Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2002
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
BROADCASTING SERVICES AMENDMENT
(MEDIA
OWNERSHIP) BILL 2002
EXPLANATORY MEMORANDUM
(Circulated by authority of the
Minister for
Communications, Information Technology and the Arts,
The Hon Daryl Williams
AM QC MP)
The Broadcasting Services Amendment (Media Ownership) Bill 2002 (the Bill) amends the Broadcasting Services Act 1992 (the BSA) to reform the foreign and cross-media ownership regime in Australia.
The Bill is the same as the Bill previously passed by the House in 2002, but incorporates those amendments made by the Senate which were agreed by the House in June 2003.
The Bill removes the regulatory barriers to investment by foreign entities in Australian media, which are contained in the BSA. This reform is expected to broaden the scope for increased competition and improve access to capital and technology in the media industry.
Foreign ownership of commercial television and subscription television interests will be regulated by the Foreign Acquisitions and Takeovers Act 1975 in the same manner as for commercial radio and newspapers. Existing limits in the BSA pertaining to audience reach and the maximum numbers of commercial broadcasting licences that can be controlled in the same licence area are not affected by the Bill. The Trade Practices Act 1974 (the TPA) will continue to apply to proposed mergers and acquisitions. The Bill clarifies the application of the TPA to cross-media mergers by requiring that nothing in Part 5 of the BSA is to be taken as specifically authorising any act or thing for the purposes of subsection 51(1) of the TPA.
Further, the proposed changes will not affect the role of the Australian Competition and Consumer Commission (ACCC) in scrutinising both existing and future arrangements that might have the effect of limiting competition.
The Bill authorises the Australian Broadcasting Authority (ABA) to grant cross-media exemption certificates on application. Holders of exemption certificates are not in breach of the cross-media rules in relation to media entities which they control, provided the conditions of the certificate are satisfied.
Certificates become active upon a person assuming control of two media entities in a way which would otherwise breach the cross-media rules. Exemption certificates may authorise joint ownership of any two of the forms of media included under the existing cross-media ownership rules: commercial television broadcasting licences; commercial radio broadcasting licences; and associated newspapers (the BSA defines a ‘newspaper’ as an associated newspaper that is in the English language and is published on at least 4 days in each week, but does not include a publication if less than 50 percent of its circulation is by way of sale).
Further, the Bill provides that a holder of a cross-media exemption certificate must ensure that an unacceptable 3-way control situation does not exist: this ensures that a person may not, by holding more than one cross-media exemption certificate, be in a position to control one of each of the three forms of media operation. The Bill also provides that, in relation to regional areas, certain local newspapers are to count as associated newspapers, for the purpose of determining whether an unacceptable 3-way control situation exists. This will ensure that small newspapers that provide a relevant local voice will be considered in the context of any cross-media merger in regional areas.
The ABA must maintain a register of active cross-media exemption certificates which is to be available on the internet.
The Bill provides that an exemption certificate must be issued if the ABA is satisfied of two defined matters. Firstly, that the conditions included in the application will, within such period as the ABA considers appropriate (but no longer than 60 days after the certificate becomes active), meet the objective of editorial separation for the set of media operations concerned. Separate editorial decision-making responsibilities must be maintained in relation to each of the media operations.
Three mandatory tests are prescribed for the objective of editorial separation to be met. They are the existence of:
1. separate editorial policies;
2. appropriate organisational charts; and
3. separate editorial news management, news compilation processes and news gathering and interpretation capabilities.
These requirements do not prevent the sharing of resources or other forms of cooperation between jointly-controlled media operations.
The ABA must also be satisfied that the set of media operations to which the cross-media exemption certificate is to apply will satisfy the minimum number of media groups test. This test, which applies to all sets of media operations, except those associated with certain remote broadcasting licence areas, provides a guarantee that media mergers involving a cross-media certificate will not result in less than four media groups in regional areas of Australia, or less than five media groups in the metropolitan markets of Sydney, Melbourne, Brisbane, Adelaide, Perth and Hobart.
The Bill prevents cross-media exemption certificate holders from owning more than one associated newspaper in a licence area covered by the certificate. It does not prevent other operators from owning more than one newspaper in a market.
Once a certificate becomes active, holders of the certificate must ensure that the certificate requirements are continuously met in order for the certificate to remain active. In addition, the ABA may direct the person under section 70 of the BSA to take action (eg selling shares) to cure the breach. Meeting the objective of editorial separation also becomes a condition of licence, so that the ordinary mechanisms for enforcement of licence conditions apply. The ABA has the power to investigate complaints in relation to breaches of such licence conditions.
The Bill also imposes a general obligation to disclose a cross-media relationship on media outlets subject to the same exemption certificate. There are two means of disclosure detailed in the legislation:
1. the ‘business affairs’ model, which will apply to commercial television broadcasters and newspaper publishers, and which will be the default disclosure model for commercial radio broadcasters; and
2. an alternative ‘regular disclosure’ model which will only be available to commercial radio broadcasters. A commercial radio broadcaster may choose to adopt this model by written notice to the ABA.
The business affairs model requires that media outlets disclose a cross-media relationship at the time that they broadcast or publish matter, other than advertising matter, that is wholly or partly about the business affairs of a cross-controlled media organisation. This includes the promotion of specific matter broadcast or published by a cross-controlled media organisation.
Exemptions are given for clearly identified advertising, factual listings of programs (for example, television and radio guides), journalistic acknowledgment of sources, and comments made in live broadcasts which could not reasonably have been anticipated.
Further material may be exempted from the business affairs disclosure requirement by Ministerial determination. This is intended to cover situations where the breadth of the business affairs definition means that the disclosure requirement is triggered in a manner inconsistent with the objects of the Bill. Any such determination would be a disallowable instrument.
Commercial radio broadcasters may adopt the regular disclosure method by written notification to the ABA. This method requires a radio outlet covered by a certificate to regularly disclose a cross-media relationship in such a way and with such frequency that the prime-time hours audience of the commercial radio broadcaster would be reasonably likely to be aware of the cross-media relationship. The intended effect is to establish a general level of audience and reader awareness about the cross-media relationship.
In order to provide greater certainty, a provision is also included which specifies a means by which radio broadcasters may satisfy the requirement for regular disclosure. This requires that a statement be broadcast at least once a day during prime-time hours in a way that would adequately bring it to the attention of a reasonable person that may have listened to the broadcast of the statement. The provision establishes a ‘sufficient but not necessary’ means of disclosure.
The alternative regular disclosure model is provided as an option only in the case of radio as commentary on radio is generally unscripted and the radio broadcasting companies typically vary greatly in size and resources.
Under both methods of disclosure, it will be sufficient if the disclosure statement is to the effect that there is a cross-media relationship between the media outlets covered by the exemption certificate. For each method, regulations may also prescribe a sufficient means in relation to the manner and timing of the disclosure.
Compliance with the disclosure requirement will be a licence condition for television and radio licences. As newspapers are not subject to the licensing scheme in the BSA, enforcement of the disclosure requirement for newspapers is by way of a criminal offence.
The Bill requires regional commercial radio broadcasters, in relation to which an active cross-media exemption certificate applies, to maintain existing levels of local news and information, or to provide a prescribed minimum level of local news and information services, whichever is the higher. The prescribed minimum level of local news and information services comprises minimum standards in relation to the broadcast of local news and weather bulletins, local community service announcements and emergency warnings.
When a cross-media exemption certificate becomes active, the relevant licensee must specify whether it met these minimum standards in the previous (benchmark) year. It must specify reasonable estimates of local news and weather bulletins broadcast in total, and within and outside prime-time hours, in the benchmark year.
If the licensee did meet the minimum standards, the ABA must require the licensee to ensure that these benchmark levels are maintained, and that the minimum standards in relation to local community service announcements and emergency warnings are also met.
If the licensee did not meet the minimum standards, the ABA must require the licensee to do so within six months.
The Bill also contains a provision requiring the ABA to impose licence conditions that require all commercial television broadcasters in the regional aggregated commercial markets of Northern New South Wales, Southern New South Wales, Regional Victoria, Regional Queensland and Tasmania, and metropolitan markets (the mainland State capitals), to broadcast a minimum amount of material of local significance.
Under provisions in Schedule 6 of the BSA, datacasters are not permitted to transmit sports programs and sports news bulletins (except in very limited ways eg. short extracts of such programs). The Bill will permit datacasters to transmit local sports programs and local sports news bulletins in full. Local sports programs and local sports news bulletins can provide coverage only for local sporting events.
Local sporting events are limited to those events taking place in the area in which the datacaster is authorised (by the relevant radiocommunications licence) to transmit, or relate to a competition in which a team from that area is competing. The definition excludes: international or national sporting competitions; sporting events in the highest level of competition in a State or Territory; and sporting events on the anti-siphoning list.
The Bill prohibits contracts and arrangements which restrict the program format of commercial broadcasting radio services. These provisions are intended to address a situation where, for commercial or other reasons, a person acts in a manner which limits or restricts the diversity of commercial radio broadcasting services of broad appeal available within a licence area. A related concern is a potential reduction in competition for audience and advertisers, which could result from program format restrictions.
The following types of transactions will be void under the new provisions:
(a) a contract or arrangement for the transfer of a commercial radio broadcasting licence, where the contract or arrangement restricts the program format of the service provided under that licence;
(b) a contract or arrangement for the transfer of control of a commercial radio broadcasting licence, where the contract or arrangement restricts the program format of the service provided under that licence; and
(c) any other contract or arrangement which restricts the program format of a commercial broadcasting radio service, where the purpose or effect, or likely effect, of the contract or arrangement is to confer a commercial advantage on another commercial radio broadcasting licensee in the same licence area.
The term ‘arrangement’ is intended to apply to a transaction, agreement or understanding which does not constitute a legally binding contract. For this purpose, an arrangement could be formal or informal, written or unwritten.
The prohibitions will not apply to contracts or arrangements exempted by regulation. There may be legitimate types of transactions which should not be prevented. The regulations making power is included to allow some flexibility once the provisions commence.
In the case of contracts or arrangements falling under the broad provisions outlined in paragraph (c), the ABA may exempt a particular proposed contract or arrangement from the prohibition on a case by case basis. This provision is intended to take account of unanticipated and unique circumstances where, for example, a contract or arrangement that would otherwise be in breach is considered by the ABA not to be contrary to the public interest.
In the case of contracts or arrangements falling under paragraph (c), where there is licence area overlap the same test is applied to establish the relevant licence areas as under existing section 51 of the BSA.
The conditional sale of a licence may, depending on the circumstances, be contrary to certain provisions of the TPA which deal with contracts that have the effect of substantially lessening competition, and abuse of market power. However, the nature of such an investigation and the likelihood of successful enforcement action would be dependent on the specifics of each case. Furthermore, tests under the TPA generally relate to competition, rather than diversity, which is the primary concern of this amendment.
The Bill builds upon current provisions and addresses concern associated with section 67 of the BSA which permits the ABA to grant a prior approval of a temporary breach of the control provisions for up to two years (subject to the possibility of extension for up to one further year).
The Bill restricts the circumstances in which such an approval could be granted and ensures that any approvals are granted only for the minimum practical time as determined by the ABA. The Bill also provides for a reduction in the period of deemed approval, from two years to one year, where the ABA has not responded by refusing or approving the breach in the required time period. In addition, a temporary breach would not be approved if it resulted in the person seeking approval of a temporary breach becoming the successful applicant for a commercial radio licence.
Given the rapid commercial and technological changes in the media and wider communications sector, a statutory review will enable an assessment of the extent to which the proposed changes continue to safeguard the public interest and provide access to diverse and relevant sources of information.
