Additional comments by Senator Bridget McKenzie
Senator McKenzie recognises the intention of the Bill to remove what are
in effect defunct rules such as the ‘reach rule’ and the uncompetitive ‘2 out
of 3’ rule.
Senator McKenzie appreciates the great difficulties facing all media
companies given the trend away from traditional forms of broadcasting towards
streaming and the consequent loss of revenue to support their operations as
they are currently structured. However, her primary focus is to ensure regional
communities have access to locally produced news, current affairs and
Commercial regional licensees have been hit hard. Due to the streaming
of metro-based stations into their regional licence areas, they have seen a
reduction in their advertising revenue with no commensurate reflection of that
market share usurpation in their affiliate agreements with the encroaching
metro-based, regional-streaming broadcasters.
Submissions to the inquiry by regional broadcasters highlight the
difficulties of licence fee costs and affiliation fee increases, the reduced
value of a programming relationship towards ensuring a business’s profitability
has challenged their ability to service regional communities as they would
like. The value of an ongoing affiliation is a poisoned chalice and regional
commercial broadcasters are prudent to be consolidating their operations,
however unfortunate for their regional audiences.
Securing local content for regional
The removal of the ‘one to a market’ rule should be a matter seriously
considered by the Government as part of this Bill. This would allow regional
broadcasters to consolidate amongst each other instead of operating in silos
and their operational ability being diminished without an alternative redress
to selling up.
As evidence was provided to the committee, a failure to allow regional
broadcasters to consolidate will see the ABC as the sole provider of local
content in rural and regional Australia – this simply unacceptable. Regional
Australians are entitled to a variety of local content provision.
Another issue raised throughout the inquiry is the impact of
metro-affiliates streaming content that regional licensees have purchased into
their licence areas. The ability of regional licensees to compete with
operators streaming over them is compromised. Also made more difficult is the
production of local content in the regions.
As Hansard will show, metro-broadcasters have conflicting views on the
relevance of the 2002 Ministerial Direction defining broadcasting services.
Senator McKenzie sees the Direction as it stands as completely out of touch
when considering current media environment.
It is incongruous that the definition of broadcasting remains archaic
and does not include streaming. Whilst understanding that this definition
underpins the regulation of broadcasting and that to attempt to alter the
definition would affect digital rights and other rights also – but it must be
Ultimately, the definition does not reflect the current landscape and
has skewed competition. Regulation of the media landscape in the future must
evolve to better reflect the market realities. At present, traditional media
forms are advantaged over other players, by an illogical definition, that it
has nonetheless become embedded in our outdated media law framework.
The flaw and the fact that broadcasting rights and digital rights have
had to be dealt with separately since that definition was created, has meant
the landscape has evolved and diverged in a multi-pronged way for some time. In
turn, the legacy of this policy is that now it is a major impediment to
necessary reform in the drastically evolved media market.
For a healthy media landscape we must allow a competitive industry, but
also to remove impediments to healthy competition through deregulation where
deregulation is called for. The exception to this is in local content where
there is a lack of provision.
Senator McKenzie questions the need or purpose of a ‘trigger event’ to
introduce the new local content regulations when most regional commercial
broadcasters meet and exceed their local content quotas. To increase them
further is a public policy initiative in recognition of the need to improve and
maintain relevant discourse and news programming in the regions.
The behaviour of stakeholders in this rapidly changing environment has
led Senator McKenzie to believe that the inclusion of the ‘trigger event’ as a
means of incentivising the production of local content, is meaningless.
The original purpose of the trigger event was to aid in the smoothness
of acquisition of regional broadcasters in any merger. Given a number of public
assertions which bring in to question any desire to by metropolitan networks to
acquire regional broadcasters, one wonders why the trigger event need be in
place at all.
For example, when asked where acquiring a regional broadcaster sat as a
priority, Mr Marks said:
“I don’t see acquiring a regional broadcaster as high on our
priority list.” Hansard
“I don’t know if there will be a rush of mergers and
acquisitions...my focus is [on being] a content business...as a content business
the platform becomes less relevant.”
In the past it was also noted by David Gyngell, former Nine CEO in late
2014 that “In five years’ time we will just go around regional television and
stream our content into those markets. We ultimately won’t have a regional
In turn, Senator McKenzie seeks the removal of the need for a ‘trigger
event’ to institute the increased regional content quotas (with the six-month
lead-in time still remaining). This should apply to all licensees in aggregated
and non-aggregated and Tasmanian markets.
Should any mergers take place, the status quo would remain. Secondly,
any of their perceived efficiencies would still not be able to reduce adequate
regional news programming.
With Nine expected to provide targeted ads on live streaming by the end
of the 2017 year and regional affiliates’ reliance on programming at a high
cost (50% of advertising revenue in the case of Southern Cross), the need for
Nine and other companies to acquire regional broadcasters is defunct. Again,
they can simply stream over the top of regional broadcasters.
The ‘one to market’ rule means that regional broadcasters cannot
consolidate their businesses amongst themselves as a competitive business
From evidence to the inquiry and in public debate, it is clear that
affiliate fees are highly unlikely to decrease, further affecting regional
broadcasters’ ability to operate when their advertising revenue is diminishing.
This is in large part due to metro-companies streaming over their heads and
attracting advertising to themselves.
There is no way to control what metro broadcasters charge for content
and this pressure is enormous considering the encroachment by other media
companies into regional markets.
As the Nine CEO reminded the committee, metropolitan broadcasters do not
need to acquire regional broadcasters to compete in regional markets. Their
ability to stream into regional areas where they do not have a licencing
agreement circumvents any urgency or need to acquire regional broadcasters.
In addition to ensuring regional broadcasters can compete, Senator
McKenzie acknowledges that the exclusion of remote areas from requirements is
rational. It further highlights the case for market-failure regions to be
better served by our public broadcaster, the ABC. Regional Australians are
entitled to a competitive media market and successful, commercial regional
broadcasters exist - and should be given the opportunity to compete as a result
of any media reforms.
Regional Australians are missing out on the forensic dialogue on
important issues that is taken for granted by metropolitan residents. This has
negative consequences for the decision-making and the cultural education of
Senator McKenzie commends the Minister’s commitment to ensure that the
production of local content is promoted and protected.
The Government’s Budget announcement of a 25% reduction in broadcasting
licence fees is welcomed.
Material of local significance definitions must be carefully reviewed at
some point in the future, given the problem in quality and journalism when ‘rip
and read’ broadcast meet the local significance definition, but it is
effectively poor quality journalism and outsourced to the detriment of those
regions. It does not take much to understand that the quality and embeddedness
of the best kind of journalism has not been evident here.
Our media laws must be amended to better reflect the reality of today’s
media landscape. Similarly, we must acknowledge unfair playing fields and seek
to do what we can to enable broadcasting operators that are maintaining good
programming and news delivery in regional areas, to continue their good work.
In summary, Senator McKenzie recommends that the Bill be passed and
include the removal of the ‘one to a market’ rule, the definition of
‘broadcasting services’ be updated to include the internet and other forms of
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