ParlInfo - Broadcasting Legislation Amendment (Media Reform) Bill 2016 (Print Version)

Broadcasting Legislation Amendment (Media Reform) Bill 2016

ISSN 1328-8091

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest.

BILLS DIGEST NO. 13, 2016â€“17 16 SEPTEMBER 2016

Broadcasting Legislation Amendment (Media Reform) Bill 2016 Dr Rhonda Jolly Social Policy Section

This Bills Digest updates an earlier version dated 21 April 2016.

Contents

The Bills Digest at a glance ................................................... 3

Purpose of the Bill ................................................................... 3

Structure of the Bill.................................................................. 3

Background .............................................................................. 3

Key issues................................................................................. 3

History of the Bill ................................................................. 4

Purpose of the Bill ............................................................... 4

Structure of the Bill ............................................................. 4

Background ......................................................................... 4

Hawke Government ................................................................. 5

Howard Government ............................................................... 5

Rudd-Gillard Government ....................................................... 7

Current proposal...................................................................... 7

Figure 1: updating Australiaâ€™s media laws ............................. 8

Committee consideration .................................................... 9

Selection of Bills Committee.................................................... 9

Senate Standing Committee for the Scrutiny of Bills .............. 9

Senate Environment and Communications Legislation Committee ............................................................................... 9

Policy position of non-government parties/independents ... 10

Australian Labor Party ......................................................... 10

The Australian Greens ......................................................... 10

Independents ...................................................................... 11

Position of major interest groups ....................................... 12

Date introduced: 1 September 2016

House: House of Representatives

Portfolio: Communications and the Arts

Commencement: Sections 1 to 3 the day the Act receives Royal Assent. Schedules 1 and 2 and Schedule 3, Part 1 the day after Royal Assent. Schedule 3, Part 2 six months after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Billâ€™s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at

September 2016.

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest. Broadcasting Legislation Amendment (Media Reform) Bill 2016 2

Industry .................................................................................. 12

Previous comment .............................................................. 12

Re-introduction of reform proposal .................................... 14

Media and other commentators ........................................... 15

Audiences .............................................................................. 17

Table 1: 2013: satisfaction with media regulation .............. 17

Figure 2: 2015: audience opinion of media reform ............. 18

Financial implications ........................................................ 18

Statement of Compatibility with Human Rights .................. 18

Key issues and provisions................................................... 19

Schedule 1 ............................................................................. 19

Schedule 2 ............................................................................. 19

Schedule 3: Part 1 .................................................................. 19

Schedule 3: Part 2 .................................................................. 22

Comment ............................................................................... 22

The national and community broadcasters issue ............... 22

Questions about local content ............................................ 23

Alternative means to deliver more diversity ....................... 24

Trigger events ...................................................................... 24

Definition of control ............................................................ 25

Appendix A: ...................................................................... 26

Table 2: major media interests snapshot: January 2016 ..... 26

Appendix B:....................................................................... 27

Summary of industry stakeholder views on media reform.................................................................................. 27

The Bills Digest at a glance Purpose of the Bill The purpose of the Broadcasting Legislation Amendment (Media Reform) Bill 2016 (the Bill) is to amend the Broadcasting Services Act 1992 (the BSA) to:

â€¢ repeal certain media ownership, control and diversity laws

â€¢ introduce new local programming obligations for regional commercial television broadcasting licensees when a change in control, known as a trigger event, results in a licence forming part of a group of commercial television broadcasting licences whose combined licence area populations exceed 75 per cent of the Australian population.

Structure of the Bill â€¢ The Bill consists of three schedules:

â€“ Schedule 1 repeals the 75 per cent reach rule â€“ Schedule 2 repeals the two of three cross media control rule â€“ Schedule 3 inserts a new Division 5D in Part 5 of the BSA which introduces new local programming requirements for regional commercial television broadcasting licensees and revokes current programming

requirements.

Background The federal government has regulated the broadcasting industry since the 1930s. Almost from that time the industry has protested that media control rules have been too onerous, but objections to media regulations have intensified since the emergence of the Internet and new media technologies and the increasing convergence of various media platforms.

Sections of the broadcasting industry have been lobbying for the removal of certain rules which they consider outdated and which they argue prevent mergers and economies of scale which will assist them to remain economically viable in the modern media environment.

The Government has responded by introducing this legislation.

Key issues There are two main areas of argument in the debate over this legislation. As noted in the point above, one is that certain media regulation is unnecessary and is preventing media entities from realising the economies of scale needed for them to survive in the modern media environment. This argument continues that it is possible to replace outdated regulations in regional areas with modifications that protect existing, and encourage greater local content, production.

The main opposing view is that, while broadcasters remain a primary source of news and information for audiences, it is not in the public interest to remove regulations which are likely to encourage mergers of existing media outlets and the consequential efficiencies that this will involve. According to this view, these efficiencies will lead to less, not more, media diversity in the long run. This is because one owner will be able to control radio, television and newspapers in local areas. Despite minimal local content requirements that may be in place, there will be larger companies, fewer independent voices and fewer local journalists employed to report on, and investigate, local issues.

History of the Bill An earlier version of this Bill (the March 2016 Bill) was introduced into the 44th Parliament on 2 March 2016.1 The earlier version of the Bill lapsed when Parliament was prorogued on 15 April 2016.

Purpose of the Bill The purpose of the Broadcasting Legislation Amendment (Media Reform) Bill 2016 (the Bill) is to amend the Broadcasting Services Act 1992 (the BSA) to:

â€¢ repeal certain media ownership, control and diversity laws.

The Bill also:

â€¢ introduces new local programming obligations for regional commercial television broadcasting licensees when a change in control, known as a trigger event, results in a licence forming part of a group of commercial television broadcasting licences whose combined licence area populations exceed 75 per cent of the Australian population.

Structure of the Bill The Bill consists of three schedules:

â€¢ Schedule 1 repeals the 75 per cent reach rule

â€¢ Schedule 2 repeals the â€˜two out of three ruleâ€™ cross media control rule

â€¢ Schedule 3 inserts a new Division 5D in Part 5 of the BSA to introduce new local programming requirements for regional commercial television broadcasting licensees and revokes current programming requirements.

Background A trend towards media concentration in Australia first became noticeable in the 1930s. At that time, the federal government became concerned that the public interest would not be adequately served if this trend was allowed to continue without restraint.2 Hence, it introduced the first media ownership and control regulations. These restricted the number of commercial broadcasting stations that could be owned by an individual or companyâ€”four in any one state and eight throughout the country and only one metropolitan station per state.3

From the 1930s to the present, various governments have continued to address what has become an ongoing trend towards media concentration. This has resulted in the strengthening of regulations by some governments and the relaxation of rules by other administrations. However, despite the various strategies employed to curb media concentration, Australia now has one of the most concentrated media environments in the world.4

What have now come to be called traditional media operatorsâ€”television and radio broadcasters and the pressâ€”have protested that the majority of regulations governments have imposed have been onerous. Not only have restrictions been onerous, according to the media operators, regulation has stifled the development of their businesses.

Since the advent of new media technology â€” which has brought the Internet and its promises of greater diversity of sources, multiple news and information voices and innovative practices â€” traditional media operators have become so alarmed by what they maintain are the adverse effects of regulation that they have intensified advocacy for the removal of what they argue are outdated rules. Their message has been that removal of rules, such as those targeted in this Bill, is vital for their survival.

The current media ownership and control regulations are the result of legislation introduced by a Labor Government under Bob Hawke and a Coalition Government led by John Howard.

1. The earlier version of the Broadcasting Legislation Amendment (Media Reform) Bill 2016 can be found on the Parliament website. 2. R Jolly, Media ownership and regulation: a chronology: part one: from print to radio days and television nights, Research paper series, 2015â€“ 16, Parliamentary Library, Canberra, 1 February 2016. 3. Wireless Telegraphy Regulations 1935 (nos. 104 and 120). 4. R Harding-Smith, Media Ownership and Regulation in Australia, Issue brief, Centre for Policy Development, August 2011.

Hawke Government One report commissioned by the Hawke Government into the broadcasting media recommended that the government encourage local ownership, control and presence and prohibit the â€˜buying and selling of licences for purely investments purposesâ€™.5 Another report suggested that there was a need to strengthen the position of regional media owners in relation to their metropolitan counterparts, and that this could occur if a market reach limit was imposed and supplemented with a minimum number of owners rule.6

These reports were partly responsible for the introduction of legislation which changed media ownership rules in 1987. An ownership rule which prevented broadcasters from owning more than two television stations (introduced by the Menzies Coalition Government in 1956) was replaced by the audience reach rule.7 This rule stated that a person was not to control commercial television licences reaching more than 60 per cent of the population; more than one commercial licence in the same licence area; more than two commercial radio licences in the same area and in any area a combination of any two of the followingâ€”a commercial television licence, a commercial radio licence or a major newspaper.8 The broadcasting reach rule was later amended to allow for an audience reach of 75 per cent of the population.9

Treasurer Paul Keating is often quoted as proclaiming that the cross-media changes in the Hawke Governmentâ€™s legislation would mean that media proprietors would have to choose whether they wanted to be â€˜queens of the screen or princes of printâ€™.10 According to a number of commentators, rather than this being what the legislation is remembered for, it is often cited as producing â€˜the greatest media carve-upâ€™ in Australiaâ€™s history.11 That is, the regulatory change which delivered more media concentration than any other.

Howard Government When the Howard Government was elected in 1996 it announced that it was committed to abolishing what it saw as anachronistic limitations on the media.12 To this end, it directed the Productivity Commission (PC or the Commission) to inquire into broadcasting regulation and to provide advice â€˜on practical courses of action to improve competition, efficiency and the interests of consumers in broadcasting servicesâ€™.13 In so doing, the PC was to keep in mind that legislation which restricted competition should be retained only if the benefits to the community as a whole outweighed the costs and if the objectives could be met only through restricting competition.14

In its report published in 2000, the Commission recommended that certain media regulations should be removed.15 The PC added one critical proviso that reform should only occur once a more competitive Australian media environment had been established.16 It also recommended that the media landscape should be structured so that broadcasters delivered services that took into account the public interest.17

The Howard Government did not accept the PCâ€™s recommendation, arguing that subjective judgement by an individual or organisation would inevitably occur in deciding what constitutes the public interest and that this

5. J Oswin, Localism in Australian broadcasting: a review of the policy, Department of Communications and the Arts (DCA), Australian Government Publishing Service (AGPS), Canberra, August 1984. 6. Suggestions for the minimum reach rule originally ranged from 33 per cent to 43 per cent and were prompted by the fact that at the time the Murdoch and Packer families had control of two stationsâ€”in Sydney and Melbourneâ€”the reach of which amounted to 43 per cent of the

population). Forward Development Unit, Ownership and control of commercial television: future policy directions (two vols.), DCA, AGPS, Canberra, 1986. 7. Under section 53A of the Broadcasting and Television Act 1956. 8. Broadcasting Amendment Act 1987 and Broadcasting (Ownership and Control) Act 1987. 9. Broadcasting Services Act 1992. 10. This comment is attributed to Mr Keating by numerous commentators and academics, but there is no definitive source for the quotation. It appears from some reports that the comment was made in a Labor Caucus meeting and later reported to the media. G Earl, â€˜Murdoch shakeout would trigger a media upheavalâ€™, The Australian Financial Review, 4 December 1986. 11. For example, Anne Davies makes this comment in â€˜Broadcasting under Labor: 1983 to 1994â€™, in J Craik, J Bailey and A Moran, eds., Public voices, private interests: Australia's media policy, Allen and Unwin, St. Leonards, 1995, p. 3. 12. J Howard (Prime Minister), Interview with Neil Mitchell, radio 3AW, transcript, 1 September 2000. 13. Productivity Commission (PC), Broadcasting, Inquiry report, 11, PC, Melbourne, 3 March 2000, p. iv. 14. Ibid.

