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Media Ownership Regulation in Australia

E-Brief: Online Only issued 22 October 2001; updated 26 March 2002; updated 16 June 2003; updated 30 May 2006.

Dr John Gardiner-Garden, Analysis and Policy, Social Policy Section
Jonathan Chowns, Analysis and Policy, Economics, Commerce and Industrial Relations Section

Introduction

Although Australia's media ownership laws have remained unchanged for over a decade, debate on the desirability of reform has continued unabated. This debate has been fuelled by the advent of new media technologies, a number of inquiries proposing regulatory changes, and the self-interest of those media organisations that report the controversy. The Government has long indicated that it believed the rules to be anachronistic, and in 2002 unsuccessfully attempted to amend the cross-media ownership restrictions.

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

This e-brief provides background on the issue, together with links to relevant sites and documents. For a comprehensive, well-presented, study released in April 2006 and covering thesame ground as this e-brief, see Content, Consolidation and Clout: How will regional Australia be affected by media ownership changes? The Executive summary and key findings are available online here.

The Constitutional Position

The Commonwealth's legislative controls on media ownership can be divided into two broad categories:

• specific controls relating to broadcasting contained in the Broadcasting Services Act 1992. These derive from the Commonwealth's power to make laws with respect to electronic communications under section 51(v) of the Constitution
• generic controls relating to commercial activity such as those contained in the Trade Practices Act 1974 and the Foreign Acquisitions and Takeovers Act 1975. These derive from the Commonwealth's powers regarding trade and corporations under sections 51(i) and 51(xx) of the Constitution.

Thus while the Commonwealth is able to impose prescriptive conditions on broadcasting licensees, its legislative reach over print media ownership is largely limited to general competition law and foreign acquisitions.

Current Media Ownership Controls

The specific controls over media ownership contained in the Broadcasting Services Act 1992 are as follows.

Television

A person must not control television broadcasting licences whose combined licence area exceeds 75 per cent of the population of Australia, or more than one licence within a licence area (section 53). Foreign persons must not be in a position to control a licence and the total of foreign interests must not exceed 20 per cent (section 57). There are also limits on multiple directorships (section 55) and foreign directors (section 58).

Radio

A person must not be in a position to control more than two licences in the same licence area (section 54). Multiple directorships are also limited (section 55).

Cross-Media Control

Under section 60 a person must not control:

• a commercial television broadcasting licence and a commercial radio broadcasting licence having the same licence area
• a commercial television broadcasting licence and a newspaper associated with that licence area
• or a commercial radio broadcasting licence and newspaper associated with that licence area.

There are also similar limits on cross-media directorships (section 61).

Subscription Television Broadcasting Licences

A foreign person must not have company interests exceeding 20 per cent in a broadcasting subscription licence, and the total of foreign company interests in any licence must not exceed 35 per cent (section 109).

Foreign Investment Controls

There are a number of controls on foreign investment in the media in addition to those contained in the Broadcasting Services Act. All direct (i.e. non-portfolio) proposals by foreign interests to invest in the media sector irrespective of size are subject to prior approval under the Government's foreign investment policy. Proposals involving portfolio share holdings of five per cent or more must also be approved.

The maximum permitted aggregate foreign (non-portfolio) interest in national and metropolitan newspapers is 30 per cent, with a 25 per cent limit on any single foreign shareholder. The aggregate non-portfolio limit for provincial and suburban newspapers is 50 per cent.

Details of the Government's foreign investment policy with regard to the media can be obtained from Appendix A of the Annual Report of the Foreign Investment Review Board.

Background to the Media Ownership Rules

In August 1985 the then Minister for Communications, the Hon. Michael Duffy, directed the Forward Development Unit of the Department of Transport and Communication to undertake a study of the ownership and control rules for commercial television. The resulting report Ownership and Control of Commercial Television: Future Policy Directions (August 1986) proposed various options for imposing limits on cross-media ownership.

On 27 November 1986 the Minister issued a Press Release detailing the Government's proposed changes to the ownership and control provisions of commercial television licences. In summary, the proposals involved the replacement of the existing 'two station rule' with an audience reach rule, which limited any person to controlling interests in licences serving a maximum of 75 per cent of the population. In addition, cross-media restrictions were to be imposed which were designed to prevent a person from controlling both a television licence and a newspaper published 4 times per week and having more than 50 per cent of its circulation in the same area served by the television licence.