The Bill therefore requires that the Minister, before 31 December 2006, cause to be conducted a review of the media ownership arrangements. A report must be prepared and tabled in both Houses of Parliament no later than 30 June 2007.
There is no impact on Commonwealth expenditure or revenue.
1. The Government’s election policy states that it supports a system of granting exemptions from the cross-media rules if two significant undertakings are made to ensure that there is ongoing diversity of opinion and information:
• an undertaking to retain separate and distinct processes of editorial decision-making; and
• in the case of television and radio, an undertaking to maintain existing levels of locally produced news and current affairs.
2. The election commitments also supported the removal of media-specific foreign ownership and control restrictions in the Broadcasting Services Act 1992 (BSA), and the discontinuation of newspaper-specific foreign ownership limits under Australian foreign investment policy.
3. The March 2000 report of the Productivity Commission’s (PC) Inquiry into Broadcasting included a comprehensive summary of the structure of the media industry in Australia. Key trends noted by the report were investment by traditional media companies in new types of media services, such as Internet content provision, and the formation of strategic partnerships with international media operators. Overall, there have not been any fundamental changes to the structure of the Australian media since the PC reported. In contrast, giant media companies, such as AOL Time Warner and Vivendi Universal, which own both content and the means of delivery, have emerged in the US and Europe, prompting review of cross-control regimes. The emergence of these companies may point to the significant amount of capital required to rollout new communications infrastructure, and the economic benefits of some vertical integration.
4. There are currently 48 licensed commercial television services in Australia, with a moratorium on the issue of new commercial licenses until 2007. Fifteen are located in capital cities (mainland State capitals) with the balance in regional and remote areas. All mainland capital cities have three commercial television services, as do the regional areas in the mainland eastern States. Hobart and some regional areas have two commercial channels, and there are four ‘solus’ markets with only one commercial service (Broken Hill, Mount Gambier, Riverland and Spencer Gulf).
5. Most commercial television stations are owned by one of the larger metropolitan or regional networks. Networks Seven, Nine and Ten broadcast to the major metropolitan areas. Following the takeover of Telecasters by Southern Cross in 2001, there are now three major regional broadcasting groups - WIN, Prime and Southern Cross.
6. The largest shareholder in the Seven Network is Kerry Stokes (approximately 35%) while the largest shareholder in the Nine Network is the Packer family controlled Publishing and Broadcasting Limited. The Canadian group CanWest has a major interest (voting and economic) in the Ten Network.
7. The free-to-air commercial television broadcasting industry is complemented by the two national broadcasters, the ABC and the SBS, in addition to a vibrant community television sector.
8. There are currently three main retail pay TV service providers in Australia: Foxtel, Optus Vision and Austar. In addition, there are a number of smaller operators including Neighbourhood Cable, TARBS, TPG, TransACT Communications, and Access1 currently delivering or shortly to deliver subscription broadcasting, broadcast-like, or bundled services to niche and regional markets. Although the pay TV licences held by all of the existing operators are national licences which entitle them to deliver a pay TV service anywhere in Australia, commercial arrangements have limited direct competition to between Optus and Foxtel, in the high-density Sydney, Melbourne and Brisbane markets, and between Austar and Foxtel in parts of the Gold Coast.
9. On 5 March 2002 Foxtel and Optus announced an agreement for Optus to resell Foxtel subscription television channels on the Optus Television cable network once all necessary conditions are satisfied. Under the agreement, Foxtel will assume Optus's financial obligations under its movie and other content arrangements. Subject to the consent of content providers, Foxtel proposes to supply some Optus content over the Foxtel platforms. The agreement is subject to a number of matters, including consideration by the Australian Competition and Consumer Commission and consents from various content providers.
10. There are currently around 52 pay TV channels offered in Australia. Many of these channels are vertically integrated with one or more of the pay TV providers.
11. There are approximately 250 commercial radio licences spread over more than 100 licence areas in Australia. Major commercial radio network owners include DMG Regional Radio Pty Ltd (UK owned), Broadcast Operations Pty Ltd, RG Capital (Australia) Pty Ltd, the Australian Radio Network (ARN) (joint Australian (APN) / and US (Clear Channel) ownership), and Austereo Pty Ltd.
12. As with the commercial television industry, an array of national broadcasting and community broadcasting services is available in addition to commercial radio broadcasts. For example, there are currently 192 licensed community radio services operating throughout Australia.
13. Major newspaper proprietors include News Limited, publisher of the only daily national newspaper, the Australian, John Fairfax Holdings, publisher of the Age and the Sydney Morning Herald, and Rural Press, with significant regional newspaper holdings, including the Canberra Times.
14. Changing patterns of media consumption in Australia demonstrate an increase in the use of alternative information sources. According to the AC Nielsen report, Australian Pay TV Trends 2001, the penetration of pay TV in Australian households has increased from 5% in 1996 to 20.7% in July 2001. Over the same period, the AC Nielsen publication, Australian TV Trends 2001, reports that there has been little variation in the amount of time spent watching television, both in regional and metropolitan markets. According to Nielsen/ NetRatings, as at September 2001, 67% of Australian households owned or leased a PC, with 52% of households online. By the same period, 72% of Australians aged 16 years and over had access to the Internet, with 64% of those with access actively using the Internet.
15. Cross-media mergers and acquisitions are regulated under the Broadcasting Services Act 1992 and general competition law under the Trade Practices Act 1974 (TPA), administered by the Australian Broadcasting Authority (ABA) and the Australian Competition and Consumer Commission (ACCC) respectively. Foreign acquisitions are the responsibility of the Treasurer under the Foreign Acquisitions and Takeovers Act 1975 (FATA). Australia’s general foreign investment policy also applies.
16. Under the BSA, there are currently three sections that impose foreign ownership control on commercial and subscription television:
• section 57 (Division 4, Part 5) of the BSA states that a foreign person must not be in a position to exercise control of a commercial television broadcasting licence (normally company interest greater than 15%) and two or more foreign persons must not have company interests greater than 20% in such a licence;
• section 58 (Division 4, Part 5) of the BSA states that, unless approved by the ABA under special circumstances, not more than 20% of directors of each commercial television broadcasting licensee may be foreign persons;
• section 109 (Division 3, Part 7) of the BSA states that a foreign person must not have company interests greater than 20% in a subscription television broadcasting licence and that these interests when added to the company interests in that licence held by other foreign persons, should not represent greater than 35% foreign interest.
17. Foreign acquisitions of newspaper interests are the responsibility of the Treasurer under the FATA. Under FATA, proposals for foreign investment of 15% or more (individuals) and 40% or more (aggregate) in companies valued over $50 million are notifiable and considered by the Treasurer who has the power to reject them if s/he determines that control would change and the proposal was contrary to the national interest.
18. Under foreign investment policy, all direct foreign media investment (and all portfolio investment over 5%) requires prior approval. The foreign ownership limit for a national or metropolitan daily is 25% individual and 30% in aggregate. Foreign ownership of suburban and provincial newspapers is limited to less than 50%. The current limits on foreign investment in newspapers are a matter of policy rather than legislation and could be altered without reference to Parliament.
19. The restrictions on foreign ownership and/or control in the BSA relate only to commercial free-to-air and subscription television licences. For commercial television licences, foreign persons are prevented from being in a position to exercise control of a licence, and two or more foreign persons are restricted to having combined interests of 20%. Foreign persons must not have company interests in a subscription broadcasting licence that exceed 20% in the case of an individual or 35% in the aggregate.
20. As no control provisions apply to subscription television, foreign firms are able to set up in the subscription television industry by establishing contractual relations with Australian owned licensees. Under the control rules that apply to commercial free-to-air television such an arrangement may constitute control and be disallowed.
21. The BSA imposes no specific foreign ownership or control rules on radio or newspapers. Controls on radio licences were lifted in 1992. Foreign Investment Review Board (FIRB) guidelines govern this issue, and proposals are considered on a case by case basis. The entry of foreign buyers has led to greater competition for licences in various market areas. Foreign acquisitions in radio have coincided with consolidation in the market, and the formation of networks to create economies of scale for programming and to reduce costs.
22. Limitations on the cross control of influential media are a critical determinant of the structure of Australia’s media industries. The cross-media regime applies in addition to general competition law. The cross-media regime under the BSA is monitored and enforced by the ABA. The cross-media ownership and control provisions were first introduced in 1987, and retained with the passage of the BSA in 1992.
23. The cross-media rules prohibit a person from being in a position to exercise control, or being a director, of a commercial television licence or commercial radio licence and an associated newspaper in the same licence area. A prohibition also applies to a person being in a position to control, or being a director, of a commercial radio licence and a commercial television licence in the same licence area. A person cannot be in a position to control or be a director of either commercial television/commercial radio, or commercial television/associated newspaper, or commercial radio/associated newspaper within the same licence area.
24. The ABA is required to maintain an Associated Newspaper Register, which records the broadcasting licence areas with which a newspaper is associated. A newspaper is deemed to be associated with a commercial television broadcasting licence area if 50% of the circulation of the newspaper is contained within that licence area. A newspaper is determined to be associated with a commercial radio broadcasting licence area if at least 50% of the circulation of a newspaper is within that licence area, and the circulation is at least 2% of the licence area population.
25. Limitations on control and directorships of commercial television broadcasting licences, commercial radio broadcasting licences, and associated newspapers also apply. The ABA requires licensees to regularly report the names of the directors of a licensee, and persons who, to the knowledge of the licensee, are in a position to exercise control of the licence. Licensees are also required to notify the ABA of any changes to the control of a licence.
26. While the cross-media and foreign ownership and control provisions address different objects under the BSA, they combine to restrict consolidation of ownership among traditional media companies.
27. In 1999 the Productivity Commission (PC) conducted an inquiry into broadcasting, which stemmed from the Commonwealth’s commitment under the Competition Principles Agreement to review legislation that restricts competition. The principal piece of legislation under review was the BSA as amended, including the 1998 digital conversion amendments. The Commission’s Report, which was released in March 2000, made a number of recommendations to reform the operation of the cross media and foreign ownership and control regime.
28. The PC recommended reform of the cross-media ownership regime, beginning with the introduction of a media specific public interest test under the TPA. Repeal of BSA restrictions on foreign ownership and control, and removal of regulatory barriers to entry in broadcasting were further preconditions for lifting the cross-media rules.
29. In respect of foreign ownership and control restrictions, the PC recommended the removal of foreign investment, ownership and control restrictions from the BSA and leaving the sector to be regulated by Australia’s general foreign investment provisions.
PROBLEM
30. Technological progress and globalisation are combining to change the structure of the Australian media market, and patterns of media consumption. While industry participants have responded to these changes by investing in new technology enterprises, and forming broader strategic partnerships, regulation of ownership and control of Australian media has been largely static. This has created tension between the tendency towards convergence in the communications market, and legislative provisions based on sector-specific regulation and an assumption that influential sources of news and opinion are limited to traditional domestic media outlets.
31. Restrictions on cross-media and foreign ownership and control are no longer relevant to the current media environment. The Government’s election policy notes that ‘without reform, the current media ownership laws will consign the Australian media sector to an outdated structure, little or no capacity for new players, an absence of further competition, and an inability to respond to a rapidly evolving and converging international media environment.’ The ownership and control regime gives rise to potential organisational inefficiencies and restrictions on competition. The restrictions also hinder the BSA’s object, under section 3(e), ‘to promote the role of broadcasting services in developing and reflecting a sense of Australian identity, character and cultural diversity’.
32. The cross-media restrictions on ownership and control contained in the BSA are inflexible and tightly focussed. They do not provide scope to reflect the changing influence of technologies, and the evolution of the communications market, over a period of time.