15. Ibid., p. 24. 16. Ibid., p. 25. 17. Ibid.

would create uncertainty for the media industry.18 Nonetheless, the Government included public interest concessions in its media reform legislation which passed into law in 2006.19 These were the result of negotiations with some of its own backbenchers who were concerned that changes to regulations would have adverse effects for regional media. The changes resulted in the four/five rule that permits transactions involving commercial radio licensees, commercial television licensees and associated newspapers, including crossâ€“media transactions, to occur subject to conditions under which there needs to remain a minimum number of separately controlled commercial media groups or operationsâ€”sometimes referred to as voicesâ€”in a relevant radio licence area following such transactions.20

The minimum number of commercial media groups which must remain in a mainland metropolitan radio licence areas is five, and in regional areas it is four. If the number of media groups drops below these stipulated levels then an â€˜unacceptable media diversity situationâ€™ is said to exist.

The Australian Communications and Media Authority (ACMA) has established a Register of Controlled Media Groups (RCMG), the job of which is to identify who owns and controls the media groups in each licence area in order that compliance with the rules can be monitored and breaches of the rules investigated by the regulator.21

The full list of media ownership and reach regulations is summarised in Box 1.

Box 1: current media rules

75 per cent rule (audience reach rule)

A person, either in his or her own right or as a director of one or more companies, must not be in a position to exercise control (see below) of commercial television broadcasting licences which have a combined licence area population that exceeds 75 per cent of the population of Australia.

Two out of three rule (cross-media ownership rule)

A person can only control two of the regulated media platforms (commercial television, commercial radio and associated newspapers) in a commercial radio licence area.

Five/four rule (minimum voices rule)

There must be at least five independent media voices in metropolitan commercial radio licence areas (the mainland state capital cities) and at least four in regional commercial radio licence areas.

One to a market rule

A person (either in his or her own right or as a director of a company) must not exercise control over more than one commercial television broadcasting licence in a licence area.

Two to a market rule

A person (either in his or her own right or as a director of a company), must not control more than two commercial radio broadcasting licences in the same licence area.

Control

18. Explanatory Memorandum and Regulation Impact Statement, Broadcasting Services Amendment (Media Ownership) Bill 2006, pp. 21â€“22. 19. Ibid.

20. Media group is defined as: a grouping of one or more of a commercial radio licence, a commercial television licence and an associated newspaper where there is at least one person in a position to exercise control over each of the media entities in the media group and where the media operation complies with the statutory control rules: Broadcasting Services Act 1992 (BSA), section 61AA. The number of media groups is calculated in accordance with a points test. Radio licence areas are specific geographic areas which are determined in a Licence Area Plan (LAP). The Australian Media and Communications Authority (ACMA) defines Licence Areas in terms of areas defined by the Australian Bureau of Statistics for the purposes of the Australian Census.

21. ACMA, Media Control database. Note: licensees operating outside the broadcasting services bands are exempt from media diversity rules and are not considered in assessing an unacceptable media diversity situation. As defined in section 6 of the BSA, broadcasting services bands are that part of the radiofrequency spectrum that is designated under subsection 31(1) of the Radiocommunications Act 1992 as being primarily for broadcasting purposes and that part of the radiofrequency spectrum that is designated under subsection 31(1A) of the Radiocommunications Act 1992 as being partly for the purpose of digital radio broadcasting services.

A person whose interest in a company exceeds 15 per cent is regarded under the current rules as being in a position to exercise control of that company.

The rules also acknowledge that control can be exercised in other ways, such as through a person being in a position to appoint a majority of the board of directors of a company.

Rudd-Gillard Government The Independent Convergence Review Committee (CRC), formed under the Rudd-Gillard Government, pointed out in 2013 that since the 1990s and in the short time since the 2006 media changes had come into effect, the media landscape had experienced major upheavals as a result of media convergence due to technological advances.22 The CRC considered that existing statutory control and media ownership and diversity rules are based on distinctions between traditional broadcasting and print media which no longer exist, as media enterprises increasingly operate across a range of platforms. The CRC recommended the abolition of the current rules and proposed instead that a public interest test could be used in conjunction with the Australian Competition and Consumer Commissionâ€™s (ACCC) media and merger powers to â€˜provide sufficient safeguards to maintain diversity and a competitive marketâ€™.23

The Rudd-Gillard Government tried to implement media reforms, some of which were based on the CRCâ€™s recommendations. But most of Laborâ€™s plans for media reform were subject to intense criticism from within the media. Indeed some critics labelled some of its proposals â€˜reckless and flawed media reformsâ€™ and â€˜a danger to democracy and free speechâ€™.24 The Rudd-Gillard Governmentâ€™s attempt at reform was, in fact, spectacularly unsuccessful and abandoned by the Government.

Current proposal In early 2014, however, under a newly-elected Coalition Government, media reform was again on the agenda when Communications Minister Malcolm Turnbull declared that he was â€˜fairly sympatheticâ€™ to relaxing media diversity and ownership regulations.25 The rules in line for removal were said to be the 75 per cent reach rule and the two out of three cross ownership rule.26

Predictions that reform was imminent continued into 2015, although there were hiccoughs. One of these was that the Prime Minister, Tony Abbott, was reported as being reluctant to take any action unless a broad consensus within the industry on the form it would take could be identified.27 However, when Malcolm Turnbull replaced Mr Abbott as Prime Minister in September 2015, many media commentators once more predicted that certain control rules would be relaxed.28

In late 2015 regional television networks also began a campaign to allay disquiet that had been expressed by regional Members of Parliament about the consequences of lifting media restrictions.29 The â€˜Save Our Voicesâ€™ campaign, led by Prime Media, Southern Cross Austereo, WIN Corp and Imparja, proposed that any changes to regulations should have to include the proviso that a buyer of a regional television station would be required to maintain that station's local news services at existing levels.30 In addition, the networks suggested that buyers of

22. Convergence Review Committee, Convergence Review: final report, Department of Broadband, Communications and the Digital Economy, Canberra, March 2012, p. 26. 23. Australian Competition and Consumer Commission (ACCC), Media mergers, ACCC, Melbourne, 2006 (revised 2010). 24. Editorial, â€˜Senator Conroy's reckless and flawed media reformsâ€™, The Australian, 13 March 2013, p. 13. See analysis of the reforms in R Jolly,

Media reform: in shallows and miseries, Research paper series, 2013â€“14, Parliamentary Library, Canberra, 2013. The label of â€˜reckless and flawedâ€™ was particularly applied to the proposal to create an office of the Public Interest Media Advocate (PIMA). This body was intended as an independent statutory office which would have responsibility for administering a public interest test. 25. A Bennett, â€˜Review tipped for media lawâ€™, Adelaide Advertiser, 10 March 2014, p. 9. 26. D Davidson, â€˜Media bosses press Turnbull on rules of ownershipâ€™, The Australian, 20 December 2013, p. 17 and D White, â€˜Licence fee cuts taken off airâ€™, The Australian Financial Review, 3 February 2014, p. 36. 27. D Davidson, â€˜PM dodges media reform fightâ€™, The Australian, 18 June 2015, p. 2. 28. Mark Day from The Australian claiming, for example, that the 75 per cent reach rule was redundant, simply because anyone with a computer, smart phone or tablet can stream programs on the Internet to the world: M Day, â€˜Catching up with the times: laws set to meet modern television reality, at lastâ€™, The Australian, 2 November 2015, p. 30 and D Davidson and M Bodey, â€˜Turnbull moves to dump reach ruleâ€™, The Australian, 9 November 2015, p. 23. 29. D White, â€˜Regionals push for local news servicesâ€™, The Australian Financial Review, 5 October 2015, p. 26. 30. Save Our Voices website.

regional networks should be required to provide a minimum local news service in markets where no such requirement currently exists.31

Adding to speculation that change was imminent were reports that in effect, both the 75 per cent reach rule and the two out of three rule were being ignored, regardless of the directives of the BSA following legal advice that had led to a Seven Network decision to stream its channels via the Internet to lap-tops or mobile phones from Melbourne Cup Day in November 2015.32 This decision was based on advice that streaming programs was not covered by the BSA.33

Minister Fifield introduced the much-anticipated reform to the reach and two out of three rules on 1 March 2016. In his announcement the Minister called the proposed changes the most significant reforms to media laws in a generation, â€˜supporting the viability of our local organisations as they face increasing competition in a rapidly changing digital landscapeâ€™.34

The Department of Communications and the Arts (DCA) published information leaflets with a simple diagrammatical explanation of the proposed changes (see Figure 1 below). The Departmental leaflets provided an overview of the Governmentâ€™s rationale for introducing the proposed changes to media laws:

The current rules restrict traditional media companies from optimising the scale and scope of their operations and from accessing resources, capital and management expertise in other media sectors. While these laws have been adjusted over time in an attempt to accommodate changes in technology and media consumption patterns, more fundamental reform is needed to ensure the framework remains relevant â€¦

The proposed changes will help traditional media businessesâ€”which still play a significant role in Australian societyâ€”to better compete and adapt in the changing media landscape. The rest of the control and ownership framework will be retained and play an important role in ensuring media diversity. The strengthened local content obligations for regional commercial television broadcasters will address concerns that the media reforms may have a negative impact on the provision of local content in regional Australia.

The proposed reforms will support the viability of our local organisations as they face increasing global competition in a rapidly changing digital landscape. 35

Figure 1: updating Australiaâ€™s media laws

Source: Department of Communications.36

31. White, â€˜Regionals push for local news servicesâ€™, op. cit. 32. Streaming refers to the practice of watching video in â€˜real timeâ€™, instead of downloading to watch later. 33. G Dwyer, â€˜Govt to scrap reach rule, so expect media to screw up their newfound freedomâ€™, Crikey, 13 November 2015. 34. M Fifield (Minister for Communications), Modernising Australian media laws, media release, 1 March 2016. 35. DCA, â€˜Updating Australiaâ€™s media laws: overviewâ€™, DCA website, March 2016. 36. Ibid.

