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Monday, 24 May 1965

Senator ANDERSON (New South Wales) (Minister for Customs and Excise) . - I move -

That the Bill be now read a second time.

The primary purpose of this Bill is to amend the Broadcasting and Television Act 1942- 1964 to make more effective the provisions relating to the ownership and control of television stations. Because of the substantial amendments required to the existing provisions of Division 3 of Part IV of the Act it has been decided to redraft the whole of this Division. At the same time the opportunity has been taken to introduce a number of incidental amendments to the Act. It is also proposed to make certain alterations to the manner in which, in the future, problems in respect of programme matters are to be dealt wilh.

Honorable senators may remember that on 17th December 1964 the PostmasterGeneral made a statement announcing the Government's intention to bring down legislation to deal with problems which had arisen with respect to the ownership and control of television stations. The Minister pointed out in that statement that the Government's policy with respect to the control of commercial television stations has always been, broadly, that no person, and this includes a company, should be in a position to control, either directly or indirectly, more than two commercial television station licences and that, as far as practicable, licences for country television stations should be held or controlled by interests of the area which the station is designed to serve. The present provisions of the Broadcasting and Television Act relating to this matter were enacted in 1960 and were framed with the intention of giving effect to this policy. However, notwithstanding the comprehensive provisions of that legislation, situations have developed which, though they are not in breach of the law, are in conflict with the Government's stated policy.

At the time the 1960 legislation was enacted, it was thought that the new provisions of the Act would be effective in limiting, to the desired extent, the control or influence which might be exercised by any one person or company, or group of persons or companies, over companies holding licences for television stations. Although there was no departure from the original concept that a person might control, directly or indirectly, two licences, providing they were not both in the same capital city, the 1960 provisions attempted to give practical force to this concept by amending the definition of " control " to extend to practical and commercial control by any means, and secondly, to provide that a person would be deemed to exercise control of a company and all its operations if that person was in a position to exercise control of more than 15 per cent, of the voting rights of that company, either directly or indirectly. The 1960 amendments represented a sincere endeavour on the part of the Government to ensure that its policy in respect of the ownership and control of television stations would not be frustrated. I must, however, be frank and say that our expectations in this regard have not been completely realised.

The Government has had the question of the ownership and control of commercial television stations under review for some time. Honorable senators will gather from the comprehensive and rather complicated provisions of this Bill that this has been a difficult area in which to legislate.I am confident, however, that the provisions of this Bill which I now introduce will be effective in carrying out the Government's policy in this important field of mass communication.

Because of the complex nature of this Bill,I do not propose in this second reading speech to deal in any great detail with the various clauses of the Bill, but to leave the detailed examination to the committee stages of the Bill. I do propose, however, to outline broadly the meaning of the main clauses of the Bill for the benefit of honorable senators. I should say, at the outset, that in its deliberations, the Government has taken cognizance of the fact that a measure of influence over the affairs of a company may be exercised through the medium of funds contributed in other manners than by way of share capital. With the purpose of making effective the Government's policy that any person or company may not control more than two licences, either directly or indirectly, the Bill provides that no person shall be permitted to acquire more than a 5 per cent. " interest " in more than two licensee companies. In determining the' extent of the " interest " held by any person in a commercial television station, interests of a financial character in the widest sense will be taken into account, in addition to interests by way of voting rights and shareholdings, both directly and indirectly.

Proposed section 92 of the Bill provides that a person shall contravene the provisions of the Act if he has a " prescribed interest " in each of three or more commercial television stations in Australia or in two or more stations in a Territory or in the capital city of a State. Proposed Section 91 (2.) provides that a person has a " prescribed interest " in a licensee company if he is -

(a)   the holder of a licence for a commercial television station;

(b)   in a position to exercise control, either directly or indirectly, of such a licence;

(c)   in a position to exercise control, either directly or indirectly, of more than 5 per cent, of the maximum number of votes that could be cast at a general meeting of a company holding such a licence;

(d)   the holder of an interest - i.e. shareholding or loan interest - in the licensee company exceeding 5 per cent, of the total of all interests in the company;

(c)   the holder of a shareholding interest in the licensee company in excess of 5 per cent, of the total amount paid on all shares in that company.

In ascertaining whether a person has a " prescribed interest " in a licensee company, the Bill provides in the case of tests (c), (d) and (e) which I have mentioned, that indirect interests shall be taken into account in each case by tracing down interests through related companies in those cases where companies are shareholders in licensee companies or are holders of loan interests in licensee companies. Proposed section 91a provides for the tracing back of share holding interests through a series of companies, whilst proposed section 91b provides for the determination of indirect loan interests, which are taken into account together with shareholding interests, for the purposes of test (d) relating to prescribed interests. The concept of the tracing back of interests was already contained in existing section 92b of the Act relating to " control of a company ", involving the tracing back of interests on the basis of voting rights.

Proposed new section 92b extends the meaning of " control of a company " to embrace, in addition to 15 per cent, of voting rights as contained in existing section 92b, the holding of more than 15 per cent, of the shares carrying unrestricted voting rights, or the holding of more than 15 per cent, of the total share capital of a company. This provision, in effect, applies the principle of " one share - one vote " and will remove the effect of any manipulation of the articles of association of a company with the intention of restricting voting rights, no matter how large the shareholding, for the purposes of preventing a contravention of the voting rights test of control of a company for the purposes of the Act. It was, in effect, mainly by the amendment of articles of association to limit a shareholder's voting rights to 15 per cent, that the existing provisions, which deemed a person to be in control of a company if he was in a position to control more than J 5 per cent, of the voting rights of the company, were circumvented.