33. The application of restrictions on foreign ownership and control of commercial free-to-air and subscription television similarly limits investment and innovation. The foreign ownership restrictions are inconsistent with the regulation of other areas of the media.
OBJECTIVES
34. The objective of the proposed amendments to the BSA is to improve competition in the media sector while supporting the objects of the BSA.
35. For foreign ownership and control specifically, an objective is to allow greater access to capital together with continuing general foreign investment safeguards.
36. In the case of cross-media reform, the proposals seek to allow increased scope for commercial opportunities whilst preserving a diversity of opinion and information which is of relevance to local communities.
37. A second general objective is to ensure that the legislative framework has sufficient flexibility to accommodate changing conditions within the communications environment, and that the objectives of the BSA are applied consistently across the media sector.
38. There are essentially three options for regulating foreign ownership of broadcasting services:
• to make no change to the current regulatory arrangements;
• to amend the media-specific provisions within the BSA to allow for limited forms of foreign investment in Australian media;
• to remove foreign ownership and control limits from the BSA and discontinue newspaper specific provisions under general foreign investment policy.
Impact Analysis
Option (a): to make no change to the current regulatory arrangements
1. The regulatory framework governing the media has significant economic and social consequences. Current limits on foreign ownership and control of Australian media affect the structure of the broadcasting sector, as well as the media more generally. The restrictions are employed as a mechanism for protecting national and cultural interests. The key affected groups are media proprietors, foreign investors, and consumers.
2. Retaining the existing framework would require no change to the existing regulatory arrangements, and would not alter the current roles of regulators.
3. The existing regime applies inconsistently across the media, with more stringent limits applied to commercial free-to-air television broadcasters than for subscription television licensees, and no limits applied to some other forms of media such as radio. The limits included in the BSA are inflexible, and do not allow for the influence of new forms of media, such as the Internet, or the changing structure of the communications marketplace. This inflexibility directly affects media organisations, by limiting their potential for growth, which may have the consequence of limiting the services on offer to consumers.
4. The PC’s report recommended that foreign investment in broadcasting should be covered by Australia’s general foreign investment policy, and that all restrictions on foreign investment, ownership and control in the BSA should be repealed. Many industry respondents to the Commission’s inquiry supported this approach; however, the support of some domestic media operators was contingent on concurrent reform of the cross-media regime.
5. Foreign ownership and control provisions are becoming increasingly compromised. Complex contractual arrangements and corporate structures increase compliance costs for industry and the regulator, and challenge the objective of ensuring Australian control of commercial television licences.
6. Technological convergence in the communications sectors has resulted in increasing pressure on media operators to invest in digital technologies. Digitisation of production and transmission could enable new types of interactive services to be offered and reduce the cost of producing content. However, investment in digital technologies requires large capital outlays. Restricting Australian media outlets’ access to foreign capital reduces the capacity of the Australian media to adopt new technologies.
7. The continued rollout of global communications networks has been linked to economic, political and social globalisation. In this environment, Australian media proprietors seeking to expand internationally may be limited by their restricted access to capital. Preventing increased foreign investment in Australia may similarly restrict the capacity of Australian media enterprises to forge strategic, international partnerships. Limiting the foreign control of Australian media enterprises could restrict access to technology and managerial expertise.
8. There are no specific limitations on foreign investment in Australian commercial radio licences, although general foreign investment policy requires prior approval of all direct foreign media investment (and all portfolio investment over 5%). Experience in radio suggests that foreign investors increase the potential pool of media owners, and create increased competition in the sale of licences.
Option (b): to amend the media-specific provisions within the BSA to allow for limited forms of foreign investment in Australian media
9. Restrictions on foreign control and ownership of commercial television licences contained in the BSA are comprehensive, including prohibitions on direct ownership and control, passive investment[1], and foreign-managed but Australian sourced funds above a defined level. The definition of control in the BSA is extensive, in recognition of the often complex interests involved in a particular company.
10. Under subsection 8(2), paragraph (a) of the BSA, a person is considered to hold a voting interest in a company if the person is in a position to exercise control of votes cast on a poll at a meeting of the company. The percentage of the voting interest is calculated as the greatest percentage of the number of votes able to be controlled by a person, expressed as a percentage of the total votes that could be cast on any issue at a meeting of the company. A winding up interest entitles a person to a share of the property of the company available for distribution, as a result of winding-up or other circumstances.
11. An alternative to the current regime is to amend the BSA to allow limited investment by foreign sources in Australian media. This could be achieved by removing restrictions on either or both passive investment or investment by foreign managed but Australian sourced funds. The introduction of exemptions for passive investments would probably require reference to a decision-making body (such as the ABA) in cases where the terms and conditions of securities contracts require individual consideration (eg. hybrid or individualised securities). Compliance would be the responsibility of the broadcaster and the regulator who would need to ensure that ownership limits were not breached.
12. A number of investment and securities types are defined under the Corporations Act 2001 and related legislation. The introduction of exemptions for passive investments could utilise existing definitions subject to consideration on a case by case basis. Alternatively, economic interests could be exempted without limit, or up to individual and aggregate percentage limits.
13. Enabling passive investment in commercial television stations would increase access to capital without substantially reducing current levels of Australian control.
14. However, in its final report the PC doubted that many foreign investors would accept a passive role, defeating the purpose of liberalisation. This approach would also entail a heavy administrative burden in determining and monitoring holdings and in enforcing compliance by ‘passive’ shareholders.
15. A second option is to remove restrictions on investment by foreign managed but Australian sourced funds in commercial television broadcasters. This was the approach recommended by the PC in the event that sole reliance on Australia’s general foreign investment policy was unachievable. There are a number of precedents in Australia which embody the concept of a substantially Australian investment fund, notably for Telstra and Qantas.
16. A similar model in the broadcasting sector would provide opportunities for ‘Australian money’ deposited in foreign-controlled investment funds to be invested in Australian broadcasters.
17. With a high proportion of foreign owned fund managers operating in Australia, there is an argument that the restrictions on foreign managed but Australian sourced funds unduly limit access to capital. It also increases the costs of monitoring and compliance with the legislation.
18. This option is preferable to offering exemptions for passive investment, as it facilitates access to capital, while incurring lower compliance costs. However, it would not achieve the full benefits of removing restrictions. Interest from foreign investors is likely to be higher if they can be assured of voting rights. As the PC noted, through a combination of commercial incentives and local content requirements, Australian control is no longer a prerequisite for the provision of Australian programming.
Option (c): to remove foreign ownership and control limits from the BSA, and discontinue newspaper specific provisions under general foreign investment policy
19. In its final report the PC recommended the removal of foreign investment, ownership and control restrictions from the BSA, leaving the sector to be regulated by Australia’s general foreign investment provisions. The Government’s election policy also expressed a preference for this approach, in conjunction with the discontinuation of newspaper specific provisions under general foreign investment policy.
20. Abolition of all media-specific foreign ownership and control limits in the BSA is legislatively simple. Discontinuing the newspaper-specific provisions under general foreign investment policy is at the discretion of the Treasurer. The BSA provisions and newspaper specific foreign policy provisions have similar objectives, and it would be consistent to remove them simultaneously. Foreign ownership and control of Australian media would then be subject solely to the provisions of FATA and the Government's amended general foreign investment policy.
21. Repeal of restrictions under the BSA on foreign investment may improve access to capital, increase the pool of potential media owners and act as a safeguard on media concentration.
22. Like other sectors of the economy, Australia’s media industries are becoming more global in their technology and equity links. Media convergence imposes considerable pressures on existing media players to take strategic positions in the marketplace and to strengthen their competitiveness through better use of economies of scale and scope. However, restrictions on foreign investment and control limit the options open to Australian media businesses.
23. Removing the foreign investment constraints opens up the capital market for television, and improves access to technology and managerial expertise. The maintenance of a restriction on foreign investment is at odds with policies that encourage international competition in other sectors of the economy.
24. Removing the restrictions on foreign ownership and control in the BSA would introduce consistency in the application of foreign investment regulation in the media sector. Compliance costs for the industry would be reduced through simplification of regulation and through removing the need to monitor foreign interests for the purposes of compliance with the BSA.
25. The intention behind the media-specific foreign ownership and control provisions was to ensure that Australians have effective control of the more influential broadcasting services. Changes to the media environment mean that the existing ownership and control regime may no longer be effective, or necessary.
26. The penetration of alternative media sources and access to global communications systems means Australian audiences have an increasing number of outlets from which to source news, information, and entertainment.
27. There has been criticism of repealing restrictions on foreign investment on the grounds that it may result in a reduction in Australian content. This argument was disputed by the PC, who found that media proprietors are bound by commercial imperative and competition from alternative services to show programming of relevance to audiences. Foreign owners may also be less likely to seek to interfere in domestic affairs or to have conflicts of interest in the local market, aiding the BSA’s objective of encouraging diversity of opinion. Legitimate concerns about foreign control of Australian media on national security grounds could still be addressed through FATA and general foreign investment policy.
28. Similar arguments have been raised in respect of allowing foreign ownership and control of Australian newspapers through discontinuation of newspaper-specific provisions under general foreign investment policy. However, as with commercial broadcasting, it is unlikely that foreign owners would be as inclined to interfere in domestic affairs as domestic owners, and the pool of potential media owners would be considerably increased. FATA and general foreign investment policy would continue to operate to ensure continued oversight on national interest grounds over foreign control and ownership of Australian newspapers.
29. The Government’s election commitments referred to the simultaneous repeal of media-specific foreign ownership and control provisions and reform of the cross-media regime. It would be legislatively possible to remove the foreign ownership provisions without amendment to the cross-media rules. Such an approach would not be in the interests of either potential foreign investors (for whom there would be less incentive to invest in Australian media enterprises if limitations on cross-control remain) or domestic broadcasters, who would have a competitive disadvantage.
30. Restrictions on foreign ownership and control of Australian commercial television stations have implications for business, potential investors, and the broader Australian community.
31. The proposed changes to the BSA were canvassed in the context of a comprehensive legislation review conducted by the Productivity Commission. A number of submissions were received from affected parties, including business, industry groups, community members and regulatory bodies.
32. In response to the PC’s Inquiry into Broadcasting, many industry participants indicated support for the combined removal of media-specific foreign ownership and control restrictions. This was based on arguments that lifting restrictions would allow greater access to capital, guard against excessive concentration in the media, and stimulate investment in the Australian media sector. Some domestic media proprietors expressed concern that liberalising foreign ownership and control restrictions prior to the lifting of cross-media rules would impact negatively on Australian businesses.
33. While there remains some community concern about foreign control of Australian media sources on national interest and cultural grounds, these may be addressed through general foreign investment policy and local content requirements. Community concerns are balanced by benefits for the community associated with increased foreign investment, such as a diversity of opinion, increased capital for investment in new services, and protection against excessive concentration of media ownership.
34. Since the release of the PC’s final report, Inquiry participants have indicated their continuing support for the views expressed in their submissions. Changes to the media regime were outlined as part of the Government’s election commitments.
Conclusion and Recommended Option
35. Option (a) is to make no change to the current regime, which imposes fixed restrictions on foreign ownership and control of commercial television broadcasters in Australia. This option lacks the flexibility to accommodate changing technological and market conditions and is restricted in its ability to achieve the Government’s public interest objectives.
36. Option (b) provides for limited foreign investment in Australian media. While this approach offers improved flexibility from the current regime, and easier access to capital, it is not certain that this option would be sufficiently attractive to foreign investors.
37. Option (c) introduces more consistent and simplified regulation to foreign investment. It opens access to foreign and domestic capital markets and promotes greater diversity in ownership and control, subject to the operation of the general foreign investment law. In simplifying regulation it removes some monitoring and compliance costs and improves Australia’s potential as a site for investment. General foreign investment provisions would remain as a safeguard of national interest.