The Bill introduced by Minister Fifield lapsed on prorogation of the Parliament on 15 April 2016. A new session of Parliament commenced on 18 April 2016. As no election had been held between the two Parliamentary sessions, the Bill could have proceeded in the new session at the stage it had previously reached, if the House of Representatives passed a resolution restoring it to the Notice Paper.37 This did not occur prior to the announcement of the 2016 election and the Bill lapsed with the dissolution of the 44th Parliament.

Committee consideration Selection of Bills Committee The Selection of Bills Committee resolved on 2 March 2016 that the provisions of the earlier incarnation of this Bill were referred to the Senate Environment and Communications Legislation Committee for inquiry and report by 12 May 2016.

The Selection of Bills Committee cited several reasons that had prompted its recommendation for referral and issues for consideration. These were to enable the Senate to:

â€“ examine the detail of the Bill â€“ investigate the impact of proposed changes to regulation on the community and the public interest and â€“ investigate the impact on local content and quality of regional and rural broadcasting.38 The Selection of Bills Committee in the current Parliament met on 1 September 2016 and considered this Bill â€˜but was unable to reach agreementâ€™.39 When permission to include the Report in Hansard was requested, the Labor Party sought to add that the Bill should be referred to the Environment and Communications Legislation Committee for inquiry and report by 7 November 2016.40 This was agreed to and the Bill has been once again referred to a committee inquiry.

Senate Standing Committee for the Scrutiny of Bills The Senate Standing Committee for the Scrutiny of Bills reported on 16 March 2016 that it had no comment on the previous iteration of this Bill.41 At the time of writing this Committee has not made any comment on this Bill.

Senate Environment and Communications Legislation Committee The Senate Environment and Communications Legislation Committee inquiry into the previous media reform Bill received 21 submissions and held two public hearings before producing a report on the Billâ€™s proposals.42

The Committee made two recommendations in its report on the previous Bill. One recommendation was that the Bill was passed by the Parliament; the other recommendation was in relation to what was seen as a drafting omission.

The Bill as it was originally drafted did not impose local content obligations if a regional commercial television broadcasting licensee was to assume a position of 'control' of a metropolitan commercial television broadcasting licence. The Committee recommended, therefore, that Schedule 3 to the previous Bill was amended to provide:

â€¢ if a person is in a position to exercise control of a regional commercial television broadcasting licence and

â€¢ the person then becomes in a position to exercise control of a metropolitan commercial television broadcasting licence and

â€¢ immediately after that event the person is in a position to exercise control of two or more commercial television broadcasting licences and the combined licence area populations of those licences exceed 75 per cent of the population of Australia,

â€¢ then that event should also be considered a trigger event for each of those licences that is a regional commercial television broadcasting licence.43

37. B Wright, ed., House of Representatives Practice, 6th edn., Department of the House of Representatives, Canberra, September 2012, p. 399. 38. Senate Standing Committee for Selection of Bills, Report, 3, 2016, The Senate, Canberra, 3 March 2016. 39. Senate Standing Committee for Selection of Bills, Report, 5, 2016, The Senate, Canberra, 1 September 2016. 40. Selection of Bills Committee, Report [debate and division], Senate, Debates, (proof), 1 September 2016, pp. 23â€”31. 41. Senate Standing Committee for the Scrutiny of Bills, Alert digest, 4, 2016, The Senate, 17 March 2016. 42. Submissions and transcripts of the two hearings can be found on the Committeeâ€™s website.

In introducing this Bill in the House of Representatives the Minister for Urban Infrastructure, Paul Fletcher, noted that the Government had made the amendment to the â€˜trigger event â€˜provision as had been suggested by the Senate Environment and Communications Committee in its report published in May 2016.44

Policy position of non-government parties/independents Australian Labor Party Laborâ€™s communications spokesperson, Jason Clare, discussed media reform in an interview conducted on the morning the previous media reform Bill was introduced. Shadow Minister Clare considered that in the Oppositionâ€™s view removing the 75 per cent reach rule was relatively uncontroversial. He added that the previous Labor Government had intended to get rid of the rule.45 Mr Clare was not convinced that removing the two out of three rule was as straightforward an issue, however. He acknowledged the argument that getting rid of the rule may help create â€˜scalableâ€™ media businesses, but he was unconvinced that such a situation would be compatible with media diversity. He continued:

One of the challenges here is that even in an internet age where there is so much more content available, much of that content is still owned by the traditional media companies. If you Google a list of the top ten media news websites, youâ€™ll find that seven or eight of them are owned by Fairfax or News Limited, Nine, Seven, Ten or the ABC.

Although the internet has meant that there is a lot more content, itâ€™s easier to get information in different ways, much of that information is still created, collected, curated by those traditional media companies. 46

The issue of preservation of local content was also raised in the context of this interview. Mr Clare was of the view:

â€¦ I think youâ€™ve got to expect that youâ€™re going to see less local content in the regions and that invariably means a bigger role for the ABC which is out there everywhere, providing important information, whether itâ€™s in an emergency or whether itâ€™s just local news. The importance of the ABC in this internet age is only going to get bigger and more important.

In seeking to have this Bill referred to a committee inquiry, Laborâ€™s Sam Dastyari argued that despite previous investigations into media reform legislation:

We are dealing with a brand-new Senate with 11 new crossbench senators. This is a very complex piece of legislation. We want to make sure that ample opportunity is given for a full investigation and a full inquiry into the different parts of this Bill and make sure that senators, when coming to vote on these matters, are able to be well informed of the debate and well informed of the specific nature of this Bill. The Senate committee inquiry process is the appropriate process to have those questions investigated and those questions explored.

The Australian Greens With reference to the previous media reform proposal the Greensâ€™ Senator Scott Ludlam was of the view that while the Internet has changed the way Australians engage with media, it should not be an excuse to change media regulations â€˜to suit some of the most powerful media barons in Australia, the country with the most concentrated media ownership in the worldâ€™.49 Senator Ludlam considered that it was too easy for the Government to claim that the Internet â€˜has negated the need for any diversity protectionsâ€™ as the dominant

43. Senate Standing Committee on Environment and Communications, Broadcasting Legislation Amendment (Media Reform) Bill 2016 [Provisions], The Senate, Canberra, May 2016, p. 37. 44. P Fletcher, â€˜Second reading speech: Broadcasting Legislation Amendment (Media Reform) Bill 2016â€™, House of Representatives, Debates, 1 September 2016, p. 16. The amendment has been made to proposed section 61CV of the BSA. 45. J Clare (Shadow Minister for Communications), Interview with Michael Brissenden, ABC AM: Media Reform, marriage equality, Western

Australian MPs, transcript, 2 March 2016. 46. Ibid.

47. Ibid.

48. S Dastyari, â€˜Selection of Bills Committee: reportâ€™, Senate, Debates, (proof), 1 September 2016, p. 28. 49. S Ludlam (Deputy Leader Australian Greens), Protect media diversity and local content first: Greens, media release, 2 March 2016.

players in print and broadcast media â€˜have successfully used their incumbency to cement their place at the top of Australiaâ€™s online news media space as wellâ€™.50 The Senator considered:

We need to make sure new entrants can compete, that existing players are not so dominant that new voices are crushed. We need to make sure local content is still being produced, and that Australian stories are still being told â€¦ Technological advances in streaming services and the like are being used as a reason to abolish the reach rule, but this only makes sense if there is a decent national broadband network to deliver these services.

Independents Some Independents in the 44th Parliament were in favour of media reform, but when the Parliament was dissolved others had still not confirmed their support for this Bill.

Of the re-elected Senators, it appears that Senator David Leyonhjelm (Liberal Democratic Party) will be likely to support the Bill. Senator Bob Day (Family First Party) was expected to vote for the Bill for reform in the last Parliament, but reserved his position after the Government introduced proposals to reform voting for the Senate. Given that the Senator has been re-elected it is likely he too will support the Bill.52 Senator Jacqui Lambie was reportedly considering her position on the earlier Bill when parliament was dissolved, and she has not commented since the Bill was re-introduced.53

Journalist Nic Christenson has commented that how Senators Pauline Hanson, Jacqui Lambie and Derryn Hinch will vote â€˜is anyoneâ€™s guessâ€™.54 Senator Hinch is reported to have said that he has not given the issue of media reform â€˜a tremendous amount of thought, but that he would take it â€œissue by issueâ€ and get briefings from the relevant ministersâ€™.55 It has been speculated that Senator Jacqui Lambie may be supportive if she can be convinced the Bill will protect local news coverage in Tasmania.56 It was also noted prior to the introduction of the reform legislation that Senator Lambie was interested in ensuring that any reform contained safeguards to protect local journalism jobs.57 Senator Hansonâ€™s office commented in July that media reform and its impact on regional Australians is an area of interest for One Nation Senators, but that the time the party did not have a formal policy position, and to date it appears none has been announced.58

With regards to the previous version of this Bill, Independent Senator from South Australia, Nick Xenophon, commented that he would participate in the Senate inquiry process before deciding his position on the reforms proposed. Senator Xenophon added that he would like to see licence fees slashed and local television producers given more generous tax offsets and the revenue loss that this would incur could be recovered by ensuring that companies such as Netflix, Google and Apple â€˜were paying their fair share of taxâ€™.59

Senator Xenophon has since elaborated on his proposal arguing in a similar vein to industry advocates that the free-to-air regional broadcasters operate in an environment where they pay high licence fees and where advertising revenue is declining. 60 Like the industry advocates, Senator Xenophon wants to see the playing field levelled; he suggests companies such as Google, Facebook and Netflix should be â€˜taxed on a turnover basisâ€™.61 Senator Xenophon adds that revenue gained from Google, Facebook and Netflix could be then used to offset the â€˜disproportionately harsh cutsâ€™ which community radio and community television have suffered.62

50. Ibid.

51. Ibid.

52. M Mason, â€˜Cross bench not sold on case for reform,â€™, The Australian Financial Review, 7 March 2016, p. 29. 53. Ibid.

54. N Christensen, â€˜Will Pauline Hanson and Derryn Hinch hold the key to media reform?â€™, Mumbrella website, 8 July 2016. 55. Ibid.

56. Ibid.

57. D White, â€˜Broadcasters to be viable after reformâ€™, The Australian Financial Review, 19 January 2016, p. 6. 58. Christensen, â€˜Will Pauline Hanson and Derryn Hinch hold the key to media reform?â€™, op. cit. 59. Mason, â€˜Cross bench not sold on case for reformâ€™, op. cit. 60. N Xenophon (Independent Senator), Deal or no deal: media law changes must include licence fee cuts and a fair tax on Facebook, Google and

Netflix, media release, 1 September 2016. 61. A turnover tax is a tax levied on turnover (revenue) at a specific rate, irrespective of the source of revenue and whether or not the revenue is associated with any profit or loss to the entity (as defined by Economics Section, Parliamentary Library). 62. Xenophon, Deal or no deal, op. cit.

