Labor Senators reject the trumped-up notion that the Broadcasting
Legislation Amendment (Media Reform) Bill 2016 represents 'the most significant
reforms to our media laws in a generation'.
This narrow and shortsighted Bill is not about genuine or meaningful reform to
address the disruptive challenges of digitisation and convergence in the long
term, nor does it offer sound policy in the public interest.
Prime Minister Turnbull and Minister Fifield waited two and a half years
in office before proposing this piecemeal package of amendments to the
regulatory structure governing media in Australia. The fact that the
Abbott-Turnbull Government did nothing in media ownership policy for almost
three years shows this is all about politics rather than coherent public
Labor Senators understand that high media ownership concentration is an
enduring concern of the Australian public, and that we need diversity in the
control of our media to support the effective functioning of our democracy. We
note that media concentration in Australia is amongst the highest in the world
and reject this Government's move to make the situation worse. We note that the
majority of voters disapprove of changing media ownership laws to allow a single
company to control a newspaper, TV network and radio network in the same area.
Labor Senators understand that Australia needs a thriving media industry
to promote a diversity of voices, to create jobs and to produce quality news,
information and entertainment. We acknowledge the competitive pressures faced
by Australian media in the face of digitisation and convergence.
Labor has repeatedly indicated its support for the removal of the 75 per
cent reach rule and Labor Senators wish to express our disappointment that the
government has dithered and delayed this important reform.
Labor Senators support the proposal to bolster local content following a
trigger event, but take no comfort in the fact that these provisions do little
to promote diversity. We are cognisant of the compromised position of
Australians in regional areas in terms of access to a diversity of news and
current affairs content, both in the traditional and new media environments.
Labor supports proposed reductions to commercial broadcast licence fees
as a measure to level the competitive playing field between Australian and
overseas media companies. Labor Senators regard this measure as important in
improving the international competitiveness of Australia's media sector and
promoting the production of local content, as has been the case in
Labor Senators reject the proposition that scrapping the two out of
three rule will promote media diversity and/or a competitive media industry.
The widely acknowledged fact borne out by evidence presented to this inquiry is
that removing the two out of three rule will lead to further media
consolidation and, consequently, reduce media diversity in Australia. The
Australian public deserves better than a government that is condemning
important media diversity safeguards to the scrap heap in the name of 'reform'.
Labor Senators oppose the removal of the two out of three rule given
this change would achieve so little for industry at potentially great cost to
our democracy. There is no compelling evidence to justify its removal.
The two Senate Inquiries set up to examine the Government's package
demonstrate that Parliament does not have available to it, at this time, the
evidence or the depth of analysis required to justify embarking on a decision
with such significant implications for decades to come. There has not been a
comprehensive inquiry into ownership, concentration and competition in the
Australian media market conducted by an independent body such as the
Productivity Commission since the late 1990s.
Labor Senators conclude that it is ill-advised to remove the two out of
three rule at a time when Australia's media is amongst the most concentrated in
the world and when traditional media—newspapers, commercial television and commercial
radio—continue to be the main source of news and current affairs for
Australians, particularly in regional areas.
Labor Senators acknowledge the increasing influence of new media in
Australia, however we do not mistake the abundance of online content for
diversity in terms of diversity of ownership of Australian media. We note that
the majority of the top 10 news websites accessed by Australians are either
directly or jointly owned by traditional media platforms.
Furthermore, and even if the proliferation of new media did solve the
issue of media diversity in the true sense (and we are not convinced it does),
Labor Senators note that the digital divide means that access to new media
still remains out of reach for many Australians given substandard levels of
broadband connectivity, particularly in rural and regional areas.
Labor Senators recognise that, in the absence of a coherent,
evidence-based, vision for the future from the Turnbull Government, the
pragmatic course of action at this time is to repeal the 75 per cent reach rule
and provide licence fee relief to the commercial broadcasting industry. Once
the impact of these changes can be assessed, then the question of media
diversity safeguards should be considered properly, in a broader and genuine
Labor Senators wish to express our disappointment at the Government's
latest thought bubble on media regulation, which undermines diversity without
reference to the realities of news media consumption today, without evidence of
the knock-on implications and without recalibrating public interest safeguards
for the 21st century.