38. Option (c) is recommended as it ensures legislative consistency, encourages investment in the Australian media sector, and provides greater opportunity for diversity of opinion. Option (a) is not recommended because it lacks regulatory flexibility and fails to address changes in the media sector. Option (b) is not recommended as it provides only limited scope for increased access to capital, and would be unlikely to result in increased competition.
Implementation and Review
39. Option (c) is legislatively simple to implement and involves removing the following sections from the BSA:
• sections 57-58 (Division 4, Part 5) on the limitation on foreign control of television for commercial FTA services; and
• section 109 (Division 3, Part 7) on foreign ownership limits for subscription television broadcasting licences.
40. As per the Government’s election commitments, newspaper specific provisions under Australia’s general foreign investment policy would be discontinued. Provisions under FATA as well as Australia’s general foreign investment policy, would continue to apply.
41. There are three main options for cross-media regulation:
• to retain the current legislative framework;
• to allow exemptions to the existing regime subject to the application of a public interest test;
• to remove cross-media provisions under the BSA.
Impact Analysis
Option (a): to retain the current legislative framework
1. The Australian media environment has undergone significant change since the introduction of the cross-media regime in 1987. Audiences have increasing access to new forms of media, supplementing traditional services regulated by cross-media provisions (radio, television and newspapers). The convergence of the media, and the communications sector more generally, is creating new commercial opportunities. More than ever, the media plays an important role in the public dissemination of information and the shaping of community attitudes.
2. The PC found that, while diversity of opinion remains an important objective, it is not necessarily best achieved by the current cross-media regime. Cross-media regulation should not unduly constrain the ability of media companies to develop innovative new products and services.
3. The prescriptive approach of the current regime creates an inflexible regulatory framework. It does not account for changes in industry structure, or the varying degree of influence different types of media have on public opinion. This may have the effect of inhibiting the growth of new services and foreclosing future developments in the marketplace, which has costs for the community and for business.
4. One such cost is limitations on businesses achieving economies of scope. The PC noted that although cross-media restrictions do not prevent media operators from purchasing different media in different markets, the majority of media organisations had not pursued this strategy to any marked degree (with the exception of Southern Cross Broadcasting). This outcome indicates that cross-media restrictions act as a significant deterrent to media organisations pursuing economies of scope, an approach at odds with market and technology trends in the media sector.
5. With the digitisation of production and distribution facilities, media organisations around the world are under pressure to invest in new technologies and to recoup that investment through efficiency savings. The current regime incurs costs to business by limiting the ability of media companies to invest in different types of media services, and by restricting the corporate structure of media companies. Industry respondents to the PC Inquiry reported content sharing was only one advantage of cross-controlled companies. Sharing of administrative and corporate functions, such as marketing, could reduce business costs and promote coordinated publicity campaigns across the organisation’s different media outlets. This approach could have benefits for media-buyers, with trade practices law regulating against anti-competitive behaviour or collusion.
6. Globalisation of technology and business exposes domestic Australian media companies to competition from overseas sources. Some industry participants complain that domestic restrictions prevent Australian companies from achieving a sufficient size to secure expansion into overseas markets. Similar restrictions apply, however, in other foreign markets, such as the United States and Britain.
7. By restricting investment in certain combinations of media services but not others, the regulatory framework directs the market towards outcomes that may not be the most economically efficient, and may not ensure diversity amongst influential media.
8. The current approach is not consistent with the Government’s competition policy, which requires that as far as possible universal and uniformly applied rules of market conduct should apply to all market participants, regardless of the form of business ownership.
9. While mergers and acquisitions are assessed on a case by case basis under general competition law, the cross-media provisions are applied indiscriminately to mergers between certain types of media. As the PC noted in its report, this approach ignores research into patterns of media consumption, which indicates that mergers between newspaper groups and commercial television licensees can have very different effects on different audience segments’ access to a diversity of sources of information and opinion.
10. Retaining the cross-media provisions but changing the allowable percentage of ownership and control is not considered as a separate option, as it does not address the inherent structural problems of the current regime. Furthermore, given that there is no accurate measure of the influence of different media, it would be difficult to set an appropriate level for ownership and control limits.
Option (b): to apply a public interest test to media mergers and acquisitions
11. This option provides that all proposed cross-media mergers and acquisitions would be required to satisfy a media-specific public interest test before gaining regulatory approval. Applying a media-specific public interest test has the benefit of introducing greater flexibility into the legislative framework, while at the same time ensuring that the public interest objectives of the BSA are met. The PC recommended the adoption of a media-specific public interest test in its report on the broadcasting industry, describing it as an achievable and desirable outcome.
12. Provision for a media-specific public interest test could be introduced under existing legislation. The test would supplement general competition law, under which proposed mergers are assessed to determine whether they would have the effect of substantially lessening competition within a market. Combining the test with exemptions to the cross-media regime would provide greater flexibility in the regulatory framework, enabling media regulation to better adapt to changing technological and commercial conditions.
13. Cross-media rules are generally aimed at ensuring diversity in the sources of information and opinion and a plurality in the ownership of the media. Australia’s cross-media rules act as an absolute barrier to media firms taking advantage of economies of scale and scope which might arise from owning different types of media in the same market. At the same time convergence within the communications sector is making these restrictions increasingly redundant and anachronistic.
14. In its 2000 Report on Broadcasting, the PC recommended the eventual removal of the cross-media rules subject to certain conditions, including deregulation of free-to-air broadcasting and changes to digital implementation. The PC concluded that the current provisions of the Trade Practices Act 1974 (TPA) were not adequate to address the public interest considerations associated with media mergers because trade practices law does not provide for a single market nor could it readily address the issue of diversity of sources of news and opinion. The PC proposed the immediate implementation of a media-specific public interest test to be administered by the Australian Competition and Consumer Commission (ACCC) acting after advice from the Australian Broadcasting Authority (ABA). The PC found that three key factors would need to be addressed prior to implementation of the test. These were the definition of the test, the development of guidelines and the designation of which sectors were to be covered.
15. The PC suggested that the media specific public interest test should address the public interest in promoting diversity of ownership and diversity in sources of opinion and information. While not articulating the elements of a test, the PC pointed to the media-specific public interest test used in the UK. The UK Independent Television Commission (ITC) assesses applications for merger approval on a case by case basis. In this process, the ITC is required to consider promotion of plurality of ownership and diversity of sources of information and opinion; possible economic benefits from the merger; and the overall effect on the market or markets.
16. However, as the PC itself acknowledges, there are no generally accepted methods for measuring diversity or plurality or related parameters such as media concentration or share of voice across different media markets. As a result, these criteria become a matter of subjective judgement by the regulator. Indeed, the UK recently indicated an intention to reform their cross-media provisions in recognition of criticism from industry of the subjectiveness of the current provisions and the resultant uncertainty for investors. There are overseas precedents for the introduction of a public interest test (see above). However, including general criteria under the test may result in greater industry uncertainty, and a lack of public confidence in the objectivity and efficacy of the scheme.
17. Under the proposed model, potential acquirers would be required to give undertakings against specific criteria established under the test. Defining specific criteria that potential mergers would be required to meet has the benefit of providing greater certainty to industry and transparency to the community.
18. The PC’s preferred approach places the onus on the company seeking merger approval to prove that the merger is not contrary to the public interest. This reversal of the normal burden of proof would only increase the arbitrary power of the regulator and the uncertainty faced by industry.
19. The Government proposal involves a more objective media-specific public interest test which would minimise the scope for subjective judgements by the regulator and improve certainty for investors. This approach focuses on diversity of sources of information and opinion rather than plurality of ownership (beyond the limits imposed by the competition rules already provided in the TPA). Removal of the media-specific foreign investment limits will offer scope for greater plurality of ownership. The growth of new sources of information such as the Internet will also continue to expand peoples’ choice.
20. In submissions to the PC Inquiry, some industry participants were critical of a media-specific public interest test on the grounds that there was no adequate means of measuring the influence of different types of media, and concentration across media sectors. While these concerns are legitimate, they could be avoided if the public interest test contained relatively straightforward criteria and provided clear guidelines for compliance.
21. As the proposal operates as a system of exemptions, it would apply to mergers and acquisitions that would normally be in breach of the cross-media restrictions.
22. If a public interest test is applied to media mergers and acquisitions, either the ABA or the ACCC could be empowered to grant the relevant exemptions.
23. The ACCC has the advantage of offering a ‘one-stop shop’ to organisations whose acquisition proposals will also have to pass normal competition tests. Since the release of the PC’s report, however, community concern over reform of cross-media regulation has centred on content issues. The potential for compromises of editorial independence, a reduction in diversity of opinion, and a reduction in the level of local information and news services have been of particular concern, and were accordingly acknowledged in the Government’s election commitments. In this respect the ABA is better placed as an industry regulator for broadcasters to investigate and monitor the substance of the undertakings given its ongoing role in content regulation.
24. As the Government has proposed to introduce the public interest test as a prerequisite for exemptions from the cross-media regime, it is logical to insert provision for the test into the BSA, rather than the TPA. The BSA has the further benefit of allowing for specific requirements to be placed on broadcasters as licence conditions. Provisions can include fines for breaches and suspensions and removal of licences in the case of repeated or severe breaches of licence conditions.
25. The BSA also provides for compulsory reporting of information to allow the ABA to monitor compliance. For example broadcasters are required to report their total revenues, expenditure of Australian and New Zealand (ANZ) content and hours of ANZ content broadcast. It is proposed to require regional broadcasters subject to a cross-media exemption to report to the ABA regularly on the levels of their local news and information services. Any undertakings approved under the public interest test could be included as licence conditions, binding on the licence of the relevant radio or television operator, and subject to the reporting and monitoring scheme administered by the ABA. This could reduce the costs of regulating the scheme, and minimise the potential impact on the regulator’s resources. On balance, the ABA is recommended to administer a media specific public interest test.
26. The Government’s election policy nominates two criteria for a media-specific public interest test: an undertaking to retain separate and distinct processes of editorial decision-making; and, in the case of television and radio, an undertaking to maintain existing levels of local news and current affairs.
27. In relation to the first criterion, it is proposed that applicants be required to demonstrate to the regulator provision for separate editorial decision-making responsibilities through: publication of separate editorial policies within a timeframe developed by the ABA; the existence of accurate organisational charts in connection with editorial decision-making responsibilities at the time of application; and maintenance of separate editorial news management, separate news compilation processes, and separate news gathering and news interpretation capabilities.
28. These requirements would not preclude sharing of resources or other forms of co-operation in newsgathering between organisations. Co-operation should be encouraged as owners seek to realise efficiencies from co-owned organisations.
29. The election commitment in relation to local news levels addressed a widely-held concern about reductions in levels of local news and current affairs coverage provided by television and radio stations, especially in regional areas. It is proposed to strengthen the effect of such a commitment through the imposition of a condition on broadcasting licensees in regional licence areas qualifying for a cross-media exemption that would require compliance with minimum local news and information levels to be established by the ABA, in accordance with statutory guidelines. Broadcasters which exceeded the minimum requirement before acquisition would be required to maintain existing levels of local news and information. Affected broadcasters would be required to report to the ABA on their levels of local content in news and information.
30. The ABA would be empowered to review the requirements in the light of any subsequent restructuring of the ownership and control arrangements. This approach would provide a more effective mechanism than the provision of undertakings originally envisaged, which provides no scope for improvement in existing levels of local news, where these are low or non-existent.