These proposed changes were introduced by the Broadcasting (Ownership and Control) Act 1987 which amended the Broadcasting Act 1942. Under this legislation, a person owning a television licence could not own more than 15 per cent of a newspaper published 4 days per week which had more than 50 per cent of its circulation in the same area as that of the licence. However, a newspaper proprietor was restricted to owning just 5 per cent of a television licence in the same area. In order to effect passage of the Bill through the Senate, the Government reduced the maximum population reach for television licences from 75 per cent to 60 per cent. According to the then Minister for Communications, the Hon. M. Duffy MP, the cross-media rules were introduced in order to:

• support competition policy
• discourage concentration of media ownership in local markets
• enhance public access to a diversity of viewpoints, sources of news, information and commentary.

Further changes to cross-media regulation were contained in the Broadcasting (Ownership and Control) Act 1988. This Act extended limits on cross-media ownership to radio licences. The owner of a radio licence could not own more than 15 per cent of a television licence serving substantially the same market and 15 per cent of a newspaper published 4 days per week and with more than 50 per cent of its circulation in the same area serviced by the radio licence. Similarly, the owner of a television licence was restricted to owning 15 per cent of a radio licence serving substantially the same market, while a newspaper proprietor could own up to 15 per cent of a radio licence.

Other minor changes to the media ownership rules were introduced by the following legislation.

• the Broadcasting (Ownership and Control) Act 1989, which amended provisions relating to cross-media ownership of television and radio licences by including 'grandfathering' of interests and directorships held before 29 October 1987
• the Broadcasting Amendment Act (No.2) 1990, which exempted networking arrangements between affiliated television licensees from breaches of the cross-media limits and audience reach limits. It also exempted lending institutions from breaches of the control provisions and cross-media limits
• the Broadcasting Amendment Act 1991, which strengthened the powers of the Australian Broadcasting Tribunal in relation to breaches of the cross-media rules. The Broadcasting Services Act 1992 was a complete rewrite of the Broadcasting Act 1942 (repealed by the Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992). The Broadcasting Services Act 1992 (the Act) imposed a new regime of regulation on the ownership and control of commercial radio and television broadcasting licences. Although little was made of it at the time, this Act altered the limits on cross-media ownership for a newspaper proprietor from 5 per cent of a television licence to 15 per cent, by virtue of the definition of 'control'. Other cross-media limits introduced by earlier legislation remained the same.

The Role of the ACMA

The administration of the Broadcasting Services Act is the responsibility of the Australian Communications and Media Authority (ACMA). This body commenced operation in July 2005, having subsumed the functions of the Australian Broadcasting Authority (ABA) and the Australian Communications Authority (ACA).

Definition of Control

The focus of cross-media ownership limits under the Act is on control. Section 6 of Schedule 1 of the Act provides a simple '15 per cent' rule for establishing whether a person has control of a company. If a person has company interests (for example voting, shareholding, or dividend interests) in a company exceeding 15 per cent, then in the absence of proof to the contrary the person is deemed to be in a position to exercise control of the company. This section does not apply where another person who is not an associate of the first person has interests in the company exceeding 50 per cent. The Schedule also makes it clear that a person can be in control of a company with less than 15 per cent. For example, a holding of 10 per cent would constitute control if no other persons had more than 2 per cent and such other persons did not act in concert. Alternatively, a holding of 51 per cent might not constitute control if the holder had given undertakings to a lender. In such circumstances the lender (with no direct company interests) might be in a position of control. The '15 per cent' rule does not only apply to interests held directly in a company. Section 7 of Schedule 1 provides for it to be applied to a succession or chain of companies.

The ACMA has a page with information on ACMA opinions on control issues.

ABA Investigations

The former ABA conducted a number of investigations into control issues. Reports of these inquiries are available from this page. Some of the major findings on ownership and control include:

• an April 1995 determination that although Mr Kerry Packer held 17.7 per cent of the Fairfax newspaper group he was not in a position of control because Mr Conrad Black had a higher percentage interest
• approval of the overseas CanWest Global Communications' purchase of the Ten network. The ABA determined that subordinated and convertible debentures were not company interests in the terms of the legislation. Although CanWest financed 57.5 per cent of the equity capital invested in the purchase, its voting rights were restricted to 15 per cent. In April 1997, following a number of share transactions and Board membership changes, the ABA determined that CanWest now controlled Ten and ordered it to take action to remedy the breach
• a March 1999 finding that Mr Brian Powers and Mr Kerry Packer were not in breach of the cross-media rules with regard to their interests in Fairfax.

