BROWN, Mrs Shirley, Group Business Director, WIN Television Network Pty Ltd

LANCASTER, Mr Andrew, Chief Executive Officer, WIN Television Network Pty Ltd

Evidence was taken via teleconference—

Committee met at 13:01

CHAIR ( Senator Cameron ): I declare open this public hearing of the Senate Standing Committee on Environment Communications in relation to its inquiry into the Broadcasting Services Amendment (Material of Local Significance) Bill 2013. The committee's proceedings today will follow the program as circulated. These are public proceedings. The committee may also agree to a request to have evidence heard in camera or may determine that certain evidence should be heard in camera. I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to the committee. If a witness objects to answering a question, the witness should state the ground upon which the objection is to be taken and the committee will determine whether it will insist on an answer, having regard to the ground which is claimed. If the committee determines to insist on an answer, a witness may request that the answer be given in camera. Such a request may of course also be made at any other time.

I now welcome representatives of the WIN network. The committee has received your submission, submission No. 3. Do you wish to make any amendments or alterations to your submissions?

Mr Lancaster : No, we do not at this stage.

CHAIR: Thank you. Do you wish to make a brief opening statement before we go to questions?

Mr Lancaster : No, we are happy to take questions.

CHAIR: We go firstly to questions. Senator Xenophon?

Senator XENOPHON: Thank you for your submission and for giving evidence before this inquiry. The catalyst for my bill was the closing down of the WIN regional TV services which were much loved and were very popular in both the Riverland and the south-east of South Australia. My question is this: under the current legislation there are requirements for news services to be provided in various areas under section 43A(2) of the Broadcasting Services Act, which you are obviously familiar with. Would it be fair to say that it was easier to make the tough decision to close down regional news services in the Riverland and in the south-east in South Australia because there was no legislative requirement to have local content as such compared to the other areas that are covered such as Northern New South Wales and regional Victoria and regional Queensland and Tasmania?

Mr Lancaster : I do not know that the word 'easy'—

Senator XENOPHON: Sorry, I do not say that flippantly, I am saying that you could actually close down the service because there was no legislative requirement to maintain the local content in the area. It is not a criticism of WIN. I am just asking if the framework or the legislation influenced your decision?

Mr Lancaster : I am not sure that it did. The only thing that we then had to get our minds around was at what level could we then service those markets in South Australia, and the decision making pretty much came down to: do we do what we believe are cynical updates or do we make an effort to ensure that Channel 9 Adelaide News gives greater coverage into the regional market? Under the legislation, if that legislation applied to South Australia, it would have been fine for us to do two-minute updates or 90-second updates as other broadcasters do across the country. We were going to try and continue in one fashion or another to provide some coverage to South Australia; the decision was more about whether we were going to give those updates or whether we were going to look to our Adelaide newsroom to give more coverage.

Senator XENOPHON: So consideration was given at least to giving a regional update of even a couple of minutes to give locals some regional news? Was that something that was at least considered?

Mr Lancaster : It was considered, but I think we have been well and truly on record saying we believed that was quite a cynical approach to news.

Senator XENOPHON: Sure. But would it be fair to say that, if South Australia was included in section 43A(2), you may have had to cut your cloth accordingly so that rather than knocking out one particular regional news service, you may have had to rationalise across the board, but still maintain that regional news service?

Mr Lancaster : No, I think South Australia is a different market altogether given that there are nine commercial television signals that we broadcast into South Australia. In isolation that decision was made. That decision was not made taking into consideration how we look after other markets.

Senator XENOPHON: Normally at these sorts of hearings there is a complaint about the provider of the content or the nature of the content. The complaint here is that you are no longer there, because I have had many complaints from local residents in the south-east and the Riverland. What feedback did WIN get from local communities when the news services closed down?

Mr Lancaster : There was feedback. There was not as much individual feedback as there was feedback driven by the local newspapers.

Senator XENOPHON: Okay, but clearly people preferred you being there than not being there?

Mr Lancaster : I understand that. The reality is there are 124,000 viewers, and we are in a situation where we are being required to run nine commercial signals. At 6:30 of a night-time you can assume that 30 per cent of the audience might be watching. Our news may have been getting an audience of 4,000 to 5,000 people per night. So it is hard to justify the level of expenditure in any commercial organisation that may well be hitting an audience that small.

Senator XENOPHON: You say that, under the licensing agreement you have with other networks, that is part of the deal. You cannot just broadcast the news on more of those channels—than simply one channel?