Labor Senators acknowledge the need to reconfigure Australia's media
laws and understand the need for integrated, evidence-based policy to move to
an adaptive regulatory framework suited to the contemporary media ecosystem,
and the transition to the knowledge economy.
Labor Senators look forward to engaging in a genuine conversation about
the future of our media industry.
Diversity of ownership and control still matters
Media ownership and control rules are designed to encourage diversity in
control of the more influential media by avoiding concentration of ownership,
both within a particular medium and between different media. Like much of
broadcast regulation, these rules are directed toward social policy ends. As
Butler and Rodrick state:
The principal objection to a high concentration of media
ownership is not economic. Diversity of ownership is primarily valued, not for
its propensity to encourage competition and, as a consequence, lower prices for
the consumer, but because it is assumed to be a necessary means of securing a
diversity of views, ideas and opinions on a broad range of issues, which is
regarded as essential for the effective functioning of a modern democracy.
The Bill does not propose to amend the objects of the Broadcasting
Services Act 1992, which include facilitating a broadcasting industry that
is 'efficient, competitive and responsive to audience needs'
and encouraging 'diversity in control of the more influential broadcasting
The tension between these objects, and the degree to which concentration of
media ownership may support or undermine diversity is the subject of much
debate, however the fact is that diversity of information and opinion is 'more
likely to be achieved where there is a diversity in the ownership and control
of the more influential media'.
The concept of diversity is enduring and goes to the heart of our
democracy. As noted by the Australian Communications and Media Authority:
At the core of liberal democracy is the idea of 'pluralism'—that
is, more than one perspective has validity, and there is social and political
value in people expressing, and engaging with, these perspectives. The
rationale for intervention is that in the absence of intervention, media and
communications markets (or other interests) may consolidate perspectives or
favour certain opinions at the expense of others, and that a diversity of
voices has social value.
Issues of diversity, ownership and control matter to the Australian
public. A recent Essential Poll shows that the majority (61 per cent) of
voters across every demographic disapprove of changing media ownership laws to
allow a single company to control a newspaper, TV network and radio network in
the same area'.
Australia needs a competitive media sector
Australia needs a thriving media industry to promote a diversity of
voices, to create jobs and to produce quality news, information and
entertainment. It is imperative that the Australian media industry remains
viable and competitive in the modern media environment.
Australian media proprietors face competitive pressures arising out of
digitisation and convergence. Over the top content providers such as Netflix,
Google and Facebook don't pay tax in the same way as Australian media companies
and aren't subject to detailed Australian media regulation. As noted in Inquiry
Australian media companies are now competing directly against
the foreign internet companies that are exempt from local media regulation, don't
pay television licence fees, pay minimal corporate tax despite taking billions
in advertising revenue in this market.
[S]tructural and cyclical change in the Australian media
industry drives local players towards consolidation and scale as a means of
responding to increased competition.
Labor in Government recognised the challenges faced by commercial TV
broadcasters in the convergent media environment and the pressures on local
content production. In announcing licence fee relief in February 2010, then
Communications Minister Conroy also stated that Labor was committed to
reviewing the future role of licence fees in Australia in the face of
significant change, specifically noting that licence fee rebates would ensure
that commercial broadcasters can continue to invest in new Australian content.
Labor supports the proposed further reduction in licence fees and the
removal of the 75 per cent reach rule as a pragmatic response to the pressures
of convergence. Labor rejects the notion that removal of the two out of three
rule addresses competitive pressures effectively and notes the risk of
unintended consequences if removed before the impact of the reduction in
licence fees and the removal of the 75 per cent reach rule is known. As
stated by Nine in its submission to the Inquiry:
Changing any ownership rules before addressing onerous and
unfair licence fees has the potential to distort the market and have unintended
Australia's media ownership is heavily concentrated
The present state of concentration in the Australian media is a matter
for concern. Evidence to the Inquiry from three eminent professors includes the
Professor Michael Fraser:
It is notorious, in terms of news and current affairs, that
we, among the democracies, have the least diversity in our newspapers and have
very little in television.
