more than two commercial radio licences in the same area and in any area a combination of any two of the following—a commercial television licence, a commercial radio licence or a major newspaper.[8] The broadcasting reach rule was later amended to allow for an audience reach of 75 per cent of the population.[9]

Treasurer Paul Keating is often quoted as proclaiming that the cross-media changes in the Hawke Government’s legislation would mean that media proprietors would have to choose whether they wanted to be ‘queens of the screen or princes of print’.[10] According to a number of commentators, rather than this being what the legislation is remembered for, it is often cited as producing ‘the greatest media carve-up’ in Australia’s history.[11] That is, the regulatory change which delivered more media concentration than any other.

Howard Government

When the Howard Government was elected in 1996 it announced that it was committed to abolishing what it saw as anachronistic limitations on the media.[12] To this end, it directed the Productivity Commission (PC or the Commission) to inquire into broadcasting regulation and to provide advice ‘on practical courses of action to improve competition, efficiency and the interests of consumers in broadcasting services’.[13] In so doing, the PC was to keep in mind that legislation which restricted competition should be retained only if the benefits to the community as a whole outweighed the costs and if the objectives could be met only through restricting competition.[14]

In its report published in 2000, the Commission recommended that certain media regulations should be removed.[15] The PC added one critical proviso that reform should only occur once a more competitive Australian media environment had been established.[16] It also recommended that the media landscape should be structured so that broadcasters delivered services that took into account the public interest.[17]

The Howard Government did not accept the PC’s recommendation, arguing that subjective judgement by an individual or organisation would inevitably occur in deciding what constitutes the public interest and that this would create uncertainty for the media industry.[18] Nonetheless, the Government included public interest concessions in its media reform legislation which passed into law in 2006.[19] These were the result of negotiations with some of its own backbenchers who were concerned that changes to regulations would have adverse effects for regional media. The changes resulted in the four/five rule that permits transactions involving commercial radio licensees, commercial television licensees and associated newspapers, including cross–media transactions, to occur subject to conditions under which there needs to remain a minimum number of separately controlled commercial media groups or operations—sometimes referred to as voices—in a relevant radio licence area following such transactions.[20]

The minimum number of commercial media groups which must remain in a mainland metropolitan radio licence areas is five, and in regional areas it is four. If the number of media groups drops below these stipulated levels then an ‘unacceptable media diversity situation’ is said to exist.

The Australian Communications and Media Authority (ACMA) has established a Register of Controlled Media Groups (RCMG), the job of which is to identify who owns and controls the media groups in each licence area in order that compliance with the rules can be monitored and breaches of the rules investigated by the regulator.[21]

The full list of media ownership and reach regulations is summarised in Box 1.

Box 1: current media rules

75 per cent rule (audience reach rule) A person, either in his or her own right or as a director of one or more companies, must not be in a position to exercise control (see below) of commercial television broadcasting licences which have a combined licence area population that exceeds 75 per cent of the population of Australia. Two out of three rule (cross-media ownership rule) A person can only control two of the regulated media platforms (commercial television, commercial radio and associated newspapers) in a commercial radio licence area. Five/four rule (minimum voices rule) There must be at least five independent media voices in metropolitan commercial radio licence areas (the mainland state capital cities) and at least four in regional commercial radio licence areas. One to a market rule A person (either in his or her own right or as a director of a company) must not exercise control over more than one commercial television broadcasting licence in a licence area. Two to a market rule A person (either in his or her own right or as a director of a company), must not control more than two commercial radio broadcasting licences in the same licence area. Control A person whose interest in a company exceeds 15 per cent is regarded under the current rules as being in a position to exercise control of that company. The rules also acknowledge that control can be exercised in other ways, such as through a person being in a position to appoint a majority of the board of directors of a company.

Rudd-Gillard Government

The Independent Convergence Review Committee (CRC), formed under the Rudd-Gillard Government, pointed out in 2013 that since the 1990s and in the short time since the 2006 media changes had come into effect, the media landscape had experienced major upheavals as a result of media convergence due to technological advances.[22] The CRC considered that existing statutory control and media ownership and diversity rules are based on distinctions between traditional broadcasting and print media which no longer exist, as media enterprises increasingly operate across a range of platforms. The CRC recommended the abolition of the current rules and proposed instead that a public interest test could be used in conjunction with the Australian Competition and Consumer Commission’s (ACCC) media and merger powers to ‘provide sufficient safeguards to maintain diversity and a competitive market’.[23]

The Rudd-Gillard Government tried to implement media reforms, some of which were based on the CRC’s recommendations. But most of Labor’s plans for media reform were subject to intense criticism from within the media. Indeed some critics labelled some of its proposals ‘reckless and flawed media reforms’ and ‘a danger to democracy and free speech’.[24] The Rudd-Gillard Government’s attempt at reform was, in fact, spectacularly unsuccessful and abandoned by the Government.