Attempted Amendment of the Rules in 2002

On 21 March 2002 the Government introduced the Broadcasting Services Amendment (Media Ownership) Bill 2002. The purpose of the Bill was to remove controls on the foreign ownership of television, to provide for exemptions to the cross-media rules, and to ensure that local news services were maintained in regional areas subject to exemptions from the cross-media rules.

The Bill was referred to the Senate Environment, Communications, Information and the Arts Committee. The main recommendation of the Committee was that the Bill be amended so that in regional markets, cross-media exemptions only be allowed in relation to proposals that could result in a media company having cross-ownership in only two of the three generic categories of newspapers, radio and television. It also made recommendations to promote regional news and current affairs coverage and to encourage disclosure of cross-media interests. The Government accepted these recommendations and introduced the Broadcasting Services Amendment (Media Ownership) Bill 2002 (No.2) which incorporated the changes. The Bill was passed by the House of Representatives in December 2003, but was not approved by the Senate and lapsed with the Federal election of October 2004.

The 2006 Discussion Paper

On 14 March 2006 the Minister for Communications, Information Technology and the Arts released a Discussion Paper on media reform options. The Discussion Paper (pdf file) expresses its proposals as �preferred options� that can be amended in the light of the response to the paper. Submissions closed on 18 April 2006. The major features of the paper are as follows:

Digital Action Plan

A new Digital Action Plan to facilitate the take-up of digital television, with the analogue switchover (i.e. the end of the simulcast period) commencing around 2010-12.

No New Commercial FTA Channels

No new commercial free-to-air (FTA) licences in the broadcasting services band (BSB) before the switchover, but with a review on whether such new licences should be allocated in the post-simulcast period.

New Services

Two digital terrestrial channels for new services which could commence in 2007. These could include subscription TV services, FTA niche �narrowcasting� services, as well as interactive and short video or �datacasting� services, whether delivered to fixed or mobile television receivers. Existing FTA operators would not be permitted to bid for these services.

Transfer of the decision-making power for the allocation of new commercial FTA television licences delivered outside BSB spectrum (such as wireless, satellite and broadband services) from ACMA to the Government.

Multichannelling

The current restrictions on commercial FTAs with regard to multichannelling would be removed at the end of the simulcast period. The genre restrictions on multichannelling by the ABC and SBS to be removed as soon as practicable.

HDTV Quota

Current HDTV quota to be maintained until end of simulcast period, but with removal of the requirement for HDTV broadcasts to be simulcast in SDTV. This would allow the existing FTAs to run one multichannel in HDTV.

Anti-siphoning List

Commencing on 1 January 2007, a 'use it or lose it' scheme would be introduced for events on the anti-siphoning list. Prior to the expiry of the anti-siphoning list on 31 December 2010 and the end of the simulcast period, the Government would review the ongoing rationale for the anti-siphoning scheme.

Foreign Ownership

Removal of the media-specific foreign ownership rules in the Broadcasting Services Act 1992 and the newspaper-specific foreign ownership restrictions in the Foreign Investment Policy under Foreign Acquisitions and Takeovers Act 1975. Proposals by foreign interests to directly invest in the media sector, irrespective of size, would remain subject to prior approval by the Treasurer.

Cross-media Restrictions

The cross-media rules would be amended to allow cross-media transactions to proceed, subject to there remaining a minimum number of commercial media groups in the relevant market (five in mainland state capitals, four in regional markets � the 5/4 rule). However, the ACCC would separately assess the competitive impacts of transactions, in accordance with the requirements of the Trade Practices Act 1974. For an illustration of the possible impact of the 5/4 rule, see this table below.

Timing of Ownership Changes

Media ownership reforms could take effect following automatic changes to the regulatory framework in 2007 that would also allow new licences for digital services on reserved spectrum to be allocated. Alternatively, media ownership reforms could be linked with the end of the simulcast period, in line with the digital Action Plan.

Regional Local Content

Continued requirements for minimum levels of content on matters of local significance in key regional commercial television markets. The Government may consider extending licence conditions relating to levels of local content to other regional television and radio markets if local content levels decline materially.

Summary of Australian Commercial Media

The source for the following information is the Communications Law Centre publication, Communications Update: Media Ownership Update (June 2005). This is the only comprehensive regular review of Australian media ownership. It is not freely available online.

Newspapers

The following table gives the number of titles and combined circulation of the major types of newspapers.

The following table gives the percentage of circulation in each category for the newspapers controlled by the major owners.