Professor Rodney Tiffin:
Media concentration in Australia is amongst the highest in
the world. Our daily press is the most concentrated in the world...Our pay TV
industry is the most concentrated in the world.
Professor Graeme Turner:
[It] is important that we are alert to the likelihood of any
relaxation of media ownership restrictions making what is already an
undesirable situation any worse.
A study of Australian media ownership and control by the Department of
Communications states that 'the print sector has historically exhibited
relatively high levels of concentration, dominated by News Corp Australia,
Fairfax and APN' and that commercial television and commercial radio are 'more
moderately concentrated' but that 'affiliation agreements, programming
syndication and joint venture operations tend to result in fairly homogenous
content (i.e. channels and stations) being available to consumers in any given
Australia already has a highly concentrated news market, by
international comparison. As noted in the Finkelstein Inquiry into the Media:
Australia's newspaper industry is among the most concentrated
in the developed world...Australia is the only country in which the leading press
company accounts for more than half of daily circulation, while in 20 of the 26
countries it is under 40 per cent. With a share of 86 per cent, Australia also
ranks highest by a considerable margin when considering the share of the top
two companies. The share of the top two companies exceeds 60 per cent
in only six of the 26 countries.
In terms of the industry structure within Australia, the Finkelstein
Overall the industry comprises four major publishers and is
highly concentrated. Measured by circulation, News Limited is by far the
largest with 65 per cent of total circulation of metropolitan and national
daily newspapers, or 58 per cent of circulation when counting all daily
newspapers. Fairfax Media, the second largest group, controls 25 per cent of metropolitan
and national daily circulation, or 28 per cent of all daily newspaper
The Department's assessment of media diversity across the country found
the level of diversity at a market level to be at or below the minimum number
of 'voices' required by the 5/4 rule
in 70 per cent of all licence areas (in 73 of the 105 licence areas).
In the mainland State capitals, where over two thirds of the Australian
population resides, the Department reports the number of 'voices' to be above
the minimum level required by the 5/4 rule, with Sydney at 10 voices, Melbourne
at 9 voices, Brisbane at 8 voices.
Adelaide currently sits at 6 voices (only one above the minimum safety net) and
Perth at 7 voices.
In regional and remote areas the level of diversity falls away and is either at
the minimum level, or below it, with 42 per cent of licence areas at, and 28
per cent of licence areas below, the minimum 'floor'.
Traditional media still dominates
Traditional media still dominates the media landscape in Australia, in
terms of reach, penetration and influence. While new media is growing in
importance, the traditional media still dominates when it comes to news and
current affairs production and consumption. As Chris Mitchell, former
editor-in-chief of The Australian states:
The truth is that newspaper editors still drive the national
media agenda. Their ideas are followed by news directors in the electronic
media and on social media.
Industry research and marketing company Think TV states that 'Television
is the number 1 medium', that 'TV is ubiquitous; every home has one (99+ per
cent)—the majority of homes have two or more TV sets' and that '[d]espite the
diverse range of entertainment and information options and devices on which to
view content, [Australians] spend around 3 hours a day watching TV on a TV set'.
Industry peak body Commercial Radio Australia reports that the first
major comprehensive study of Australia's audio consumption has found that 'the
entry of global players such as Pandora, Spotify and Apple Music have failed to
dent Australian radio's dominance of the audio landscape' and that 'the
findings showed radio was dominant across the day for all demographics,
including younger listeners'.
In terms of the main sources of news, in particular:
Broadcast television remains the main source of news,
including for Australians who access news online'.
Older Australians tend to consider the more traditional
platforms of television (free-to-air or subscription), print newspapers and traditional
radio to be their main sources for news, while younger generations have a
greater affinity with the internet and social media' and that 'more regional
viewers tend to identify television as their main source compared with city
Diversity potential of new media is yet to be realised
In the online space, traditional media still dominate the provision of
news to Australians and diversity safeguards remain necessary in the Australian
media environment. On the question of whether online news enhances media
diversity, the Department of Communications concludes that 'the news genre is
in a state of dynamic change and...the diversity-enhancing potential of the
online space is yet to be fully realised'.