It has also been reported that Senator Xenophon has â€˜struck a dealâ€™ with Minister Fifield â€˜to back the crossbenchersâ€™ efforts to ban gambling advertising during daytime sporting broadcasts in exchange for media reform bill supportâ€™.63 The Minister has denied this is the case. And while Senator Xenophon has also called for anti-siphoning to be included in the media reforms proposals, the Minister has decreed this issue is at present unacceptable.64

Position of major interest groups Industry

Previous comment In 2013, in conjunction with the Labor Governmentâ€™s attempt to reform media legislation, a Senate Committee investigated the 75 per cent reach rule and concluded that it was irrelevant in the modern media environment. The Committee recommended removal of the rule, but added that this should be on the condition that legally enforceable undertakings were in place to safeguard the delivery of local content for regional Australia.65

At the time of this investigation most broadcasters argued that the rule was out of date, and that removing it would mean that regulations were more consistent with converging media technologies. In addition, if the rule were removed, regional networks and metropolitan networks would be allowed to merge and this would increase industry efficiency and economies of scale (see a snapshot of current major media interests in Appendix A).66 The WIN and Ten Networks in particular expressed some doubt that rescinding the reach rule would be as beneficial as most of their fellow broadcasters believed. WIN, for example, voiced concern that the end of the rule could mean the end of local content on regional stations.67 WIN, however, is now in favour of the changes and other broadcasters that have expressed support recently have been Prime Media, Southern Cross Media Group and Fairfax Media.68

WIN, in fact, appears to have experienced a turnaround with regards to its view on the reach rule. This can be illustrated by its submission to the Senate inquiry into the media reform proposals introduced in the 44th parliament in which it argued that not only is it the case that pay television can reach 100 per cent of the population, but the Seven, Nine and Ten networks are able to do so through their regional affiliates.69 In addition, it considered the ABC and SBS, as â€˜direct competitorsâ€™ for viewers and SBS a competitor for revenue. WIN, therefore:

â€¦ question[ed] why a government broadcaster is free to compete for regional advertising revenue whilst not being constrained by the 75% audience reach rule and also not being required to work to the local content obligations that apply to regional broadcasters. 70

The broadcaster added:

Online broadcasters such as Netflix, Foxtel Go, Stan, Presto, Quickflix, ABC iView, SBS on Demand, Ten Play, 9 Now, Plus 7, Fetch TV, Hulu, Google, YouTube and any other online media group in Australia, and for that matter the world, is able to broadcast their content to 100% of the population whilst Australian commercial television networks are constrained from gaining scale by the 75% Reach Rule.

Perhaps the most telling example of the redundancy of the Reach Rule is the recent action of Seven West Media and more recently Nine Entertainment Co in streaming their channels into regional Australia, effectively bypassing the Reach Rule. Regional Broadcasters pay a large percentage of their gross revenue to these Metropolitan

63. D Davidson and J Mitchell, â€˜Fifield warns diversity in dangerâ€™, The Australian, 5 September 2016, p. 23. 64. Ibid.

65. Joint Select Committee on Broadcasting Legislation, Three broadcasting reform proposals, House of Representatives, Canberra, June 2013: recommendation 1. 66. I Audsley (Chief Executive Officer, Prime Media Group), Evidence to Joint Select Committee on Broadcasting Legislation, 18 March 2013, p. 17. 67. WIN Network and Network TEN, Submissions to Joint Select Committee on Broadcasting Legislation, March 2013. 68. D Crowe and J Mitchell, â€˜Forces massing to fight Fifield's media reformsâ€™, The Australian, 2 March 2016, p. 6. 69. WIN, Submission to Senate Standing Committee on Environment and Communications, Inquiry Into Broadcasting Legislation Amendment

(Media Reform) Bill 2016, 21 March 2016, pp. 5â€“6. 70. Ibid.

broadcasters for the right to broadcast the programming and are being forced to compete with their own product suppliers for viewers and for revenue

WIN, along with the other independent regional broadcasters have together argued that the abolition of the 75% audience Reach Rule will give regional broadcasters the ability to find opportunities through which to gain scale, either through acquisition, merger, partnering with, in a material fashion or selling into, a Metro Broadcaster. All of these options lead to the gaining of scale for television networks and create the opportunity to remove unnecessary or duplicated costs in non-generating content areas of television businesses and allowing the regional division of the up scaled business. The result being a greater opportunity to continue with the current investment into local content and support in regional communities.

Fairfaxâ€™s Nick Falloon has commented that changes, such as are proposed in this Bill, will correct what he has called â€˜an imperfect marketâ€™ which â€˜gives unregulated overseas players a complete free handâ€™.72 The Fairfax Groupâ€™s Chief Executive, Greg Hywood, has stressed the point that a level playing field was what Fairfax wants and he has insisted that the Group was not interested in buying a television network, despite any changes to regulations as:

â€¦ it could produce as much video as it wanted across its websites and the â€˜notion of scale in advertising between print and TV is not remotely as powerfulâ€™, thanks to the digital revolution â€¦

We're very supportive of operating in a deregulated, unregulated environment because it just provide optionality [sic] and we should have optionality because the major competitors in our advertising are not having to deal in a regulated environment at all. 73

News Corp Australia, commenting from a subscription television service point-of-view, has been more cautious in its support, but nevertheless it has labelled proposals, such as those in this Bill, as â€˜â€¦ a step towards media reform.â€™74 It could be argued that News Corp Australiaâ€™s caution is prompted by its failure to convince Minister Fifield to consider including radical changes to the anti-siphoning regime which currently exists in Australia as part of current media reform proposals.75

Foxtel, which is 50 per cent owned by News Corp Australia, has been more emphatic in its condemnation. It stated in its submission to the Senate Environment and Communications Committee in March 2016 that it does not support the repeal of media ownership and control rules unless that repeal occurs â€˜in conjunction with reform of the anti-competitive anti-siphoning regime that shackles subscription television licensees when it comes to acquisition of sporting rightsâ€™.76

Simon Kelly, who was until recently the Chief Operating Officer at Nine Entertainment, has been enthusiastic about media reform and encouraged Nine, Fairfax Media and Southern Cross Media to pursue a â€˜megamergerâ€™ should the reforms in the previous version of this Bill not pass the Parliamentâ€”â€˜to bulk up in the face of growing competition from global giants Google, Facebook and Netflixâ€™.77 According to Mr Kelly, the combination would â€˜create a very powerful local forceâ€™ which would deliver revenues of around $4.0 billion and command close to 30 per cent of the advertising marketplace.78

71. Ibid.

72. D White, â€˜Fairfax chair hopeful of media reformâ€™, The Australian Financial Review, 9 November 2015, p. 9. 73. P Durkin and J Lynch, â€˜Ownership laws a decade overdue, says Fairfax CEOâ€™, The Australian Financial Review, 17 March 2016, p. 10. 74. Crowe and Mitchell, â€˜Forces massing to fight Fifieldâ€™s media reformsâ€™, op. cit. 75. The anti-siphoning regime prevents certain televised events, which have been listed by the Government, from being appropriated by pay

television operators so that only those who subscribe to a pay service are able to view the events. Free-to-air television broadcasters argue that it is not in the public interest to allow subscription operators to force audiences to pay to view programs; subscription television owners argue free-to-air broadcasters support the anti-siphoning list because it is in their financial interest to do so and not for any concern about the public interest. For a detailed discussion of this issue see R Jolly, Sport on television: to siphon or not to siphon?, Research paper, 14, 2009â€“10, Parliamentary Library, Canberra, 2010. 76. Foxtel, Submission to Senate Standing Committee on Environment and Communications, Inquiry Into Broadcasting Legislation Amendment

(Media Reform) Bill 2016, 21 March 2016, p. 1. 77. J Mitchell, â€˜Kelly urges Nine-Fairfax mega-mergerâ€™, The Australian, 7 March 2016, p. 23. 78. Ibid.

Seven West Mediaâ€™s Tim Worner, however, claimed when the reforms in this Bill were proposed in the 44th Parliament that they would do nothing to improve media competitiveness. Mr Worner iterated an earlier call for a cut in licence fees for commercial television broadcasters; he considered that this action would be more likely to assist traditional broadcasters to remain financially viable. The Government proved amenable to the idea of reducing licence fees and the 2016â€“17 Budget provided for a 25 per cent reduction in the amounts free-to-air television and radio broadcasters will be required to pay.79 The Government also stated in the budget papers that it will continue to consider licence fees â€˜as part of broader reforms to broadcasting and spectrum policyâ€™.80

The issue of licence fees has also been brought up by Screen Producers Australia Chief Executive Matthew Deaner and the point raised by Mr Deaner could address some of the criticism levelled at these media reform proposals with regards to the loss of local content. Mr Deaner has suggested that licence fee reductions should be accompanied by â€˜an obligation to invest in diverse local contentâ€™.81 It should be noted, however, that while free-to-air commercial television networks have indicated that they would not be adverse to such a conditionâ€” as local shows rate highlyâ€”there remains a number of aspects of such a proposal that would need to be addressed. These include whether there should be quality standards for local content imposed in this instance, and to what extent â€˜localâ€™ could be defined so that it reflected not only metropolitan programming, but also local programming for regional areas.82 The Government has not addressed such suggestions in this Bill.

Re-introduction of reform proposal The Ten Network welcomed the re-introduction of the Broadcasting Legislation Amendment (Media Reform) Bill and called on the Parliament to pass it â€˜as a matter of urgencyâ€™.83 Ten Network chief executive officer Paul Anderson urged Parliament to support Australian media companies that are investing in local content and local jobs by passing the legislation. According to Mr Anderson, unless the Bill passed â€˜our big tech competitors [will continue to get] a free ride by strangling local media companiesâ€™.84 In response to concerns raised about removing the two out of three rule Mr Anderson added that he had heard no rational argument in favour of its retention; it was â€˜illogical and antiquated and threatens local diversity by constraining Australian media companies in our efforts to grow and competeâ€™. The Ten Network officer was â€˜disappointedâ€™ that there was to be another inquiry into these reforms proposals.85

News Corp Australia welcomed the reintroduction of the Bill into the Parliament and supported its passage, as did WIN Network Chief executive Officer, Andrew Lancaster who saw the legislation as â€˜pivotalâ€™ for ensuring Australian companies are able to compete with â€˜foreign-owned tech companiesâ€™.86 The Chairman of Prime Media Group John Hartigan called upon all Parliamentarians to support the reforms in the Bill and warned that if they were not passed â€˜the Federal parliamentarians who chose to stand in the way of reform need to be prepared to accept the blame for less diversity, the value erosion of Australian media companies and the loss of hundreds of jobsâ€™.87 Grant Blackley, CEO Southern Cross Austereo, added his support for the legislation and stressed his view that rules put in place in the days before the Internet, pay TV, Google, Facebook and YouTube â€˜have no place in todayâ€™s media landscape and are holding back regional media businessesâ€™.88

These comments supplement those made to the Senate Committee inquiry into the earlier version of this Bill and re-stress the arguments that commercial media, in particular regional commercial media, are undergoing 'significant structural challenges', including the loss of advertising markets to online platforms.89 Prime Media,

79. Australian Government, â€˜Part 1: Revenue measuresâ€™, Budget measures: budget paper no. 2: 2016â€“17, p. 8. 80. Ibid.