31. In determining the local news and information requirements it is proposed that the ABA be required to have regard to statutory guidelines. Possible criteria could include that there must be no reduction in the levels of regional news and information programming provided prior to the merger or acquisition, and that the relevant licensees will be required, following merger or acquisition, to provide minimum levels of local news and information. The minimum level could be at least 5 news and weather bulletins per week, broadcast at peak listening/viewing periods which adequately reflect matters of local significance; or more than 5 such bulletins per week, where the objective is met through shorter, more frequent bulletins. Relevant licensees could also be required to provide community service announcements and emergency warnings as provided by emergency service agencies.
32. A separate Regulatory Impact Statement will be prepared as appropriate to examine regulatory options developed in relation to these issues.
33. An alternative to imposing pre-defined limits as a licence condition is to establish an undertakings procedure along the lines of that recommended for ensuring structurally separate and distinct editorial processes. However, the public interest is better served through requiring the ABA to ensure minimum levels of news and information services are met.
34. While there may be some costs to industry in meeting these undertakings, these are likely to be less than the costs of maintaining the current scheme, and do not appear to outweigh the benefit to the community of ensuring a diversity of opinion and information of relevance to local communities.
35. The effect on the structure of the Australian media of allowing exemptions to the cross-media regime together with repeal of foreign ownership and control restrictions is difficult to quantify as relevant assets have never been made available in an international market or comparable investment climate. The change in market outlook for the communications sectors before April 2000 (the time of the ‘dotcom crash’) and thereafter is evidence of the difficulty of predicting how the market will develop. Amendments to the current foreign and cross-media ownership rules would be expected to facilitate some consolidation amongst Australian firms through acquisition. However, new foreign entrants would be expected to increase diversity and competition.
36. While it is likely that there will be some movement to acquire cross-controlled enterprises currently prohibited under cross-media rules, some practical and legislative barriers remain. The moratorium on new free-to-air commercial television licences until 1 January 2007 will limit the entry of new participants in the broadcasting sector, unless acquiring existing licences. Similarly, while a system of exemptions to the cross-media regime would remove regulatory barriers preventing existing commercial television broadcasters entering the newspaper market, the substantial cost of establishing a new newspaper service means broadcasters could be expected to purchase an existing business, rather than enter as a new competitor.
37. Of the three sectors currently regulated under cross-media rules (radio, television and newspapers) it may be that the most immediate effects of the exemptions will occur in the radio sector. There are a greater number of potential commercial radio licences compared with commercial television broadcasting, and the set-up costs of establishing a radio station may be lower than for a newspaper. However, limited spectrum capacity will place practical constraints on the establishment of new services.
Option (c): to remove cross-media provisions under the BSA without providing a media-specific public interest test
1. The PC’s report into Broadcasting considered the option of repealing cross-media provisions in favour of sole reliance on general competition law under the Trade Practices Act 1974 (TPA). This option has the benefit of ensuring that all media mergers and acquisitions are assessed under a single legislative framework. Such an approach would reduce the opportunity for subjectivity in approving media mergers and acquisitions, allowing flexibility in consideration of future cases, and comply with the Government’s objectives under the competition framework of uniform rules across the economy. It also has the advantage of reducing, or removing, any discontinuity of policy and duplication of function.
2. A more flexible regulatory environment could stimulate new enterprises among media operators, leading to a growth in new technologies and services. It could lead to further innovation in the media sector, resulting in a better range of services for audiences, more efficient use of technologies, and a greater diversity of content.
3. A disadvantage, however, would be the limited capacity to address public interest concerns, as required under the BSA. While the TPA contains provision for a public benefits test, it is unlikely to be triggered in the case of media mergers and acquisitions. The existing public benefits test under the TPA does not explicitly cover the criteria of separate and distinct editorial processes and the maintenance of levels of local content included by the Government in its election commitments.
4. A further difficulty of this approach is that trade practices law is restricted in its ability to consider the economic and competition effects of media mergers and acquisitions in a convergent environment. Under current provisions, mergers are assessed against a test of whether they would have the effect of substantially lessening competition within a market. The definition of the relevant market, crucial to the outcome of the assessment, is based on whether the products and/or services under consideration are close substitutes. This is in turn based on whether a rise in the price of one would encourage consumers to increase substantially their consumption of the other.
5. The ACCC has advised that the definition of a market employed in trade practices law would be unlikely to capture mergers between different types of media. It is also unlikely that the definition would distinguish between the degree to which types of media are substitutable (for example, no distinction being made between the merger of two print based media as opposed to a print-based operation and a broadcast operation). The conclusion of the PC was that the general competition rules might be effective in preventing consolidation within a market segment, but could not be relied upon to adequately address cross-media acquisitions.
6. While an alternative approach to assessing the cross-media mergers would be to assess the impact on a common market, such as advertising, this approach would be unlikely to satisfy community concern about impacts on the ‘market for ideas’.
7. Smaller and less established media organisations have not endorsed this option, arguing that general competition law provides inadequate protection against excessive consolidation in media ownership, and that the reach of new technologies, such as the Internet and subscription broadcasting, is not yet equal to the influence of traditional media.
8. The Government’s election commitments refer to the simultaneous repeal of foreign ownership and control provisions and the introduction of exemption to the cross-media ownership regime. While these reforms are proposed as a single package, it would be legislatively possible to amend the cross-media regime without removal of the foreign ownership provisions. This would, however, be likely to have the effect of allowing greater consolidation within the Australian media market without substantially increasing the potential pool of media owners.
9. Reforming only the cross-media regime would do little to increase Australia’s potential as a site for foreign investment. Not only would this continue to disqualify foreign owners from owning or controlling a television broadcasting licence it would also continue to restrict domestic companies’ access to capital. An important benefit of allowing cross-media enterprises is stimulation of investment in new technologies. The ability to invest in capital intensive technologies would be significantly reduced if access to foreign capital were limited.
10. Convergence in the communications sector is occurring at an uneven rate across sectors. While some new technological applications have reached high levels of penetration very rapidly, for example text messages sent via mobile phones, other applications, such as digital television, are proving to have slower rates of adoption. Where there is a clear case for reform, as with the ownership and control regime, there are benefits in amending the framework as early as possible.
11. This approach would ensure that the regulatory regime has sufficient flexibility to respond to changing market and social conditions, while at the same time providing investment certainty to business, and greater certainty for consumers looking to purchase new technology products.
1. Since its inception in 1987, the cross-media ownership and control regime has been the subject of considerable debate. Representations have been received from a number of stakeholders, including industry, community representatives, and regulators.
2. Reform of cross-media provisions in the BSA was canvassed in the context of a comprehensive legislation review conducted by the Productivity Commission, which received numerous submissions from affected parties. The views represented were diverse, and supported by both economic and social policy arguments.
3. There has generally been support for cross-media reform amongst the media industry. Proponents of reform argue that the provisions are overly restrictive, result in efficiency costs for business, and are no longer representative of the Australian media environment. There is also criticism that the provisions unfairly target radio, television and newspaper irrespective of the rising influence of new technologies. However, there is also some opposition to change to the broadcasting legislative framework on public interest grounds.
4. Support for a media-specific public interest test has been mixed, with key concerns ranging from the potential for subjectivity in the assessment process and the difficulty of quantifying the influence of different types of media.
5. Traditional media industries, such as free-to-air broadcasters and newspapers, have tended towards support for the total repeal of the cross-media rules. While Australians’ consumption of media is changing, there remains some resistance to the total removal of cross-media provisions because of concerns about scope for reductions in diversity of service and opinion. Community opposition to the closure of local news services also indicates the importance of information that is relevant to local communities.
6. Since the release of the PC’s final report, some Inquiry participants have indicated their continuing support for the views expressed in their submissions. Changes to the media regime were also outlined as part of the Government’s election commitments. The ABA’s Inquiry into the provision of news services in regional areas has also provided an opportunity for stakeholders to comment.
Conclusion and Recommended Option
7. Option (a) proposes that no change be made to the current regime, to ensure the continuing protection of public interest objectives. Although support for these objectives remains valid, it is doubtful that the current regime is the most efficient, or even effective, means of achieving these objectives given its limited scope and lack of flexibility in responding to new technological or commercial developments.
8. Option (b) provides for some exemptions to the existing regime subject to a media specific public interest test. It would allow greater flexibility in the regulatory framework and create a more level playing field for new and traditional media players. It would also provide increased opportunities for media outlets to achieve efficiency savings, which may in turn assist the development of innovative products and services.
9. Option (c) would initiate more sweeping changes intended to achieve greater competition. However, the PC and ACCC agree that trade practices law provides limited scope to consider the public interest objectives outlined in the Government’s election commitments, and that it would be unlikely to prevent mergers between media organisations in different markets without significant amendment to existing provisions.
10. Option (b) is therefore recommended as it introduces a greater measure of flexibility into the regulatory regime, while at the same time accommodating public interest concerns. Option (a) is not recommended as it entails significant costs to industry, does not provide an adequate level of regulatory flexibility, and cannot guarantee diversity of opinion and information. Option (c) is not recommended as it fails to address public interest concerns.
Implementation and Review
11. The proposal to offer exemptions to the cross-media control provisions subject to a system of undertakings and the imposition of licence conditions would be introduced through amendment to the Broadcasting Services Act 1992 and administered by the Australian Broadcasting Authority.
12. As requirements for separate editorial decision-making responsibilities and minimum levels of local news and information are included as licence conditions, they would be subject to current monitoring, compliance, and reporting arrangements.
Addendum
13. Since the original introduction of the Bill into the House of Representatives on 21 March 2002, a number of significant enhancements have been developed. In combination, these measures further address public interest concerns and provide stronger safeguards to protect diversity of news and opinion, and prevent market dominance by any one media group.
14. The amendments made to the original Bill include:
• An amendment stipulating that a cross-media merger cannot be approved unless five independently owned commercial media outlets (across radio, associated newspapers and television) in metropolitan markets, and four in regional markets, remain in the market after the cross-media acquisition occurs.
• The national extension of the restriction on a person controlling more than the 2 of the 3 types of media that are covered by the cross-media rules in a single market (that is commercial television, commercial radio, and associated newspapers).
• The inclusion of local newspapers in the ‘2 out of 3’ test in regional areas.
• A restriction on newspaper ownership to one newspaper per market where the person also holds a cross-media exemption certificate for that market.
• Permitting datacasters to transmit local sports programs and local sports news bulletins.
• Prohibiting contracts and arrangements that attempt to restrict the program format of commercial radio broadcasting services.
• Ensuring that a temporary breach of the ownership and control rules would not be approved by the ABA if it resulted in the person seeking approval of a temporary breach becoming the successful applicant for a commercial radio licence. The amendment is also intended to ensure that approvals are granted only for the minimum practical time as determined by the ABA.
• Clarification that a cross media merger (or any other action in relation to ownership or control) is subject to the provisions of Part IV of the Trade Practices Act 1974, including the merger and anti-competitive conduct provisions.
• A requirement to review the ownership and control provisions in three years time.
• A requirement for the ABA to impose licence conditions requiring the broadcast of a minimum amount of material of local significance on all commercial television broadcasters in the regional aggregated markets of Northern New South Wales, Southern New South Wales, Regional Victoria, Regional Queensland, Tasmania, and the mainland State capital cities.
Clause 1 provides for the citation of the Broadcasting Services Amendment (Media Ownership) Act 2002 (the Act).
This clause provides for the Act to commence on Royal Assent.
Clause 3 provides that the BSA is amended as set out in the Schedules to the Bill, and any other provisions in the Schedules have effect according to their terms.
Schedule 1 to the Bill removes all provisions in the BSA that restrict foreign ownership of commercial television and subscription television interests.
The effect of removing all restrictions on foreign ownership from the BSA is that questions of foreign ownership of commercial and subscription television interests will be regulated by the Foreign Acquisitions and Takeovers Act 1975. That is, the situation in relation to commercial and subscription television interests will be the same as for commercial radio and newspapers. The Trade Practices Act 1974 will also continue to apply.
