On 1 September 2016, the government introduced the Broadcasting
Legislation Amendment (Media Reform) Bill 2016 in the House of Representatives.
Later that day, the Senate referred the provisions of the bill to the
Environment and Communications Legislation Committee (the committee) for
inquiry and report by 7 November 2016.
Overview of the bill
The changes proposed by the bill are contained in three schedules:
Schedules 1 and 2 would repeal two media ownership and control
rules: the '75 per cent audience reach rule' and the '2 out of 3 rule
cross-media control rule'.
Schedule 3 would amend and introduce additional local programming
obligations for regional commercial television broadcasting licensees.
Additional local programming requirements would apply if, as a result of a
change in control, licences become part of a group of commercial television
licences whose combined licence area populations exceed 75 per cent of the
Australian population. These proposed changes are intended to address concerns
that any television sector consolidation made possible by the proposed changes
in schedules 1 and 2 could lead to reductions in local programming.
Inquiry conducted during the 44th Parliament
This inquiry follows an inquiry into an earlier version of the bill
conducted during the previous parliament. The earlier version of the bill was
introduced in the House of Representatives in March 2016. The provisions of
that bill were examined by the Senate Environment and Communications
Legislation Committee appointed in the previous parliament. That committee
received 21 submissions and conducted two public hearings.
After considering this evidence, on 5 May 2016 that committee presented
a report recommending:
that the government consider amending the 'trigger event'
provision in schedule 3 to bill so that the additional local programming
obligations proposed by the bill would be triggered in a situation where a
regional broadcaster came to be in a position to control a metropolitan
(the bill only covered situations where a metropolitan broadcaster came to be
in a position to control a regional broadcaster); and
after due consideration of the above recommendation, that the
bill be passed.
The government accepted the first recommendation of the 5 May 2016
report; accordingly, the bill introduced on 1 September 2016 differs from the
earlier version of the bill to ensure that that the additional local
programming obligations would be triggered if a regional broadcaster came to be
in a position to control a metropolitan broadcaster. A minor drafting
style change in clause 1 has also been made. The bill is otherwise identical to
the bill that was examined by the committee appointed in the previous
Conduct of this inquiry
The committee agreed to refer to the evidence received during the previous
inquiry. In addition, the committee wrote to individuals and organisations
involved in the previous inquiry inviting them to provide updated information.
The committee received 12 submissions. These submissions are listed in
Appendix 1 and are available from the committee's website: www.aph.gov.au/senate_ec.
The committee also conducted a public hearing in Sydney on 24 October
2016. A list of the witnesses who gave evidence at that hearing is at Appendix
The committee thanks all of the individuals and organisations that
contributed to the inquiry.
Scope and structure of this report
As the bill before the committee is largely unchanged compared to the
earlier version, it is unnecessary to repeat much of the background information
and analysis contained in the May 2016 report. This report will draw on the
previous report, at times verbatim, to provide a brief overview of the bill and
to highlight the principal issues. The report uses additional evidence received
during this inquiry that provides further insight into the arguments made
regarding the bill, however, readers interested in a more detailed overview of
the proposed measures in the bill and the issues that the bill is intended to
address should refer to the May 2016 report.
This report comprises two chapters:
The remainder of Chapter 1 provides an overview of the legislative
framework governing media control and ownership in Australia.
Chapter 2 examines the proposed measures contained in the bill in
detail. The evidence received by the committee on developments in the
media sector that led to the introduction of the bill is discussed first,
followed by evidence received regarding the specific measures and the overall
approach taken to reform. The committee's findings are set out at the end of
Note on references
The report cites submissions received during the inquiry conducted by
the committee appointed in the 44th Parliament and submissions received by the
committee during this inquiry. Submissions to both inquiries are assigned a
number from 1 onwards based on the order of publication. To distinguish between
the two sets of submissions, the text '(previous inquiry)' is added to
submissions cited from the inquiry conducted into the earlier version of the
Similarly, the report refers to the hearing conducted during this
(on 24 October 2016) and the hearings conducted by the predecessor committee
(on 31 March 2016 and 29 April 2016). References to the committee Hansard
transcript for the 24 October 2016 public hearing are to the proof transcript.