81. M Mason and D White, â€˜Free and pay TV row over licence feesâ€™, The Australian Financial Review, 14 March 2016, p. 30. 82. The licence fees issue is, of course, further complicated by the fact that subscription television operators see licence fee cuts as the Government providing more benefits for free-to-air broadcasters, while it refuses to reform the anti-siphoning list to help them compete in the modern media marketplace

83. Ten Network Holdings, A statement from Ten Network on media reform, media release, 1 September 2016. 84. Ibid.

85. Ibid.

86. Mediaweek, â€˜Media bosses unite to push media reform with threat of more delaysâ€™, Mediaweek (online news), 2 September 2016. 87. Ibid.

88. Ibid.

89. Prime Media, Submission to Senate Standing Committee on Environment and Communications, Inquiry Into Broadcasting Legislation Amendment (Media Reform) Bill 2016, 21 March 2016, p. 3.

for example, noted that regional television had suffered falls in advertising revenue of $65.0 million in the past three years.90

Media and other commentators Criticism of changes to media regulation

In 2014 Ben Eltham in the New Matilda asked what deregulation in general would mean for Australiaâ€™s media and for democracy and concluded that the result would be media consolidation â€˜and a further weakening of diversity in the Australian mediascapeâ€™.91 Mr Elthamâ€™s 2016 assessment is that, while the Government says that local content will be protected by the rules in this Bill, â€˜Australian citizens that rely on journalists to gather and report the news so they can make informed decisions about our democracy may beg to differâ€™.92 The efficiencies that will be inevitable as media companies merge will mean job losses and fewer, larger media companies will control fewer media voices. In Mr Elthamâ€™s view this will also mean there will be fewer journalists to report and investigate.93

Crikey commentators Bernard Keane and Glenn Dyer also discussed media changes in an article in 2014. In relation to the possible removal of the two out of three rule, Keane and Dyer considered the only substantial beneficiary would be News Corp Australia, as this international media giant would then be able to take control of the Ten Network and have the potential to increase its influence over Australian audiences. In Keane and Dyerâ€™s opinion, this was because:

[d]espite a fragmenting media landscape, thereâ€™s still nothing more politically influential in Australia than a TV network, which is one of the last places where hundreds of thousands of Australians still gather to be told whatâ€™s going on. 94

Commentary on the previous Bill included a critique from academic Vincent Oâ€™Donnell who maintained that the Billâ€™s proposals did not represent reform. For Mr Oâ€™Donnell, they are instead:

â€¦ a capitulation to the interests of licensees, shareholders and rent-seekers in the Australian media industries, painted up in the gaudy raiment of the protection of the public interest. 95

Mr Oâ€™Donnell continues:

[t]he proposed changes to the points system, which deals with the number of news stories relating to â€˜localâ€™ areas, seeks to support diversity. But like so much government regulation, conscientiously planned by those with little experience of the industry it will affect, it will be easy to meet the target without honouring the purpose.

Story selection, buying in copy, sourcing amateur footage from mobile phones and using uncorroborated eyewitness accounts are among the many ways of covering the surface of events without providing the depth that serious news journalism demands. 96

Others who have expressed similar concern include Associate Professor Tim Dwyer from the University of Sydney who believes that, should this legislation pass, there will be an inevitable reduction in the news sources people need to access a wide range of points view â€” â€˜especially in an election yearâ€™.97 Professor Michael Fraser from the University of Technology Sydney agrees and argues that â€˜it is important to maintain the media ownership laws we have to ensure diversity in the mainstream mediaâ€™.98 Denis Muller from the University of Melbourne argues that, while the rules this Bill proposes to rescind are â€˜unenforceableâ€™ and â€˜mockedâ€™ by digitisation, the underlying rationale for the rules remains valid.99 Dr Muller believes that it is â€˜in the public

90. Ibid.

91. B Eltham, â€˜Who benefits from deregulating the media?â€™, New Matilda, 11 March 2014. 92. B Eltham, â€˜Good For moguls, bad for journalists: what the Coalitionâ€™s media reforms will doâ€™, New Matilda, 2 March 2016. 93. Ibid.

94. B Keane and G Dyer, â€˜Removal of â€˜two out of threeâ€™ ainâ€™t bad for News Corpâ€™, Crikey, 4 February 2014. 95. V Oâ€™Donnell, â€˜Who benefits from media reform? If history is any guide, itâ€™s not the publicâ€™, The Conversation, 11 March 2016. 96. Ibid.

97. T Dwyer, Statement to Media Watch, Media Watch, transcript, Australian Broadcasting Corporation (ABC),27 January 2016. 98. M Fraser, Statement to Media Watch, Media Watch, transcript, Australian Broadcasting Corporation (ABC), 27 January, 2016. 99. D Muller, â€˜Diversity and local voices at risk as media owners aim to become emperors of everythingâ€™, The Conversation, 29 February 2016.

interest to have a diversity of voices in the news media and some restraints on the concentration of media powerâ€™. He continues:

Theoretically, digital technology enables everyone with a computer, access to the internet and the skills of basic literacy to become a publisher. A few new players have emerged as a result, most notably Crikey and The Guardian Australia, but the overwhelming majority of people who get their news online get it from the long-established media organisations â€“ the ABC, News Corp and Fairfax.

The reason is that even with the heavy cuts to journalistsâ€™ jobs, these organisations still have more resources, more access to newsmakers, a bigger news-making capability and stronger reputations than most start-ups.

If the mooted rule changes go through, the mergers already foreshadowed by the media industry will mean less diversity â€“ not more. 100

Support for change

ACCC Chairman, Rod Sims, has criticised current media legislation as obsolete and â€˜possibly protectionistâ€™. According to Mr Sims, the reach rule potentially limits competition and efficient investment in the media industry, while the two out of three rule may be preventing the efficient delivery of content over multiple platforms.101 In addressing the concerns expressed by commentators such as Keane and Dyer about a possible News Corp takeover of the TEN Network as a result of change, Mr Sims has also commented that section 50 of the Competition and Consumer Act 2010 prohibits any deal that would have the effect, or likely effect, of substantially lessening competition.102

Senior Lecturer in Political Science at the University of Canberra, Michael de Percy, has argued that it is a contentious point whether localism (a term which includes both the provision of local content by regional broadcasters and the local ownership of those broadcasters) has ever existed in Australia in the first place. Dr de Percy sees localism as â€˜much more than simply requiring commercial television stations to provide local news servicesâ€™.103 In his opinion, the broadband services that now exist enable greater consumer participation in news media production and social networks transform â€˜traditional top-down localism of television programming to a more participatory localism driven by consumersâ€™.104 Dr de Percy is of the view that this has eroded the relevance of Australiaâ€™s cross-ownership laws. In such an environment:

â€¦ [continuing to place] restrictions on cross-media ownership where the distinction no longer exists is hardly the recipe for a commercially viable and internationally competitive communications industry. Ideas about localism need to change too if the advantages of reconvergence are to be realised by Australian media companies. Indeed, regulating for localism may well benefit overseas competitors rather than the people it was designed to serve.

105

An editorial in The Australian has argued that the removal of cross media ownership law may be the way that local content offerings can be improved for regional areas because a proprietor who owns television, radio, print and Internet assets in an area â€˜could deepen and expand local content and newsâ€™.106 In a similar vein Chris Berg from the Institute of Public Affairs has argued also that â€˜it is possible that local content requirements are crowding out alternative entrepreneursâ€™ who may be better able to produce local content.107

In his critique of the earlier media reform Bill, Dr Derek Wilding from the University of Technology Sydney considers the media changes suggested represented â€˜a media landscape that is worth supportingâ€™.108 Dr Wilding

100. Ibid. 101. â€˜ACCC chair backs push for media law reformâ€™, The Newspaper Works, 5 November 2015. 102. D White, â€˜ACCC addresses fears over News Corp expansionâ€™, The Australian Financial Review, 1 February 2016, p. 29 and Competition and Consumer Act 2010.

103. M de Percy, â€˜Archaic cross-media laws wonâ€™t save local contentâ€™, The Conversation, 12 March 2014. 104. Ibid. 105. Ibid. 106. Editorial, â€˜Technology and market forces test old media lawsâ€™, The Australian, 11 March 2014, p. 11. 107. Institute of Public Affairs, Submission to Senate Standing Committee on Environment and Communications, Inquiry into Broadcasting

Legislation Amendment (Media Reform) Bill 2016, 21 March 2016, p. 2. 108. D Wilding (University of Technology Sydney) Evidence to Senate Standing Committees on Environment and Communications, Inquiry into Broadcasting Legislation Amendment (Media Reform) Bill 2016, 31 March 2016, p. 8.

is in favour of repealing the 75 per cent rule and the two out of three rule â€˜if it helps support the transition of print media companies into converged news gathering organisations in a landscape where we have at least three strong local commercial playersâ€™.109 His proviso for supporting this situation is, however, that there needs to be an assurance of â€˜reasonable standards of practiceâ€™ such as accuracy, fairness, transparency and respect for privacy.110 He concludes:

If the number of independent sources of information is reduced, whether through market forces or legislative change, then in my view it becomes more important that those players are committed to appropriate industry based standards of accuracy and fairness in reporting. It is also appropriate that, in a regulatory environment permitting cross-media ownership, those standards apply across media platforms.

111

In Dr Wildingâ€™s words his support, therefore, is for the removal of regulation, provided that there is an appropriate scheme for standards of practice that applies across media platforms and that this scheme is developed and maintained through self-regulatory processes which are not subject to abuse or dilution.

Audiences Audience views of changes to media regulation can reflect the types of questions asked in surveys. For example, in 2014 Essential Report research found that most voters were not overly enthusiastic about removing media regulation. Those surveyed by Essential believed that media regulation was either â€˜about rightâ€™ or that there needed to be more regulation (see Figure 2 below).112

A later survey of regional audiences by JWS Research for the Australian Financial Review in 2015 concluded that there was almost equal support for retention of the media regulation and changing the rules (see Figure 3 below). The interesting finding from this latter survey was that people were very supportive of rule changes if they thought that these would ensure they continued to receive local news.113

Table 1: 2013: satisfaction with media regulation

Total Vote Labor Vote Lib/Nat Vote Greens

Needs to be more regulation

29% 38% 22% 40%

Needs to be less regulation

10% 9% 11% 9%

Present regulation about right

43% 36% 55% 35%

Donâ€™t know

17% 18% 12% 16%

Source: Essential Report.114

109. Ibid. 110. Ibid. 111. Ibid. 112. Essential Media Communications, â€˜Media regulationâ€™, Essential Report, 25 March 2013, p. 7. 113. D White, â€˜Regional Australia backs media reformâ€™, The Australian Financial Review, 12 October 2015, p. 26. 114. Essential Media Communications, â€˜Media regulationâ€™, op. cit.

Figure 2: 2015: audience opinion of media reform

Source: Australian Financial Review.115

Financial implications According to the Explanatory Memorandum this Bill will have no significant financial implications on Australian Government revenue or expenditure.116

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Billâ€™s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.117

The Explanatory Memorandum argues that the measures in the Bill enhance the human rights of people in regional areas of Australia by providing a means through which they are able to receive â€˜information and ideasâ€™ which are relevant to, and affect, their local areas.118

There is, however, some question about the extent to which broadcasters would be able to deliver local content to the satisfaction of all constituencies within each area within the limited time requirements that will be imposed under the Bill.