Current proposal

In early 2014, however, under a newly-elected Coalition Government, media reform was again on the agenda when Communications Minister Malcolm Turnbull declared that he was ‘fairly sympathetic’ to relaxing media diversity and ownership regulations.[25] The rules in line for removal were said to be the 75 per cent reach rule and the two out of three cross ownership rule.[26]

Predictions that reform was imminent continued into 2015, although there were hiccoughs. One of these was that the Prime Minister, Tony Abbott, was reported as being reluctant to take any action unless a broad consensus within the industry on the form it would take could be identified.[27] However, when Malcolm Turnbull replaced Mr Abbott as Prime Minister in September 2015, many media commentators once more predicted that certain control rules would be relaxed.[28]

In late 2015 regional television networks also began a campaign to allay disquiet that had been expressed by regional Members of Parliament about the consequences of lifting media restrictions.[29] The ‘Save Our Voices’ campaign, led by Prime Media, Southern Cross Austereo, WIN Corp and Imparja, proposed that any changes to regulations should have to include the proviso that a buyer of a regional television station would be required to maintain that station's local news services at existing levels.[30] In addition, the networks suggested that buyers of regional networks should be required to provide a minimum local news service in markets where no such requirement currently exists.[31]

Adding to speculation that change was imminent were reports that in effect, both the 75 per cent reach rule and the two out of three rule were being ignored, regardless of the directives of the BSA following legal advice that had led to a Seven Network decision to stream its channels via the Internet to lap-tops or mobile phones from Melbourne Cup Day in November 2015.[32] This decision was based on advice that streaming programs was not covered by the BSA.[33]

Minister Fifield introduced the much-anticipated reform to the reach and two out of three rules on 1 March 2016. In his announcement the Minister called the proposed changes the most significant reforms to media laws in a generation, ‘supporting the viability of our local organisations as they face increasing competition in a rapidly changing digital landscape’.[34]

The Department of Communications and the Arts (DCA) published information leaflets with a simple diagrammatical explanation of the proposed changes (see Figure 1 below). The Departmental leaflets provided an overview of the Government’s rationale for introducing the proposed changes to media laws:

The current rules restrict traditional media companies from optimising the scale and scope of their operations and from accessing resources, capital and management expertise in other media sectors. While these laws have been adjusted over time in an attempt to accommodate changes in technology and media consumption patterns, more fundamental reform is needed to ensure the framework remains relevant …

The proposed changes will help traditional media businesses—which still play a significant role in Australian society—to better compete and adapt in the changing media landscape. The rest of the control and ownership framework will be retained and play an important role in ensuring media diversity. The strengthened local content obligations for regional commercial television broadcasters will address concerns that the media reforms may have a negative impact on the provision of local content in regional Australia.

The proposed reforms will support the viability of our local organisations as they face increasing global competition in a rapidly changing digital landscape.[35]

Figure 1: updating Australia’s media laws

Source: Department of Communications.[36]

Committee consideration

Selection of Bills Committee

The Selection of Bills Committee resolved on 2 March 2016 that the provisions of this Bill were referred to the Senate Standing Committee Environment and Communications Legislation Committee for inquiry and report by 12 May 2016.

The Selection of Bills Committee cited several reasons that had prompted its recommendation for referral and issues for consideration. These were to enable the Senate to:

• examine the detail of the Bill
• investigate the impact of proposed changes to regulation on the community and the public interest and
• investigate the impact on local content and quality of regional and rural broadcasting.

The Selection of Bills Committee considered that possible evidence to the Environment and Communications Legislation Committee may come from commercial television broadcasters, commercial radio broadcasters, the national broadcasters, community broadcasters, newspaper publishers, independent media outlets, the Australian Press Council, the Media, Entertainment and Arts Alliance, ACMA, the ACCC, the Department of Communications, academics, consumer groups and the general public.[37]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills reported on 16 March 2016 that it had no comment on this Bill.[38]

Policy position of non-government parties/independents

Australian Labor Party

Labor’s communications spokesperson, Jason Clare, discussed media reform in an interview conducted on the morning this Bill was introduced. Shadow Minister Clare considered that in the Opposition’s view removing the 75 per cent reach rule was relatively uncontroversial. He added that the previous Labor Government had intended to get rid of the rule.[39] Mr Clare was not convinced that removing the two out of three rule was as straightforward an issue, however. He acknowledged the argument that getting rid of the rule may help create ‘scalable’ media businesses, but he was unconvinced that such a situation would be compatible with media diversity. He continued:

One of the challenges here is that even in an internet age where there is so much more content available, much of that content is still owned by the traditional media companies. If you Google a list of the top ten media news websites, you’ll find that seven or eight of them are owned by Fairfax or News Limited, Nine, Seven, Ten or the ABC.

Although the internet has meant that there is a lot more content, it’s easier to get information in different ways, much of that information is still created, collected, curated by those traditional media companies.[40]

The issue of preservation of local content was also raised in the context of this interview. Mr Clare was of the view:

… I think you’ve got to expect that you’re going to see less local content in the regions and that invariably means a bigger role for the ABC which is out there everywhere, providing important information, whether it’s in an emergency or whether it’s just local news. The importance of the ABC in this internet age is only going to get bigger and more important.[41]

The Australian Greens

The Greens’ Senator Scott Ludlam was of the view that while the Internet has changed the way Australians engage with media, it should not be an excuse to change media regulations ‘to suit some of the most powerful media barons in Australia, the country with the most concentrated media ownership in the world’.[42] Senator Ludlam considered that it was too easy for the Government to claim that the Internet ‘has negated the need for any diversity protections’ as the dominant players in print and broadcast media ‘have successfully used their incumbency to cement their place at the top of Australia’s online news media space as well’.[43] The Senator considered:

We need to make sure new entrants can compete, that existing players are not so dominant that new voices are crushed. We need to make sure local content is still being produced, and that Australian stories are still being told … Technological advances in streaming services and the like are being used as a reason to abolish the reach rule, but this only makes sense if there is a decent national broadband network to deliver these services.[44]

Independents

It has been reported that West Australian Senator Zhenya Wang (Palmer United Party) and New South Wales Senator David Leyonhjelm (Liberal Democratic Party) will most likely vote for this Bill. Senator Wang has stated that reform to the media laws is necessary to maintain regional news but the Palmer United Party would not dictate to people how they should run their businesses.[45]

Until the Government introduced proposals to reform voting for the Senate, it was expected that Senator Bob Day (Family First Party) would also vote in favour of this Bill. Senator Day has now said his position ‘is reserved’.[46] It appears that Senator Glenn Lazarus (Glenn Lazarus Team) supports media reform in principle, but he has not expressed a definitive opinion on this Bill.[47] Independent Tasmanian Senator Jacqui Lambie and Victorian Senators, Independent John Madigan and Ricky Muir (Australian Motoring Enthusiast Party) are said to be considering their positions on media reform.[48]

The Independent Senator from South Australia, Nick Xenophon, commented that he will participate in the Senate inquiry process before deciding his position on the reforms proposed in this Bill. Senator Xenophon added that he would like to see licence fees slashed and local television producers given more generous tax offsets and the revenue loss that this would incur could be recovered by ensuring that companies such as Netflix, Google and Apple ‘were paying their fair share of tax’.[49]

Position of major interest groups

Industry

In 2013, in conjunction with the Labor Government’s attempt to reform media legislation, a Senate Committee investigated the 75 per cent reach rule and concluded that it was irrelevant in the modern media environment. The Committee recommended removal of the rule, but added that this should be on the condition that legally enforceable undertakings were in place to safeguard the delivery of local content for regional Australia.[50]

At the time of this investigation most broadcasters argued that the rule was out of date, and that removing it would mean that regulations were more consistent with converging media technologies. In addition, if the rule were removed, regional networks and metropolitan networks would be allowed to merge and this would increase industry efficiency and economies of scale (see a snapshot of current major media interests in Appendix A).[51] The WIN and TEN Networks in particular expressed some doubt that rescinding the reach rule would be as beneficial as most of their fellow broadcasters believed. WIN, for example, voiced concern that the end of the rule could mean the end of local content on regional stations.[52] WIN, however, is now in favour of the changes and other broadcasters that have expressed support recently have been Prime Media, Southern Cross Media Group and Fairfax Media.[53]

WIN, in fact, appears to have experienced a turnaround with regards to its view on the reach rule. This can be illustrated by its submission to the Senate inquiry into this Bill in which it has argued that not only is it the case that pay television can reach 100 per cent of the population, but the Seven, Nine and Ten networks are able to do so through their regional affiliates.[54] In addition, it considered the ABC and SBS, as ‘direct competitors’ for viewers and SBS a competitor for revenue. WIN therefore:

… questions why a government broadcaster is free to compete for regional advertising revenue whilst not being constrained by the 75% audience reach rule and also not being required to work to the local content obligations that apply to regional broadcasters.[55]

The broadcaster adds:

Online broadcasters such as Netflix, Foxtel Go, Stan, Presto, Quickflix, ABC iView, SBS on Demand, Ten Play, 9 Now, Plus 7, Fetch TV, Hulu, Google, YouTube and any other online media group in Australia, and for that matter the world, is able to broadcast their content to 100% of the population whilst Australian commercial television networks are constrained from gaining scale by the 75% Reach Rule.

Perhaps the most telling example of the redundancy of the Reach Rule is the recent action of Seven West Media and more recently Nine Entertainment Co in streaming their channels into regional Australia, effectively bypassing the Reach Rule. Regional Broadcasters pay a large percentage of their gross revenue to these Metropolitan broadcasters for the right to broadcast the programming and are being forced to compete with their own product suppliers for viewers and for revenue

WIN, along with the other independent regional broadcasters have together argued that the abolition of the 75% audience Reach Rule will give regional broadcasters the ability to find opportunities through which to gain scale, either through acquisition, merger, partnering with, in a material fashion or selling into, a Metro Broadcaster. All of these options lead to the gaining of scale for television networks and create the opportunity to remove unnecessary or duplicated costs in non-generating content areas of television businesses and allowing the regional division of the up scaled business. The result being a greater opportunity to continue with the current investment into local content and support in regional communities.[56]

Fairfax’s new chairperson, Nick Falloon, has commented that changes, such as are proposed in this Bill will correct what he calls ‘an imperfect market’ which now ‘gives unregulated overseas players a complete free hand’.[57] The Fairfax Group’s Chief Executive, Greg Hywood, has stressed the point that a level playing field was what Fairfax wants and he has insisted that the Group was not interested in buying a television network, despite any changes to regulations as:

… it could produce as much video as it wanted across its websites and the ‘notion of scale in advertising between print and TV is not remotely as powerful’, thanks to the digital revolution …

We're very supportive of operating in a deregulated, unregulated environment because it just provide optionality [sic] and we should have optionality because the major competitors in our advertising are not having to deal in a regulated environment at all.[58]