Proposed section 92f deals with changes in the ownership of shares in, or debentures of, a company holding a licence, or shares in a company having a shareholding interest in a licensee company. It provides that the Minister's approval must be sought in respect of transactions defined in that section, where such transactions involve the acquisition of a " prescribed interest " in a licence or an increase in an existing " prescribed interest ".

Proposed sub-section (4.) of section 92f provides that the Minister shall not refuse his approval for a transaction unless the transaction would result in a contravention of section 92 of the Act, which restricts the interests which may be held by any one person, or unless the Minister considers it necessary to do so in the public interest, such as in the case of an undesirable takeover of a licensee company. Experience has shown that the Minister must have power to refuse approval of transactions on the grounds of public interest if the provisions are to have any real meaning. It is not difficult to imagine the many undesirable changes which could take place - quite lawfully - if the Minister is not in a position to exercise some control over the situation. It is relevant to point out that, pursuant to section 86 of the Act, the Minister has power to revoke a licence in the public interest. It is, to say the least, logical that the Minister should also have power to refuse approval of changes of ownership and control on the grounds of public interest. I should point out, in this connection, that proposed section 92f (4.) provides that the Minister shall not refuse his approval of transactions unless there has first been a report by the Australian Broadcasting Control Board. Proposed section 92fa provides that changes in the memorandum or articles of association of licensee companies shall not take place without the approval of the Minister.

I turn now to the provisions of the Bill relating to programme matters. Briefly, it is proposed to repeal section 105a of the Act, relating to the monopolising of television programmes, which provisions were enacted in 1960, and to extend the provisions of section 134, which provide for the making of regulations, to embrace a number of matters in the programme field which it is considered could properly be dealt wilh by regulation, if the need should arise. When the 1960 legislation was introduced, it was explained that the provisions of section 105a were intended primarily to prevent the " cornering " of television programmes. The Government had hoped that these provisions would ensure that the ownership of programmes did not become concentrated in the hands of a few, who by means of their control over programmes, might effectively control the operations of a television station seeking to use such programmes. It was realised that unless some action was taken in this connection, the policy of the Government with respect to the control of commercial television stations might be frustrated by leaving an independent station in a position where it could not obtain, on just or reasonable terms, the television programmes required to maintain its service.

Experience has demonstrated that the provisions made in the Act in 1960 were inadequate to deal with the problems which subsequently developed. In a relatively new and rapidly developing industry, it will be appreciated that it is difficult to foresee with any certainty the problems which might arise in the future. I might add, in passing, that this situation is not confined to Australia, as in most countries where television has been introduced it has been necessary to make continuous changes in the form of regulatory controls to meet the changing circumstances during the course of development of the services.

It is, I think, not unrealistic to say that the capacity to exercise control of television stations through the ownership of programmes or through programming arrangements or agreements, is a significant part of the overall problem of control and is matter with which we shall probably be concerned from time to time. Although ft is my understanding that no licensee is at present experiencing difficulties in obtaining programmes on reasonable terms, it is nevertheless considered necessary that provision should be made in the Act to deal with any situations which may develop in this field. The principal difficulty in this connection is that it is not possible to predict with any certainty the nature of the problems which may arise in the programme field and, for this reason, it has been considered that the most appropriate course is to provide in the Act for the power to make regulations in respect of programme matters. The proposed amendments to section 134 of the Act are being introduced for this purpose.

Another aspect of this matter which requires some comment at this stage is the proposal to repeal section 16 (3.)(e) of the Act which empowers the Board to regulate the establishment of networks of stations and the making of arrangements by licensees for the provision of programmes or the broadcasting or televising of advertisements. There has always been doubt regarding the application of this provision and it is, in fact, difficult to say precisely just what a network is. A similar difficulty has been experienced in other countries. In' these circumstances, it has been considered desirable to repeal this provision in the Act and to provide for the making of regulations in respect of such matters.

In introducing this legislation, the Government has given close consideration to the position of persons or companies who, by virtue of their present shareholdings in licensee or related companies, or financial interests in licensee companies, would be in breach of the Act when amended. However, we have come to the conclusion that serious difficulties would arise if the provisions of the Bill were made to apply retrospectively in such cases. Apart from being required to divest themselves of interests held directly in licensee companies, some of the persons and companies involved would, in many cases, be required to divest themselves of shareholdings in companies other than licensee companies. The acquisition of these indirect interests may have come about in the normal course of business, and although such interests are not significant in terms of the existing legislation, they might well become significant under the new provisions.

For this reason, as indicated in the Minister's statement of 17th December 1964, it is proposed that no shareholding arrangement existing as at that date will be invalidated by the new provisions or will constitute an offence against the Act as amended. However, if a person, or company, who has acquired excess interests prior to 17th December 1964, subsequently divests himself of such interests, he will not thereafter be entitled to recapture those excess holdings, although he will be able to participate in any new issue of shares which may be made. This position is covered in sub-sections (3.) and (4.) of proposed section 92 of the Bill. It has also been necessary to make provision in this section for proposals relating to rearrangements of interests in licensee companies which have been submitted to the Minister prior to 1 7th December 1964, but in respect of which the Minister's approval has not yet been given.

Necessarily, the comments I have made relate only to the main features of the Bill. Honorable senators may think that this is a complicated piece of legislation, and I would agree, but I am satisfied that, in the light of experience, it must necessarily be so if effect is to be given to the Government's policy. In essence, however, the major effect of the Bill may be fairly succinctly stated. It provides that no person shall, in the future, be permitted to acquire interests of a voting, shareholding, or financial character in television licensee companies, which would result in such interests being in excess of 5 per cent, in more than two licences. I comment the Bill to the Senate.

Debate (on motion by Senator McCelland) adjourned.

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