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Thursday, 1 September 2016
Page: 257

Mr FLETCHER (BradfieldMinister for Urban Infrastructure) (10:58): I move:

That this bill be now read a second time.

The Broadcasting Legislation Amendment (Media Reform) Bill 2016 will amend media control and ownership rules in the Broadcasting Services Act 1992 and establish new local television programming obligations for regional commercial broadcasters.

These reforms will allow media businesses to gain the scale necessary to compete in an increasingly fragmented and global media environment while ensuring that Australians continue to have access to a diversity of sources of news and information.

Much of the legislative framework governing the Australian media was developed in the analog era when the industry was dominated by the three established media platforms: commercial television, commercial radio and associated newspapers. This structure allowed the development of predictable numerical tests as a proxy for media diversity.

The modern media environment is significantly different, and some of these tests have lost their relevance. While traditional commercial television and radio platforms are still well loved by Australians, they are not the only sources of video, audio and news content. Australians are increasingly using new sources of news and entertainment content, including subscription and online platforms, which are not subject to regulations restricting their investment decisions and operating structure.

Australia's domestic media businesses are placed at risk by their constrained ability to compete, and elements of the regulatory framework originally designed to protect media diversity are now impeding the capacity of local businesses to deal with the change underway in the industry and continue to provide quality professional journalism and reporting.

This bill seeks to repeal two control and ownership rules that no longer make sense in the digital media environment: the '75 per cent audience reach rule' and the 'two out of three cross-media control rule'. These rules are antiquated and do little to support media diversity. Their removal will allow regulated media companies to achieve greater scale in their operations and, subject to the general law, to structure their businesses to make the most of opportunities as they emerge.

The '75 per cent audience reach rule' prohibits a person, either in their own right or as a director of one or more companies, from controlling commercial television broadcasting licences whose combined reach exceeds 75 per cent of the Australian population. This rule effectively prevents any major commercial television network (Seven, Nine or Ten) from merging with or acquiring the regional television networks of Prime, WIN and Southern Cross, or vice versa.

In the digital media environment, the '75 per cent audience reach rule' is irrelevant. Online platforms allow content to be accessed by viewers all over Australia and the world. In practical terms, the rule acts as a barrier to commercial television broadcasters competing with scale in this environment. The rule also does little to further media diversity.

Viewers in regional areas already receive the same number of commercial television services, and the same commercial television programming, as their metropolitan counterparts due to affiliation agreements, including many news services.

Two of the three metropolitan commercial networks now provide streamed versions of their services which are available in regional markets across Australia.

Any merger between metropolitan and regional commercial television broadcasters—should this occur—would generally involve the replacement of one television 'voice' with another, due to the fact that the metropolitan and regional networks generally operate in separate licence areas.

The 'two out of three rule' is also redundant. This rule prevents mergers or changes in control that involve more than two of the three regulated media platforms in any commercial radio licence area. Online media is no longer viewed as something distinct from the more traditional media platforms. Audiences in Australia and overseas now discover and access news from multiple sources across a range of media platforms, including online, social media, television, radio and newspapers. It is no longer appropriate that commercial television, commercial radio and associated newspapers be restricted by this rule when unregulated platforms are free to consolidate and adapt their businesses as much as they see fit, subject to wider considerations like competition rules.

Like the '75 per cent reach rule', the 'two out of three rule' is also not significantly contributing to media diversity. In most of the licence areas around Australia, the 'two out of three rule' is not in play as these licence areas do not include operations from all three regulated platforms: commercial television, commercial radio and associated newspapers. The removal of the rule would therefore have no bearing on cross-media ownership in these markets.

In around a third of the remaining areas, further media transactions of any sort will be prohibited because they are all at or below the 'diversity floor' of a minimum of four 'voices' under the five-four rule, which provides that at least five independent media groups must at all times be present in metropolitan commercial radio licence areas and four such groups in regional commercial radio licence areas.

Any consolidation that may arise from the removal of the rule would therefore be limited to the metropolitan and larger regional markets, where diversity issues are unlikely to arise given the greater numbers of media outlets in operation.

Together, the repeal of the '75 per cent reach rule' and 'two out of three rule' will reduce regulatory burden on the media industry, allow media businesses to operate more flexibly in the market, and help ensure they can continue to provide high-quality news and entertainment services to Australians.

The government has carefully listened to stakeholders and parliamentary colleagues who have expressed their concern that television sector consolidation could lead to reductions in local programming. The bill therefore includes a package of measures which will ensure the availability of local content in most regional areas and strengthen links between local content and the communities it is broadcast to.

Communities in regional Australia have told the government how important it is to maintain locally relevant news and information in their areas. Not only is local news and commentary valued, but local content also supports jobs and investment in regional communities where such programming is produced locally. While there are clear benefits associated with services that provide local television content, there are also significant costs and investment outlays associated with it, and market forces alone may not ensure that local content is provided at optimal levels.

Additionally, regional commercial broadcasters are under increasing pressure from new and emerging services, and from internet streaming of metropolitan broadcasts into regional areas. In the absence of regulation, the high costs of local content production and the structural changes underway in the media more broadly will create incentives for broadcasters to achieve efficiencies, placing pressure on the continued supply of local programming at current levels.

Currently, the Broadcasting Services Act requires regional commercial television licensees in certain types of markets to provide local content—termed material of local significance in the act—within specified areas. The framework for allocating commercial free-to-air television broadcasting licences divides Australia into various commercial television broadcasting licence areas that broadly reflect population distribution. Licence areas are then divided into local areas, however in some cases the local area is equal to the licence area.