News Ltd, commenting from a subscription television service point-of-view, has been more cautious in its support for this legislation, but nevertheless it has labelled the proposals in the Bill as ‘a step towards media reform.’[59] It could be argued that News Ltd’s caution is prompted by its failure to convince Minister Fifield to consider including radical changes to the anti-siphoning regime which currently exists in Australia as part of the current proposals.[60] Foxtel, which is 50 per cent owned by News Ltd, has been more emphatic in its condemnation. It stated in its submission to the Senate Environment and Communications Committee that it does not support the repeal of media ownership and control rules unless it occurs ‘in conjunction with reform of the anti-competitive anti-siphoning regime that shackles subscription television licensees when it comes to acquisition of sporting rights’.[61]

Simon Kelly, who was until recently the Chief Operating Officer at Nine Entertainment, is enthusiastic about this legislation and has encouraged Nine, Fairfax Media and Southern Cross Media to pursue a ‘megamerger’ should the Bill pass the Parliament—‘to bulk up in the face of growing competition from global giants Google, Facebook and Netflix’.[62] According to Mr Kelly the combination would ‘create a very powerful local force’ which would deliver revenues of around $4.0 billion and command close to 30 per cent of the advertising marketplace.[63]

Seven West Media’s Tim Worner, however, has claimed that the proposed reforms will do nothing to improve media competitiveness. Mr Worner has iterated an earlier call for a cut in licence fees for commercial television broadcasters and he considers that this action would be more likely to assist traditional broadcasters to remain financially viable. There has been speculation following from Mr Worner’s comments that the Government is amenable to this reform, and that the concession will be included in the 2016–17 Budget.[64]

The issue of licence fees has also been brought up by Screen Producers Australia Chief Executive Matthew Deaner and the point raised by Mr Deaner could address some of the criticism levelled at this Bill with regards to the loss of local content. Mr Deaner suggests that any free-to-air television licence fee reductions that may occur in the future should be accompanied by ‘an obligation to invest in diverse local content’.[65] It should be noted, however, that while free-to-air commercial television networks have indicated that they would not be adverse to such a condition—as local shows rate highly—there remains a number of aspects of such a proposal that would need to be addressed. These include whether there should be quality standards for local content imposed in this instance, and to what extent ‘local’ could be defined so that it reflected not only metropolitan programming, but also local programming for regional areas.[66]

Media and other commentators

Criticism of the changes to media regulation

In 2014 Ben Eltham in the New Matilda asked what deregulation in general would mean for Australia’s media and for democracy and concluded that the result would be media consolidation ‘and a further weakening of diversity in the Australian mediascape’.[67] Mr Eltham’s 2016 assessment is that, while the Government says that local content will be protected by the rules in this Bill, ‘Australian citizens that rely on journalists to gather and report the news so they can make informed decisions about our democracy may beg to differ’.[68] The efficiencies that will be inevitable as media companies merge will mean job losses and fewer, larger media companies will control fewer media voices. In Mr Eltham’s view this will also mean there will be fewer journalists to report and investigate.[69]

Crikey commentators Bernard Keane and Glenn Dyer also discussed media changes in an article in 2014. In relation to the possible removal of the two out of three rule, Keane and Dyer considered the only substantial beneficiary would be News Corp, as this international media giant would then be able to take control of the Ten Network and have the potential to increase its influence over Australian audiences. In Keane and Dyer’s opinion, this was because:

[d]espite a fragmenting media landscape, there’s still nothing more politically influential in Australia than a TV network, which is one of the last places where hundreds of thousands of Australians still gather to be told what’s going on.[70]

Recent commentary has included this critique from academic Vincent O’Donnell who maintains the proposals in this Bill do not represent reform. For Mr O’Donnell, they are instead:

… a capitulation to the interests of licensees, shareholders and rent-seekers in the Australian media industries, painted up in the gaudy raiment of the protection of the public interest.[71]

Mr O’Donnell continues:

[t]he proposed changes to the points system, which deals with the number of news stories relating to ‘local’ areas, seeks to support diversity. But like so much government regulation, conscientiously planned by those with little experience of the industry it will affect, it will be easy to meet the target without honouring the purpose.

Story selection, buying in copy, sourcing amateur footage from mobile phones and using uncorroborated eyewitness accounts are among the many ways of covering the surface of events without providing the depth that serious news journalism demands.[72]

Others who have expressed similar concern include Associate Professor Tim Dwyer from the University of Sydney who believes that, should this legislation pass, there will be an inevitable reduction in the news sources people need to access a wide range of points view — ‘especially in an election year’.[73] Professor Michael Fraser from the University of Technology Sydney agrees and argues that ‘it is important to maintain the media ownership laws we have to ensure diversity in the mainstream media’.[74] Denis Muller from the University of Melbourne argues that, while the rules this Bill proposes to rescind are ‘unenforceable’ and ‘mocked’ by digitisation, the underlying rationale for the rules remains valid.[75] Dr Muller believes that it is ‘in the public interest to have a diversity of voices in the news media and some restraints on the concentration of media power’. He continues:

Theoretically, digital technology enables everyone with a computer, access to the internet and the skills of basic literacy to become a publisher. A few new players have emerged as a result, most notably Crikey and The Guardian Australia, but the overwhelming majority of people who get their news online get it from the long-established media organisations – the ABC, News Corp and Fairfax.

The reason is that even with the heavy cuts to journalists’ jobs, these organisations still have more resources, more access to newsmakers, a bigger news-making capability and stronger reputations than most start-ups.