On Line Opinion commentator David Wadori makes the following observations with regards to how the rights of audiences may be affected by the proposals in this Bill:

The democratic ideal of a media which is impartial, and designed to inform citizens, is inevitably compromised as media ownership becomes more concentrated. Article 19 of the Universal Declaration of Human Rights unequivocally states that everyone has the inalienable right â€˜to hold opinions without interference ...â€™ However this right is undermined as media ownership becomes more concentrated and the number of proprietors is reduced.

Concentration of media ownership is frequently seen as a problem of contemporary media and society. The fundamental threat that concentrated media poses to any society is that, as the influence of privately funded media

115. White, â€˜Regional Australia backs media reformâ€™, op. cit., p. 26. 116. Explanatory Memorandum, Broadcasting Legislation Amendment (Media Reform) Bill 2016, p. 4. 117. The Statement of Compatibility with Human Rights can be found at page 5 of the Explanatory Memorandum to the Bill. 118. Ibid.

increases, the democratic capacity of the media as an instrument to inform and educate citizens is diminished. This is due to a reduction in the number of perspectives that are available to citizens on any given issue, at any given time; and this interferes with an individual's ability to formulate an opinion, as access to information presented in an unbiased and balanced fashion becomes more and more restricted. In Australia, this problem is markedly more acute than elsewhere in the world and thus governments should strive to ensure that the Australian media is impartial and informative.

119

Key issues and provisions Schedule 1 Schedule 1 of the Bill proposes to repeal the sections of the BSA which set out the conditions of the 75 per cent reach rule. Subsections 53(1) and 55(1) and (2) of the BSA set out this rule which prevents a person, either as an individual or as a director of one or more companies, from being in a position to exercise control over commercial television broadcasting licences whose combined licence area populations exceed 75 per cent of the population of Australia.120

Schedule 2 Schedule 2 of the Bill proposes to repeal the two out of three cross-media control rule which is set out in section 61AEA and subdivision BA of Division 5A of Part 5 of the BSA. The two out of three rule prohibits a person controlling more than two out of three regulated media platforms (that is, a commercial television broadcasting licence, a commercial radio broadcasting licence and an associated newspaper) in any one commercial radio licence area.

Items 1 to 3 of this Schedule propose to repeal the definition of unacceptable three-way-control situation and the prohibition on media business transactions which may lead to a three-way-control situation. The other items in this Schedule are either consequential to the repeal of the two out of three rule or are technical amendments.

Schedule 3: Part 1 Box 2: definitions

Aggregated markets: aggregated markets came into being in the 1980s. Aggregation involved creating larger regional television markets by combining certain existing licence areas in the well-populated eastern states so that the combined areas could be served by three commercial services. The rationale for aggregation was that larger service areas would provide an opportunity for licensees to expand and develop regional content and that the preferences of viewers would provide an incentive for regional licensees to produce local programs.121 The current aggregated markets are listed in the definitions at proposed section 61CU. These are: Northern New South Wales, Southern New South Wales, Regional Victoria, Eastern Victoria, Western Victoria, Regional Queensland and Tasmania.

Non-aggregated markets: non-aggregated markets are those that have been considered to be too widespread geographically and which do not have the population to support three competing commercial television services.122 These are listed in proposed section 61CU. They are: Broken Hill, Darwin, Geraldton, Griffith and the Murrumbidgee Irrigation Area, Kalgoorlie, Mildura/Sunraysia, Mount Gambier/South East, Mt Isa, Remote and Regional Western Australia, Riverland, South West and Great Southern and Spencer Gulf.

Trigger event: proposed section 61CV of the BSA will define a trigger event for a regional commercial television broadcasting licence as: occurring when a person starts to be in a position to exercise control of a commercial television broadcasting licence, and immediately after that event, is in a position to control two or more television broadcasting licences (including at least one regional commercial television licence) with a combined licence area population that exceeds 75 per cent of the population of Australia.

119. D Vadori, â€˜Democracy and diversity: media ownership in Australiaâ€™, On Line opinion, 11 June 2014. Note: paragraph added to enhance readability. 120. Broadcasting Services Act 1992. 121. Department of Communications Forward Development Unit, Future directions for commercial television, AGPS, Canberra, 1985, p. xx. 122. Australian Broadcasting Authority (ABA), Adequacy of local news and information programs on commercial television broadcasting services in

regional and rural Australia (solus operator and two operator markets), ABA, Sydney, June 2004, p. 3.

Material of local significance: proposed section 61CU intends that material of local significance will be defined in a local programming determination. Proposed section 61CZ provides that the ACMA will make the local programming determination. The determination will deal with issues such as: what areas will be designated local areas â€˜in relation toâ€™ a regional commercial television licence, what constitutes material of local significance for a local area and what is required for news reports to receive three points towards quota points.123

Item 1 of Schedule 3 proposes to insert a new Division (Division 5D) into Part 5 of the BSA. Commercial television broadcasters who broadcast in aggregated markets and who are affected by a trigger event will be required to broadcast to local areas material of local significance in order to accumulate at least 900 points in each timing period (with at least 120 points being broadcast each week) that commences six months after the trigger event occurs (proposed subsection 61CW(1)).

In the six month transitional period the broadcaster will be required to broadcast 720 minutes of local content (with at least 90 points broadcast each week) (proposed subsection 61CW(2)). There is no change in the local content broadcasting requirements for broadcasters who are not affected by a trigger event (proposed subsection 61CW(3)).

New subsection 61CX also proposes to introduce local programming requirements for non-aggregated markets if a trigger event occurs. The broadcaster will be required to broadcast to each local area material of local significance to accumulate 360 points (with at least 45 points being broadcast each week) in each timing period that commences six months after the trigger event occurs. The proposed subsection does not apply to licences granted under sections 38A and 38B of the BSA.124

Proposed section 61CZA requires licencees who have experienced a trigger event to produce and retain (for 30 days after each six week timing period or longer if ACMA requires) an audio visual record of the material of local significance it has broadcast in local areas. The record must be provided to ACMA on request.

In addition, proposed section 61CZB proposes that licencees subject to trigger events must provide ACMA with two compliance reports. The first of these is to cover a 12-month period commencing six months after the trigger event and the second report to cover the 12-month period after the first report period.

Box 3: the points systemâ€”definitions and allocations

Under proposed section 61CY:

Eligible period: it is intended that points will be able to be accumulated in the hours from 6.30am to midnight Monday to Friday and 8am to midnight on Saturday and Sunday (proposed subsection 61CY(1)).

Timing period: it is intended that points will be calculated during certain timing periods. Proposed subsection 61CY(2)) designates these timing periods as:

- the period starting on the first Sunday in February each year and continuing for six week periods until the end of the 42nd week after this date. Points can be accumulated in this period

- the period starting at the end of the 42nd week after the first Sunday in February and ending immediately before the first Sunday in February the following year. (Points cannot be accumulated during certain parts of this periodâ€”see proposed subsection 61CY(4)).

Under proposed subsections 61CY(9) and (10) it is proposed through the local programming determination that ACMA may be able to vary the timing periods for individual non-aggregated licensees.

123. Explanatory Memorandum, Broadcasting Legislation Amendment (Media Reform) Bill 2016, op. cit., p. 40. 124. Under section 38A, the Broadcasting Services Act 1992 (the BSA) provides for the allocation of an additional commercial television licence to an operator who is providing the only commercial television service in a market. Under section 38B the BSA provides for the allocation of an additional commercial television broadcasting licence to licensees in markets where there are two commercial television licences in force.

Box 4: the points systemâ€”points allocations

Item Material Points for

each minute of material

1 News that:

(a)is broadcast during an eligible period by a licensee covered by subsection 61CW(1) or 61CX(1); and

(b) has not previously been broadcast to the local area during an eligible period; and

(d) meets such other requirements (if any) as are set out in the local programming determination.

2 News that:

(a) is broadcast during an eligible period; and

(b) has not previously been broadcast to the local area during an eligible period; and

(d) is not covered by item 1.

3 Other material that:

(a) is broadcast during an eligible period; and

(b) except in the case of a community service announcementâ€”has not previously been broadcast to the local area during an eligible period; and

4 News that:

(a) is broadcast during an eligible period; and

(b) has not previously been broadcast to the local area during an eligible period; and

5 Other material that:

(a) is broadcast during an eligible period; and

(b) except in the case of a community service announcementâ€”has not previously been broadcast to the local area during an eligible period; and

Proposed subsections 61CY(5) and (6) place limitations on the material that is able to be used towards accumulating points. These subsections intend that material which relates to an overall licence area (or in the case of the Regional Victoria licence areas 104 and 106, to the combined areas) can accumulate no more than 50 per cent of the points required under the legislation.

Further limitations apply to the number of community service announcements that can be broadcast to accumulate points. Under proposed subsection 61CY(7) the first broadcast of a community service announcement (and four repeats of that announcement) are eligible to accrue points. In addition, no more than

ten per cent of points accumulated in a local area in a timing period can be community service announcements (proposed subsection 61CY(8)).

Box 5: ACMA and the Minister

Proposed subsection 61CZC will require ACMA to review the new Division 5D, the licence conditions in paragraph 7(2)(ba) of Schedule 2 of the BSA (see below) and the local programming determination within 30 months after the legislation receives Royal Assent and provide a report to the Minister on its findings.

It is intended that the Minister will be able to direct ACMA about the exercise of the powers conferred on it by Division 5D (other than the review and reporting requirements in proposed subsection 61CZC) and that ACMA must comply with these directions (section 61CZD).

Item 2 of Schedule 3 to the Bill proposes to impose a new licence condition in Schedule 2 of the BSA. This will be imposed under proposed paragraph 7(2)(ba) and will require all commercial television broadcasting licences to comply with the applicable local programming requirements.

Schedule 3: Part 2 Item 3 proposes to repeal section 43A of the BSA which sets out the current requirements for regional aggregated commercial television broadcasting licences to provide material of local significance. The repeal of this section is to take place six months after this Bill receives Royal Assent.

Item 4 provides that ACMA is presumed, six months after the Bill receives Royal Assent, to have revoked the Broadcasting Services (Additional Television Licence Condition) Notice 2014.125 The requirements in subsections 43(2) and 43(3) of the BSA do not apply to the revocation.126 However, the Notice continues to apply with regards to material broadcast during a timing period that commenced before the revocation is taken to have occurred.

