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Wednesday, 23 October 2002
Page: 5774


Senator IAN MACDONALD (Minister for Forestry and Conservation) (6:25 PM) —I table a revised explanatory memorandum relating to the bill and I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The communications environment is experiencing a period of rapid change. Existing and potential media operators are forging innovative commercial strategies to secure their position in the new market place. Consolidation and diversification have created substantial global communications groups. Consumers are no longer confined to the traditional media of radio, free-to-air television and newspapers available in their local area.

The regulatory framework in relation to the ownership and control of Australian media assets is anachronistic in such a dynamic environment. The current restrictions impede commercial flexibility and access to capital for infrastructure and content investment. They hinder the ability of Australian media organisations to succeed in the new market environment.

The Government is committed to reforming the regulatory framework governing foreign and cross-media ownership of media assets. This bill seeks to give effect to this commitment and allows Australian media organisations to take greater advantage of the rapidly evolving communications environment.

When the Government introduced this legislation, it invited sensible debate on these important media ownership issues. The bill was immediately sent to the Senate Environment, Communications, Information Technology and the Arts Legislation Committee for consideration and to enable public input into the proposed changes prior to debate in either House of Parliament.

The Government welcomed the Committee's inquiry and report, and adopted their recommendations concerning the introduction of an obligation to disclose cross-media relationships, and restricting regional cross-media mergers to two of the three types of media covered by the cross-media rules. The remaining recommendations are also under consideration.

I turn now to the specific measures contained in the bill.

Like other sectors of the economy, Australia's media industries are under pressure to become more global in their technology and equity links. These business strategies are necessary because technological convergence in the communications sectors has placed pressure on media operators to invest in digital technologies. Digitisation of production and transmission could enable new types of interactive services to be offered and reduce the cost of producing content. However, investment in digital technologies requires large capital outlays.

The current foreign ownership and control restrictions in the Broadcasting Services Act 1992 (the BSA), which apply to free-to-air and subscription television services, serve as a major deterrent to investment in Australian media organisations.

The bill therefore repeals the media-specific foreign ownership and control restrictions contained in the BSA. Foreign ownership of Australian media assets will continue to be regulated by the Foreign Acquisitions and Takeovers Act 1975 and Australia's general foreign investment policy. These provisions have the ability to address national interest concerns that might arise in relation to a particular investment.

Repealing these restrictions will improve access to capital, increase the pool of potential media owners and act as a safeguard on media concentration.

I turn now to measures to reform the cross-media rules.

Technological progress and globalisation are changing the structure of the Australian media market, and patterns of media consumption. Increasingly, Australian media organisations are responding to these changes by investing in new technology, developing new business models and forming broader strategic partnerships. Despite this, the regulation of ownership and control of Australian media has remained largely static.

Reform of the cross-media rules will clear the way for renewed market interest in Australian media assets and will allow media companies to take greater advantage of investment opportunities as they arise.

The Government is committed to ensuring ongoing diversity of opinion and information in the Australian media. It does not believe that diversity of ownership is necessary to achieve this. Nevertheless, the Government recognises the need to ensure that media owners do not exploit their co-ownership of media organisations in a way which prevents those organisations from exercising separate editorial judgements.

To this end, the bill provides for a transparent and effective public-interest test in relation to maintaining separate editorial decision-making responsibilities in cross-controlled media organisations.

Diversity of opinion is further protected by existing provisions in the BSA relating to limitations on the number of licences able to controlled by an individual organisation, and on the percentage of audience share able to be controlled by a person or organisation. These provisions will be preserved.

The Trade Practices Act 1974 will continue to apply to proposed media mergers and acquisitions. Any such proposals will be subject to a test for the effect on competition, which is administered by the Australian Competition and Consumer Commission (ACCC).

The bill provides for a process whereby exemption certificates are issued to applicants who would otherwise be in breach of the cross-media provisions. Holders of exemption certificates will not be in breach of the cross-media rules in relation to media entities which they control, provided the conditions of the certificate are satisfied. Certificates become active upon a person assuming control of two or more media entities in a way which would otherwise breach the cross-media rules.

Consistent with a recommendation of the Majority Report of the Senate Environment, Communications, Information Technology and the Arts Legislation Committee, the bill provides that a cross-media exemption in regional areas could only authorise cross-ownership of two of the three types of media (television, radio and newspapers) covered by the cross-media rules. This acknowledges that regional areas frequently have comparatively fewer choices of media outlets than in metropolitan Australia. This provision is an appropriate means of addressing the differences that exist in the metropolitan and regional media environments, and the different economic circumstances experienced by regional media.

The Australian Broadcasting Authority (ABA) must maintain a Register of active cross-media exemption certificates which is to be available on the Internet.

The certificate must be issued if the ABA is satisfied that the conditions included in the application will meet the objective of editorial separation for the set of media operations concerned. This objective is that separate editorial decision-making responsibilities must be maintained in relation to each of the media operations.

Three mandatory tests are prescribed for the objective of editorial separation to be met. They are the existence of:

(a) separate editorial policies;

(b) appropriate organisational charts; and

(c) separate editorial news management, news compilation processes and news gathering and interpretation capabilities.

These requirements will not preclude the sharing of resources or other forms of co-operation in newsgathering between organisations that could assist owners seeking to realise efficiencies from jointly owned organisations.

The conditions for exemption included in the bill are straightforward, reasonable and transparent. They provide certainty for industry by clearly setting out expectations for editorial separation.

It is important that there be adequate monitoring and compliance measures to ensure public confidence in the new provisions.

