Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2013-2014-2015-2016
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
BROADCASTING LEGISLATION AMENDMENT (MEDIA REFORM) BILL 2016
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Communications
Senator the Honourable Mitch Fifield)
BROADCASTING LEGISLATION AMENDMENT (MEDIA REFORM) BILL 2016
OUTLINE
The Broadcasting Legislation Amendment (Media Reform) Bill 2016 (the Bill) will amend
the Broadcasting Services Act 1992 (BSA) to repeal outdated media ownership and control
laws to better reflect the contemporary digital media environment, including repealing the '75
per cent audience reach rule' and the '2 out of 3 rule cross-media control rule'.
The Bill also introduces new local programming obligations for regional commercial
television broadcasting licensees where 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.
75 per cent audience reach rule
The BSA prevents a person, either in their own right or as a director of one or more
companies, from being in a position to exercise control of commercial television broadcasting
licences whose combined licence area populations exceed 75 per cent of the population of
Australia. This rule is known as the '75 per cent audience reach rule'.
The rule has the practical effect of preventing mergers between any of the predominantly
metropolitan commercial television broadcasting licensees (Seven, Nine and Ten) and any of
the regional commercial television broadcasting licensees (Prime, WIN and Southern Cross)
because such a transaction would result in a person controlling commercial television
licences whose combined licence area populations substantially exceeded the 75 per cent
population threshold.
This rule does little to support media diversity as regional viewers essentially receive the
same commercial television programming as metropolitan viewers, due to affiliation or
content supply agreements. In addition, two metropolitan licensees now stream versions of
their services across Australia, including in regional markets.
Schedule 1 to the Bill will repeal this rule, which would, subject to competition law and other
relevant laws, allow consolidation within the commercial television sector and greater scale
in operations, thus allowing commercial broadcasters to compete in an environment where
audiences can readily access premium content online.
2 out of 3 cross-media control rule
The '2 out of 3 cross-media control 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.
This rule regulates the traditional media platforms of commercial television, commercial
radio and associated newspapers and does not take into consideration the changed media
landscape, where consumers access news content from alternative sources, such as online. In
this context, the '2 out of 3 cross-media control rule' is ill-suited to a contemporary media
environment. Accordingly, Schedule 2 to the Bill proposes to repeal it.
1
Local programming
Schedule 3 to the Bill inserts a new Division 5D in Part 5 of the BSA which sets out new
local programming requirements for regional commercial television broadcasting licensees.
Currently, the BSA requires regional commercial television broadcasting licensees in
aggregated markets and Tasmania to provide approximately 120 points of material of local
significance per week to local areas within the licence areas. Material of local significance is
material that is broadcast to a local area and relates directly to either the local area or the
licence area. The aggregated markets include the following licence areas: Northern New
South Wales, Southern New South Wales, Regional Victoria, Eastern Victoria, Western
Victoria, and Regional Queensland.
Under the current points system, 1 minute of material of local significance is worth 1 point
and 1 minute of news that relates directly to the local area is worth 2 points. In the absence of
a trigger event, the practical effect of these provisions, including the existing 720 point
requirement over a 6-week timing period, will be maintained under the amended local
programming obligations contained in the Bill.
Main changes to be introduced by Schedule 3
The main changes that will apply as a result of Schedule 3 are described below.
Six months after the occurrence of a trigger event, the Bill will:
increase local programming requirements for affected regional commercial television
broadcasting licensees in aggregated markets and Tasmania by 30 points per week (new
subsection 61CW(1)); and
introduce local programming requirements for affected regional commercial television
broadcasting licensees in non-aggregated markets. These include the following licence
areas: Broken Hill, Darwin, Geraldton, Griffith and Murrumbidgee Irrigation Area
(MIA), Kalgoorlie, Mildura/Sunraysia, Mount Gambier/South East, Mt Isa, Remote and
Regional WA, Riverland, South West and Great Southern, and Spencer Gulf. A new
Section 61CX will require licensees to provide approximately 60 points of material of
local significance per week to each local area, with a minimum of 45 points per week.
Broadcasts to remote areas of Australia will be excluded given the large geography and lack
of large population centres.
The Bill will introduce a new local programming points system for licences affected by a
trigger event whereby each minute of local news programming that depicts people, places or
things in the relevant local area (ie. is filmed in the local area) will be allocated 3 points
(item 1 in the table in new Subsection 61CY(3)). Otherwise the local programming points
system will replicate the current material of local significance points system.
The Bill will require licensees to provide the Australian Communications and Media
Authority (ACMA) with an initial report on their compliance with the obligations 18 months
after a 'trigger event' and a second report one year later.
2
In order to evaluate the extent to which the Bill achieves its objective, the ACMA will review
the operation of the new local programming provisions within two years following the
commencement of the additional obligations.
Transitional arrangements for the new requirements
The new local programming requirements will phase in as set out below.
The old local programming requirements under section 43A of the BSA, and the
Broadcasting Services (Additional Television Licence Condition) Notice 2014 will continue
to apply in respect of any 'timing period' operating during the 6 months following Royal
Assent (following which they are repealed by Part 2 of Schedule 3) to allow the ACMA time
to develop certain details of the new scheme under new Section 61CZ. Timing periods are
generally 6 weeks in duration.
In relation to regional aggregated commercial television broadcasters:
if no trigger event occurs, during any timing period beginning more than 6 months after
Royal Assent, the licensee must broadcast to each local area approximately 120 points
per week of material of local significance under the new Division 5D requirements (new
subsection 61CW(3));
if a trigger event occurs during the 6 months after Royal Assent, the licensee must
broadcast to each local area:
- approximately 120 points per week of material of local significance under the old
section 43A requirements during any timing period operating during the 6 months
following Royal Assent;
- approximately 120 points per week of material of local significance under the new
Division 5D requirements during any timing period beginning more than 6 months
after Royal Assent and operating during the remainder of the 6 months after the
trigger event (new subsection 61CW(2)); and
- approximately 150 points per week of material of local significance under the new
Division 5D requirements during any timing period beginning more than 6 months
after the trigger event (new subsection 61CW(1));
if a trigger event occurs more than 6 months after Royal Assent, the licensee must
broadcast to each local area approximately 150 points per week of material of local
significance under the new Division 5D requirements during any timing period
beginning more than 6 months after the trigger event (new subsection 61CW(1)).
In relation to regional non-aggregated commercial television broadcasters:
if a trigger event occurs, the licensee must broadcast to each local area approximately
60 points per week of material of local significance under the new Division 5D
requirements during any timing period beginning more than 6 months after the trigger
event (new subsection 61CX(1)).
3
FINANCIAL IMPACT STATEMENT
The Bill is expected to not have any significant financial impact on Commonwealth
expenditure or revenue.
4
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Broadcasting Legislation Amendment (Media Reform) Bill 2016
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
The Broadcasting Legislation Amendment (Media Reform) Bill 2016 (the Bill) includes
measures to reform outdated media regulation contained in the Broadcasting Services Act
1992 (BSA) to better reflect the contemporary digital media environment. This includes
repealing the '75 per cent audience reach rule' and the '2 out of 3 rule cross-media control
rule'. The Bill also amends and introduces some additional local programming obligations for
regional commercial television broadcasting licensees, where, as a result of a change in
control, their licences become part of a group of commercial television licences whose
combined licence area populations exceed 75 per cent of the Australian population.
Human rights implications
The measures contained in the Bill directly relate to regulating commercial television
broadcasting licensees, which are corporations, rather than individuals. Accordingly, the
Bill's amendments to the BSA do not have a direct impact on human rights. However, the
effect of the local programming obligations on regional commercial television broadcasting
licensees does engage the right to freedom of expression.
Article 19(2) of the International Covenant on Civil and Political Rights (ICCPR) recognises
the right to freedom of expression, including the right to receive and impart information and
ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of
art, or through any other media of a person's choice.
By requiring regional commercial television broadcasting licensees to broadcast a minimum
level of material of local significance, the Bill promotes the freedom to receive information
and ideas of local significance, disseminated through television programmes to people living
in regional areas of Australia.
Conclusion
The Bill is compatible with human rights because it advances the protection of human rights
and freedoms.
5
REGULATION IMPACT STATEMENT
MEDIA OWNERSHIP AND LOCAL PROGRAMMING OBLIGATIONS
CONTEXT
Media control and ownership rules
The regulatory framework governing the control and ownership of Australia's media was
developed in an analogue media environment that was dominated by three platforms: free-to-
air television, free-to-air radio and print. The current control and ownership rules regulate
these three platforms, and are based on a common geographical area within which diversity
can be measured - the commercial radio licence area. This arrangement allowed the
development of numerical tests as a proxy for diversity.
The current framework, established under Part 5 of the Broadcasting Services Act 1992 (
BSA), is essentially comprised of five rules which limit the 'control' of commercial
broadcasting services (television and radio) and newspapers associated with their licence
areas.
The media ownership and control rules are based on the concept of 'control', not
ownership per se. If a person has company interests exceeding 15 per cent, they are
regarded as being in a position to exercise control of the company. However, holding
company interests is not the only way to be in a position to exercise control. Other
examples of control are if the person: is the licensee; can control the selection or
provision of a significant proportion of the licensee's programming; can control a
significant proportion of the operations of the company; can appoint, secure or veto the
appointment of at least half of the board of directors; or can exercise direction or restraint
over any substantial issue affecting the management or affairs of the licensee or
company. Similar criteria apply to newspapers, their publishers and persons exercising
control of them.
An 'associated newspaper' is one that that is 'linked' in terms of circulation with the
relevant licence area. Importantly, this excludes the national newspapers, The Australian
and the Australian Financial Review, and as a consequence, the ownership of these
papers is not regulated through the media control rules.
'5/4' rule (the 'minimum voices rule')
At least five independent media 'voices' must be present in metropolitan commercial
radio licence areas (the mainland state capital cities), and at least four in regional
commercial radio licence areas.
- A 'voice' is a commercial television broadcasting licence, a commercial radio
broadcasting licence or an associated newspaper (a 'media operation'), or a group of
two or more media operations (a 'media group'). A standalone media operation and
a separate media group each count for one 'point' under the 'minimum voices rule'.
6
'2 out of 3' rule (the 'cross-media ownership rule')
Mergers cannot involve more than two of three regulated media platforms (commercial
television, commercial radio and associated newspapers) in any commercial radio licence
area.