Mr Lancaster : I am not entirely sure why that would be a consideration. If you only have one television set you can only watch one item.

Senator XENOPHON: You are saying that it was not rating well? Or is it because you lost a number of commercial sponsors because of the state of the regional economies?

Mr Lancaster : I will go to the second part first. Yes, it is a tough market. Obviously that part of South Australia has its own challenges. In terms of ratings, we do not survey that market. It is not a market that we actually measure the audience of on a day-to-day basis as we do in larger markets, and once again it comes down to a commercial decision about the ability to do so and fund it.

Senator XENOPHON: If the advertising market picked up in those regions, it this a decision that would be revisited by WIN or do you see this as a long-term decision not to have local content in terms of regional news content?

Mr Lancaster : I am not sure I have the vision on that. We assess the business on a regular basis is not just on an annual basis. We are constantly looking at our business and we made a decision in Tasmania some time ago to reduce our seven-day a week service to a five-day a week service, and then had a revisit of that situation. We now run a seven-day service again in Tasmania and that is working quite well for us.

Senator XENOPHON: Thank you.

CHAIR: WIN, as I am advised, is a very profitable business—is that correct?

Mr Lancaster : I am not sure what you mean by a very profitable.

CHAIR: What was your profit last year?

Mr Lancaster : Am I obliged to disclose that?

CHAIR: Don't you disclose that?

Mr Lancaster : It is a privately owned company, so no we do not.

CHAIR: Would you argue differently to some of the submissions we received to an inquiry recently where it was indicated that you are very profitable?

Mr Lancaster : An argument I probably made myself last time I was in Canberra is that news is a very expensive operation to run around the country and the same argument would apply that WIN is more committed than any other broadcaster to running local news.

CHAIR: Yes, but that does not go to the question. Does WIN make a profit?

Mr Lancaster : WIN makes a profit.

CHAIR: Right. Has there been any discussion about cross-subsidisation of regional news markets at any of your board meetings?

Mr Lancaster : I am not sure I follow.

CHAIR: You are saying that you will not do local news because of the slowing of the local economy, the increased costs of delivering to that region and not having enough news to fill a half-hour daily bulletin. These were the arguments you put. Did you ever consider cross-subsidising?

Mr Lancaster : Just to clarify, are you asking whether we considered taking any profit that may be made from another market that is already carrying the burden of running a local news?

CHAIR: Are you saying that the local news is above them?

Mr Lancaster : No, it is a financial impost on a business though.

CHAIR: You are the one who raised it as a burden, not me. I am just trying to clarify what you mean by a burden for local news.

Mr Lancaster : It costs money to run local news.

CHAIR: So that is a burden, is it?

Mr Lancaster : It costs money to run local news.

CHAIR: I am just trying to clarify what you mean by burden.

Mr Lancaster : I understand what you are trying to clarify. It costs money to run local news.

CHAIR: In terms of the issue that Senator Xenophon has raised with you, if there was a legislative requirement for you to run news within the Riverland-Mt Gambier area, how would you have handled that?

Mr Lancaster : We have quite a history of working within our legislative requirement and we would handle it as per the legislative requirement.

CHAIR: So you would have kept news running?

Mr Lancaster : No, not necessarily.

CHAIR: If there was a legislative requirement to have news?

Mr Lancaster : I do not think that is what the legislative requirement is.

CHAIR: Okay. Thank you.

Senator BILYK: Bearing in mind your decision to cut news from the Riverina area of South Australia, is that an indication that you are likely to be cutting local news from other regional areas?

Mr Lancaster : No, that is not an indication of any future plans we have.

Senator BILYK: You mentioned the fact that previously you dumped the Tasmanian weekend news bulletin only to reinstate it a year later—I think after a fair bit of public outcry.

Can you guarantee the people of Tasmania that you will not be cutting regional news to them again?

Mr Lancaster : I have not come to this meeting with any thoughts on Tasmania's future. We know what we are doing right now.

Senator RUSTON: I should declare that I live in the Riverland and have been on your television news service on many occasions. Unlike Senator Cameron, I do not believe that you have a responsibility or a duty for a public service.

CHAIR: Senator Ruston, you should not reflect on anything that I may or may not think.