Under the current arrangements, regional commercial television licensees in aggregated markets and Tasmania are required to provide approximately 120 points of material of local significance per week to local areas within the licence areas. Material of local significance is material that is broadcast to a local area and relates directly to either the local area or the licence area. The aggregated markets include the following licence areas: northern New South Wales, southern New South Wales, regional Victoria and regional Queensland.

Currently there are no local content obligations in non-aggregated markets, which include Darwin, the major regional population centres in South Australia and Western Australia, and parts of western New South Wales, Victoria and Queensland.

The bill will extend and increase local content obligations for regional commercial television licensees. The new obligations will apply to regional commercial television broadcasting licences which, as a result of a change in control (called a 'trigger event'), become part of a group of commercial television broadcasting licences whose combined licence area populations exceed 75 per cent of the Australian population. The additional local content obligations will commence six months after the bill receives royal assent.

The requirement for the licensee to be part of a commercial television group that reaches over 75 per cent of the population ensures that the additional local content obligations are only 'triggered' after the licensee is in a position to benefit from the additional scale and efficiency that the media reforms will allow.

Under the Broadcasting Services Act, currently local programming targets are expressed as 'points' where each minute of material of local significance is worth one point, and each minute of news that relates directly to the local area is worth two points.

Where a trigger event takes place the bill will:

increase local programming requirements for regional commercial television licensees in aggregated markets and Tasmania that are subject to a trigger event by 30 points per week; and

introduce new local programming requirements for regional commercial television licences in non-aggregated markets that are subject to a trigger event. These include smaller regional licence areas in Mildura and Griffith, where currently no local programming is provided, and regional licence areas in Darwin, Broken Hill, Spencer Gulf, Riverland, Mount Gambier, Geraldton, Kalgoorlie and South West and Great Southern Western Australia where some local programming is provided. The bill will require licensees to provide approximately 60 points of material of local significance per week to each local area, with a minimum of 45 points each week.

The additional local content obligations will take effect for each licensee six months after the trigger event. This will allow the licensee sufficient time to implement the necessary business and investment decisions in order to broadcast the required amount of local programming.

The additional obligations are aimed at ensuring that there is local content in nearly all regional licence areas following a change in control, including those where there is none currently. However, broadcasts to remote areas of Australia, predominantly in Western and Central Australia, will be excluded given the large geography and lack of large population centres.

Licences allocated under sections 38A and 38B of the Broadcasting Services Act will also be excluded. These licences are allocated by the Australian Communications and Media Authority to existing licensees to ensure that regional audiences receive all three main television networks, where there are less than three broadcasters in the licence area. To place local programming obligations on section 38A and 38B licences would represent an unrealistic financial burden on the original 'parent' broadcaster in each regional licence area.

To maximise the relevance of local content to served markets, this bill includes an incentive for local news to be filmed in the local area. To achieve this the bill introduces a new three-point category under the local programming points system for licences affected by a trigger event. Under the revised points system, each minute of local news programming that depicts people, places or things in the relevant local area will be allocated three points. The local programming points system will otherwise replicate the current material of local significance points system under the Broadcasting Services (Additional Television Licence Condition) Notice 2014.

The bill will require the Australian Communications and Media Authority to make a new local programming determination which would identify the local areas for the purposes of the local programming obligations. The delayed introduction of the additional local programming obligations in the bill by six months will allow the Australian Communications and Media Authority sufficient time to make the local programming determination before the commencement of the new obligations.

The bill will require licensees to provide the Australian Communications and Media Authority with two reports detailing their compliance with the obligations from 12 months after their new obligation commences and another a year later.

In order to evaluate the extent to which the bill achieves its objective, the Australian Communications and Media Authority will review the operation of the new local programming provisions within two years following the commencement of the additional obligations.

Prior to the commencement of schedules 1 and 2, it is the government's expectation that prospective changes to the law should not be relevant to the Australian Communications and Media Authority's consideration of any prior approval applications made under sections 67, 61AJ and 61AMC of the Broadcasting Services Act. The government considers that the Australian Communications and Media Authority would continue to consider applications for prior approval of temporary breaches of the control and ownership rules without reference to these proposed amendments (in other words, to consider such applications on the law as it stands at the time). This will avoid any party gaining a 'first mover advantage' in pursuing transactions that may be permitted only once schedules 1 or 2 have commenced.

A previous incarnation of the Media Reform bill was introduced into the former parliament in March 2016. The Senate referred the bill to the Senate Environment and Communications Legislation Committee for inquiry and report. Public hearings were held in Canberra on 31 March 2016 and in Melbourne on 29 April 2016.

On 5 May 2016, the committee released its report which made two recommendations. Recommendation 1 was that the government consider amending the 'trigger event' provision in schedule 3 to the Media Reform bill. The definition of a 'trigger event' did not cover changes in control where a regional broadcaster came to be in a position to control a metropolitan broadcaster, and as a result the proposed additional local programming obligations would not apply. Recommendation 2 was that the Media Reform bill be passed.

The government thanks the committee for its report and agrees with the committee's recommendations. The government has made the suggested amendment to the 'trigger event' provision in the Media Reform bill.

The Turnbull government is committed to reforming legislation in areas where archaic regulation is holding Australian businesses back. This bill is yet another step in removing restrictive and redundant regulation, and ensuring independent sources of news, current affairs and similar programming continue to be available to all Australians, particularly those in regional areas.

Debate adjourned.