'75 per cent audience reach' rule
A person, either in their own right or as a director of one or more companies, must not be
in a position to exercise control of commercial television broadcasting licences whose
total licence area population exceeds 75 per cent of the population of Australia.
'One-to-a-market' rule
A person, either in their own right or as a director of one or more companies, must not be
able to exercise control of more than one commercial television broadcasting licence in a
licence area.
'Two-to-a-market' rule
A person, either in their own right or as a director of one or more companies, must not be
able to exercise control of more than two commercial radio broadcasting licences in the
same licence area.
Media transactions are also subject to other regulatory assessments in relation to competition
under the Competition and Consumer Act 2010 and foreign investment under the Foreign
Acquisitions and Takeovers Act 1975 and Foreign Acquisitions and Takeovers Regulations
2015.
Local programming in regional Australia
Between 1989 and 1992 some smaller regional commercial television licence areas that had
received television services from single providers were aggregated into larger areas or
'aggregated markets,' these being:
Regional Queensland;
Northern New South Wales;
Southern New South Wales; and
Regional Victoria.
These services were aggregated to provide three commercial television services to major
regional areas in Australia so that the number of services available would be comparable to
metropolitan areas, and also to promote competition and establish more viable regional
television markets.
Following concerns about the level of local programming being broadcast in these aggregated
markets, the Broadcasting Services (Additional Television Licence Condition) Notice 7 April
2003 (the 2003 licence condition) was introduced by the Australian Broadcasting Authority
(the industry regulator, and predecessor to the Australian Communications and Media
Authority). The 2003 Licence Condition required regional commercial television
broadcasting licensees to provide minimum levels of material of local significance in local
7
areas within the four aggregated markets. Note that, 'material of local significance' (referred
to hereafter as 'local programming') is defined in the relevant licence condition to be material
that is broadcast to a local area if it relates directly to the local area, or the licensee's licence
area.
During broader media ownership reforms in 2006, Parliament introduced section 43A into
the BSA. Section 43A requires the Australian Communications and Media Authority
(ACMA) to make and maintain a licence condition to require commercial regional
broadcasters to provide minimum levels of local programming to local areas within licence
areas in aggregated markets. The scope of the obligations was also extended to include
Tasmania.
The obligations provided under section 43A currently operate as a licence condition - the
Broadcasting Services (Additional Television Licence Condition) Notice 2014 (BSN). Under
the BSN, licensees in the aggregated markets and Tasmania are required to provide
minimum levels of local programming to specified local areas, with the minimum required
levels set by a points system. Points are accumulated by licensees through broadcasting local
programming during eligible periods (6:30am to midnight Monday to Friday, and 8am to
midnight on weekends) for timing periods defined in the BSN. Points are accumulated on a
'per minute' basis, i.e. 1 point for 1 minute of qualifying programming, with local news
programming incentivised through being allocated 2 points per minute broadcast.
Specified licensees are required to meet minimum quotas of:
an average of 720 points per six-week period; and
a minimum requirement of 90 points per week.
Information supplied to the ACMA by relevant licensees up until 2014 indicates that many
licensees subject to the BSN obligations significantly exceed their programming
requirements, while some broadcasters operating in non-aggregated regional markets provide
local programming despite there being no regulatory obligation to do so, indicating that there
are commercial drivers for providing local programming in some markets. This compliance
information is no longer supplied to the ACMA.
THE PROBLEM
The legislative framework governing the Australian media is no longer appropriate for the
modern media environment. The current media control and ownership laws were developed
in the analogue era and only apply to traditional platforms, namely: commercial television,
commercial radio and associated newspapers. Collectively, these rules restrict traditional
media companies from optimising the scale and scope of their operations and from accessing
resources, capital and management expertise available in other media sectors. Under the
current rules, established media operators do not have the flexibility to respond to increasing
financial pressures by adapting to the changing media landscape including through mergers
with other television broadcasters or other associated newspapers or radio broadcasters.
Current media rules are outdated
The current media ownership and control framework was set in a time when traditional media
companies dominated the delivery of audio, audio visual and news content to audiences and
the opportunities for advertisers to reach those audiences. Within this dynamic, predictable
numerical tests (performed through the media control and ownership rules outlined above)
8
could act as a proxy for media diversity. This is no longer the case as the modern media
environment consists of more than the three regulated platforms. For example, Foxtel,
Australia's most profitable media company, is not regulated under the media ownership rules,
nor are online sources of content, such as popular streaming service Netflix.
Internet platforms and services: the Internet and IP-based technologies have provided
opportunities for new platforms and business models, and the pressure on established
operators has increased significantly. The impact of the Internet can be seen in the shift of
advertising revenue by platform. As shown in Figure 1, online platforms have grown from
having a 6.1 per cent share of the Australian advertising 'pie' to achieving the largest share of
advertising revenues, capturing 36.2 per cent in 2014.i Over the same period, television and
radio shares have declined modestly (to 30.7 per cent and 8.2 per cent respectively), while
newspapers have plummeted from 37.5 per cent to 15.7 per cent.
Figure 1 - Share of total advertising by media platform
40
35
30
25
20
15
10
5
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Television Radio Newspapers Online
Source: Commercial Economic Advisory Service Australia, 2015
While traditional media platforms remain profitable and attract significant audiences (with
some exceptions), consumers are moving to new sources of video, audio and news content.
Newspaper circulations have shrunk significantly in recent years and while digital
subscriptions continue to grow, they are not replacing the hard copy readership. Weekly print
readership of titles including The Sydney Morning Herald, The Daily Telegraph, The Age and
The Herald Sun fell between 22 and 46 per cent between 2003 and 2014.ii Digital revenues
remain low, making up less than 10 per cent of print revenues in 2014.iii Online sources of
news are widespread, with consumers having access to both local and international online
sources. Close to half of all Australians (44 per cent) actually identify online sources of news,
including social media, as their main source of news, ahead of the more traditional
platforms.iv Local online-only or predominantly online sources now include The
Conversation, Crikey, New Matilda, The Huffington Post, The Daily Mail, The Guardian
Online and BuzzFeed, and online aggregators such as Google News and Apple's News app.
The business of commercial broadcasting is hinged on the capacity to amass viewers for
advertisers. At an aggregate level, the majority of viewing time remains devoted to broadcast
television on in-home setsv, and commercial television audiences have been relatively
9
resilient over the past decade; between 2003 and 2015, the total evening audience for the
metropolitan commercial free-to-air television broadcasters has declined modestly from 3.691
million to 3.386 million viewers.vi However, more dramatic declines were evident in 2015,
with free-to-air audiences for the metropolitan broadcasters falling by 5 per cent compared
with 2014,vii and the average number of hours of broadcast television viewed fell below 90
hours per month (or 3 hours per day) in the first quarter of that year,viii representing the first
decline below the 90 hours per month level since television people meters were introduced in
1991.ix
Audience stability at the industry-wide level also masks significant divergence between the
main networks, as seen in Figure 2: the Seven Network posted modest growth in its average
evening audiences of 4 per cent over the 13 years to 2015; the Nine Network recorded a
decline of 11 per cent over this period; while Network Ten's total evening audience has fallen
by some 25 per cent, with the primary channel audience dropping by close to 50 per cent.x
Figure 2 - Commercial free-to-air television audiences
Seven combined
Commercial FTA Growth in average
annual daily audience
Average annual daily audience, prime time, 2003 to 2015 (prime time) of 36,000,
1,200,000 or 4%, over the 13 years
to 2015. Equates to a
compound annual
growth rate (CAGR) of
1,000,000 0.31%.
Nine combined
Decline in average annual
daily audience (prime
800,000 time) of 124,000, or 11%,
over the 13 years to
Daily audience 2015. Equates to a CAGR
annual avg of -0.96%.
600,000
Ten combined
Decline in average annual
daily audience (prime
400,000 time) of 213,000, or 25%,
over the 13 years to
2015. Equates to a CAGR
of -2.35%.
200,000
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
Source: Sun-Sat 1800-2400, 5 City Metro, Wks 1-52 2003-2015, Total People, Consolidated
(2003 to 2009 live only). Data © OzTAM Pty Limited 2015. The Data may not be
reproduced, published or communicated (electronically or in hard copy) without the prior
written consent of OzTAM.
Furthermore, industry analysts IBISWorld and PricewaterhouseCoopers (PWC) are
predicting a decline in revenue for free-to-air television in real terms, which is consistent with
a linear trend analysis of Free TV Australia revenue data, as shown in Figure 3.
10
Figure 3 - Free-to-air commercial television advertising revenue projections
6000
5000
$ million (real dollars)
4000
3000
2000
1000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
IBIS PwC FreeTV Linear Trend
Source: IBISWorld industry report, PWC media outlook 2015-2019, FreeTV BFR data
Note: figures adjusted for inflation using the GDP Implicit price deflator produced by the
ABS. Forecast figures adjusted for inflation IBISWorld figures adjusted to remove
government revenues. FreeTV data analysis based on a line of best fit (least squares) linear
regression.
Radio audiences have also been relatively stable over recent years, although this does not
necessarily translate to revenue. Metropolitan commercial radio audiences grew by between 1
and 3 per cent per annum from 2009 to 2013,xi and 6.2 per cent from 2013 to 2015.xii
However, audience growth has also been strong online. Research from Nielsen indicates that
Australians are already listening to more online audio content (8.2 hours) than terrestrial
radio (8.0 hours) per week.xiii
There is also significant fragmentation within the radio sector. Metropolitan commercial
radio services attract larger audiences than their regional counterparts simply due to the
differences in market size. However, in all areas, there is a stark divide between AM and FM
stations. Consistent with generally poor ratings, regional AM revenues have dropped 46.1 per
cent in real terms between 2000 and 2014 (4.3 per cent per annum), while revenues for the
metropolitan AM broadcasters have declined 18.8 per cent over the same period (1.5 per cent
per annum). At the same time, FM broadcasters - metropolitan and regional - have increased
revenues at close to 1 per cent per annum. This is demonstrated in Figure 4.