However, the Bill does not affect the requirement that a commercial or subscription television broadcasting licensee must be a company formed in Australia (see sections 37 and 95 of the BSA respectively). A foreign owner would therefore need to establish an Australian subsidiary to be the licensee company.
Item 1 repeals the object of the BSA relating to Australian effective control of the more influential broadcasting services, as a consequence of the repeal of the foreign ownership restrictions by items 3 and 10 below.
Item 2 repeals the definition of foreign person from the interpretation provision, as a consequence of the repeal of the foreign ownership restrictions by items 3 and 10 below.
This item repeals Division 4 of Part 5 of the BSA (sections 57 and 58). Section 57 currently prevents foreign persons from controlling a commercial television broadcasting licence, and section 58 currently imposes limitations on foreign directorships of a commercial television broadcasting licensee.
Item 4 is a technical amendment made necessary as a consequence of item 5.
Item 5 removes the requirement for commercial television broadcasting licensees to notify the ABA of the name of each foreign director. This amendment is a consequence of the repeal of Division 4 of Part 5 by item 3 above.
These items delete references to the provisions of Division 4 of Part 5 from sections 66 and 70, as a consequence of the repeal of Division 4 by item 3 above.
Item 10 repeals all remaining restrictions on foreign ownership and control of subscription television broadcasting licences in Divisions 3, 4 and 5 of Part 7 (sections 104-110, 111 and 112 respectively):
Section 109 is the only provision of Division 3 that is currently in force. All other provisions of Division 3 ceased to have effect on 1 July 1997 (see section 104). Accordingly, Division 3 is repealed in its entirety.
As a consequence, Division 4 becomes redundant and is therefore repealed in its entirety.
Subsections 112(6) and (7) are the only provisions of Division 5 that are currently in force (see subsection 112(8)). Subsections 112(6) and (7) also become redundant as a consequence of the repeal of Division 3. Division 5 is therefore repealed in its entirety.
Items 11, 12 and 13 repeal table rows from section 204 (the Administrative Appeals Tribunal review provision), as a consequence of the repeal of the foreign ownership provisions by items 3 and 10 above.
Item 14 is a technical amendment necessary as a consequence of item 15.
Item 15 repeals the commercial television broadcasting licence condition preventing any election to the board of directors that would result in more than 20% of the directors being foreign persons. The amendment is consequential on item 3 above.
Paragraph 10(1)(c) of Schedule 2 requires the articles of association (now called the company constitution) of a subscription television broadcasting licensee to contain certain provisions. These provisions were designed to assist enforcement of the foreign ownership rules.
Item 16 repeals paragraph 10(1)(c) of Schedule 2 as a consequence of the repeal of the foreign ownership restrictions for subscription television by item 10 above.
Item 1 inserts a definition of cross-media exemption certificate into the interpretation section of the BSA.
Item 1AA adds new section 43A to the BSA, which requires the ABA to impose licence conditions that require all commercial television broadcasters in regional aggregated markets to broadcast a minimum amount of material of local significance.
In 2002, the ABA concluded an investigation into local content in most aggregated regional markets. As an outcome of this investigation the ABA imposed a licence condition on relevant broadcasters requiring the broadcast of a minimum amount of material of local significance for relevant local sub-markets. Material of local significance in that licence condition includes material such as local news (local news has a higher relative value in reaching the prescribed minimum amount of material of local significance).
Material of local significance also includes current affairs or other programs. This recognises that a diversity of locally relevant programming will be of interest to viewers.
For the purposes of new section 43A, regional aggregated commercial television markets include those markets examined in the ABA’s recent investigation. The investigation related to defined licence areas in New South Wales, Victoria and Queensland. In these States the commencement date for the new licence condition has been set at 1 August 2003. The Bill provides for the licence condition to also require a minimum level of material of local significance in Tasmania. As Tasmania was not included in the initial investigation, the applicable date for the commencement of a licence condition has been set at 1 July 2004 to enable the ABA to determine the appropriate licence condition for that market.
Item 1AB adds new section 43B to the BSA, which requires the ABA to impose licence conditions that require all metropolitan commercial television broadcasters to broadcast a minimum amount of material of local significance.
The commencement date for the new licence condition has been set at 1 July 2004. This will enable a proper investigation to be undertaken into the appropriate level of local content for metropolitan markets.
For the purpose of the licence condition, metropolitan commercial television broadcasters are those broadcasters whose licence areas include the mainland State capitals.
Item 1A inserts new section 49A into the BSA, which will prohibit contracts or arrangements which restrict the program format of commercial radio broadcasting services.
Contracts or arrangements for transfer of licences
Subsection 49A(1) prohibits a person from entering into a contract or arrangement for the transfer of a commercial radio broadcasting licence if:
(a) the contract or arrangement imposes any restriction on the program format of the service provided under the licence; or
(b) the contract or arrangement will, or is likely to, have the effect of limiting the program format of the service provided under the licence.
An arrangement need not be legally binding to be caught by the prohibition. The term ‘arrangement’ is intended to apply to a transaction, agreement or understanding which does not constitute a legally binding contract. For this purpose, an arrangement could be formal or informal, written or unwritten.
As these tests are objective, the parties’ subjective intentions are irrelevant.
Because the prohibition is in broad terms, subsection (2) allows regulations to be made to exempt kinds of contracts or arrangements from the prohibition in subsection (1).
Contracts or arrangements for transfer of control of licences
Subsection (3) is essentially the same prohibition as subsection (1). However, subsection (3) applies where the contract or arrangement provides for the transfer of control of a licence to another person, rather than transfer of the licence. Subsection (3) would cover, for example, a transaction for the sale of the shares in the licensee company, where the identity of the licensee company itself does not change.
Subsection (4) explains that ‘transfer of control’ occurs where the contract or arrangement results in a person becoming in a position to exercise control of the licence.
The existing provisions in Schedule 1 of the BSA will apply in determining questions of control for the purposes of this section.
Subsection (5) allows regulations to be made to exempt kinds of contracts or arrangements from the prohibition in subsection (3). There may be legitimate types of transactions which should not be prevented.
Other contracts or arrangements
It is possible that program format restrictions might be imposed in circumstances where neither the licence itself, nor control of the licence, is transferred. For example, the format restriction might be imposed not by the transfer contract, but by a collateral contract between the parties. Arrangements might also be structured so that the format restriction is imposed by a contract or arrangement with a third party.
Accordingly, subsection (6) prohibits a person from entering into any contract or arrangement which will, or is likely to, have the effect of limiting the program format of the service provided under the licence (the same test in paragraph (1)(b)), where:
(a) the contract or arrangement is intended to give a commercial advantage to another commercial radio broadcaster in the same licence area; or
(b) the contract or arrangement will, or is likely to, have the effect of giving a commercial advantage to another commercial radio broadcaster in the same licence area.
Subsection (10) treats significantly overlapping licence areas as the same licence area for the purposes of paragraph (6)(b). This is the same approach taken in the ownership and control provisions in Part 5 of the BSA (see section 51).
A transaction which is covered by subsection (1) or (3) is excluded from the prohibition in subsection (6) (see paragraph (7)(a)).
The mechanism for regulations to exempt classes of transactions from the prohibition applies to subsection (6) (see paragraph (7)(b)).
The ABA will also have a power to exempt a particular proposed transaction from subsection (6), on a case by case basis (see paragraph (7)(c) and subsection (8)). Regulations may prescribe matters which the ABA would be required to consider in deciding whether to exempt the transaction (subsection (9)). Refusal to exempt a transaction will be reviewable by the Administrative Appeals Tribunal (see item 8A below).
Enforcement
A contract or arrangement which is contrary to subsection (1), (3) or (6) will be void (see subsection (11)).
As an additional deterrent, provision is also made for the ABA to apply to the Federal Court for a pecuniary penalty order (subsections (12) and (16)). The limitation period is 6 years (subsection (17)). Provision for civil penalties rather than criminal offences is consistent with the approach taken to breaches of the restrictive trade practices provisions in Part IV of the Trade Practice Act 1974.
The maximum penalty for an individual is $55,000 (subsection (15)). This amount is equivalent to 500 penalty units (see subsection 4AA(1) of the Crimes Act 1914). Five hundred penalty units is the maximum penalty for the criminal offence of breach of a licence condition by a commercial radio broadcasting licensee (see existing subsection 139(3)). Consistently with subsection 4B(3) of the Crimes Act, the maximum penalty for a body corporate is set at five times the ordinary maximum penalty, ie $275,000 (subsection (14)). Subsection (13) lists matters which the Court must consider in determining the appropriate penalty.
Sections 60 and 61 of the BSA place limitations on control of commercial television broadcasting licences, commercial radio broadcasting licences and associated newspapers, and on cross-media directorships.
These items insert notes at the end of sections 60 and 61 that refer to the effect of cross-media exemption certificates (see Subdivision B of new Division 5A of Part 5, inserted by item 4 below).
Item 4 inserts a new Division 5A into Part 5 of the BSA, which deals with exemptions from the cross-media rules.
New section 61A provides a simplified outline of new Division 5A.
New section 61B defines a number of terms used in new Division 5A.
The term constitutional corporation is used in the provisions of new Subdivision BA (disclosure of cross-media relationships) which apply to newspapers (ie sections 61PF and 61PG below).
The term prime-time hours, which is used in new Subdivision C (local news and information requirements) has a different meaning for radio and for television. For television, prime-time is defined as the hours between 5 pm and 10.30 pm each day. For radio, prime-time is defined as the hours between 6 am and 10 am each day. Different times may be prescribed for the purpose of these definitions by regulation.
The term regional licence area, also used in Subdivision C, is in effect defined as a licence area which is outside the mainland State capitals (see also the definition of metropolitan licence area).
The term set of media operations means:
(a) a commercial television broadcasting licence and a commercial radio broadcasting licence with the same licence area (see below); or
(b) a commercial television broadcasting licence and an associated newspaper (see below); or
(c) a commercial radio broadcasting licence and an associated newspaper.
The term unacceptable 3-way control situation means a situation where a person would, unless they were protected by an exemption certificate, be in breach of the cross-media rules in relation to three types of media in a market: television and radio (paragraph (a) of the definition); and television and newspaper (paragraph (b) of the definition); and radio and newspaper (paragraph (c) of the definition). The term is used in new sections 61C and 61E. The effect of these new provisions, in combination with the definition of set of media operations, is that a person may only hold a cross-media exemption certificate in relation to two out of the three media types (commercial television broadcasting licences, commercial radio broadcasting licences, and associated newspapers) for a given licence area.
Section 51 provides that if more than 30% of the population of a licence area is within an area that overlaps with another licence area, the two licence areas are treated as one. The same rule applies to the situation where one licence area is entirely within another.
Under section 59, if at least 50% of a newspaper’s circulation is within a licence area (and, in the case of commercial radio licences, the circulation of the newspaper in the licence area is at least 2% of the licence area population), the ABA must enter the newspaper in the Associated Newspaper Register. The newspaper is thus ‘associated’ with the licence area.
New section 61BA provides for the definition of the term unacceptable 3-way control situation to have different effect in relation to regional licence areas.
New subsection 61BA(1) provides that, in relation to a regional licence area, each reference in the definition of that term in new section 61B, and in other provisions of the Bill and the BSA, to a newspaper includes a reference to a local paper, if:
- at least 50 per cent of the circulation of the local paper is within the licence area; and
- the circulation of the local paper, or of all the local papers that are controlled by the same person as that local paper, is at least 25 per cent of the licence area population.