The Department notes:
[T]he proliferation of online sources of news content does
not necessarily equate to a proliferation of independent sources of news,
current affairs and analysis. Indeed, the internet has, to date at least,
tended to give existing players a vehicle to maintain or actually increase
their influence...[T]he established media outlets have tended to dominate the
online news space.
[I]t is notable that eight of the top ten news websites in
Australia in 2013, in terms of average unique daily users, are owned by these
major mastheads or their publishers...There is also a notable clustering of users
with the top 2 or 3 news websites.
While the internet has facilitated the entry of new voices (for example New
Daily and The Guardian Australia) it is worth noting that overseas
competitors in the media space are not necessarily concerned with quality
coverage of matters of public interest in Australia. Further, it is a mistake
to confuse the proliferation of content for diversity of ownership or opinion.
As Lesley Hitchens cautions:
It is the case that the media ecosystem seems to be
characterized by abundance – there are multiple ways in which news, information
and opinion, and entertainment content can be accessed. Of course, very often
one is simply receiving much the same content via these new platforms, as would
be received via the traditional platforms. And so there is a need for caution
to ensure that one is not misled by an illusion of diversity. Scarcity may be
present despite the appearance of abundance.
Digital divide undermines diversity in regional areas
The digital divide in Australia means that, in regional Australia, the
diversity-enhancing potential of the online space is even further away from
being realised. This was expressed in direct terms by the National Farmers'
Federation at the Inquiry:
We would like nothing better than for regional NSW to be part
of the digital age – but sadly communications in the bush are more 19th Century
than 21st. As a consequence, and as we have made clear in our submission, the
media landscape has not changed substantially for regional Australians, yet.
The interplay of these factors highlight an important point: any further
concentration of traditional media through the removal of two out of three rule
will have a disproportionate impact on diversity for regional segments of the
population, who by virtue of various factors consume less content over the
internet and are more dependent on traditional sources of media for news.
When considering the potential impact of removing the two out of three
rule it is important to consider how broadband availability and use in regional
Australia shapes preferences for the sources of news consumed.
The Australian Bureau of Statistics Household Use of Information
Technology 2014-15 survey highlights there remains a gap (albeit narrowing) in
internet penetration between the cities and the regions. In major cities the
proportion of households with internet access is 88 per cent, compared to 82.3
and 79 per cent respectively for inner and outer regional areas. This drops to
66 per cent when controlled for the lowest quintile of household income,
compared to 97.8 per cent for the highest quintile.
Further, when taken as a proportion of the segmented population there are
almost twice as many regional and remote households who do not have internet
access compared with individuals living in urban areas and the cities.
The availability of broadband has not been helped by Malcolm Turnbull's
bungling of the NBN Sky Muster Satellite Service which has caused delays for
tens of thousands of regional and remote households. Further, a recent report
by the Australian National Audit Office on the Mobile Black Spot Programme
found the Government wasted $28 million on 89 mobile towers that delivered
minimal to no coverage of additional premises.
The higher cost of data in regional areas may also affect the capacity
of individuals to access digital content with the frequency of city
counterparts. An ACMA survey of price data indicates those living outside
major capital cities are more likely to have the lowest data-cap allowances,
with 14 per cent having less than 6 GB and 10 per cent having 6–30 GB (compared
with six per cent and seven per cent respectively for those in major capital
There is strong evidence demographic and age factors influence platform
preferences. For example, the Reuters Digital News Report illustrates the
strong effect age has on the main source of news. For example, consumers over
the age of 50 are almost two and a half times more likely nominate traditional
TV as their main source of news, in contrast to younger age cohorts who prefer
Further, data from the 2014–15 Roy Morgan Single Source survey indicates that
non-urban areas have a higher representation of older Australians (56 per cent
aged over 50, compared with 39 per cent in major capital cities).
The sum of these factors is captured in the recent Digital Inclusion
Index, which highlights important differences between regional and urban areas
in levels of digital inclusion. For example, the Capital-Country gap has
widened to 6.6 points.
The evidence is clear that geography and socio-economic factors are critical
for access, affordability and digital activity in Australia.