11
Figure 4 - Free-to-air commercial radio revenue by modulation
800.0
$ millions (2014 dollars) 700.0
600.0
500.0
400.0
300.0
200.0
100.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Metro - AM Metro - FM Regional - AM Regional - FM
Source: ACMA Broadcast Financial Results, various years
Notes: Figures are adjusted for inflation using the GDP implicit price deflator. Based on
service revenue (which includes advertising revenue, other licence fee revenue and other
revenue)
In the audio visual market, the changing dynamic is centred on the proliferation of video and
audio on demand and streaming services, most notably the Australian launch and rapid
consumer take-up of US-based streaming service Netflix in March 2015. As at October 2015,
2.68 million Australians aged over 14, or 11.4 per cent of Australian households, had access
to a Netflix subscription.xiv Pay-based television services more broadly are also growing, with
3.1 million Australian households subscribing to one or more services as at 30 June 2015.xv
This includes Foxtel, as well as new Subscription Video On Demand (SVOD) services (such
as Netflix, Stan and Presto) and IPTV providers such as Fetch TV. A similar situation exists
in the audio market, where ad-supported and subscription audio services are available to
Australians from Spotify, iTunes Radio and Pandora, among others, for relatively low cost
($10 to $12 per month). Spotify has over 15 million paying subscribers and more than 60
million active users across 56 markets worldwide, including Australia.xvi With so many
market players, audiences have an unprecedented variety to choose from for accessing news
and entertainment.
Free-to-air television and radio broadcasters have not been standing still amidst these changes
and have sought out new revenue streams.
SVOD: two on-demand streaming services involving free-to-air television broadcasters
were launched in early 2015: Stan (a joint venture with Nine Entertainment and Fairfax
Media) and Presto (a joint-venture between Seven West Media and Foxtel)
Catch-up: All of the free-to-air television networks have online catch-up services, where
audiences can watch video content online after its initial broadcast on television: PLUS7
(Seven Network), 9Now (Nine Network) TENplay (Network Ten), iView (ABC) and SBS
on Demand (SBS).
12
Streaming: Seven West Media and Nine Entertainment Co have either commenced or
intend to commence live-streaming of their television channels (Seven Network and Nine
Network respectively),xvii,xviii while many commercial radio broadcasters stream their
terrestrial services. Australian Radio Network (ARN) operates iHeartRadio, which allows
listeners to access any of network's stations or create customised stations.xix
Although these developments are notable, the likelihood that broadcasters will be able to
successfully diversify into the new media space and compete with online providers remains
unclear.
While Stan and Presto launched in Australia at approximately the same time as Netflix,
they have been taken up by viewers in less than 1 per cent of Australian homes, compared
with over 11 per cent for Netflix.xx Broadcasters are clearly seeing these services as
complementary rather than as profit drivers. David Gyngell, former CEO of Nine, stated
it would remain to be seen whether Stan would turn a profit, and that rather than being a
"saviour" of the company, Stan is "an adjunct to content acquisition and original content
deals."xxi
Radio broadcasters looking to develop audio streaming services face a crowded market,
with competition from international players such as Spotify, Apple and Google.
Consolidation is the overwhelming trend as smaller players are absorbed, a recent
example being Nova's exit from its joint-venture in streaming service Rdio shortly before
Rdio declared bankruptcy and had its assets acquired by US-based internet radio service
Pandora.xxii
The experience in overseas markets, where subscription video and audio streaming
services are more mature, suggests that online only providers have the capacity to rapidly
gain a dominant market position. For example, in the United States, Netflix had 42
million subscribers as of July 2015xxiii and accounted for 37 per cent of internet traffic, xxiv
and its growth has exacerbated the 'cord cutting' or cancellation of traditional cable
television services by consumers.xxv
It is clear that free-to-air commercial television and radio broadcasters and print newspapers
are under increasing and unprecedented commercial pressure. Their operating environment
has changed substantially, and is likely to continue to do so over the coming 5 to 10 years.
The current media control and ownership rules constrain the capacity of Australian media
operators to optimally structure their businesses to deal with change underway in the
industry, through increasing the scale of their operations and providing new opportunities for
growth and diversification into new services.
Availability of local programming
Local programming is valued by regional Australians and provides them with access to news,
information and commentary relevant to them and the areas in which they live. It also
supports jobs and investment in regional communities, particularly where such programming
is produced locally. While there are clear benefits associated with services that provide local
programming, there are also significant costs and investment outlays associated with it, and
market forces alone may not ensure that local programming is provided at optimal levels. In
particular, local programming may be at risk where regional television broadcasters merge
with metropolitan operations and there are strong expectations of cost savings from the
merger or acquisition.
13
Increasingly, domestic businesses are placed at risk by their inability to compete with
unregulated media businesses, and regulatory frameworks originally designed to protect
diversity are now impeding the capacity of local businesses to continue to provide quality
professional journalism and reporting. The drive for efficiencies within the constraints of
regulation has been seen with the closures of news rooms and cessation of local news
bulletins by regional commercial television. In 2015 WIN closed TV newsrooms in Mackay
and Mildura, and this was followed by job losses from Prime7 in Wagga Wagga and
Tamworth as that organisation also rationalised its operations.
As noted above, many regional commercial television broadcasting licensees subject to the
local programming obligations significantly exceed their programming requirements, while
some broadcasters operating in non-aggregated regional markets provide local programming
despite there being no regulatory obligation to do so. This suggests that there are commercial
drivers for providing local programming in some markets, and that the pressure to realise
efficiencies may not result in cuts to local production and content provision.
However, the high costs of providing local programming relative to other programming
(outlined in the options section below) suggest there is a clear risk that the drive for
rationalisation of local programming and facilities will be a reality for commercial
broadcasters in smaller markets. This local programming is valued by local audiences. While
emerging services and platforms are offering regional Australians new, additional means of
accessing news and information, the value of television compared to other media has been
described by the ACMA as being unique in providing moving visual images of people and
events in local communities with accompanying audio, compared to other platforms. For
instance, the ACMA note that some competing services provide audio only (e.g. radio), some
services are not as efficient in providing up-to-date information (e.g. newspapers), and some
do not provide a significant amount of local programming (e.g. online/streaming services).xxvi
In addition to being valued by audiences, local programming provision by traditional media
outlets also has an economic role. The administration and production facilities of commercial
broadcasters provide employment and opportunities for Australians living in these areas: the
WIN Network claims to employ over 1400 staff across six states of Australia and the ACT,
xxvii
while Prime Media Group states that it is a significant employer of regional Australians
with offices stretching from the Gold Coast, throughout many major cities and towns in
regional NSW and Victoria, and across Western Australia to Geraldton.xxviii
Local advertising also has a role in facilitating economic activity more broadly in regional
markets, enabling local businesses to reach their local customers and stimulate sales.
Although advertising revenues for commercial television broadcasting has declined in real
terms over recent years, it remains significant, with industry body Free TV Australia
reporting over $423 million earned by regional commercial broadcasters for the July -
December 2015 period.xxix
While there are clear, identifiable benefits associated with services that provide local
programming, market forces alone may not ensure that such programming is provided at
optimal levels. The availability of local programming will be under pressure in smaller or
more geographically-dispersed regional markets in particular.
14
THE NEED FOR GOVERNMENT ACTION
There is a clear need for government action to address the problems outlined above,
comprised of two key parts:
Repeal of regulatory impediments to business: Aspects of the existing regulatory
framework are out-dated and are preventing regional television broadcasters from
restructuring and rescaling their operations to better address competition from unregulated
platforms, particularly over the Internet. Repeal of these regulatory impediments will help
modernise the media ownership and control framework, and will provide businesses with
opportunities to strengthen their businesses, with likely flow-on benefits for consumers in the
form of higher-quality services being available to them.
Establishment of effective support for regional Australians' access to the local
programming they value, where the market fails to deliver this: Providing local television
programming is a high cost activity and will not always be commercially feasible for regional
broadcasters on their own to pursue, particularly in large geographic areas with relatively
dispersed populations. Subsequently, while regional Australians value programming relevant
to them and the areas in which they live, in the absence of regulation the market will not
always be an effective mechanism for providing it. The significant scale and efficiency
benefits available through mergers with metropolitan broadcasters will better position
regional broadcasters to sustainably supply local programming and ensure a return to local
communities from the repeal of the 75per cent audience reach rule.
As these obligations are based in legislation Government action is required to deliver the
intended reforms.
As articulated above, the current rules constrain the capacity of Australian media operators to
optimally structure their businesses to deal with change underway in the industry and
increase the scale of their operations. These constraints on scale and structure are not an
anomaly or by-product of the rules but are, in fact, an explicit aim: they operate to stop
consolidation beyond certain limits within and across the traditional media platforms of
commercial broadcasting and certain newspapers.
Increasingly, domestic businesses are placed at risk by their inability to compete on a level
playing field, and regulatory frameworks originally designed to protect diversity are now
impeding the capacity of local businesses to continue to provide quality professional
journalism and reporting. Regional commercial television broadcasters face particular
challenges, for two reasons:
Their lack of bargaining power for content. Regional broadcasters enter into programme
affiliation agreements with metropolitan networks that require significant affiliation fees
in return (between 32 and 39 per cent of their revenues). In late 2015, WIN television
risked 'going black' over its affiliation agreement with the Nine network, with reports
that Nine was increasing affiliation fees from 39 per cent to 55 per cent of revenue.
While the issue was temporarily resolved on 31 December 2015, this interim
arrangement is due to expire on 30 June 2016.
Moves by the metropolitan networks - including Seven and Nine - to provide live online
streaming of their content, which effectively allows them to penetrate regional licence
areas. Over time, this is likely to result in the erosion of regional audiences and
15
advertising revenue. It is notable that in February 2016 WIN launched legal action
against Nine in relation to its live streaming service, indicating the significance of such
services to the players involved.
It is doubtful whether this targeting of the traditional media is sustainable given the financial
pressures being brought to bear on these operators as a result of audience fragmentation and
increasing competition for viewers and audience. While there is no case for shielding
incumbent media operators from competitive disruption, it is important to ensure that
regulatory frameworks are not impeding their capacity to compete effectively in the global
media market place against media firms that, in many instances, are not regulated to the same
extent as commercial broadcasters
However, any reform of the control and ownership rules to permit greater scale and
efficiencies in the operations of transitional media companies will need to balance these
benefits with the policy objectives of media diversity and the provision of local
programming. The Government has and will continue to have a role in this regard, as
broadcasters may not otherwise provide the level of local programming that is optimal for
local communities. As noted above, the high costs of local programming production and the
structural changes underway in the media more broadly will continue to create incentives for
broadcasters to achieve further efficiencies, placing pressure on the continued supply of local
television at current levels.