Percentage of Circulation for Major Newspaper Owners

(1)     Includes joint venture with West Australian Newspapers Holdings Ltd

(2)     Includes joint venture with Torch Publishing

(3)     Comprises 121 companies/owners

Television

There are 56 commercial television licences. The main operators, together with the percentage of the population that their stations reach, are as follows:

• the Seven Network (Seven Network Ltd) has 6 licences reaching 73 per cent of the population
• the Nine Network (PBL) has four licences reaching 52 per cent
• Network Ten (Ten Network Holdings Pty Ltd) has five licences reaching 66 per cent
• Southern Cross Broadcasting (Australia) Ltd has fifteen licences reaching 42 per cent
• WIN Television (WIN Corp P/L) has fourteen licences reaching 26 per cent
• Prime Television Ltd has nine licences reaching 25 per cent.

It should be noted that the three major networks are also broadcast by stations that they do not own, so that their actual reach and influence is greater than would appear from the above figures.

The national broadcasters, the ABC and SBS, also have television networks that reach most of the population. On average, the ABC is watched by around 13 million people each week. Over 7 million people watch the SBS each week.

The major pay TV operators are Austar United Communications Ltd (498 000 subscribers), Foxtel (more than 998 000 subscribers) and Optus Television (164 000 subscribers).

There are also six community television licences and eighty remote indigenous community broadcasting licences.

Radio

The following table summarises the radio services available in Australia.

Those radio networks that reach over ten per cent of the population are listed below.

Regional Broadcasting Issues

The maintenance of local regional programming first became an issue with the introduction of 'aggregation' in the late 1980s. This was the process of creating larger, more viable regional television markets by combining existing licence areas so that they could be served by three commercial services. Aggregation was introduced by the Broadcasting Amendment Act 1987. At the time, it was argued that the larger service areas provided through aggregation would provide an opportunity for licensees to expand and develop regional content and that viewer' preferences would provide an incentive for regional licensees to produce local programs.

These hopes do not appear to have been fulfilled. The House of Representatives Standing Committee on Communications, Transport and the Arts report, Local Voices: Inquiry into Regional Radio (September 2001) drew attention to the decline of local radio programming with the consolidation of ownership in the commercial radio industry and the consequent increase in networking. In 2001 there was also a decline in regional television news coverage: Prime Television cut news bulletins in Canberra, Newcastle and Wollongong, while Southern Cross Broadcasting cut local news in Canberra, Townsville, Cairns, Darwin and Alice Springs.

On 6 December 2001 the Australian Broadcasting Authority announced that it would undertake an investigation into the adequacy of local television news and information programs in regional and rural Australia. The final report was published in August 2002. The ABA inquiry focussed on the four aggregated television markets of Regional Queensland, Northern NSW, Southern NSW and Regional Victoria. It found that:

• while there has been an overall increase in the quantity of local news broadcast in the four aggregated markets since aggregation there has been a decline in competing sources of news since the mid-1990s
• there has been a significant decline in local information (other than news) broadcast in the four aggregated markets since aggregation
• there is a lack of diversity in broadcasts of matters of local significance by commercial televisions licensees and there is a lack of competition in delivering local news and information
• some regional commercial television broadcasters are not sufficiently responsive to audience needs for local content, particularly programs about matters of local significance.

The ABA proposed an additional condition on all regional licensees in the four aggregated markets. This condition would require them to broadcast a minimum amount of programs about matters of local significance to each sub-market. Documents, compliance results and background can be obtained from this ACMA page.

Competition Regulation and the Changing Media Environment

It has been argued that the media ownership rules in the Broadcasting Services Act should be repealed and that the industry should be treated the same as other areas of the economy, i.e. be subject to competition regulation through the Australian Competition and Consumer Commission (ACCC). The major difficulty with the general competition law approach is that the merger provision of section 50 of the Trade Practices Act 1974, while maintaining competition within markets, would not necessarily maintain plurality and diversity across different markets. This means that a newspaper owner would be able to acquire television and radio stations that served the same region. It was for this reason that the Productivity Commission recommended that the insertion of a media-specific public interest test into the Trade Practices Act be a precondition to the repeal of the cross-media rules. These matters are dealt with at more length in the ACCC's submission to the Productivity Commission's Broadcasting Inquiry, which can be obtained from this page (submission No.159).

More recently, the Chairman of the ACCC has discussed the possible development of new regulatory approaches appropriate for the changing media environment:

The upshot of all these changes is that in the future a media market might be defined by the content, such as, for example, classified advertising, or even just employment advertising, rather than the medium used to convey the content. In other words, the ACCC won�t simply be saying, �one newspaper, one radio and one TV� doesn�t amount to a substantial lessening of competition. In certain matters, that may no longer be the case.