The news consumption habits of consumers in regional areas differs to
those in the cities. The ACMA's Regional Australians online research snapshot
illustrates that accessing news and reading news online are higher in major
capital cities than in non-urban areas (respectively 10 and 13 percentage points).
The evidence demonstrates the impact of the digital divide on online
media consumption is not simply a function of how many people have access to
quality internet, but also driven by how different population segments make use
of the connection they have to consume content. This highlights the importance
of considering how the reconfiguration of market structures impacts consumers
with different geographic and demographic characteristics.
Removal of the 2 out of 3 rule not justified
Removal of the two out of three rule will achieve very little at
potentially great cost. There is no compelling evidence that this will improve
the competitiveness of the sector but there is a significant risk that it will
reduce media diversity. The knock-on effects are unclear and it is
ill-advised to condemn this rule to the scrapheap at a time when Australia's
media market is amongst the most concentrated in the world. This uncertainty
about knock-on effects is also shared within industry:
[W]hat we would like to see is a comprehensive package of
changes so that we can understand the full implications of regulatory change
for our business, for our industry and for consumers more generally.
As numerous commentators have noted, removal of the two out of three
rule will permit further media consolidation in Australia's already highly
concentrated media environment, leading to a reduction in media diversity in
Australia. Such consolidation may undermine the things diversity seeks to
protect, such as quality news and current affairs, jobs in the production
sector and the number of journalists on the ground. For example, as stated by
the ABC's Media Watch:
The two-out-of-three rule currently stops anyone owning TV,
newspapers and radio in the same market. And if it goes, as almost all media
proprietors want, we're likely to see some mergers: Like Fairfax Media teaming
up with Channel Nine or Channel Seven and perhaps News Corp and Channel Ten
doing the same. And that will mean even greater concentration of media
ownership than we have now.
Consolidation of media assets through merger and acquisition activity
may lead to job losses, including a reduction in the number of services and
journalists on the ground, as well as the concomitant undermining of the things
diversity seeks to protect, such as quality news and current affairs. For
example, the merger of Macquarie Radio and Fairfax was reported to have
resulted in an approximate reduction of 10 per cent of roles across the
Removal of this rule will achieve little in terms of alleviating the
commercial pressures felt across the broadcasting sector. According to the
Regulation Impact Statement to the Bill:
In most licence areas, the 2 out of 3 rule is not in play as
no single entity controls media assets from two of the three regulated
platforms in these areas. If the rule is removed, the great majority of
regional and remote licence areas of Australia would see little change as the
retention of the 5/4 minimum voices rule would ensure preservation of
existing levels of media diversity.
It is difficult to justify the removal of the two out of three rule on
the basis that it will assist regional broadcasters in remaining commercially
competitive when the vast majority of licence areas would not be affected by
its removal. According to evidence from representatives of the Department of
Communications and the Arts, the removal of the two out of three rule would
have 'no impact' in 72 of the 99 regional or remote licence areas on the
There are 99 regional or remote radio licence areas for the
purposes of the media control rules; 62 of them have no newspaper, so the
two-out-of-three rule is not relevant, and 10 of the remainder are constrained
by the five-out-of-four rule, so no further consolidation can take place in
those areas...So, there are 27 areas that could have further consolidation done
Further, it is difficult to justify the removal of the two out of three
rule on the basis that it will assist metropolitan operators in remaining
commercially competitive or facilitate a level playing-field given the
likelihood that only a limited subset of the industry may take advantage of the
change, which risks creating uneven outcomes across the industry:
[B]ecause only some ownership laws are being looked at and
not others, there are a very limited number of transactions available post
these changes – in fact, possibly only one national transaction out of the
changed two-out-of-three rule.
We are having this massive national debate so that there can
be one transaction. It is first in, best dressed because after that the gate
closes in terms of the number of voices in metropolitan markets, and I am
specifically speaking about Adelaide, where there are six voices and there
needs to be a minimum of five...The gate is closed; that is it.
So we are really having this discussion about who is going to
get their deal away first. We just do not think that this is an outcome that is
even-handed across the industry and that is going to drive positive outcomes
across the industry.