OPTIONS AND ANALYSIS
Option 1: No change
Description
Leave existing media ownership and control rules and local programming provisions
unchanged.
Analysis
In the current media environment, as described above, the control rules are hindering
competition by preventing traditional media companies from adapting to the changing nature
of the industry and building scale to compete with unregulated media companies. No new or
additional regulatory requirements would apply to industry under this option. The costings
for this option are zero.
Option 1: Average annual regulatory costs (from business as usual)
Change in Business Community Individuals Total change in
costs ($ organisations costs
million)
Total, by sector $ 0 $0 $0 $0
Assessment
There are significant short-comings to a 'do-nothing' option. The current rules are no longer
relevant in the contemporary media environment and unnecessarily constrain the capacity of
regulated Australian media operators to optimally structure their businesses to deal with
change underway in the industry. Without reform, financial pressures being brought to bear
16
on traditional media operators as a result of audience fragmentation and increasing
competition for viewers and audience will continue to mount. The regulatory framework will
become increasingly antiquated and impede media companies' capacity to compete
effectively in the global media market place.
Option 2: Repeal outdated media ownership rules, while leaving existing local television
programming rules unchanged.
Description
Repeal the '75 per cent audience reach' rule and the '2 out of 3' rule, while leaving the
existing local television programming rules provided at section 43A of the BSA unchanged.
Analysis
Retention of '75 per cent audience reach' rule and the '2 out of 3' rule is increasingly
difficult to justify when consumers are using online sources of news as often if not more than
traditional platforms, and where there are no media-specific restrictions on consolidation or
industry structure of online media, beyond general competition laws. The implications of
removing these rules are outlined below.
The '75 per cent audience reach' rule
This rule effectively prevents the owners or controllers of any one of the major
metropolitan commercial networks (Seven, Nine and Ten) from gaining control of (or
merging with) any one of the regional commercial networks (Prime, WIN and Southern
Cross Austereo), as the metropolitan networks are currently close to the permitted
maximum reach of 75 per cent of the Australian population. Removal of this rule will
allow consolidation of control between metropolitan and regional broadcasters - noting
that a range of possible scenarios could occur depending on commercial considerations.
- One such example of a consolidation, which has been the subject of media
speculation, could be Nine Entertainment Co. acquiring the assets of Southern Cross
Austereo.
In a practical sense, the rule is redundant as viewers in regional areas already receive the
same number of commercial television services, and substantially the same commercial
television programming, as their metropolitan counterparts due to affiliation agreements,
including many news services. If consolidation occurs, local advertising arrangements
would be expected to be maintained because they support local markets (and local
revenue sources).
Any mergers between metropolitan and regional broadcasters would be unlikely to result
in a reduction in the diversity or number of voices in the affected markets. On a practical
level, programming provided within a licence area that was involved in a merger or
acquisition would be unlikely to change, at least in the short term. This is because any
such merger or acquisition activity will generally involve the replacement of one voice
with another, because metropolitan and regional networks for the most part operate in
separate licence areas.
17
The '2 out of 3' rule
This rule assists in maintaining media diversity by preventing a person that controls two
regulated media platforms in a licence area from acquiring control of a third platform in
the same licence area.
- For example, Fairfax Media cannot currently control a commercial television licence
in Sydney or Melbourne unless it divests its commercial radio or associated
newspaper holding in the relevant licence area. Without this rule, Fairfax Media
would be allowed to control a television, radio and associated newspaper licence in
the Sydney and/or Melbourne licence area.
In most licence areas, the 2 out of 3 rule is not in play as no single entity controls media
assets from two of the three regulated platforms in these areas. If the rule is removed, the
great majority of regional and remote licence areas of Australia would see little change
as the retention of the 5/4 minimum voices rule would ensure preservation of existing
levels of media diversity. Given the greater number of media outlets and levels of media
diversity in metropolitan areas, consolidation in these larger markets may not raise
particular diversity concerns.
Even if potential transactions complied with the proposed revised media ownership and
control rules, they may not proceed for other reasons: the Australian Competition and
Consumer Commission (ACCC) may prohibit mergers that substantially lessen
competition under the Competition and Consumer Act 2010 (the proposed reforms will
not alter the ACCC's role); or they may not have sufficient commercial merit and
industry participants may opt not to acquire additional media assets.
From a costing perspective, the repeal of the '2 out of 3' and '75 per cent audience reach'
rule would have a zero regulatory cost (and deregulatory cost). These measures are
deregulatory in nature, removing current constraints on media market corporate activity, in
relation to mergers and audience reach. The repeal of the '2 out of 3' rule will provide the
possibility for media operations in certain markets to merge, which may provide economies
of scale in their operations. There are no new reporting or administrative obligations arising
from this proposal, and there is no removal of administrative overhead associated with
existing arrangements.
Option 2: Average annual regulatory costs (from business as usual)
Change in Business Community Individuals Total change in
costs ($ organisations costs
million)
Total, by sector $ 0 $0 $0 $0
Assessment
Removal of the '75 per cent audience reach' rule and the '2 out of 3' rule would be effective
in modernising the media control and ownership framework and allowing media companies
to compete in the current media environment. This option would also involve retention of
18
existing regulated amounts of local programming in aggregated markets, ensuring a minimum
requirement is maintained regardless of control changes in the television industry.
However, there could be expected to be changes in the actual amounts of local programming
in regional areas. Where changes in control of an organisation lead to the business
rationalising its operations, there is a possibility that this may involve a reduction in the
amount of local programming to the minimum levels required by the current obligations in
relevant licence areas. Regional advocates have expressed concerns that mergers or other
consolidation in this sector may result in reduced local programming being available in
regional areas, particularly in markets not currently subject to local television programming
obligations. As such, this is not the preferred option for reform as it does not strike the right
balance between giving media companies the freedom they need to remain competitive and
ensuring the provision of local programming.
Option 3: Repeal outdated media ownership rules, while updating local television
programming rules.
Repeal outdated media ownership rules to facilitate a more competitive media sector, while
establishing a new framework to support the continued availability of minimum levels of
local television programming in regional Australia, particularly when changes of control
occur.
Description
Remove the '75 per cent audience reach' rule and the '2 out of 3' rule, and introduce local
programming obligations for certain commercial regional broadcasters.
Local programming obligations
To support the proposed media ownership and control reforms outlined above, it is
proposed that new obligations be established in conjunction with the proposed media
ownership reforms, so as to support the availability of minimum levels of local
programming on regional commercial television.
As noted previously, the majority of commercial television licensees in aggregated
markets and Tasmania are currently required to meet local programming obligations
under section 43A of the BSA. The aggregated markets include much of regional New
South Wales, Queensland and Victoria. Licensees in these markets and in Tasmania must
provide between 60 and 120 minutes of local programming (such as news) per week. In
all other regional and remote licence areas, there is no obligation to provide local
programming (though some is provided in some areas).
The proposed local programming obligations described below would be linked
specifically to business activities which result in certain changes of control. They would
apply to regional commercial television licences forming part of a commonly-controlled
group of licences that collectively reach more than 75 per cent of the Australian
population as a result in a change in control of one or more of those licences (a 'trigger
event' for the new obligations).
An approach to implementing local programming obligations in regional areas is outlined in
below.
19
New programming obligations for regional commercial broadcasters - basic outline
The most effective approach to establishing programming obligations for regional
commercial broadcasters is to establish a new, tailored framework that requires commercial
regional broadcasters to meet enhanced local programming obligations where a 'trigger-
event' occurs.
Benefits Shortcomings
Design would be tailored to problem Some broadcasters may incur
Flexibility for different broadcasters and additional costs as a result of the
licence areas would be provided proposal
Would ensure minimum levels of local
programmes are available across
regional Australia
New regulatory requirements would
only apply to licensees as a trade-off for
the opportunity to exploit new
opportunities and improve the
efficiency of their operations
Analysis
As discussed in Option 2, retention of the '75 per cent audience reach' and '2 out of 3' rules
is increasingly difficult to justify. Option 3 is to remove these outdated rules (for the reasons
outlined in option 2), while revisiting local television programming rules to ensure the
availability of valued television programming.
The element of Option 3 which proposes to strengthen obligations for the minimum levels of
local programming in regional Australia will have a moderate cost impact on industry. These
costs will be incurred by licensees in both aggregated and non-aggregated regional licence
areas, and the costs will vary significantly between broadcasters and licence areas. However,
as outlined earlier, these costs would only arise when a trigger event has occurred, and any
decision to undertake such a transaction (and trigger additional local programming
obligations) is solely a commercial judgement for free-to-air broadcasters.
It is reasonable to assume that any decision by broadcasters to change control of one or more
commercial television licences would take all factors into account and determine it was in the
interests of their shareholders. The deregulatory benefits of any such mergers (such as
economies of scale in programming, marketing and distribution) do not fall within the scope
of the Regulatory Burden Measurement (RBM) framework. However it is expected that these
benefits would materially outweigh any costs that fall within the scope of the RBM. For this
reason it is important to put the RBM costs in context and note that Option 3 remains
deregulatory in net terms.
In estimating costs under the RBM the Department has used a variety of information sources.
This includes:
Compliance data about the levels of content currently provided in aggregated licence
areas
20
Assumes three mergers will occur over a five year period if the proposal was to come
into effect
Research and analysis on the costs of providing local programming
An analysis of the business as usual costs to acquire content (in the absence of a
regulatory obligation).
Option 3: Average annual regulatory costs (from business as usual)
Change in Business Community Individuals Total change in
costs ($ organisations costs
million)
Total, by sector $ 3.51 mil $0 $0 $ 3.51 mil
(regulatory) (regulatory)
Assessment
Removing the '75 per cent audience reach' and '2 out of 3' rules, while establishing a new
framework to support the availability of local television programming in regional Australia is
considered to be the optimal option for achieving the intended objectives. In regards to
supporting the availability of local television programming in regional areas, the option
described above removes out-dated media ownership rules while ensuring continued diversity
in the ownership and control of media services in Australia. Additionally, it ensures that
where the repeal of current media ownership rules results in significant changes to the scale
and structure of some media organisations' business operations, this will not be at the
expense of regional communities and their ability to access the local programming that these
communities value.