New subsection 61BA(2) provides that a local paper is a newspaper that is in the English language, is published at least once a week and is not entered on the Associated Newspaper Register. Newspapers that are distributed free are not included.
New section 61C provides an exemption from the prohibitions in sections 60 and 61. A person does not breach the prohibitions in those sections in relation to a set of media operations (see new section 61B) if:
(a) a cross-media exemption certificate is in force in relation to the set, or in relation to a set that includes the first mentioned set; and
(b) the conditions of the certificate (see new section 61G) are satisfied; and
(ba) the person satisfies the separately-controlled newspaper test (see new section 61FC) for the first-mentioned set;
(c) one of the following subparagraphs applies:
(i) the person is the holder of the certificate;
(ii) the person is an associate of the holder of the certificate;
(iia) the holder of the certificate is an associate of the person;
(iii) (where a company is the holder of the certificate) the person is director of the company; or
(iv) (where an associate of the holder of the certificate is a company) the person is a director of the company; and
(d) an unacceptable 3-way control situation (see new sections 61B and 61BA) does not exist in relation to the person in relation to any licence or newspaper in the set.
Where the holder is a company, a consequence of the definition of ‘associate’ in subsection 6(1) of the BSA is that companies higher up the chain of control are not covered by subparagraph (ii). Accordingly, subparagraph (iia), which is essentially the converse of subparagraph (ii), has been added. Subparagraph (iia) will cover the situation where the holder is an associate of the person. This will ensure that a certificate will cover a company higher up the chain of control from the holder.
If the conditions of the certificate are not satisfied, the exemption ceases. The usual enforcement mechanisms in Divisions 7 and 8 of Part 5 apply. In particular, the ABA may direct the person under section 70 to take action to cure the breach. This could be either action to comply with the conditions of the certificate or action to divest one or other of the cross-media holdings (eg, selling shares).
New subsection 61D(1) provides that the ABA may issue a cross-media exemption certificate to a person on written application by that person or on behalf of that person.
An application for a certificate must:
• be in accordance with a form approved in writing by the ABA (new paragraph 61D(2)(a)); and
• be accompanied by the application fee (see item 10) determined in writing by the ABA (new paragraph 61D(2)(b));
• state that the certificate is to relate to a specified set of media operations (new paragraph 61D(3)(a));
• include a set of conditions to which the certificate is to be subject (new paragraph 61D(3)(b)); and
• include proposed organisation charts as mentioned in new paragraph 61F(2)(b) (new paragraph 61D(3)(c)); and
• state that the applicant undertakes that the conditions of the certificate (see new section 61G below) will be satisfied when the certificate is active (new paragraph 61D(3)(d)).
New subsection 61D(4) provides that, if the ABA considers that it requires more information before it can make a decision on the application, it may, within 30 days of the receipt of the application, make a written request to the applicant for such information.
If the ABA does not make a decision on the application within 60 days of:
(a) receiving the application; or
(b) if the ABA requested further information—receiving that information;
then the ABA is taken to have refused the application. Any such deemed refusal is appealable to the Administrative Appeals Tribunal (new subsection 61D(5)).
If the ABA refuses the application, then the applicant must be notified of the refusal in writing, and the ABA must also provide the applicant with reasons for the refusal (new subsection 61D(6)).
The ABA may, by written notice given to the applicant, extend the period during which it may make a decision by up to a further 60 days (new subsection 61D(5A)), if the ABA is unable within the initial 60-day period to satisfy itself in relation to the minimum number of media groups test (see new sections 61E and 61FA).
New subsection 61E(1) provides that the ABA must issue a cross-media exemption certificate to an applicant if:
(a) the applicant satisfies the ABA that the conditions in the application:
(i) are sufficiently specific and detailed; and
(ii) will, by the end of such period as the ABA determines, be an adequate means of continuously meeting the objective of editorial separation (see new section 61F below) for the set of media operations mentioned in the certificate; and
(aa) the set of media operations is not exempt from the minimum number of media groups test, and the ABA is satisfied that the minimum number of media groups test is satisfied for the set of media operations; and
(ab) the set of media operations is not exempt from the minimum number of media groups test, and the ABA is satisfied that, if the certificate were to be issued and become active, neither:
(i) the transactions, agreements and circumstances that resulted in the certificate becoming active; nor
(ii) any related transactions, agreements or circumstances;
will result in the minimum number of voices test not being satisfied for the set of media operations; and
(b) the ABA is satisfied that the application is not frivolous or vexatious; and
(c) the ABA is satisfied that, if the certificate were to be issued, paragraph 61C(d) would not stop the certificate from becoming active.
The period mentioned in new paragraph 61E(1)(a) is intended to give the applicant some time after assuming control of the media operations mentioned in the certificate within which to put in place measures to give effect to the conditions of the certificate. These measures will be designed to meet the objective of editorial separation, which is explained below at new section 61F. New subsection 61E(2) provides, however, that that period must not be longer than 60 days after the certificate becomes active.
New paragraphs 61E(1)(aa) and 61E(1)(ab) provide that the ABA must be satisfied in relation to the minimum number of media groups test (see new section 61FA).
New paragraph 61E(1)(c) provides that the ABA must also be satisfied that new paragraph 61C(d) (which relates to an unacceptable 3-way control situation) would not prevent the certificate from becoming active (see new section 61J).
New subsection 61F(1) provides that the objective of editorial separation for a particular set of media operations is that the entities, or the parts of the entities, that run the media operations must maintain separate editorial decision-making responsibilities in relation to each of those media operations.
The term ‘editorial’ in this section is intended to refer to all media covered by the cross-media rules: television, radio and newspapers. It is intended to relate to the selection, interpretation and presentation of news.
New subsection 61F(2) provides that that objective is met if and only if the entities, or parts of entities, that run the media operations:
(a) have separate editorial policies in relation to the each of those media operations; and
(b) have organisational charts in connection with editorial decision-making responsibilities in relation to each of those media operations; and
(c) have:
(i) separate editorial news management in relation to each of those media operations;
(ii) separate news compilation processes in relation to each of those media operations; and
(iii) separate news gathering and news interpretation capabilities in relation to each of those media operations.
The editorial policies and organisational charts mentioned in new paragraphs 61F(2)(a) and 61F(2)(b) above must be consistent with the existence of the separate editorial decision-making responsibilities mentioned in new subsection 61F(1) (new subparagraphs 61F(2)(a)(i) and 61F(2)(b)(i)).
The editorial policies and organisational charts must be made available for inspection on the Internet (new subparagraphs 61F(2)(a)(ii) and 61F(2)(b)(ii)).
The processes and capabilities mentioned in new paragraph 61F(2)(c) above must also be consistent with the existence of the separate editorial decision-making responsibilities mentioned in new subsection 61F(1).
The term ‘entity’ is used in this section to refer to a business entity that carries on the media operations. Such business entities could include companies, trusts, partnerships or sole traders.
New subsection 61F(3) provides that, to avoid doubt, section 61F does not preclude the sharing of resources or other forms of co-operation, between the entities, or parts of entities, that run the media operations, so long as the entities or parts of entities maintain the requirements of subsection 61F(2). New subsection 61F(3) is intended to ensure that entities that run media operations will be able to share resources and still meet the objective of editorial separation. However, entities that do share resources will still have to satisfy the elements required to meet the objective, which are outlined in subsection 61F(2).
New section 61FA establishes the minimum number of media groups test. This provides that a cross-media exemption certificate cannot be approved unless there remain a minimum of five separately owned and controlled commercial media groups available in metropolitan markets after a merger or acquisition, and a minimum of four in regional markets.
For the purposes of section 61FA, metropolitan markets are Sydney, Melbourne, Brisbane, Adelaide, Perth and Hobart.
New subsection 61FA(1) provides that the minimum number of media groups test is satisfied if, for a set of media operations consisting of commercial radio broadcasting licence and either a commercial television broadcasting licence or a newspaper, there are at least the applicable number of points in the licence area of the commercial radio broadcasting licence.
For a set of media operations consisting of a commercial television broadcasting licence and a newspaper, there must be at least the applicable number of points in each commercial radio broadcasting licence area with which the newspaper is associated.
The applicable number of points are calculated using the relevant commercial radio broadcasting licence area in recognition that such licence areas will more closely reflect the influence of relevant radio services or newspapers than a television licence area (which can be highly geographically diverse).
New subsection 61FA(2) provides that, for metropolitan licence areas, being the licence areas which contain each of the State capitals, the applicable number of points is five. For all other licence areas the applicable number of points is four. Note, however, that new section 61FB exempts remote licence areas from the minimum media groups test.
New subsection 61FA(3) provides a table to be used to work out the number of points in the licence area of a commercial radio broadcasting licence.
Item 1 of the table provides that a group of two or more media operations controlled by the same person count for one point.
Items 2, 3 and 5 of the table provide that a commercial radio broadcasting licence, newspaper and a commercial television licence, respectively, that are not subject to a cross-media exemption certificate, and therefore do not fall within the ambit of Item 1, each count for one point. This ensures that the constituent parts of a group under Item 1 do not get counted twice. Where a set of media operations commonly owned counts for one point, the media operations that make up that set do not themselves count as a point.
Item 4 of the table provides a special rule for two commercial television broadcasting licences that broadcast into one commercial radio licence area to count as only one voice, where the two services broadcast under those licences are substantially the same (see new subsection 61FA(7)). This is to ensure the appropriate operation of the minimum number of media groups test in areas such as the Gold Coast where television licence areas overlap, and where what is effectively the same service may be received via two broadcast licences. In such cases, these services only count as one point for the purposes of the test.
New subsection 61FA(4) provides that if the same media operations are in more than one group of media operations (ie, if there is more than one person in control of the same group of media operations for Item 1 of the table in new subsection 61FA(3)), then only one of those groups (the one with the largest number of media operations) should count for the calculation of the number of points.
New subsection 61FA(5) is an anti-avoidance provision for the minimum number of groups test, under which the ABA may determine that the existence of a group is to be ignored for the purpose of new subsection 61FA(3) if the ABA is satisfied that a scheme has been entered into solely to ensure compliance with the test.
New section 61FB excludes from the minimum number of media groups test, established by new section 61FA, cross-media mergers involving remote commercial television and remote commercial radio broadcasting licensees. This is designed to take account of the fact that in some areas the scale advantages of jointly delivered satellite television and radio services could be necessary to ensure the commercial viability of services to remote communities.
New section 61FC establishes the separately-controlled newspaper test. This prevents a cross-media exemption certificate holder from controlling more than one newspaper that is associated with the licence area of a commercial radio broadcasting licence.
Sections 53 and 54 of the BSA provide that a person must not be in a position to exercise control of more than one commercial television broadcasting licence, or two commercial radio broadcasting licences, in the same licence area.
New section 61FC introduces a similar limitation of one associated newspaper in the same licence area. New section 61C provides that a person does not breach a prohibition in section 60 or 61 in relation to a set of media operations if, among other things (see new section 61C, above), the person satisfies the separately-controlled newspaper test for the set of media operations.
The effect of this section will be that if, in a licence area, there is more than one associated newspaper, a cross-media exemption certificate holder will not be able to control both or all of those newspapers.
New subsection 61G(1) provides that a cross-media exemption certificate is subject to the conditions as set out in the certificate.
New subsection 61G(2) provides that these conditions must be the same as those included in the application for the certificate.
New subsection 61H(1) provides that if a cross-media exemption certificate is held by a person then the ABA may vary the conditions of the certificate on written application by the person.
New subsection 61H(2) provides that applications for variations of conditions must:
(a) be in accordance with a form approved in writing by the ABA; and
(b) be accompanied by the application fee determined in writing by the ABA.