Page numbers may vary between proof and official Hansard
Background information on media ownership and
The Broadcasting Services Act 1992 (BSA) includes five rules that
limit the 'control'
of commercial broadcasting services (television and radio) and newspapers associated
with the licence areas. The bill would repeal the following two rules:
The '75 per cent audience reach' rule (applies to
television)—this rule provides that a person, either in their own right or as a
director of one or more companies, must not be in a position to exercise
control of commercial television broadcasting licences whose total licence area
population exceeds 75 per cent of the Australian population. The rule was first
introduced as a 60 per cent reach rule in 1987, and was increased to the
75 per cent threshold in 1993.
The latest figures for combined
audiences are as follows: Seven
(74.51 per cent), Nine (73.96 per cent) and Ten (67.31 per
cent). For regional networks, which are generally affiliated with a
metropolitan counterpart, the audience figures in 2014 were as follows: Prime
(24.33 per cent), WIN Network (25.15 per cent) and Southern Cross (34.11
Organic population growth does not
result in the threshold of 75 per cent of the Australian population being
However, the current audience reach of the metropolitan networks and the
application of the 75 per cent audience reach rule means that 'no
metropolitan network can take over a regional network (acquiring all licences)
without divesting one or more commercial television licences'.
The '2 out of 3' cross-media control rule (television,
radio and newspapers)—this rule provides that mergers cannot involve more than
two of three regulated media platforms (commercial television, commercial radio
and associated newspapers)
in any commercial radio licence area. The 2 out of 3 rule was introduced in
The other three rules (which would remain if the bill is enacted) are:
The '5/4' rule (applies to television, radio and
newspapers)—this rule, which is also known as the 'minimum voices rule', is a
requirement that at least five independent media operations or media
groups must be present in the mainland state capital cities and at least four
must be present in regional commercial radio licence areas.
The 'one-to-a-market' rule (television)—a person, either
in their own right or as a director of one or more companies, must not be able
to exercise control of more than one commercial television broadcasting licence
in a licence area.
The 'two-to-a-market' rule (radio)—a person, either in
their own right or as a director of one or more companies, must not be able to
exercise control of more than two commercial radio broadcasting licences in the
same licence area.
Application of the general
In addition to the BSA regime, mergers and acquisitions in the media
sector are subject to the general prohibition of anti-competitive acquisitions
outlined in the Competition and Consumer Act 2010 (CCA). Section 50 of
the CCA prohibits acquisitions that would have the effect, or be likely to have
the effect, of substantially lessening competition in any market. The
Australian Competition and Consumer Commission (ACCC) administers the CCA.
Should the bill be passed, the ACCC's chairman, Mr Rod Sims, advised
that 'diversity of content available would probably be an even more important
consideration' for the ACCC when it reviews an acquisition in the media sector.
Since this evidence was given, the ACCC released a draft version of updated Media
merger guidelines for public consultation. The draft update, which was
released on 26 August 2016, responds to changes in the delivery and
consumption of media since the 2006 guidelines and the changes to the BSA
proposed by the bill. The guidelines outline how the ACCC will consider
particular issues arising in media merger assessments.
The Foreign Acquisitions and Takeovers Act 1975 provides a regime
for ensuring that foreign investment proposals are not contrary to Australia's
national interest. The Act enables the Treasurer to prohibit or impose
conditions on foreign investment proposals. In addition, as the media sector is
considered to be a 'sensitive sector' under the Australian Government's Foreign
Investment Policy, 'all foreign investment in local media over 5 per cent must
be notified to and approved by the Treasurer, who may grant approvals subject
to the parties meeting certain conditions'.
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