Essentially this option is about finding a balance which continues to benefit local
communities, but which is not overly burdensome for business, and only occurs when the
benefits of business consolidation become available for broadcasters.
While there are costs for broadcasters associated with the local television programming
obligations element of the proposal, the obligations are only triggered for commercial
television broadcasting licensees where they become part of a group of licences that reach
more than 75 per cent of the population. Media organisations will choose to become subject
to the obligations because there is greater benefit or opportunity for them doing so than there
is cost incurred by the additional obligations.
Additionally, while producing local programming comes at a financial cost to broadcasters,
there is also an associated financial and reputational return. Broadcasters in some regional
areas not subject to existing local programming obligations already provide local television
programming in the absence of any obligation to do so - while the extent may vary, there are
clearly some commercial or other less tangible incentives for providing local programming.
21
DESCRIPTION OF PREFERRED OPTION
New local television programming requirements for regional commercial television
licensees
As noted above, the preferred approach to supporting the availability of local television
programming in regional Australia is establishing a new framework. This framework would
be established through legislation that amends the BSA to remove the existing s43A
arrangements and provide for new, tailored local programming obligations.
The key features of this approach to implementing new local programming obligations for
regional commercial television licensees is described below. Obligations would apply to
regional commercial television licences forming part of a group of commercial television
licences whose combined licence area populations exceed 75 per cent of the Australian
population, as a result of a merger, acquisition or other change in control.
The obligations specified under these arrangements would not apply to commercial television
broadcasts to remote areas of Australia, or to holders of section 38A and 38B commercial
television licences. Section 38A and 38B licences are allocated by the ACMA to existing
licensees to ensure that regional audiences receive all three main television networks, where
there are less than three broadcasters in the licence area. To place local programming
obligations on section 38A and 38B licences would represent an unrealistic financial burden
on the original 'parent' broadcaster/s in each regional licence area. Similarly, broadcasts to
remote areas of Australia will be excluded from the new local programming obligations as
their diverse, sparse populations dispersed over a large geographical area mean that local
programming is economically unsustainable.
Regional aggregated markets and Tasmania
New legislation would set a minimum amount of local programming per week which
must be broadcast by licensees to applicable local programming areas.
Where there is no trigger event this would be the same as the existing amounts specified
in the Broadcasting Services (Additional Television Licence Condition) Notice 2014
which is an average of 120 minutes per week over a six week period, and a minimum of
90 minutes per week over the same period.
Where a trigger event occurs these amounts would increase to 150 minutes on average
over a six week period with a minimum of 120 minutes per week. The increased amount
reflects the greater resources available to broadcast groups with the scale to reach over
75 per cent of the population.
The increased local programming obligation for aggregated markets and Tasmania
equates to 900 points under the current system in the Broadcasting Services (Additional
Television Licence Condition) Notice 2014. Analysis indicates that some, but not all,
licensees already provide a quantity of local programming that is commensurate or above
the proposed quantity to be provided under the new obligations.
22
Non-aggregated markets
In the case of regional non-aggregated markets, certain licensees (section 36 licenseesxxx)
that become subject to a trigger event would be required to broadcast an average of 60
minutes of local programming per week over a six week period, with a minimum of 45
minutes per week over the same period.
Local television programming is already provided in some non-aggregated markets
despite no existing regulatory obligations to do so. Analysis indicates that some, but not
all, licensees in these areas already provide a quantity of local programming that is
commensurate with or above the quantity to be provided under the proposed new
obligations.
Incentivising local production
As noted above it is important to ensure a strong relationship between the local
programming and the local area it is intended to serve. Where amended media ownership
and control rules facilitate consolidation across media enterprises and services, the
resulting potential for centralisation of business operations may be expected to weaken
the link between broadcasters and the regional areas they serve. As such it is proposed
that the local programming obligations include a mechanism to provide an incentive for
local programming to be filmed within the local area it is relevant to.
This incentive would be built into the points system that broadcasters will be subject to
in meeting their local programming obligations under the new framework. Under the
proposed arrangements,
- each minute of the legislated amount of local programming that relates to the licence
area would accumulate one point,
- each minute of local programming that comprises news specific to the local area
would accumulate two points, and
- each minute of local programming that both comprises news specific to the local
area, and is filmed within the local area, would accumulate three points.
An illustration of how the proposed points system would work follows:
23
The proposed points system is the most straightforward method of incorporating an
incentive for filming in local areas into the local programming obligations, and is based
on the similar points system that commercial broadcasters in aggregated markets are
already familiar with.
The proposed arrangements would also mitigate against overly centralised approaches to
local news, for example news broadcasts being filmed out of central locations without
significant engagement with the local area in which it is broadcast.
The legislation would require the ACMA to determine a definition of 'filmed in the local
or licence area', however at a minimum the definition would include within its scope
both pre-recorded footage and live broadcasts or 'crosses' to the local programming or
licence area. The ACMA would need to consider how 'file footage' should be treated, for
example reusing the same footage of local schools or the main street.
The legislation would require regional commercial broadcasting licensees to provide
reports on their compliance with the obligations twelve months after a 'trigger event',
and at yearly intervals for two years after this.
Role of the ACMA
Under this proposal the ACMA would determine a new Local Programming Notice which
includes the following elements:
Identifies the local programming licence areas for aggregated markets, and the number of
local programming areas served within each licence area;
Defines, 'material of local significance', and 'filmed within the local or licence area';
Sets the hours, if any, during which the material of local significance must be broadcast;
Sets other limits, for example limiting repeats, community service announcements;
Sets the 48 week timeframe during which the material of local significance must be
broadcast, including sub periods (e.g. 6 week reporting periods);
24
Compliance and reporting requirements, and
Provide interpretative guidance as required.
The ACMA would also be required to review the operation of the local programming
provisions within two years following its commencement, or as otherwise directed by the
Minister in accordance with below.
Minister's reserve powers
It is proposed that the legislation specifically empower the Minister to give directions to the
ACMA in relation to its powers under the new provisions. This could include aspects of the
local programming notice, or to direct the ACMA to undertake a review of the provisions
earlier than the two year timeframe set out above. This is designed to allow the ACMA to
determine key parameters and specifics of the local programming arrangements whilst at the
same time preserving a level of control for the Minister. A similar provision exists in section
121G of the BSA in relation to Australian programming obligations.
Commencement
The new local programming provisions would commence six months following Royal Assent
to the amending legislation and after the commencement of legislation which repeals the '75
per cent audience reach' rule and the '2 out of 3' rule.
The delayed commencement will allow the ACMA sufficient time to make the new local
programming notice before the commencement of the new obligations. Existing obligations
for aggregated markets and Tasmania would continue until the new local television
programming obligations commence ensuring that there is no reduction in local programming
obligations for these markets.
It is important to note that licensees would not be required to meet local programming
obligations until six months following a trigger event, regardless of the commencement
provisions associated with Royal Assent. This will allow affected licensees to undertake the
necessary preparatory activity and investment in order to meet the obligations.
Benefit of preferred approach
This approach to establishing local programming obligations is the most effective and
efficient way of addressing the key problems associated with minimum levels of local
programming being available to regional Australians, as described earlier in this paper. This
approach is the most effective way of providing for regional Australians to share in the
benefits of improvements in the way media businesses operate, and strikes the right balance
between business and consumer objectives. Additionally, the approach is flexible for
broadcasters and effective for consumers in achieving the intended outcomes. This approach
provides that the design of new obligations will be tailored to the problems identified,
including that
minimum levels of local programming will be required to ensure regional Australians
have access to the programming that they value;
these obligations would be linked to changes of control, allowing businesses to capture
the benefits of the more flexible media ownership rules;
25
the amount of local programming required will vary between areas and will have regard
to different broadcasters' circumstances, but will also reflect the increased scale and
efficiency of broadcasters afforded by ownership and control rule changes; and
a strong link between local programming and the area it serves will be incentivised
through the points system that will underpin broadcasters' compliance with their local
programme obligations, with more points allocated per minute for programming filmed
in the local area than for other programming.
The new regulatory requirements will only apply to licensees as a trade-off for the
opportunity to exploit new opportunities and improve the efficiency of their operations.
CONSULTATION
The Minister for Communications has engaged in extensive consultations directly with
industry stakeholders, including regional and metropolitan broadcasters amongst other
industry participants, continuing conversations begun by the former Minister for
Communications in 2014. These consultations have identified that there will be some level of
support for the proposals, though the nature of support will vary in relation to different
elements of the proposals, and may vary between stakeholders.
Consultations with stakeholders in relation to repealing the 2 out of 3 rule indicated that Nine
Entertainment Co, Ten Network Holdings, Prime Media Group, Southern Cross Austereo,
WIN and Fairfax Media were strongly supportive of its repeal. APN News and Media were
also supportive. Seven West Media were indifferent and opposed to 'standalone' repeals
without broader media reform. Similarly Foxtel and News Corp Australia were opposed to
the repeal of any media control rules in isolation.
Consultations with stakeholders in relation to repealing the 75 per cent reach rule indicated
that Nine Entertainment Co, Ten Network Holdings, Prime Media Group, Southern Cross
Austereo, WIN and Fairfax Media were strongly supportive of the proposal. Seven West
Media was indifferent and opposed to 'standalone' repeals and argued that this repeal would
in fact reduce local content in the regions. Foxtel and News Corp were again opposed to the
repeal of any control rules in isolation.
In relation to the proposed additional local content obligations, stakeholder consultation
indicated mixed views. Prime Media Group, Southern Cross Austereo and WIN indicated
their support for the local content and local filming proposal as long as they are contingent on
a trigger event. Seven West Media, Ten Network Holdings, Foxtel, News Corp, Fairfax
Media Limited and APN News and Media did not make their views on this measure known,
noting that Seven and Nine already provide local content in some of their markets and Ten
does not own a regional licence.
The possibility and effects of changes to media control and ownership rules have been a
significant subject of discussion in the media in recent times. Media analysis and stakeholder
input to that discussion has been extensive, with the feasibility and appropriateness of various
reform options for media ownership reform having been the subject of significant analysis.