Comment

The national and community broadcasters issue One issue which has not been discussed in great detail in relation to these changes is the role the national broadcasters, the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Service (SBS) could, or should play, in light of media reforms, such as those proposed in this Bill.127 A Department of Communicationsâ€™ media ownership and control discussion paper noted in 2014 that any examination of media diversity in Australia needs to consider the role of SBS and the ABC.128 According to this paper, the national broadcasters:

â€¦ make a significant contribution to media diversity through their provision of television, radio and online services. This is particularly so for the ABC, the reach and depth of whose media outlets compare favorably to its commercial counterparts in most areas of Australia â€¦

The television, radio and online services provided by the national broadcasters, particularly the ABC, are also prominent in regional and remote Australia, providing audiences with an additional source of news and information in areas where there are frequently few local commercial media outlets. 129

In addition, community broadcasting services, predominantly community radio services, also add to media diversity.130

125. Broadcasting Services (Additional Television Licence Condition) Notice 2014. 126. Subsections 43(2) and 43(3) provide that if ACMA proposes to vary or revoke a licence condition or to impose a new condition, it must: give to the licensee written notice of its intention, give to the licensee a reasonable opportunity to make representations to the ACMA in relation to the proposed action and publish the proposed changes in the Gazette. This section does not allow the ACMA to vary or revoke a condition set

out in Part 3 or 4 of Schedule 2 of the BSA. 127. This is not to say that it has not been raised; for example Laborâ€™s spokesperson Jason Clare has alluded to the role of the ABC as noted previously in this Digest. 128. Department of Communications and the Arts (DCA), Media control and ownership, Policy background paper, 3, June 2014. 129. Ibid., p. 20. 130. Ibid.

Senator Nick Xenophon, among others, has made the point that funding could be provided to the ABC in â€˜the absence of a commercial television presence in regional areasâ€™ to increase news services and local content offerings.131 While under its Charter, the ABC is already required to deliver such services whether commercial broadcasters choose to do so or not, the Charter could be amended to include specific requirements for the types of local content it must deliver and the variety of sources from which it must obtain that content.132

It appears that the principle of the ABC taking on these obligations would be acceptable to the commercial industry. In 2013, with reference to suggestions that local content provisions should be extended to non-aggregated areas, Free TV Australia, the commercial television industry lobby group, observed that if regional news in these areas was decided to be in the public interest, then the government should provide it, instead of imposing additional regulations on commercial broadcasters.133 However, given the frequent criticism of the ABCâ€™s supposed use of government funding to compete with commercial broadcasters, from within and outside the industry, it is not likely that it would support additional funding to the national broadcaster for this purpose.134

It appears that audiences on the other hand would be satisfied with this alternative. Molly Johnson from The Australia Institute cites polling which shows that there is very strong overall support for increasing funding for the ABC to improve regional services, even among city-dwelling Australians.135

Funding the ABC (and in addition SBS and community broadcasters) in this manner may go a long way towards alleviating concerns expressed about the loss of local content.

Questions about local content As noted earlier in this Digest some people have questioned what actually constitutes local content and whether it can ever have been said to exist. The definition of â€˜material of local significanceâ€™ for television in the BSA is broad and leaves room for considerable interpretation of what material relates directly to a local area or a â€˜licenseeâ€™s licence areaâ€™.136 Stipulations for material of local significance are more stringent for radio than television but, nevertheless, there is room for considerable interpretation about what constitutes local.137

As academics Kristy Hess and Lisa Waller from Deakin University state, currently, and under changes proposed in this Bill, points are gained for commercial television broadcasters for broadcasting local content. Local areas are calculated by ACMA maps, but these group towns and cities that are often hundreds of miles apart and include a number of local government areas.138 In Hess and Wallerâ€™s opinion, the process of media reform needs to redraft the idea of local. They suggest that perhaps a grid system could be beneficial, where broadcasters gain bonus points for covering towns and cities at a considerable distance from the centre of a local area, or points for regularly presenting a full range of stories from all corners of the grid.139

This suggestion may also help to alleviate some of the concerns about the potential loss of reports of a truly local nature. To work effectively, however, it would most likely need to involve some sort of compulsory reporting of broadcaster compliance as was required for radio, for example, until the most recent licence condition notice came into effect in 2014.140

In 2013 ACMA suggested a subsidies scheme that could be adapted to encourage the production and broadcast of more local content. ACMAâ€™s suggestion involved paying broadcasters direct subsidies or providing regulatory relief as incentives.141 This could be adapted to encourage broadcasters to provide more local content than will be required under the proposed revised regulations. A variation of this idea from ACMA was that subsidies could

131. N Xenophon, Statement to Media Watch, Media Watch, transcript, Australian Broadcasting Corporation (ABC), 27 January 2016. 132. The Charter is set out at section 6 of the Australian Broadcasting Corporation Act 1983. 133. Free TV Australia, Submission to Australian Communications and Media Authority, Regional Television Local Content Investigation, 27 August 2013.

134. For example, J Sloan, â€˜Aunty suddenly fills the air, and it's a real shameâ€™, The Australian, 2 October 2010, p. 13. 135. M Johnson, Heartland: why the bush needs its ABC, Australia Institute, Canberra, September 2015, pp. 9â€“10. 136. Broadcasting Services (Additional Television Licence Condition) Notice 2014, section 8. 137. Broadcasting Services (Regional Commercial Radio - Material of Local Significance) Licence Condition 2014. 138. K Hess and L Waller, â€˜Regions at the pointy end of media reformâ€™, The Conversation, 2 March 2016. 139. Ibid. 140. Broadcasting Services (Regional Commercial Radio - Material of Local Significance) Licence Condition 2014, op. cit. 141. ACMA, Regional commercial television local content investigation report, ACMA website, December 2013, p. 35.

be provided to community organisations or to the national broadcasters to produce local content for commercial broadcasters to air.142

Further to the issue of where the public broadcasters are situated in the local content debate, DigEcon Research comments:

For many years local programming has been the forte of the ABC. The innovative ABC Local program took that to another level, encouraging community generated content for publication on ABC platforms. The ABCâ€™s digital platforms are a critical channel for the dissemination of this material. ABC local radio provides real local content on an ongoing basis.

Better funding the ABC to provide local content in regional areas is a preferable policy tool to ineffective content regulation of commercial providers. Indeed, this should be the policy position across all content regulation (except for self-regulated classification) in the radio and television markets. 143

Alternative means to deliver more diversity The Public Interest Journalism Foundation has suggested that new types of measures could be introduced to replace simple regulation and protect and monitor plurality and diversity in news and information.144 The Foundation considers three measures particularly appropriate:

â€¢ regular review of media diversity

The Government could be required to establish an independent committee to review and report every three years on the plurality and diversity of news and information sources and the adequacy of local news in regional Australia.

â€¢ establishing an independent production fund for public interest journalism

This measure would involve legislation that would establish a production fund for independent journalism. The fund would be â€˜designed to encourage innovation and experimentation in digital journalism, especially in regional and rural Australiaâ€™.

â€¢ government incentives to promote a culture of philanthropy to promote quality journalism, such as those that have a long history in the United States.145

Trigger events Professor Matthew Ricketson from the University of Canberra noted the definition of â€˜trigger eventâ€™ in the previous Bill was imprecise:146

â€¦ it is given as a â€˜change in controlâ€™ of a licence that would result in the licence covering a market that exceeds 75 per cent of the population. It seems likely that the definition of â€˜controlâ€™ derives from the existing definition in the Broadcasting Services Act. More significantly, the â€˜trigger eventâ€™ only occurs in the context of the 75 per cent reach rule, not the two out of three cross-media control rule. So a merger or acquisition that resulted in ownership of two out of three licenses in a market but whose reach stayed within 75 per cent of the population would not be a trigger event, and so the new provision of local content rules wouldn't apply.

147

Professor Ricketson also notes there are only two compliance reports required following a trigger event. Neither the Bill nor the Explanatory Memorandum refers to what, if any, reporting requirements will be imposed following that period.148

142. Ibid., p. 36. 143. DigEcon Research, Submission to Senate Standing Committee on Environment and Communications, Inquiry Into Broadcasting Legislation Amendment (Media Reform) Bill 2016, 21 March 2016, p. 5. 144. Public Interest Journalism Foundation, Submission to Senate Standing Committee on Environment and Communications, Inquiry Into

Broadcasting Legislation Amendment (Media Reform) Bill 2016, 21 March 2016, pp. 2â€“3. 145. Ibid. 146. M Ricketson, Submission to Senate Standing Committee on Environment and Communications, Inquiry Into Broadcasting Legislation

Amendment (Media Reform) Bill 2016, 21 March 2016, p. 2. 147. Ibid. 148. Ibid., p. 3.

Definition of control Prime Media also raised the issue of control in its submission to the Senate inquiry into the previous version of this Bill. Prime suggested that a more precise definition of control may be achieved by confining its meaning to that found in Schedule 1 of the BSA (see box below).149 The Senate inquiry report, published in May 2016 suggests that the Government may wish to consider the issue of control in the context of this reform, but this Bill has not addressed this issue.150

Box 6: a more precise definition of control?

Prime Media suggests that a more precise definition of control of a media company could be achieved with reference to paragraphs 2(1)(d) and (e) of Schedule 1 of the BSA.151

These define a person as in control of a company if:

(d) the person, either alone or together with an associate of the person, is in a position to:

(i) veto any action taken by the board of directors of the licensee or the company; or

(ii) appoint or secure the appointment of, or veto the appointment of, at least half of the board of directors of the licensee or the company; or

(iii) exercise, in any other manner, whether directly or indirectly, direction or restraint over any substantial issue affecting the management or affairs of the licensee or the company; or

(e) the licensee or the company or more than 50% of its directors:

(i) act, or are accustomed to act; or

(ii) under a contract or an arrangement or understanding (whether formal or informal) are intended or expected to act;

in accordance with the directions, instructions or wishes of, or in concert with, the person or of the person and an associate of the person acting together or, if the person is a company, of the directors of the person.

149. Prime Media submission to Senate Standing Committees on Environment and Communications, Inquiry, op. cit., pp. 7â€“8. 150. Senate Standing Committees on Environment and Communications, Inquiry report, op. cit., pp. 34â€“35. 151. Prime Media submission to Senate Standing Committees on Environment and Communications, Inquiry, op. cit., pp. 7â€“8.

Appendix A:

Table 2: major media interests snapshot: January 2016

Owner Interests: broadcasting Interests: print

Bruce Gordon WIN Network (family owned)

14.96% of Ten Network

14.96% of Nine Entertainment

Nine Entertainment 9.99% of Southern Cross Austereo

Gina Rinehart 8.52% of Ten Network

James Packer 7.68% of Ten Network

Lachlan Murdoch 7.68% of Ten Network

100% of Nova Entertainment

Co-Chairman News Corp (US)

Rupert Murdoch Executive Chairman News Corp (US) News Corp (US) 100% of News Corp Australia Estimated ownership of 41.7% of print media involving national, metropolitan, regional and

community newspapers

50% of Foxtel

News Corp Australia 14.99% of APN News and Media APN owns 4.1% of print media Foxtel 13.84% of Ten Network

Bill Caralis Super Network Radio (family owned)

Janet Cameron Grant Broadcasters (family owned)

Fairfax Media Ltd 54.5% of Macquarie Media Estimated ownership of print media: 33.8% involving national, metropolitan, regional and community newspapers

John Singleton 32% of Macquarie Media

Kerry Stokes 73% of Seven Group Holdings

Seven Group Holdings 41% of Seven West Media Seven West Media estimated 6.5% ownership of print media involving metropolitan, regional and community newspapers

11% of Prime Media Group

Source: ACMA and Ibis World.152

152. ACMA, â€˜Media interests snapshotâ€™, current as at 9 September 2016. Note this ACMA page also provides more detailed information about the business interests of broadcasters and Ibis World, Newspaper publishing in Australia, December 2015, available only through subscription.