Senator RUSTON: My apologies, Chair. Going back a little bit in history, a few months or a year or so ago you made the decision to cut having both a Riverland-specific news service and a Mount Gambier-specific news service. Did that have any impact on your viewer numbers or are you not aware of whether or not it did?

Mr Lancaster : As I stated previously, we do not measure those markets in terms of audience numbers.

Senator RUSTON: So you really do not have any idea of what the impact was? Did it have an impact on your advertising revenues?

Mr Lancaster : In isolation it is hard to tell. We can tell you that the local revenue out of those markets has been on the decline for some time.

Senator Xenophon interjecting—

Senator RUSTON: Senator Xenophon just asked do you think it was accelerated in any way by the combining of those two services?

Mr Lancaster : That would be hard to tell but my instinct says not necessarily.

Senator RUSTON: Following on from your comments about Tasmania, it seems the degree to which your services are local in every respect seems to have a reasonable impact on how much people love them. I raise that mainly because I look at the local Riverland ABC radio service and the fact that they do it all out of the local region. I would imagine it would have a very high viewer or listener rate simply because it is absolutely so local. I take your point that once you start diminishing the level of local content, even if you dilute it by taking it out of being specific to the region, you start diminishing the relevance that you are able to provide with the news service. There comes a point, as you say, where it becomes cynical and no longer worth having.

CHAIR: I would rather senators who have questions.

Mr Lancaster : She only just started.

CHAIR: But that was not a question. That was a statement. I would like you to keep to questions so that other senators can ask questions.

Senator RUSTON: When you originally negotiated the licence for both Mount Gambier and the Riverland, was there ever any presumption in negotiations in relation to the provision of new services?

Mr Lancaster : My apologies, I am not entirely sure of that question when you said 'negotiate our news services'.

Senator RUSTON: When you negotiated your licensing agreements for the provision of broadcast to the Riverland and to Mount Gambier was there ever any assumption or presumption in those negotiations that would suggest that a news service or local content was part of that licence?

Mr Lancaster : Do you mean with the government?

Senator RUSTON: Yes.

Mrs Brown : Those licences were awarded in 1975. At the time, there were three applicants—two relays and one local group. The then tribunal chairman, Myles Wright, handed down his decision to award the licence to the local. He commented that whilst he doubted the viability of the local stand-alone station, he had to recognise the enthusiasm of locals. They went broke 18 months after going to air and that is when a local Alan Scott took over the licences. So there were no negotiations to provide local news.

Senator RUSTON: If the requirement now was that you did have to provide a local news service, through the changing of the legislation to require that, what impact would that have on your decision to continue your services out of the Riverland and Mount Gambier?

Mr Lancaster : If we were required to run a local news service then that would be something that we would have to follow. But whether the viability of the other costs of that station or those particular nine channels were viable would be something we would also have to consider.

Senator RUSTON: So, there could be some possibility that you would remove some of the services you are currently providing because you would not be able to afford it, or for whatever reason. Is there some chance that you would remove some of the services you currently provide to those two communities if there was this requirement?

Mr Lancaster : I think the reality is that we are a commercial network. As costs are imposed then we have to consider how we manage the business.

Senator BIRMINGHAM: In terms of issues of profitability or otherwise, do you believe you deliver an above-average return on capital from your operations?

Mr Lancaster : I believe we have a number of costs that we have to manage on a regular basis. As for return on capital, I do not know that I have come here prepared on that question.

Senator BIRMINGHAM: That is fine. In terms of what you think you can deliver into these communities in local new content looking ahead, what do you see that it is possible to tailor to ensure that there is some local content available for the people in the Riverland and the south-east?

Mr Lancaster : The one thing that is not to be lost in this is that we take our place in those communities very seriously. As you can see—and I will not go into the submission—from the number of organisations, bodies, charities and groups that we support in those markets there is a very strong emphasis on being local. There is also a push, as I mentioned earlier, to ensure that we are giving coverage from our Adelaide newsroom, which is essentially a state news service as far as we are concerned. And you will find that the number of stories that cover the Riverland and the south-east on the Channel Nine Adelaide news is comparatively far in excess of what you will see out of other metropolitan markets into their regional communities.

CHAIR: Regarding the proposition you just put in relation to Senator Birmingham's question about return on equity—you said you were not prepared—could you take that on notice and provide the committee with a figure on return on equity for the WIN operations nationally?

Mr Lancaster : Could you be more specific? I think the question was return on capital.

CHAIR: Yes, capital.

Mr Lancaster : In which market.