The bill provides that once an exemption certificate is active in relation to a set of media operations, those media operations must meet the objective of editorial separation as a condition of their licence.

The BSA gives the ABA the ability to investigate bona fide complaints of failures to adhere to licence conditions, and to publish the outcome. If the ABA determines that a licensee has failed to comply with the editorial separation condition, it may issue a notice requiring the licensee to address the contravention within a specified timeframe. Failure to comply with the ABA notice is a criminal offence, which can result in a large fine being imposed. The ABA is also able to suspend or cancel a licence if a licence condition is breached. Such action may be appropriate in the case of repeated or severe breaches of the editorial separation condition.

Enforcement options are also available against controlling parties. When an undertaking is not adhered to, the exemption certificate will cease to apply and the controlling party will therefore be in breach of the cross-media provisions. In these circumstances the BSA allows the ABA to require the controlling party to divest.

In line with another recommendation of Majority Report of the Senate Committee, the bill imposes a general obligation to disclose a cross-media relationship on media outlets subject to the same exemption certificate.

The bill details two means of disclosure:

· the `business affairs' model, which will apply to commercial television broadcasters and newspapers, and which will be the default disclosure model for commercial radio broadcasters; and

· an alternative `regular disclosure' model which will only be available to commercial radio broadcasters.

The business affairs model requires that media outlets disclose a cross-media relationship at the time that they broadcast or publish matter that concerns the business affairs of a cross-controlled media organisation, including cross-promotional material (other than clearly identifiable advertising material).

Exemptions are also provided for TV/radio program guides, journalistic acknowledgment of sources, and unanticipated comments in live broadcasts. Further material may be exempted from the business affairs disclosure requirement by Ministerial determination.

Alternatively, commercial radio broadcasters may adopt the regular disclosure method by written notification to the ABA. The regular disclosure method requires a radio broadcaster covered by a certificate to regularly disclose the cross-media relationship in such a way and with such frequency that the prime-time audience of the broadcaster would be reasonably likely to be aware of the cross-media relationship.

It will be sufficient for the regular disclosure method if a statement that there is a cross-media relationship is broadcast by the radio broadcaster once a day during prime-time.

The intention of the regular disclosure model is to establish a general level of audience awareness about the cross-media relationship. This is a viable alternative to the business affairs model for radio broadcasters, given the largely unscripted nature of radio and the variation in size and resources of radio entities.

For both models (business affairs and regular disclosure), alternative means which satisfy the disclosure requirement may be specified by regulations.

The requirement for disclosure of cross-media holdings protects the public interest by ensuring that audiences and readers are made aware of the ownership structures of the media outlets from which they access information.

The Government recognises public concern about declining levels of local and regional news and information programs on both TV and radio. Local services are important for developing community identity, and ensuring that important information is relayed in a timely fashion. The Government's election commitments stated that organisations seeking exemptions from the cross-media rules would be required to give undertakings in relation to minimum levels of local TV and radio news and current affairs. This bill strengthens the nature of that commitment to ensure that substantial measures are taken to ensure the continuation of local news services.

The bill amends the BSA to impose a condition on broadcasting licences in relation to which cross-media exemptions have been granted that requires broadcasters to comply with prescribed minimum levels of local news and information services, or to retain existing levels of local news and information where these are higher than the prescribed minimum.

The prescribed minimum levels include at least five news bulletins per week containing matters of local significance, broadcast of local community service announcements and the ability to broadcast emergency warnings if and when required.

Whilst the Government is predisposed to implementing a broader local news requirement, further consideration of the Senate Committee's recommendations on local news will occur once the ABA has made its final determination in relation to its recent investigation into the adequacy of local news and information services on commercial television.

The Government is concerned to maintain a diverse range of commercial radio services of broad general appeal, especially in regional areas. Therefore, the bill prohibits contracts and arrangements that attempt to restrict the program format of commercial radio broadcasting services.

These provisions address a situation where contractual or other arrangements limit the program format of a commercial radio service, reducing the diversity of radio services and competition for audience and advertisers, particularly for the benefit of an incumbent commercial radio broadcaster.

The bill prohibits contracts and arrangements for the transfer of control of a commercial radio broadcasting licence, where the contract or arrangement restricts the program format of the service provided under that licence.

The bill also prohibits other contracts or arrangements that restrict the program format of a commercial broadcasting radio service, where the purpose or effect, or likely effect, of the contract or arrangement is to confer a commercial advantage on another commercial radio broadcasting licensee in the same licence area.

Civil penalties, including fines of up to $275 000 for a body corporate, will apply for entering into such contracts or arrangements. Furthermore, the bill renders the contract or arrangement void.

As well as written contracts, the prohibition will also apply to agreements or understandings that do not constitute legally binding contracts. An arrangement of this sort could be formal or informal, written or unwritten.

The prohibition will not apply to contracts or arrangements exempted by regulation. The ABA will also have the power to exempt particular contracts or arrangements. This is intended to allow some flexibility once the provisions commence, where there are legitimate types of transactions that should not be prevented.

The proposed changes will not affect the ability of the ACCC to scrutinise both existing and future arrangements that might have the effect of limiting competition. However, the Trade Practices Act generally only addresses competition issues, rather than effects on diversity, which are the primary concern of these provisions.

This bill provides for the timely reform of the regulatory framework governing the ownership and control of Australian media organisations, ensuring that Australian media organisations, as well as the Australian public, are positioned at the forefront of an exciting new communications era.

Debate (on motion by Senator Mackay) adjourned.