It is notable that while the number of media platforms has increased, the actual sources of news and current affairs have remained stable. A recent Morgan survey indicated that the most popular Internet news sites were those operated by Fairfax, News Limited, the ABC and Channel Nine. The same point is made by Dwyer et al. (p. 42):

� it can be argued that the significance attributed to the discussion paper to the influence and availability of Internet news sources is overstated. Recent surveys and polls point to the continuing importance of free-to-air television, newspapers and radio, particularly for coverage of national politics and current affairs. For example, a Morgan Poll conducted in December 2005 revealed that for coverage of events in Australia, 56% of people used free-to-air TV, 18% turned to radio and 11% turned to newspapers (a total of 85%). For coverage of political background and analysis of events in Australia, 41 % turned to free-to-air television, 27% turned to newspapers, and 13% turned to radio (a total of 81%). A survey of Australian electoral habits in 2004 found only 2-3% of the Australian population used the Internet for political information. A more recent poll conducted by Morgan in March 2006 revealed that 'when Australians go online for news their main sources are Fairfax or News Corporation, the two giants of print media in Australia'. The next two most-visited sites were those of the free-to-air networks, ninemsn and the ABC. Morgan reported that 'the news arm on Internet portal Yahoo!, Yahoo!, was a distant fifth'.

Possible Impact of Changes on Media Markets

The table below details the possible effect of the replacement of the current rules with the 5/4 rule suggested in the Government�s recent Discussion Paper. It refers to only those markets (defined by the relevant radio licence area) that have an associated daily newspaper. This constitutes around 86 per cent of the population.

Note: markets without given population percentages are part of other radio licence areas. It has been assumed that existing competition law would prevent any one owner from controlling more than one television licence in any one market.

Influence of Media Proprietors

There is no necessary connection between diversity of ownership and diversity of views. For example, it is possible for different licensees to broadcast the same networked program material. Alternatively, a single proprietor could maintain separate newsrooms for each of their media outlets. However, ownership is easily monitored and regulated whereas concepts such as 'diversity of views' are much more difficult to assess and regulate. The relationship between proprietors and editorial staff, which is relevant to any discussion about media ownership and influence, is a particularly difficult subject for legislative action. The House of Representatives Select Committee on the Print Media report, News and Fair Fact: The Australian Print Media Industry (March 1992) acknowledged the importance of editorial independence, but rejected calls for legislative requirements for mechanisms to support it.

The Productivity Commission's Inquiry into Broadcasting considered this issue and concluded that 'the likelihood that a proprietor's business and editorial interests will influence the content and opinion of their media outlets is of major significance. The public interest in ensuring diversity of information and opinion, and in encouraging freedom of expression in Australian media, leads to a strong preference for more media proprietors rather than fewer. This is particularly important given the wide business interests of some media proprietors (p. 314). The Commission also noted that it was not necessary for proprietors to be heavy-handed about editorial direction, as self-censorship by journalists may achieve similar outcomes.

The ABA research report, Sources of News and Current Affairs (3 May 2001; print only) involved a survey of 100 news producers and in-depth interviews with twenty key news producers and media experts. Among its conclusions:

• it was broadly accepted that news producers will be influenced by their proprietors' commercial interests. However, the news producers seemed eager to compartmentalise occasions where they might compromise their editorial integrity (for example, the commercial operations of their own outlets) and also stated that they have an independent judgment of newsworthiness on all other issues
• ownership interference was sometimes explicit, but more often described as a subconscious pressure which led to self-censorship. Some news producers reported no experience of ownership pressure.

References-print only

Bond University, Sources of news and current affair: stage one, the industry : stage two, the audience, A research report in two stages conducted by Bond University for the Australian Broadcasting Authority, Australian Broadcasting Authority, Sydney, 2001, 411 p. : ill. ISBN: 0642270449.

Communications Law Centre (Vic.), Content, consolidation and clout: how will regional Australia be affected by media ownership changes?, The Centre, 2006. xxvi, 179 p.; ISBN: 1875538348, Executive summary and key findings available here.

Dept. of Communications, Ownership and control of commercial television: future policy directions, Canberra : AGPS, 1986, 2v., Contents:v.1. Report, v.2. Appendices.

House of Representatives, Select Committee on the Print Media, News & fair facts: the Australian print media industry : a report / from the House of Representatives Select Committee on the Print Media, Chairman: Michael Lee, AGPS, Canberra, c1992, 438 p. : col. ill.

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