CHAIR: All of your markets.

Mr Lancaster : Okay.

Senator SINGH: I just want to refer to the last paragraph in your submission, where you state:

It will be necessary for us to continue to monitor our business and where necessary make the changes essential to ensure that we can continue to provide the viewing services that the community needs.

How are you going to monitor your business to do that, and to make what changes? And how is that going to address the needs the Riverland and Mount Gambier communities? It is very unclear, that last sentence, but it almost gives them hope, so it would be good if you could expand on exactly what you mean.

Mr Lancaster : I think it is pretty clear, if you read the media sections of the newspapers, that there is a fair bit of uncertainty going on in the television world at the moment in terms of program supply agreements and potential mergers and whatnot. I think that last statement is very clearly that we are having a look at our business and we will have to look at how our business functions, depending on how some of these renegotiated agreements or mergers roll out. I do not know that there is hope being provided there.

It is the case that as a network we will see our costs potentially increase dramatically and we have to have a very good look at the business to see what services that we can provide not only in South Australia but all of our regional and metropolitan.

Senator SINGH: So you are basically stating that there is potential for more regional news closures?

Mr Lancaster : That is not what I am saying.

Senator SINGH: What are you saying?

Mr Lancaster : What I am saying is that, with increasing costs to run a television network brought about by what you are reading about in the papers at the moment, we have to review our business on an ongoing basis. It would be irresponsible of me as a CEO not to be doing that.

Senator SINGH: Review your business with what outcome?

Mr Lancaster : To ensure that the business is in good shape.

Senator SINGH: By doing what, cutting more regional news services?

Mr Lancaster : They are your words, not mine.

Senator SINGH: I am asking the question.

Mr Lancaster : I am not saying that I am looking at regional news services.

Senator SINGH: What are you saying? How are you going to meet your costs?

Mr Lancaster : I am not entirely sure. But I will be continuing to have a good look at the business.

Senator XENOPHON: I have a couple of supplementary questions. I should say that I had a very pleasant conversation with Bruce Gordon, the owner of WIN, a few days ago. He rang me. I think that I will take him up on his invitation to come and see you and him in the next few weeks to see if there is another way of trying to deal with these issues. I would welcome that. I have some questions that you can take on notice. Further to Senator Ruston's questions about the new services in the Riverland, once those services were consolidated—in other words, there was less local content—without letting us know the revenue necessarily, because I am not so much interested in those figures, was there a percentage decline in the revenue in the six to 12 months before that for those news services in terms of local advertising? Did that decline accelerate? I would be interested to get something from you on that on notice. Again, I am not interested in the actual dollars figures. I want to get an idea of whether there was a slide.

Mr Lancaster : Are you talking about just the news service or the entire network—the entire South Australian business?

Senator XENOPHON: The revenue generally for that station and in particular the news service. Did advertising dollars decline? Did you lose some viewers as a result of consolidating that news service so that it became less local?

Mr Lancaster : We can answer those on notice.

Senator XENOPHON: You have also said that Nine News in Adelaide does a lot of stories on regional South Australia. Without upsetting your news director, Tony Agars, with any extra work, it would be good to get an idea of how many local stories that you have done and whether there has been an uptake of local stories with the Adelaide based service of Nine News since you closed the regional service.

Mr Lancaster : That will be fine, yes.

CHAIR: In your submission, you talk about there being not enough viewers to support a dedicated local news service and about there not being enough news. What is your definition of 'news'?

Mr Lancaster : That is an interesting question. We are talking about issues of significance in the market. There is not enough news to be of interest to people.

CHAIR: Would you agree that even the major channels produce stories on the news that are not necessarily news but that are designed to lift the ratings of the news programs?

Mr Lancaster : I believe that they produce news.

CHAIR: So everything that they produce is news, even when they make commentary?

Mr Lancaster : I am not sure that I am in a position to answer that for you.

CHAIR: You are a chief executive of a channel. I would have thought that you would be.

Mr Lancaster : I am sorry; I missed that.

CHAIR: You are the chief executive of WIN. I would have thought that you would have an idea what news was.

Mr Lancaster : Yes. I think that you asked me a question on other news networks.

CHAIR: I am asking about yours. On notice, could you provide us with your definition of 'news' and your definition of 'local news'.

Mr Lancaster : Sure.

CHAIR: Thanks very much, Mr Lancaster and Mrs Brown. That concludes the questions that we have for you.