If the mooted rule changes go through, the mergers already foreshadowed by the media industry will mean less diversity – not more.[76]

Support for change

ACCC Chairman, Rod Sims, has criticised current media legislation as obsolete and ‘possibly protectionist’. According to Mr Sims, the reach rule potentially limits competition and efficient investment in the media industry, while the two out of three rule may be preventing the efficient delivery of content over multiple platforms.[77] In addressing the concerns expressed by commentators such as Keane and Dyer about a possible News Corp takeover of the TEN Network as a result of change, Mr Sims has also commented that section 50 of the Competition and Consumer Act 2010 prohibits any deal that would have the effect, or likely effect, of substantially lessening competition.^[78]

Senior Lecturer in Political Science at the University of Canberra, Michael de Percy, has argued that it is a contentious point whether localism (a term which includes both the provision of local content by regional broadcasters and the local ownership of those broadcasters) has ever existed in Australia in the first place. Dr de Percy sees localism as ‘much more than simply requiring commercial television stations to provide local news services’.[79] In his opinion, the broadband services that now exist enable greater consumer participation in news media production and social networks transform ‘traditional top-down localism of television programming to a more participatory localism driven by consumers’.[80] Dr de Percy is of the view that this has eroded the relevance of Australia’s cross-ownership laws. In such an environment:

… [continuing to place] restrictions on cross-media ownership where the distinction no longer exists is hardly the recipe for a commercially viable and internationally competitive communications industry. Ideas about localism need to change too if the advantages of reconvergence are to be realised by Australian media companies. Indeed, regulating for localism may well benefit overseas competitors rather than the people it was designed to serve.[81]

An editorial in The Australian has argued that the removal of cross media ownership law may be the way that local content offerings can be improved for regional areas because a proprietor who owns television, radio, print and Internet assets in an area ‘could deepen and expand local content and news’.[82] In a similar vein Chris Berg from the Institute of Public Affairs has argued also that ‘it is possible that local content requirements are crowding out alternative entrepreneurs’ who may be better able to produce local content.[83]

In his critique of this Bill, Dr Derek Wilding from the University of Technology Sydney considers the media changes in this Bill represent ‘a media landscape that is worth supporting’.[84] He is in favour of repealing the 75 per cent rule and the two out of three rule ‘if it helps support the transition of print media companies into converged news gathering organisations in a landscape where we have at least three strong local commercial players’.[85] Dr Wilding’s proviso for supporting this situation is, however, that there needs to be an assurance of ‘reasonable standards of practice’ such as accuracy, fairness, transparency and respect for privacy.[86] He concludes:

If the number of independent sources of information is reduced, whether through market forces or legislative change, then in my view it becomes more important that those players are committed to appropriate industry based standards of accuracy and fairness in reporting. It is also appropriate that, in a regulatory environment permitting cross-media ownership, those standards apply across media platforms.[87]

In Dr Wilding’s words his support, therefore, is for the removal of regulation, provided that there is an appropriate scheme for standards of practice that applies across media platforms and that this scheme is developed and maintained through self-regulatory processes which are not subject to abuse or dilution.

Audiences

Audience views of changes to media regulation can reflect the types of questions asked in surveys. For example, in 2014 Essential Report research found that most voters were not overly enthusiastic about removing media regulation. Those surveyed by Essential believed that media regulation was either ‘about right’ or that there needed to be more regulation (see Figure 2 below).[88]

A later survey of regional audiences by JWS Research for the Australian Financial Review in 2015 concluded that there was almost equal support for retention of the media regulation and changing the rules (see Figure 3 below). The interesting finding from this latter survey was that people were very supportive of rule changes if they thought that these would ensure they continued to receive local news.[89]

Figure 2: 2013: satisfaction with media regulation

	Total	Vote Labor	Vote Lib/Nat	Vote Greens
Needs to be more regulation	29%	38%	22%	40%
Needs to be less regulation	10%	9%	11%	9%
Present regulation about right	43%	36%	55%	35%
Don’t know	17%	18%	12%	16%

Source: Essential Report[90]

Figure 3: 2015: audience opinion of media reform

Source: Australian Financial Review[91]

Financial implications

According to the Explanatory Memorandum this Bill will have no significant financial implications on Australian Government revenue or expenditure.[92] While this appears to be the case, it should be noted that there are consequential issues which may have substantial impact on government revenues. These include the reduction in revenue collected from commercial free-to-air television (and radio) licence fees that could be linked to possible compromises that the Government may find necessary to ensure passage of this legislation.[93]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[94]

The Explanatory Memorandum argues that the measures in the Bill enhance the human rights of people in regional areas of Australia by providing a means through which they are able to receive ‘information and ideas’ which are relevant to, and affect, their local areas.[95]

There is, however, some question about the extent to which broadcasters would be able to deliver local content to the satisfaction of all constituencies within each area within the limited time requirements that will be imposed under the Bill.

On Line Opinion commentator David Wadori makes the following observations with regards to how the rights of audiences may be affected by the proposals in this Bill:

The democratic ideal of a media which is impartial, and designed to inform citizens, is inevitably compromised as media ownership becomes more concentrated. Article 19 of the Universal Declaration of Human Rights unequivocally states that everyone has the inalienable right ‘to hold opinions without interference...’ However this right is undermined as media ownership becomes more concentrated and the number of proprietors is reduced.