Regional Australians' views on local programming have been considered as part of a local
content investigation undertaken by the ACMA in 2013. As noted previous, research that
informed the investigation suggests that regional Australians are likely to be strongly
26
supportive of any measure that facilitates their access to local television programming and
services. Such programming is highly valued in these areas. The closure of WIN's Mildura
and Mackay newsrooms in 2015 provoked 'shock and disappointment'1 from local
communities. Ten staff news staff were impacted in Mackay2 with Mildura news staff
advised to apply for vacancies at other WIN bureaus in regional Victoria3. Further, in
Mildura, sixty locals set up the 'Save Sunraysia TV News" group aimed at examining
alternatives to receiving regional news, including surveying local businesses to establish what
their advertising spend is in order to entice another provider of local news into the region.4
STATUS OF THIS REGULATION IMPACT STATEMENT
The first key decision point for the Government was to consider and determine its response to
stakeholder concerns about the continued appropriateness of existing media ownership and
control rules. A policy response option was developed and progressed as part of a cabinet
submission designed to address this issue. An interim RIS was developed to support the
cabinet submission process and to assist in informing deliberations at the relevant cabinet
meeting.
An early assessment version of this RIS was then prepared to set out the options that were
considered during the development of the proposed media reform measures and, based on
available information about the likely impacts of the proposed options, set out which option
is preferred and why. This version of the RIS was provided to Office of Best Practice
Regulation (OBPR) for review and feedback.
This current version of the RIS has been refined in response to the review and feedback
provided by OBPR, and is designed to address issues raised by them as part of the early
assessment process.
CONCLUSION
The current media control and ownership laws were developed in the analogue era and only
apply to traditional platforms such as commercial television, radio and some newspapers.
Collectively, these rules restrict traditional media companies from optimising the scale and
scope of their operations and from accessing resources, capital and management expertise
available in other media sectors. Financial pressures on established media operators continue
to build and they must have the flexibility to compete and adapt in the changing media
landscape if they are to continue to play a significant role in Australian society and
communities in the future.
Removing the '2 out of 3' and '75 per cent audience reach' rules would reduce the regulatory
burden on the media industry and enable them to better compete in the modern media
environment.
1
www.sunraysiadaily.com.au/story/3097986/sad-news-shock-aired-online/?cs=1511
2
www.tvtonight.com.au/2015/05/win-tv-mackay-mildura-in-shock-closures.html
3
www.sunraysiadaily.com.au/story/3097916/an-era-ends-win-tv-signs-off-mildura-news-bulletin/
4
www.abc.net.au/local/photos/2015/06/02/4247047.htm
27
To ensure local programming continues to be provided in regional Australia, new
programming obligations for commercial regional television broadcasters will avoid
problems associated with creating complex, unwieldy rules through amending the existing
framework. This approach will facilitate the design of an appropriate framework that is
tailored to the problem and to the different needs of affected stakeholders.
The approach described above directly responds to potential effects of the proposed media
ownership and control reforms discussed above, and takes into account that the effects of
those changes might be different in different licence areas. The arrangements are flexible for
licensees, and proportional to the different areas in which they operate. Importantly, it will
ensure that a minimum level of local programming will be available to regional areas.
It is expected that there will be costs for broadcasters associated with the local programming
obligations element of the proposal, however the obligations are only triggered for regional
commercial television broadcasting licensees where they have selected to consolidate or
restructure their operations. Media organisations will choose to become subject to the
obligations because there is greater benefit to them doing so than there is cost incurred by
local programming obligations. Additionally, while producing local programming comes at a
financial cost to broadcasters, there is also an associated financial return. Broadcasters in
some regional areas already provide local programming in the absence of any obligation to do
so - while the extent may vary, there is clearly some commercial incentive for providing
local programming.
i
Advertising across all media sectors had a value of $12.8 billion in 2014. Commercial Economic Advisory Service Australia,
2015.
ii
Derived from Roy Morgan Single Source Australia 2014, Cross-platform and print individual breakdown report (2010-
2014), commissioned research.
iii
Drawn from figures in CEASA 2015, Advertising Expenditure in Main Media, Year ended 31 December 2014, Table 2014-2,
p. 9.
iv
Reuters Institute for the Study of Journalism 2015, Reuters Institute Digital News Report 2015, pp. 10-11.
v
Nielsen 2015, Australian Multi-Screen Report, Quarter 2 2015, p. 2.
vi
OzTAM 2015, Primetime Audience for the Free to Air channels Wks 1-52 2003-2015, Sun-Sat 1800-2400, 5 City Metro,
Total People, Consolidated (2003 to 2009 live only), Commissioned research. May not be reproduced, published or
communicated (electronically or in hard copy) without the prior written consent of OzTAM.
vii
Ibid.
viii
Nielsen 2015, Australian Multi-Screen Report, Quarter 1 2015.
ix
Australian Financial review 2015, The Sharp Threat to Foxtel, 10 August.
x
OzTAM 2015, Primetime Audience for the Free to Air channels Wks 1-52 2003-2015, Sun-Sat 1800-2400, 5 City Metro,
Total People, Consolidated (2003 to 2009 live only), Commissioned research. May not be reproduced, published or
communicated (electronically or in hard copy) without the prior written consent of OzTAM.
xi
Budde Communications, Australia - Broadcasting, Pay TV, IPTV, Mobile TV, p. 134 (May 2014)
xii
Commercial Radio Australia, Record numbers tune into commercial radio in 2015, 01 February 2015.
xiii
Nielsen 2015, Australian Connected Consumers 2014, p. 134.
xiv
Roy Morgan 2015, 2.7 million Australians have Netflix as subscriptions surpass one million homes, 12 November, press
release.
xv
Roy Morgan 2015, Netflix reaches 1.89 million Australians. Foxtel loses share (but not size) as Netflix expands pay and
subscription TV market, 11 August 2015, press release.
xvi
Spotify, Fast facts, https://press.spotify.com/au/information/ (accessed 20 May 2015).
xvii
Seven West Media 2015, Melbourne Cup Carnival LIVE on Seven, press release, 26 October.
xviii
Sydney Morning Herald 2015, Nine to stream all channels live online, 26 October.
xix
ARN, iHeartRadio, http://www.arn.com.au/brands/iheartradio/iheartradio/ (accessed 20 May 2015).
xx
Roy Morgan 2015, Netflix reaches 2.2 million Australians, 8 September, press release.
28
xxi
Business Insider Australia, Nine boss David Gyngell says it will take time to see if Stan can be a 'profitable' Netflix
alternative, 27 August.
xxii
PriceWaterhouseCoopers 2015, Outlook: Australian Entertainment and Media 2015-19, Radio segment
xxiii
http://fortune.com/2015/07/15/netflix-q2-earnings-2015/
xxiv
http://variety.com/2015/digital/news/netflix-bandwidth-usage-internet-traffic-1201507187/
xxv
Research from Futuresource Consulting, reported in Digital TV Europe, UK SVoD subscriptions to double by 2019, June
18, 2015.
xxvi
See http://www.acma.gov.au/Industry/Broadcast/Television/Local--regional-content/local-content-investigation, p29.
xxvii
See www.wintv.com.au/page/about-us
xxviii
See www.primemedia.com.au/company-profile
xxix
Free TV 2016, 'Advertising revenue for commercial television networks July to December 2015', press release, 28
January.
xxx
Section 36, Broadcasting Services Act 1992, licences allocated under a price based system.
29
ABBREVIATIONS
The following abbreviations are used in this explanatory memorandum.
ACMA Australian Communications and Media Authority
Bill Broadcasting Legislation Amendment (Media Reform) Bill
2016
BSA Broadcasting Services Act 1992
Minister Minister for Communications
30
NOTES ON CLAUSES
Clause 1 - Short title
Clause 1 provides that the Bill, when enacted, may be cited as the Broadcasting Legislation
Amendment (Media Reform) Act 2016.
Clause 2 - Commencement
Clause 2 provides for the commencement of the Bill.
Clauses 1 to 3 of the Bill, and anything else not covered in the table, will commence on the
day the Bill receives Royal Assent. These provisions are introductory provisions.
Schedules 1 and 2 to the Bill and Part 1 of Schedule 3 to the Bill will commence on the day
after the Bill receives Royal Assent. Schedule 1 provides for the abolition of the 75 per cent
audience reach rule, Schedule 2 provides for the abolition of the 2 out of 3 cross-media
control rule and Part 1 of Schedule 3 introduces new local programming requirements.
Despite commencing on the day after Royal Assent, the local programming requirements in
Part 1 of Schedule 3 will not require affected licensees to meet any additional substantive
programming requirements until a period of six months after the occurrence of a trigger event
(proposed new sections 61CW and 61CX).
Part 2 of Schedule 3 to the Bill, which will repeal the current local programming requirements
in section 43A of the BSA and the Broadcasting Services (Additional Television Licence
Condition) Notice 2014, will commence six months after Schedules 1 and 2 and Part 1 of
Schedule 3 to the Bill. This is intended to provide sufficient time for the ACMA to develop a
new local programming determination (new section 61CZ).
Clause 3 - Schedules
Clause 3 provides that legislation that is specified in a Schedule to the Bill is amended or
repealed as set out in the applicable items in that Schedule, and any other item in a Schedule
has effect according to its terms. There are three Schedules to the Bill.
31
SCHEDULE 1--ABOLITION OF THE 75% AUDIENCE REACH RULE
The 75 per cent audience reach rule prevents a person, either in their own right or as a director
of one or more companies, from being in a position to exercise control of commercial
television broadcasting licences whose combined total licence area populations exceed 75 per
cent of the population of Australia.
Subsections 53(1), 55(1) and 55(2) of the BSA give effect to the 75 per cent audience reach
rule.
Subsection 53(1) provides that a person must not be in a position to exercise control of
commercial television broadcasting licences whose combined licence area populations exceed
75 per cent of the population of Australia.
Subsection 55(1) provides that a person must not be a director of a company that is, or of 2 or
more companies that are, between them, in a position to exercise control of commercial
television broadcasting licences whose combined licence area populations exceed 75 per cent
of the population of Australia.
Subsection 55(2) provides that a person must not be both in a position to exercise control of a
commercial television broadcasting licence and a director of a company that is in a position to
exercise control of another commercial television broadcasting licence, whose combined
licence area populations exceed 75 per cent of the population of Australia.
The amendments to the BSA set out in Schedule 1 would abolish the 75 per cent audience
reach rule.