Appendix B: Summary of industry stakeholder views on media reform Summary by AdNews of industry stakeholder views on media reform as at 31 March 2016 in submissions to the Senate Inquiry into the previous version of this Bill.153

Foxtel:

ï‚· the 75 per cent audience reach rule and two out of three cross-media control ruleâ€™ are outdated and â€˜prevent optimisationâ€™ ï‚· Foxtel was strongly opposed to repeal of any media control rules in isolation. Therefore, it did not support passage of the Bill at the time. Media reform is needed, but should be holistic ï‚· the anti-siphoning scheme represents analogue-era regulation ï‚· regulation should not impede competition ï‚· fair competition will enable Foxtel to invest more in sports.

Ten Network:

ï‚· the two out of three rule is outdated, has been overtaken by technology and is threatening diversity and hurting Australian media companies ï‚· Ten supported the Media Reform Bill 2016 which repeals the 75 per cent audience reach rule and the two out of threeâ€™ cross-media ownership rule ï‚· removal of both the ownership rules and the broadcasting tax is urgently needed to maintain a strong

Australian voice and protect diversity ï‚· removing the licence fee in addition to removing outdated ownership regulations would allow Ten to invest millions of additional dollars in local content ï‚· Ten supported the removal of all media ownership rules in the BSA. However, this Bill only removes two.

Seven West Media:

ï‚· Seven saw â€˜great dangerâ€™ in addressing these matters in a piecemeal manner ï‚· Seven has neither sought, nor opposed changes to media ownership rules. However, it has pointed out that the current approach is unduly narrow ï‚· related matters, such as anti-siphoning, can become trade-offs later down the track for changes legislated

now

ï‚· Seven needs to understand the true price of these media ownership changes before it can decide whether this price is the right one ï‚· no clear consumer benefit from merger and acquisition activity that may follow removal of the 75 per cent reach rule or the two out of three rule has been articulated ï‚· the television licence fee should be well up in the priorities for review. A reduction in licence fees would

therefore be the most effective mechanism to support Australian content as well as ongoing local news production.

Nine Entertainment Co:

ï‚· Nine conditionally supported the proposed changes to the 75 per cent reach and two out of three rules as a path to reform. However, they should not impose additional regulation with regard to local content ï‚· licence fee relief is the immediate and pressing issue for Nine and for ongoing investment in the Australian production industry ï‚· real media reform must address the role of the public broadcasters in meeting public policy objectives for

todayâ€™s media landscape

153. â€˜"Urgent actionâ€ required â€“ media reform submissions revealedâ€™, AdNews, 31 March 2016. Note: some changes made to the text to enhance readability.

ï‚· technology is making the current policy framework redundant ï‚· licence fee relief will drive increased investment in Australian content and innovation.

Special Broadcasting Service (SBS):

ï‚· there is no direct impact on SBS by this Bill as it deals primarily with commercial television, radio and print media. However, the reforms will change the structure of the media industry which may have an impact on SBSâ€™s activities in the medium and longer term

ï‚· the emergence of potentially five broadcasters with a national footprint, also controlling newspaper and radio assets, means it will be more important than ever for public broadcasters to provide quality, distinctive Australian content and news that is balanced and impartial

ï‚· in order to meet the call for increased distinctive, local Australian content, SBS will need to lean more heavily on funding from government than from commercial revenue sources in order to fulfil its Charter of telling Australian multicultural stories. The current levels of Australian content, at 9 per cent of its television schedule, are already insufficient to meet the Charter adequately.

Fairfax Media:

ï‚· Fairfax has a â€˜long standing, consistent and public position regarding the proposed media law reformsâ€™. The e two-out-of-three rule and the 75 per cent reach rules are â€˜outdated, irrelevant and increasingly restrictiveâ€™. The BSA is particularly out of date in a modern media environment as it â€˜does not even recognise the Internet let alone the proliferation of internet based delivery systems such as SVOD, TVOD, IPTV or audio subscription services nor the impact of global search engines like Google or social media sites such as Facebook and Twitterâ€™

ï‚· while both free-to-air television and publishers are being hit by digital disruption, newspapers have faced rapid revenue declines since the mid-2000s due to the Internet. â€˜This will inevitably lead to a reduction in the ability of publishers to invest in quality content, particularly in regional areas where digital economies of scale are very lowâ€™

ï‚· players such as the likes of Google and Facebook receive the â€˜bulkâ€™ of ad spend: â€˜Neither Google nor Facebook invest in the creation of local content, particularly news journalism contentâ€™ ï‚· â€˜Global companies are operating increasingly in Australia without similar restriction. The rules around diversity of voice are irrelevant because consumers can use the internet to access any voice on any subject

they want, including new offerings from global playersâ€™.

News Corp:

ï‚· News Corp agreed with Fairfax explaining that it believes â€˜the current legislative framework governing media ownership and control is anachronistic as the market and technological developments have delivered massive changes in the media environment and delivered enormous choice to consumersâ€™

ï‚· News Corp believed the Government should pursue the removal of all five media ownership and control rules â€“ the 75 per cent reach rule, the two-out-of-three rule, the 5/4 rule, the one to a market rule, and the two to a market rule. News also supports change to the anti-siphoning regime legislation

ï‚· News Corp said that â€˜true reform of these two pillars of Australiaâ€™s media laws (media ownership and control, and anti-siphoning) would significantly contribute to macroeconomic reform in Australiaâ€™ ï‚· it supported the Broadcasting Legislation Amendment (Media Reform) Bill 2016.

Southern Cross Austereo:

ï‚· Southern Cross Austereo's (SCA) submission is focused on local content, noting that the broadcaster is part of the Save our Voices campaign which saw it and other regional networks - Prime Media, Win and Imparja - join forces on â€˜outdatedâ€™ media laws

ï‚· audience reach rule: SCA noted that it supports the abolition of the 75 per cent audience reach rule on the basis that the Internet has reduced its relevance. It said it results in regional broadcasters in effect â€˜acting as broadcast re-transmitters for the metropolitan networksâ€™

ï‚· SCA pointed to digital technology as allowing metro networks to stream context â€˜with no regard to the exclusive broadcast licence area and regardless of any cannibalisation this may cause to viewingâ€™. It also does not extend to international operators like Netflix and YouTube

ï‚· abolition of the rules will boost local content as it will enable national broadcasters to be formed where the regional part of the business is not merely a re-transmitter of the city signals ï‚· cross-media control rule: SCA supported the abolition of the cross-media rules noted it is designed for an era where newspaper, radio and television were the only sources of news. It says it needs to be updated in a

world where Australians no longer rely on these forms of media for content ï‚· local content: While SCA agreed with the provision of a trigger event in the provision of local programming requirements it does not support the definition of a trigger event as occurring on a change of control. It

believed it should be determined by a change of majority ownership.

Prime Media Group:

ï‚· similarly to SCA, Prime, which is also part of the Save our Voices campaign, supported the abolition of the 75 per cent reach rule and the cross-media ownership rule ï‚· â€˜Regional broadcasters, including Prime do not own any intellectual property, except the local news services they produce. They do not have the capacity, flexibility or scale to innovate or respond to the rapidly evolving

media landscape. Prime cannot use the content it receives from the Seven Network or Network Ten under the affiliation arrangements to introduce streaming or catch up servicesâ€™. With the reach rule abolished it opens up opportunities for regional and metro broadcasters to merge ï‚· with the bulk of population growth likely to be in metropolitan licence areas, it is possible that the 2016 census will show that two of the three metro networks could be in reach of the reach rule with their current licences ï‚· Prime wanted a redefinition of the trigger even in local content requirements with questions surrounding the difference between deemed control and actual control. In addition, Prime says the legislation only assumes control can be from a metro licence perspective.

WIN Network:

ï‚· regional network WIN was supportive of the abolition of the 75 per cent audience reach rule and two-out-of-three rule, claiming that both are â€˜outdatedâ€™ ï‚· media is now global, so people can source media from a range of different outlets, noting that these rules were created when television, radio and press were the main sources of information ï‚· WIN noted that almost 100 per cent of its broadcast content is acquired from Nine, Ten and Seven, meaning

it faces the high cost of acquiring content, but also broadcasting it across a vast geographic area ï‚· the two-out-of-three and the reach rules need to be abolished, because otherwise regional broadcasters will struggle to survive; they need to have the opportunity to acquire, merge, partner or sell into a metropolitan

broadcaster.

Media, Entertainment and Arts Alliance (MEAA):

ï‚· MEAA supported removal 75 per cent reach rule and the extension of local content requirements following trigger events ï‚· it did not support the removal of the cross-media control rule; it appeared that the Bill's dominant focus was relieving the regulatory burden on entities, rather than benefiting media diversity ï‚· it urged the Government to defer the Bill as it had not been fully considered how diversity will be fostered

under a â€˜partially reformedâ€™ system ï‚· the MEAA supported a single platform-neutral 'converged regulatory' overseeing a common regulatory regiment; a recommendation from the Convergence Review. That approach would see a 'minimum number

of owners' rule and a 'public interest' test replacing a suite of rules.

Australian Subscription Television and Radio Association (ASTRA):

ï‚· did not support the Bill noting it is â€˜operator-specificâ€™ regulation which will â€˜entrench the competitive advantages enjoyed by [free-to-air] television networksâ€™

ï‚· anti-siphoning rules area as â€˜as much of a relic of the analogue eraâ€™ as the other reforms being discussed. There is nothing in the rules preventing a streaming service like Netflix acquiring sports rights ï‚· holistic media reform would leave consumers better served by an â€˜open and competitiveâ€™ marketplace.

Institute of Public Affairs (IPA):

ï‚· IPA supported the changes noting it has long argued media is over-regulated and that doing so can constitute a threat to freedom of speech ï‚· it called for deeper regulatory change, noting government is yet to come to terms with the consequences of technological change in the media sector. It notes the original idea behind the Gillard government's

Convergence Review was correct in approaching regulation on a functional basis rather than legacy arrangements ï‚· it questioned local content requirements saying the rules are a symptom of the deeper regulatory challenge facing any government wishing to modernise media.

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Title	Broadcasting Legislation Amendment (Media Reform) Bill 2016
Database	Bills Digests
Date	16-09-2016
Source	Bills Digest Service
Parl No.	45
Author	JOLLY, Rhonda
Citation Id	4820879
Key item	Yes
Major subject	Communications and the Arts portfolio Mass media Media ownership Regional television Broadcasting licences
Minor subject	Bills Legislative amendments
Pages	30p., bibl.
Volume	no. 013 (2016-17)
System Id	legislation/billsdgs/4820879