Removal of the two out of three rule would mean only basic diversity
safety-nets remain, with transactions otherwise subject to general competition
law. Transactions in the media sector will remain subject to section 50 of the Competition
and Consumer Act 2010 under which the Australian Competition and Consumer
Commission (ACCC) considers whether mergers will cause a substantial loss of
competition in a media market.
Competition law is of questionable efficacy as a tool for achieving
social policy objectives as contained in the Broadcasting Services Act 1992.
It is important to recognise there are subtle but important differences between
the objectives of a public interest test and the test performed by the ACCC to
establish whether there has been a substantial lessening of competition. The
former is about diversity and what that means for our democracy, the latter is
a market-based test that is not designed to capture the intangible
considerations at stake. These were encapsulated by Profession Julian Thomas, a
board member of the Public Interest Journalism Foundation:
The ACCC's remit does not extend to the public and civic
function of journalism, and they have never pretended that it does. But that is
what we are concerned with here, because we think that independent journalism—
and journalism more broadly—has a vital part to play in the proper functioning
of our democratic process as well as its importance in the economy to enable
markets to form and to make sure that businesses can communicate with
Another pertinent issue about the role and remit of the ACCC is its
power in relation to blocking mergers or acquisitions. While, at the request of
the Communications Minister, the ACCC has released draft Media Merger
to 'give parties contemplating a media merger, and those potentially affected
by a media merger, a greater awareness of some of the key issues the ACCC may
these do little to assist Parliament in understanding what mergers would be
blocked under competition law and whether competition law provides adequate
safeguards for diversity in the event of the removal of the two out of three
rule. Further, the Guidelines cannot provide an indication as to whether a
particular merger might or might not be cleared by the ACCC
and will have no legal force when finalised.
Competition law outcomes are subject to the discretion of
decision-makers in the ACCC, the Competition Tribunal and the courts, acting in
accordance with law. It is instructive to note the submission of DigEcon
to the Inquiry which states as follows:
The ACCC's functions in relation to mergers and acquisitions
are outlined in Division 3 of Part VII of the Act. On application the ACCC may
grant a "clearance" for a proposed merger or acquisition; the
clearance may be accompanied by other conditions. The basis on which the ACCC
is to decide on whether to grant the clearance is whether in the ACCC's
assessment the merger or acquisition results in a breach of section 50, that
is, results in a substantial lessening of competition.
The ACCC provides both an informal and a formal clearance process,
only the latter offers legal protection. Specifically, if the ACCC grants the
clearance then "section 50 does not prevent" the acquisition so long
as it occurs in accordance with the clearance.
However, the ACCC does not have the power to block a merger
or acquisition. If the application for clearance is refused the parties have
recourse to the Australian Competition Tribunal. Parties can apply directly to
the Tribunal for authorisation.
In removing the "2 out of 3" rule the Parliament's
concern is primarily over what mergers will be blocked. The ACCC's guidelines
on when it would not provide a clearance is of no particular relevance at all.
The only thing that will matter is the interpretation of the Australian
Absent a specific legislative provision requiring the
consideration of media diversity in proposed mergers competition law cannot be
relied upon to preserve diversity. The removal of the "2 out of 3"
rule without some other legislative provision places media diversity at
Labor Senators reject the government's piecemeal, short-sighted approach
to the future of our media industry. The proposed reforms offer no safeguards
in terms of diversity of ownership and no coherent vision for the contemporary
media ecosystem in terms of the public interest role of the media in the
effective functioning of our democracy.
Labor Senators reject the notion that the only way to support the health
of our media industry is by removing diversity safeguards. Australians deserve
meaningful public interest safeguards to ensure the health of our democracy now
and in the future.
Labor will look to promote a diverse and competitive media sector, along
with sustained production of local content and jobs, by responding effectively
to the changes in the media landscape.
Labor supports Schedule 1 and 3 (abolition of the 75 percent audience
reach rule and introduction of new local programming requirements following a
trigger event) and opposes Schedule 2 (abolition of the two out of three
cross-media control rule).
Anne Urquhart Senator Anthony
for Tasmania Senator for
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