Concentration of media ownership is frequently seen as a problem of contemporary media and society. The fundamental threat that concentrated media poses to any society is that, as the influence of privately funded media increases, the democratic capacity of the media as an instrument to inform and educate citizens is diminished. This is due to a reduction in the number of perspectives that are available to citizens on any given issue, at any given time; and this interferes with an individual's ability to formulate an opinion, as access to information presented in an unbiased and balanced fashion becomes more and more restricted. In Australia, this problem is markedly more acute than elsewhere in the world and thus governments should strive to ensure that the Australian media is impartial and informative.[96]

Key issues and provisions

Schedule 1

Schedule 1 of the Bill proposes to repeal the sections of the BSA which set out the conditions of the 75 per cent reach rule. Subsections 53(1) and 55(1) and (2) of the BSA set out this rule which prevents a person, either as an individual or as a director of one or more companies, from being in a position to exercise control over commercial television broadcasting licences whose combined licence area populations exceed 75 per cent of the population of Australia.[97]

Schedule 2

Schedule 2 of the Bill proposes to repeal the two out of three cross-media control rule which is set out in section 61AEA and subdivision BA of Division 5A of Part 5 of the BSA. The two out of three rule prohibits a person controlling more than two out of three regulated media platforms (that is, a commercial television broadcasting licence, a commercial radio broadcasting licence and an associated newspaper) in any one commercial radio licence area.

Items 1 to 3 of this Schedule propose to repeal the definition of unacceptable three-way-control situation and the prohibition on media business transactions which may lead to a three-way-control situation. The other items in this Schedule are either consequential to the repeal of the two out of three rule or are technical amendments.

Schedule 3: Part 1

Box 2: definitions

Aggregated markets: aggregated markets came into being in the 1980s. Aggregation involved creating larger regional television markets by combining certain existing licence areas in the well-populated eastern states so that the combined areas could be served by three commercial services. The rationale for aggregation was that larger service areas would provide an opportunity for licensees to expand and develop regional content and that the preferences of viewers would provide an incentive for regional licensees to produce local programs.[98] The current aggregated markets are listed in the definitions at proposed section 61CU. These are: Northern New South Wales, Southern New South Wales, Regional Victoria, Eastern Victoria, Western Victoria, Regional Queensland and Tasmania. Non-aggregated markets: non-aggregated markets are those that have been considered to be too widespread geographically and which do not have the population to support three competing commercial television services.[99] These are listed in proposed section 61CU. They are: Broken Hill, Darwin, Geraldton, Griffith and the Murrumbidgee Irrigation Area, Kalgoorlie, Mildura/Sunraysia, Mount Gambier/South East, Mt Isa, Remote and Regional Western Australia, Riverland, South West and Great Southern and Spencer Gulf. Trigger event: proposed section 61CV of the BSA will define a trigger event as occurring when, immediately after a person ‘starts to be in a position to exercise control of a regional commercial television broadcasting licence’, the person is in a position to control two or more commercial television broadcasting licences with a combined licence area population that exceeds 75 per cent of the population of Australia. Material of local significance: proposed section 61CU intends that material of local significance will be defined in a local programming determination. Proposed section 61CZ provides that the ACMA will make the local programming determination. The determination will deal with issues such as: what areas will be designated local areas ‘in relation to’ a regional commercial television licence, what constitutes material of local significance for a local area and what is required for news reports to receive three points towards quota points.[100]

Item 1 of Schedule 3 proposes to insert a new Division (Division 5D) into Part 5 of the BSA. Commercial television broadcasters who broadcast in aggregated markets and who are affected by a trigger event will be required to broadcast to local areas material of local significance in order to accumulate at least 900 points in each timing period (with at least 120 points being broadcast each week) that commences six months after the trigger event occurs (proposed subsection 61CW(1)).

In the six month transitional period the broadcaster will be required to broadcast 720 minutes of local content (with at least 90 points broadcast each week) (proposed subsection 61CW(2)). There is no change in the local content broadcasting requirements for broadcasters who are not affected by a trigger event (proposed subsection 61CW(3)).

New subsection 61CX also proposes to introduce local programming requirements for non-aggregated markets if a trigger event occurs. The broadcaster will be required to broadcast to each local area material of local significance to accumulate 360 points (with at least 45 points being broadcast each week) in each timing period that commences six months after the trigger event occurs. The proposed subsection does not apply to licences granted under sections 38A and 38B of the BSA.[101]

Proposed section 61CZA requires licencees who have experienced a trigger event to produce and retain (for 30 days after each six week timing period or longer if ACMA requires) an audio visual record of the material of local significance it has broadcast in local areas. The record must be provided to ACMA on request.

In addition, proposed section 61CZB proposes that licencees subject to trigger events must provide ACMA with two compliance reports. The first of these is to cover a 12-month period commencing six months after the trigger event and the second report to cover the 12-month period after the first report period.

Box 3: the points system—definitions and allocations

Under proposed section 61CY: Eligible period: it is intended that points will be able to be accumulated in the hours from 6.30am to midnight Monday to Friday and 8am to midnight on Saturday and Sunday (proposed subsection 61CY(1)). Timing period: it is intended that points will be calculated during certain timing periods. Proposed subsection 61CY(2)) designates these timing periods as: - the period starting on the first Sunday in February each year and continuing for six week periods until the end of the 42nd week after this date. Points can be accumulated in this period - the period starting at the end of the 42nd week after the first Sunday in February and ending immediately before the first Sunday in February the following year. (Points cannot be accumulated during certain parts of this period—see proposed subsection 61CY(4)) Under proposed subsections 61CY(9) and (10) it is proposed through the local programming determination that ACMA may be able to vary the timing periods for individual non-aggregated licensees.