Broadcasting Services Act 1992
Item 1 - Subsection 53(1)
Item 2 - Subsection 53(2)
Item 3 - Subsections 55(1) and (2)
Items 1 and 3 repeal subsection 53(1) and subsections 55(1) and (2) of the BSA, respectively.
Item 2 makes a technical amendment to subsection 53(2) of the BSA, consequential to the
repeal of subsection 53(1).
32
SCHEDULE 2--ABOLITION OF THE 2 OUT OF 3 CROSS-MEDIA CONTROL
RULE
The 2 out of 3 cross-media control rule prohibits a person being in a position to exercise
control of 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. This is known as an unacceptable 3-
way control situation.
Section 61AEA and Subdivision BA of Division 5A of Part 5 of the BSA give effect to the 2
out of 3 cross-media control rule.
Section 61AEA defines the concept of an 'unacceptable 3-way control situation' for the
purposes of Division 5A. Under section 61AEA, an unacceptable 3-way control situation
exists in relation to a commercial radio licence area (the first radio licence area) if a person is
in a position to exercise control of:
(a) a commercial television broadcasting licence, where more than 50 per cent of the
licence area population of the first radio licence area is attributable to the licence area of
the commercial television broadcasting licence; and
(b) a commercial radio broadcasting licence, where the licence area of the commercial
broadcasting licence is, or is the same as, the first radio licence area; and
(c) a newspaper that is associated with the first radio licence area (within the meaning of
section 59 of the BSA).
Subdivision BA prohibits transactions that result in an unacceptable 3-way control situation
coming into existence unless the ACMA has approved the transactions under section 61AMC.
Section 61AMC provides that the ACMA may give prior approval for transactions that result
in an unacceptable 3-way control situation. If the ACMA approves the transaction it must
specify in a notice a time period within which action must be taken by the applicant to ensure
that situation does not exist. The period specified must be at least one month, but not longer
than 12 months. The ACMA may grant one extension of time for compliance with a prior
approval notice.
Subdivision BA also sets out offence and civil penalty provisions that apply to a person that is
a party to a transaction or transactions (or is in a position to prevent the transaction(s) taking
place) that results in an unacceptable 3-way control situation coming into existence.
The amendments to the BSA set out in Schedule 2 would abolish the 2 out of 3 cross-media
control rule.
33
Broadcasting Services Act 1992
Item 1 - Section 61AA (definition of unacceptable 3-way control situation)
Item 2 - Section 61AEA
Item 3 - Subdivision BA of Division 5A of Part 5
Items 1 to 3 repeal from the BSA the definition of 'unacceptable 3-way control situation' and
Subdivision BA which prohibits certain transactions that result in such a situation coming into
existence.
Item 4 - Section 61ANA
Section 61ANA concerns remedial directions with respect to unacceptable 3-way control
situations. As the concept of an unacceptable 3-way control situation is being repealed,
section 61ANA is no longer required.
Item 4 repeals section 61ANA of the BSA.
Item 5 - Subsection 61AP(1)
Item 6 - Subsection 61AP(3A)
Item 7 - Paragraph 61AP(6)(c)
Item 8 - Paragraph 61AQ(1)(a)
Item 9 - Subsection 61AR(1)
Items 5 to 9 make consequential amendments to sections 61AP (Extension of time for
compliance with remedial direction), 61AQ (Breach of remedial direction - offence) and
61AR (Breach of remedial direction - civil penalty) of the BSA related to the repeal of
section 61ANA (see item 4 above).
Item 10 - Paragraph 61AS(1)(b)
Item 11 - Paragraph 61AS(1)(c)
Paragraph 61AS(1)(c) of the BSA relates to a written undertaken given by a person to the
ACMA that they will take specified action to ensure that an unacceptable 3-way control
situation does not exist in relation to the licence area of a commercial radio broadcasting
licence. As the concept of an unacceptable 3-way control situation is being repealed,
paragraph 61AS(1)(c) is no longer required.
Item 11 repeals paragraph 61AS(1)(c) of the BSA. Item 10 makes a technical amendment as a
consequence of item 11.
34
Item 12 - Subparagraph 61AZ(1)(b)(ii)
Item 13 - Paragraph 61AZ(1)(c)
Section 61AZ of the BSA relates to the requirement for the ACMA to keep a register of
controlled media groups. Paragraph 61AZ(1)(c) requires the ACMA to consider whether a
newly-formed media group would result in an unacceptable 3-way control situation coming
into existence. As the concept of an unacceptable 3-way control situation is being repealed,
this will no longer be a relevant consideration for the ACMA.
Item 13 repeals paragraph 61AZ(1)(c) of the BSA. Item 12 makes a technical amendment as a
consequence of item 13.
Item 14 - Subsection 204(1) (table)
Item 15 - Section 205Q
Items 14 and 15 remove references to sections contained in Subdivision BA of Division 5A of
Part 5 of the BSA, repealed by item 3 above, from the table in subsection 204(1) (Appeals to
the Administrative Appeals Tribunal) and section 205Q (Injunctions).
35
SCHEDULE 3--LOCAL PROGRAMMING REQUIREMENTS FOR REGIONAL
COMMERCIAL TELEVISION BROADCASTING LICENSEES
Part 1--New local programming requirements
Broadcasting Services Act 1992
Item 1 - After Division 5C of Part 5
Item 1 inserts a new Division 5D into Part 5 of the BSA which sets out new local
programming requirements for regional commercial television broadcasting licensees, and
relocates existing local programming obligations currently provided for under section 43A of
the BSA and the Broadcasting Services (Additional Television Licence Condition) Notice
2014.
The new Division 5D will increase the current local programming obligations that apply in
aggregated markets (and Tasmania), and introduce new local programming obligations in
non-aggregated markets, for regional commercial television broadcasting licences affected by
a trigger event. The new local programming requirements will apply only to regional
commercial television broadcasting licences that are affected by a 'trigger event' where, as a
result of a change in control, they become part of a media group whose combined licence area
populations exceed 75 per cent of the Australian population. Affected licensees would be
required to commence broadcasting any additional local programming required by Division
5D six months after the relevant trigger event.
For the purposes of new Division 5D, a trigger event occurs where, as a result of a change in
control, a regional commercial television broadcasting licence becomes part of a group of
commercial television broadcasting licences whose combined licence area populations exceed
75 per cent of the Australian population (see new section 61CV).
The main changes that will apply as a result of Schedule 3 are:
Section 61CW will increase local programming requirements for affected regional
commercial television broadcasting licensees in aggregated markets and Tasmania by
approximately 30 points per week (to 900 points in each six-week timing period and a
minimum 120 points each week), beginning six months after a trigger event.
Section 61CX will introduce new local programming requirements for regional
commercial television broadcasting licences in non-aggregated markets that are affected
by a trigger event. These include the following licence areas: Broken Hill, Darwin,
Geraldton, Griffith and Murrumbidgee Irrigation Area (MIA), Kalgoorlie,
Mildura/Sunraysia, Mount Gambier/South East, Mt Isa, Remote and Regional WA,
Riverland, South West and Great Southern, and Spencer Gulf. New section 61CX will
require affected licensees to provide at least 360 points of material of local significance to
each local area in each six-week timing period, with a minimum of 45 points per week,
beginning six months following the trigger event. The new local programming
requirements under section 61CX will not apply to licences granted under section 38A
('Additional commercial television licences in single markets') or 38B ('Additional
commercial television licences in 2-station markets') of the BSA.
36
Section 61CY will introduce a new 3-point category under the local programming points
system for licences affected by a trigger event. Under the points system in section 61CY,
each minute of local news programming that depicts people, places or things in the
relevant local area (ie. is filmed in the local area) will be allocated 3 points (item 1 in the
table in subsection 61CY(3)). The local programming points system will otherwise
largely replicate the current material of local significance points system under the
Broadcasting Services (Additional Television Licence Condition) Notice 2014.
Division 5D--Local programming requirements for regional commercial television
broadcasting licensees
61CU Definitions
Proposed section 61CU inserts various definitions that are used in Division 5D.
61CV Trigger event
Section 61CV sets out when a 'trigger event' occurs in relation to a regional commercial
television broadcasting licence for the purposes of Division 5D. A trigger event will occur
where a person starts to be in a position to control a regional commercial television
broadcasting licence and, immediately after that event, is in a position to control two or more
commercial television broadcasting licences with a combined licence area population
exceeding 75 per cent of the population of Australia.
In those circumstances the event is a trigger event for each regional commercial television
broadcasting licence in the group, and each such licensee will be subject to additional local
programming requirements under proposed sections 61CW (for regional aggregated
commercial television broadcasting licensees) or 61CX (for regional non-aggregated
commercial television broadcasting licensees) which will commence six months after the
trigger event.
61CW Local programming requirements for regional aggregated commercial television
broadcasting licensees
Section 61CW sets out the local programming obligations that will apply to regional
aggregated commercial television broadcasting licences.
The operation of section 61CW in relation to a particular regional aggregated commercial
television broadcasting licence will depend on whether a trigger event has occurred in relation
to that licence, and when it has occurred.
Trigger event - ongoing requirements
Subsection 61CW(1) sets out ongoing requirements that will apply to each timing period that
begins more than six months after a trigger event. For each such timing period to which
subsection 61CW(1) applies, the licensee will be required to broadcast, to each local area,
material of local significance in order to accumulate at least:
900 points in each timing period; and
120 points in each week included in a timing period.
37
The 900 point requirement equates to an average of 150 points per week.
Trigger event - transitional arrangements
Subsection 61CW(2) sets out transitional requirements that will apply to each timing period
that: begins before the end of the six month period following the trigger event
(61CW(2)(c)(i)); does not end before the trigger event (61CW(2)(c)(ii)); and begins more
than six months after the commencement of the subsection (61CW(2)(c)(iii)).
For each timing period to which subsection 61CW(2) applies, the licensee subject to the
trigger event will be required to broadcast, to each local area, material of local significance in
order to accumulate at least:
720 points in each timing period; and
90 points in each week included in a timing period.
These minimum levels equate to approximately 120 points per week (equivalent to the current
requirements under section 43A of the BSA).
This transitional arrangement is intended to cover timing periods that occur between the end
of the six months after Royal Assent and before the end of the six months after a trigger
event. Where timing periods commence in this period the licensee will be required meet the
requirements of subsection 61CW(2).