Box 4: the points system—points allocations

Item	Material	Points for each minute of material
1	News that: (a)is broadcast during an eligible period by a licensee covered by subsection 61CW(1) or 61CX(1); and (b) has not previously been broadcast to the local area during an eligible period; and (c) depicts people, places or things in the local area; and (d) meets such other requirements (if any) as are set out in the local programming determination.	3
2	News that: (a) is broadcast during an eligible period; and (b) has not previously been broadcast to the local area during an eligible period; and (c) relates directly to the local area; and (d) is not covered by item 1.	2
3	Other material that: (a) is broadcast during an eligible period; and (b) except in the case of a community service announcement—has not previously been broadcast to the local area during an eligible period; and (c) relates directly to the local area.	1
4	News that: (a) is broadcast during an eligible period; and (b) has not previously been broadcast to the local area during an eligible period; and (c) relates directly to the licensee’s licence area.	1
5	Other material that: (a) is broadcast during an eligible period; and (b) except in the case of a community service announcement—has not previously been broadcast to the local area during an eligible period; and (c) relates directly to the licensee’s licence area.	1

Proposed subsections 61CY(5) and (6) place limitations on the material that is able to be used towards accumulating points. These subsections intend that material which relates to an overall licence area (or in the case of the Regional Victoria licence areas 104 and 106, to the combined areas) can accumulate no more than 50 per cent of the points required under the legislation.

Further limitations apply to the number of community service announcements that can be broadcast to accumulate points. Under proposed subsection 61CY(7) the first broadcast of a community service announcement (and four repeats of that announcement) are eligible to accrue points. In addition, no more than ten per cent of points accumulated in a local area in a timing period can be community service announcements (proposed subsection 61CY(8)).

Box 5: ACMA and the Minister

Proposed subsection 61CZC will require ACMA to review the new Division 5D, the licence conditions in paragraph 7(2)(ba) of Schedule 2 of the BSA (see below) and the local programming determination within 30 months after the legislation receives Royal Assent and provide a report to the Minister on its findings.

It is intended that the Minister will be able to direct ACMA about the exercise of the powers conferred on it by Division 5D (other than the review and reporting requirements in proposed subsection 61CZC) and that ACMA must comply with these directions (section 61CZD).

Item 2 of Schedule 3 to the Bill proposes to impose a new licence condition in Schedule 2 of the BSA. This will be imposed under proposed paragraph 7(2)(ba) and will require all commercial television broadcasting licences to comply with the applicable local programming requirements.

Schedule 3: Part 2

Item 3 proposes to repeal section 43A of the BSA which sets out the current requirements for regional aggregated commercial television broadcasting licences to provide material of local significance. The repeal of this section is to take place six months after this Bill receives Royal Assent.

Item 4 provides that ACMA is presumed, six months after the Bill receives Royal Assent, to have revoked the Broadcasting Services (Additional Television Licence Condition) Notice 2014.[102] The requirements in subsections 43(2) and 43(3) of the BSA do not apply to the revocation.[103] However, the Notice continues to apply with regards to material broadcast during a timing period that commenced before the revocation is taken to have occurred.

Comment

The national and community broadcasters issue

One issue which has not been discussed in great detail in relation to these changes is the role the national broadcasters, the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Service (SBS) could, or should play, in light of media reforms, such as those proposed in this Bill.[104] A Department of Communications’ media ownership and control discussion paper noted in 2014 that any examination of media diversity in Australia needs to consider the role of SBS and the ABC.[105] According to this paper the national broadcasters:

… make a significant contribution to media diversity through their provision of television, radio and online services. This is particularly so for the ABC, the reach and depth of whose media outlets compare favorably to its commercial counterparts in most areas of Australia …

The television, radio and online services provided by the national broadcasters, particularly the ABC, are also prominent in regional and remote Australia, providing audiences with an additional source of news and information in areas where there are frequently few local commercial media outlets.[106]

In addition, community broadcasting services, predominantly community radio services, also add to media diversity.[107]

Senator Nick Xenophon, among others, has made the point that funding could be provided to the ABC in ‘the absence of a commercial television presence in regional areas’ to increase news services and local content offerings.[108] While under its Charter, the ABC is already required to deliver such services whether commercial broadcasters choose to do so or not, the Charter could be amended to include specific requirements for the types of local content it must deliver and the variety of sources from which it must obtain that content.[109]

It appears that the principle of the ABC taking on these obligations would be acceptable to the commercial industry. In 2013, with reference to suggestions that local content provisions should be extended to non-aggregated areas, Free TV Australia, the commercial television industry lobby group, observed that if regional news in these areas was decided to be in the public interest, then the government should provide it, instead of imposing additional regulations on commercial broadcasters.[110] However, given the frequent criticism of the ABC’s supposed use of government funding to compete with commercial broadcasters, from within and outside the industry, it is not likely that it would support additional funding to the national broadcaster for this purpose.[111]

It appears that audiences on the other hand would be satisfied with this alternative. Molly Johnson from The Australia Institute cites polling which shows that there is very strong overall support for increasing funding for the ABC to improve regional services, even among city-dwelling Australians.[112]

Funding the ABC (and in addition SBS and community broadcasters) in this manner may go a long way towards alleviating concerns expressed about the loss of local content.

Questions about local content

As noted earlier in this Digest some people have questioned what actually constitutes local content and whether it can ever have been said to exist. The definition of ‘material of local significance’ for television in the BSA is broad and leaves room for considerable interpretation of what material relates directly to a local area or a ‘licensee’s licence area’.[113] Stipulations for material of local significance are more stringent for radio than television but, nevertheless, there is room for considerable interpretation about what constitutes local.[114]

As academics Kristy Hess and Lisa Waller from Deakin University state, currently, and under changes proposed in this Bill, points are gained for commercial television broadcasters for broadcasting local content. Local areas are calculated by ACMA maps, but these group towns and cities that are often hundreds of miles apart and include a number of local government areas.[115] In Hess and Waller’s opinion, the process of media reform needs to redraft the idea of local. They suggest that perhaps a grid system could be beneficial, where broadcasters gain bonus points for covering towns and cities at a considerable distance from the centre of a local area, or points for regularly presenting a full range of stories from all corners of the grid.[116]

This suggestion may also help to alleviate some of the concerns about the potential loss of reports of a truly local nature. To work effectively, however, it would most likely need to involve some sort of compulsory reporting of broadcaster compliance as was required for radio, for example, until the most recent licence condition notice came into effect in 2014.[117]

In 2013 ACMA suggested a subsidies scheme that could be adapted to encourage the production and broadcast of more local content. ACMA’s suggestion involved paying broadcasters direct subsidies or providing regulatory relief as incentives.[118] This could be adapted to encourage broadcasters to provide more local content than will be required under the proposed revised regulations. A variation of this idea from ACMA was that subsidies could be provided to community organisations or to the national broadcasters to produce local content for commercial broadcasters to air.[119]

Further to the issue of where the public broadcasters are situated in the local content debate DigEcon Research comments:

For many years local programming has been the forte of the ABC. The innovative ABC Local program took that to another level, encouraging community generated content for publication on ABC platforms. The ABC’s digital platforms are a critical channel for the dissemination of this material. ABC local radio provides real local content on an ongoing basis.

Better funding the ABC to provide local content in regional areas is a preferable policy tool to ineffective content regulation of commercial providers. Indeed, this should be the policy position across all content regulation (except for self-regulated classification) in the radio and television markets.[120]

Alternative means to deliver more diversity

The Public Interest Journalism Foundation has suggested that new types of measures could be introduced to replace simple regulation and protect and monitor plurality and diversity in news and information.[121] The Foundation considers three measures particularly appropriate:

• Regular review of media diversity

The Government could be required to establish an independent committee to review and report every three years on the plurality and diversity of news and information sources and the adequacy of local news in regional Australia.

• Establishing an independent production fund for public interest journalism

This measure would involve legislation that would establish a production fund for independent journalism. The fund would be ‘designed to encourage innovation and experimentation in digital journalism, especially in regional and rural Australia’.

• Government incentives to promote a culture of philanthropy to promote quality journalism, such as those that have a long history in the United States.[122]

Trigger events

As Professor Matthew Ricketson from the University of Canberra has noted, the definition of ‘trigger event’ in this Bill is imprecise:[123]

… it is given as a ‘change in control’ of a licence that would result in the licence covering a market that exceeds 75 per cent of the population. It seems likely that the definition of ‘control’ derives from the existing definition in the Broadcasting Services Act. More significantly, the ‘trigger event’ only occurs in the context of the 75 per cent reach rule, not the two out of three cross-media control rule. So a merger or acquisition that resulted in ownership of two out of three licenses in a market but whose reach stayed within 75 per cent of the population would not be a trigger event, and so the new provision of local content rules wouldn't apply.[124]

Professor Ricketson also notes there are only two compliance reports required following a trigger event. Neither the Bill nor the Explanatory Memorandum refers to what, if any, reporting requirements will be imposed following that period.[125]

Appendix A: major media interests snapshot: January 2016

Owner	Interests: broadcasting	Interests: print
Bruce Gordon	WIN Network (family owned)
	14.98% of Ten Network
	14.96% of Nine Entertainment
Gina Rinehart	8.52% of Ten Network
James Packer	7.68% of Ten Network
Lachlan Murdoch	7.68% of Ten Network
	100% of Nova Entertainment
Rupert Murdoch	100% of News Corp Australia	Estimated ownership of 41.7% of print media involving national, metropolitan, regional and community newspapers
	14.99% of APN News and Media	APN owns 4.1% of print media
	50% of Foxtel
Foxtel	13.84% of Ten Network
Bill Caralis	Super Network Radio (family owned)
Janet Cameron	Grant Broadcasters (family owned)
Fairfax Media	54.5% of Macquarie Media	Estimated ownership of print media: 33.8% involving national, metropolitan, regional and community newspapers
John Singleton	32% of Macquarie Media
Kerry Stokes	73% of Seven Group Holdings
Seven Group Holdings	41% of Seven West Media	Seven West Media estimated 6.5% ownership of print media involving metropolitan, regional and community newspapers
	11% of Prime Media Group
Macquarie Group	26% of Southern Cross Austereo

Source: ACMA and Ibis World.[126]

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