Note that for timing periods beginning within six months of Royal Assent the licensee will be
required to comply with the current requirements under section 43A, and the Broadcasting
Services (Additional Television Licence Condition) Notice 2014, and for timing periods
beginning more than six months after a trigger event the licensee will be required to meet the
new ongoing requirements in subsection 61CW(1)).
Subsection 61CW(2) inserts a note to clarify that the Broadcasting Services (Additional
Television Licence Condition) Notice 2014 imposes local programming requirements for a
timing period that begins before the end of the period of 6 months beginning at the
commencement of the subsection.
No trigger event
Subsection 61CW(3) sets out local programming requirements for licensees not subject to a
trigger event. In that case the licensee will be required to broadcast, to each local area, during
any timing period that begins more than 6 months after Royal Assent, material of local
significance in order to accumulate at least:
720 points in each timing period; and
90 points in each week included in a timing period.
These minimum levels equate to approximately 120 points per week (equivalent to the current
requirements under section 43A of the BSA).
Subsection 61CW(3) also inserts a note to clarify that the Broadcasting Services (Additional
Television Licence Condition) Notice 2014 imposes local programming requirements for a
38
timing period that begins before the end of the period of 6 months beginning at the
commencement of the subsection.
61CX Local programming requirements for regional non-aggregated commercial
television broadcasting licensees
Section 61CX sets out the local programming obligations that will apply to regional
non-aggregated commercial television broadcasting licences that are affected by a trigger
event under section 61CV.
In the circumstance that a regional non-aggregated commercial television broadcasting
licence is affected by a trigger event, the local programming obligations set out in
section 61CX will apply to timing periods that commence after six months following the
occurrence of the trigger event.
The local programming obligations require an affected licensee to broadcast, to each local
area, material of local significance in order to accumulate at least:
360 points in each six week timing period; and
a minimum of 45 points in each week in the timing period.
These minimum levels equate to an average of 60 points per week.
Commercial television broadcasting licences granted under section 38A or 38B of the BSA
are not subject to the local programming obligations set out in subsection 61CX(1) (see
subsection 61CX(2)). Section 38A and 38B licences are allocated by the ACMA to existing
licensees to ensure that regional audiences receive all three main television networks, where
there are less than three broadcasters in the licence area. To place local programming
obligations on section 38A and 38B licences would represent an unrealistic financial burden
on the original 'parent' broadcaster(s) in each regional licence area.
61CY Points system
Section 61CY sets out the points system that would apply for the local programming
obligations under sections 61CW and 61CX. This points system would operate similarly to
the current points system for regional aggregated commercial television broadcasting licences
under section 43A of the BSA and the Broadcasting Services (Additional Television Licence
Condition) Notice 2014 made by the ACMA.
Subsection 61CY(1) sets out the 'eligible periods' for accumulating points (from 6:30 am to
midnight on Monday to Friday, and from 8:00 am to midnight on Saturday and Sunday).
Subsection 61CY(2) sets out the 'timing periods' during which points are calculated. Timing
periods are periods of 6 weeks between the first Sunday in February of a year and the end of
the 42nd week after the first Sunday in February (paragraphs (a) and (b)). The period between
the end of the 42nd week after the first Sunday in February and the start of the first Sunday in
February of the following year is also a timing period (paragraph (c)).
Subsection 61CY(3) provides a table that sets out how material of local significance
accumulates points in a local area, subject to subsections 61CY(4) to (8).
39
Subsections 61CY(4) to (8) provide limitations on how points may be accumulated. These
limitations reflect current arrangements under the Broadcasting Services (Additional
Television Licence Condition) Notice 2014.
Subsection 61CY(4) sets out the period during which points are not able to be accumulated
for the purposes of the timing period described in paragraph 61CY(2)(c).
Subsection 61CY(5) provides that not more than 50 per cent of the points accumulated in a
local area during a timing period is to be attributable to material that relates directly to the
licensee's licence area. Subsection 61CY(6) provides a modified limitation for service licence
numbers 104 and 106. Subsections 61CY(5) and (6) relate to table items (4) and (5) in
subsection 61CY(3). These licences relation to the Regional Victoria aggregated licence area
and reflect the current situation where service licence numbers 104 and 106 are only required
to serve two out of the four identified local areas, whereas other licensees for Regional
Victoria are required to serve all four local areas.
Subsections 61CY(7) and (8) provide limitations on the accumulation of points in a local area
in respect of community service announcements. Points may be accumulated for up to five
broadcasts of a community service announcement in a local area, but not more than 10 per
cent of the points accumulated in a local area during a timing period can be attributable to
material of local significance in the form of community service announcements.
Subsections 61CY(9) and (10) enable the local programming determination (made by the
ACMA under section 61CZ) to modify the timing period arrangements under
subsection 61CY(2) or (4) in respect of a regional non-aggregated commercial television
broadcasting licence, provided the relevant licensee has given its written consent to the
modification. Subsections 61CY(9) and (10) are intended to provide flexibility in the
application of the local programming requirements, to ensure that they can be applied in a
way that is fair and workable (particularly where new licensees are becoming subject to these
requirements for the first time). The consent of the affected licensee is required to ensure that
the ACMA would not modify the applications of subsection 61CY(2) or (4) to the detriment
of the licensee.
61CZ Local programming determination
Section 61CZ provides for the ACMA, by legislative instrument, to make a local
programming determination. The determination will prescribe various matters required or
permitted to be prescribed and relevant to the operation of the local programming
requirements in proposed Division 5D, which may include:
the meaning of 'local area' in relation to particular regional commercial television
broadcasting licence (section 61CU);
the meaning of 'material of local significance' in relation to a local area (section 61CU);
additional requirements that must be met before news is eligible to receive 3 points per
minute of material (subitem 1(d) of the points table at subsection 61CY(3));
modifications to subsection 61CY(2), regarding the timing periods during which points
are calculated (subsection 61CY(9));
40
modifications to subsection 61CY(4), regarding when points cannot be accumulated
(subsection 61CY(10)).
Subsection 61CZ(2) requires the ACMA to take all reasonable steps to ensure that the local
programming determination is in force at all times after 6 months from commencement.
61CZA Record-keeping requirements
Section 61CZA requires licensees subject to the requirements under section 61CW or 61CX,
as described above, to:
make and keep for 30 days after the end of each timing period (or a longer period if
directed by the ACMA) an audiovisual record of material of local significance broadcast
by the licensee in its local areas (paragraphs 61CZA(2)(a) and (b));
provide the record to the ACMA on request (paragraph 61CZA(2)(c));
comply with any ACMA directions regarding how the record must be made or retained,
or what it must cover (subsection 61CZA(3)).
It is intended that the ACMA's power under proposed subparagraph 61CZA(2)(b)(ii) to direct
a licensee to retain audiovisual records for more than the default 30 days would be exercised
in circumstances where a complaint about local content had been made and additional time
was required for the complaint to be properly investigated. This is consistent with current
arrangements under the Broadcasting Services (Additional Television Licence Condition)
Notice 2014. It is also intended that ACMA directions under proposed subsection 61CZA(3)
as to the scope and type of records kept will provide a mechanism for setting out standard
administrative requirements, rather than the final determination of an individual licensee's
rights or obligations.
61CZB Licensee must submit compliance reports
Section 61CZB requires a licensee of a regional commercial television broadcasting licences
subject to a trigger event to provide two compliance reports to the ACMA, each covering a
12-month period. The first report must cover the licensee's compliance with the local
programming requirements in Division 5D during the 12-month period commencing
six months after the trigger event, while the second report must cover compliance during the
subsequent 12-month period. Each report must be provided to the ACMA within 28 days of
the end of the relevant reporting period.
The reports will enable the ACMA to be satisfied that a licensee is properly complying with
the new arrangements before the reporting obligation ceases. The first report may also assist
in providing information for the review of local programming requirements under section
61CZC.
The ACMA will set out a form which licensees must use for the provision of compliance
reports and which specifies the information that the ACMA requires to be included in such
reports (subsection 61CZB(4)).
41
61CZC Review of local programming requirements
Section 61CZC requires the ACMA to conduct a review of the operation of Division 5D; the
associated licence condition at paragraph 7(2)(ba) of Schedule 2; and the local programming
determination. The ACMA must prepare and provide a report to the Minister and the Minister
must table the report in each House of the Parliament within 15 sitting days.
61CZD Minister may direct the ACMA about the exercise of its powers
Section 61CZD provides for the Minister to direct the ACMA by legislative instrument about
the exercise of powers conferred on it by Division 5D (other than section 61CZC relating to
the statutory review of local programming requirements). The ACMA must comply with such
a direction (subsection 61CZD(2))
Item 2 - After paragraph 7(2)(b) of Schedule 2
Item 2 adds a new standard licence condition 7(2)(ba) to subclause 7(2) of Schedule 2 to the
BSA, applying to all commercial television broadcasting licences. The new condition requires
licensees to comply with local programming requirements under new Division 5D.
The new licence condition is added to subclause 7(2), consistent with the approach taken
elsewhere in the BSA in relation to the licence condition requiring regional commercial radio
broadcasting licensees to comply with Division 5C of Part 5 (local news and information).
Regulatory options available to the ACMA to ensure compliance with the new licence
condition in paragraph 7(2)(ba) of Schedule 2 include remedial directions, enforceable
undertakings, licence suspension (for up to three months) and/or licence cancellation.
Part 2--Abolition of old local programming requirements
Broadcasting Services Act 1992
Item 3 - Section 43A
Item 3 repeals section 43A of the BSA, which sets out requirements for the provision of
material of local significance by regional aggregated commercial television broadcasting
licensees. These obligations are no longer necessary given the new local programming
requirements set out in Part 1 of Schedule 3 to the Bill. The repeal will occur six months after
Royal Assent.
Item 4 - Revocation of the Broadcasting Services (Additional Television Licence
Condition) Notice 2014
Item 4 provides that the ACMA is taken to have revoked the Broadcasting Services
(Additional Television Licence Condition) Notice 2014 immediately after the commencement
of this item, and makes clear that the notification and other requirements in subsections 43(2)
and 43(3) of the BSA do not apply to the revocation.
Subitem 4(3) is a transitional provision that preserves the effect of the Broadcasting Services
(Additional Television Licence Condition) Notice 2014 in relation to material broadcast
during a timing period that began before the commencement of the item (or a week included
in such a timing period) as if the revocation had not happened.
42