New subsection 61H(3) provides that the ABA must vary a cross-media exemption certificate in accordance with an application if:
(c) the applicant satisfies the ABA that the varied conditions:
(i) are sufficiently specific and detailed; and
(ii) will, by the end of such period as the ABA determines, be an adequate means of continuously meeting the objective of editorial separation (see new section 61F above) for the set of media operations mentioned in the certificate; and
(d) the ABA is satisfied that the application is not frivolous or vexatious.
The period mentioned in new paragraph 61H(1)(a) is intended to give the applicant some time after assuming control of the media operations mentioned in the certificate within which to put in place measures to give effect to the conditions of the certificate. These measures will be designed to meet the objective of editorial separation, which is explained above, at new section 61F. It may take some time to implement those measures, and the period mentioned is designed to permit the ABA to give the person the necessary time.
New subsection 61H(4) provides, however, that that period must not be longer than 60 days after which ever is the later of:
(a) the time when the certificate becomes active;
(b) the time when notice of the variation is given to the holder of the certificate.
New subsection 61H(5) provides that, if the ABA considers that it requires more information before it can make a decision on the application, it may, within 30 days of the receipt of the application, make a written request to the applicant for such information.
If the ABA does not make a decision on the application within 60 days of:
(a) receiving the application; or
(b) if the ABA requested further information—receiving that information;
then the ABA is taken to have refused the application. Any such deemed refusal is appealable to the Administrative Appeals Tribunal (new subsection 61H(6)).
If the ABA refuses the application, then the applicant must be notified of the refusal in writing, and the ABA must also provide the applicant with reasons for the refusal (new subsection 61H(7)).
This section provides a definition of the term active in relation to a cross-media exemption certificate. A certificate is active at a certain time if:
(a) the certificate is in force; and
(b) as a result of the operation of new section 61C in relation to the certificate, a person is not in breach of a prohibition in section 60 or 61.
New subsection 61J(2) states that for the purposes of this section, it is to be assumed that new paragraph 61C(b) had not been enacted. A certificate is in force from the time at which it is issued, but is only active during such a time when a person would, but for the certificate, be in breach. This allows certificates to be issued before a transaction which would otherwise place a person in breach takes place, but only become active from the time of that transaction.
The effect of new subsection 61J(2), as observed in a note to that section, is that the certificate will be active regardless of whether the conditions of the certificate are satisfied.
The concept of an active certificate is used in various provisions discussed below; including the requirements of new sections 61V and 61W relating to local news and information (see below).
New subsection 61K(1) provides that the ABA must revoke a cross-media exemption certificate if:
(a) the certificate was active (see new section 61J above), but has ceased to be active; or
(b) the holder of the certificate requests the ABA to revoke the certificate.
This provision is intended to deal with a situation where a person holding a cross-media exemption certificate divests an interest in one of the operations covered by that certificate, and so the certificate is no longer active.
New subsection 61K(2) requires the ABA to notify the holder if a certificate is revoked.
This section provides that cross-media exemption certificates continue to apply to licences when they are renewed.
New section 61M provides that, if a cross-media exemption certificate is issued in relation to a commercial television broadcasting licence or a commercial radio broadcasting licence, and that certificate becomes active, then the ABA must give a copy of the certificate to the relevant licensees(s) (subsection 61M(1)).
If the ABA revokes a certificate, the ABA must notify the relevant licensee(s) (subsection 61M(2)).
New section 61N provides that the ABA is to maintain a Register of active cross-media exemption certificates (subsection 61N(1)). The Register must include the conditions to which a cross-media exemption certificate is subject (subsection 61N(2)).
The Register may be maintained by electronic means (subsection 61N(3)), and must be made available for inspection on the Internet (subsection 61N(4)). However, the ABA is not required to make available for inspection on the Internet material that it is satisfied could prejudice substantially the commercial interests of a person, where that prejudice outweighs the public interest in the publication of the material (subsection 61N(5)).
New subsection 61P(1) provides that if one or more cross-media exemption certificates is active in relation to a set of media operations, and that set includes a commercial television broadcasting licence or a commercial radio broadcasting licence, then the licensee must ensure that the objective of editorial separation (as defined in new section 61F) is continuously met for the set, to the extent to which the objective relates to the licence.
That is, the objective of editorial separation is not only imposed through the conditions of a cross-media exemption certificate: by virtue of this subsection it is also a requirement placed on any licensee which is part of a set of media operations that are the subject of a cross-media exemption certificate. A note to this subsection observes that enforcement of this requirement is dealt with in paragraphs (7)(2)(d) and (8)(2)(c) of Schedule 2 (see items 13 and 16 below).
New subsection 61P(2) provides that new subsection 61P(1) does not apply during the first 60 days that a certificate is active in relation to the licence. Similarly to the period mentioned in new paragraph 61E(1)(a), this period is intended to give the licensee some time within which to put in place particular measures to give effect to the objective of editorial separation.
Subdivision BA establishes requirements for media entities covered by a cross-media exemption certificate to disclose the cross-media relationship to their audience or readership. This was recommended by the Senate Environment, Communications Information Technology and the Arts Legislation Committee in its report on the Bill. Accordingly, Subdivision BA has been added to the Bill.
Subdivision BA establishes two alternative methods of disclosure:
• the default ‘business affairs’ model (see sections 61PA, 61PC and 61PE respectively for commercial television licensees, commercial radio licensees and newspaper publishers); and
• an alternative ‘regular disclosure’ model which a radio licensee may choose to adopt by written notice to the ABA (see sections 61PB and 61PD).
Scope
Section 61PA is the disclosure requirement for commercial television broadcasters. Section 61PA will apply to any commercial television licensee covered by one or more active cross-media exemption certificates (see paragraphs 61PA(1)(a) and (b)).
The trigger for a disclosure under section 61PA is the broadcast by the licensee of matter that is wholly or partly about the business affairs of another media entity in the set covered by the certificate (see paragraph 61PA(1)(c)).
‘Business affairs’ is defined in section 61PG, discussed below.
Requirement to disclose
The business affairs disclosure requirement is that every time any material about the business affairs of a cross-controlled media entity is broadcast, the licensee must also broadcast a statement describing (in summary form or otherwise) the relationship between the licensee and the other media entity (subsections (2) and (3)). The description of the relationship may be a simple statement to the effect that there is a cross-media relationship between the commercial television licensee and the other media entity.
How statement is to be broadcast
A disclosure statement under subsection (2) or (3) must be broadcast in a way that will adequately bring it to the attention of a reasonable viewer of the trigger broadcast referred to in subsection (1) (see subsection (4)).
Subsection (5) will allow regulations to specify alternative requirements which will satisfy subsection (4).
Period of grace
Subsection (6) gives the licensee a 14-day period of grace, beginning when the certificate cross-media exemption certificate becomes active, before the disclosure requirement comes into effect.
Enforcement
Compliance with the disclosure requirement will be a condition of each licence (see item 13 below, which amends subclause 7(2) of Schedule 2).
The ABA will be able to issue a notice under section 141 requiring compliance with the disclosure requirement. Failure to comply with a section 141 notice is a criminal offence (see section 142).
The licence suspension and cancellation provisions in Division 3 of Part 10 will also be available, as will the complaint provisions in Division 1 of Part 11 (as amended by items 6-8 above).
A commercial radio licensee may notify the ABA in writing that they will adopt the ‘regular disclosure’ method from a Sunday specified in the notice (see subsections 61PB (1) and (3)). A notice must be given to the ABA at least 5 business days before the nominated Sunday (subsection (2)). A business day is a weekday which is not a public holiday (subsection (7)).
A notice continues in force until it is revoked (subsection (3)). A licensee may give the ABA a written notice of revocation, with effect from the end of the Saturday nominated in the notice (subsection (4)). A revocation notice must be given to the ABA at least 5 business days before the nominated Saturday (subsection (5)).
If a notice is not in force under section 61PB, the ‘business affairs’ provisions will apply (see paragraph 61PC(1)(d), discussed below). These notice provisions are necessary to ensure that compliance with the disclosure requirements can be adequately monitored by the ABA and enforced. The ABA must make notices which are in force available for inspection on the Internet (subsection (6)).
Section 61PC is the (default) business affairs disclosure method for commercial radio broadcasters, and corresponds to section 61PA above for commercial television broadcasters.
Section 61PC will apply to any commercial radio licensee covered by one or more active cross-media exemption certificates. As the default method, section 61PC will apply unless the licensee has chosen (via a notice under subsection 61PB(1)) the regular disclosure method in section 61PD below (see paragraphs 61PC(1)(a), (b) and (d)).
As for section 61PA, the trigger for a disclosure under section 61PC is the broadcast by the licensee of matter that is wholly or partly about the business affairs of another media entity in the set covered by the certificate (see paragraph 61PC(1)(c)).
As for section 61PA, compliance with the disclosure requirement will be a condition of each licence (see item 15 below). The enforcement and complaint provisions outlined above in relation to section 61PA will therefore apply.
Scope
Section 61PD is the (optional) regular disclosure method for commercial radio broadcasters. Section 61PD will apply to any commercial radio licensee covered by one or more active cross-media exemption certificates. However, as the optional method, section 61PD will only apply if the licensee has chosen this method via a notice under subsection 61PB(1) (see subsection 61PD(1)).
Requirement to disclose cross-media relationship
As there is no trigger broadcast in the regular disclosure method, the obligation here is to regularly broadcast a statement describing (in summary form or otherwise) the relationship between the licensee and the other media entity (subsections (2) and (3)). The description of the relationship may be a simple statement to the effect that there is a cross-media relationship between the commercial television licensee and the other media entity.
The substance of the required statement is thus the same as for the standard disclosure provisions in sections 61PA, 61PC and 61PE.
How statement is to be broadcast
A disclosure statement under subsection (2) or (3) must be broadcast in a way, and with a frequency, that is reasonably likely to ensure that the prime-time audience of the service is aware of the cross-media relationship (see subsection (4)).
Subsection (5) provides that subsection (4) is satisfied if a licensee broadcasts the statement:
(a) at least once each day during prime-time; and
(b) in a way that will adequately bring it to the attention of a reasonable person who listens to the statement.
Subsection (6) will allow regulations to specify alternative manner and timing requirements which will satisfy subsection (4). The reference to timing here is intended to give sufficient flexibility so that regulations may specify, for example, how often a statement must be broadcast, and/or the period of the day during which the statement must be broadcast.
Period of grace
As for other provisions, subsection (6) gives the licensee a 14-day period of grace before the disclosure requirement comes into effect.
Enforcement
As for other provisions, compliance with the disclosure requirement will be a condition of each licence (see item 15 below). The enforcement and complaint provisions outlined above in relation to section 61PA will therefore apply.
Section 61PE is the disclosure requirement for newspaper publishers. Section 61PE will apply to any newspaper covered by one or more active cross-media exemption certificates (see paragraphs 61PE(1)(a) and (b)).
The trigger for a disclosure under section 61PE is the publication in a particular edition of the newspaper of material that is wholly or partly about the business affairs of another media entity in the set covered by the certificate (see paragraph 61PE(1)(d)).
Section 61PE relies on the corporations power in the Constitution (paragraph 51(xx)) rather than the communications power (paragraph 51(v)). Accordingly, the provision applies to a publisher of a newspaper which is a constitutional corporation (as defined in paragraph 61PE(1)(c) above). A constitutional corporation is a corporation to which paragraph 51(xx) of the Constitution applies: that is, a foreign corporation or an Australian trading or financial corporation.
Requirement to disclose
The disclosure requirement is that every time any material about the business affairs of a cross-controlled media entity is published in the newspaper, a disclosure statement must be published in the same edition of the newspaper (subsections (2) and (3)).
The content of the required statement is essentially the same as the statement required of broadcasters under section 61PA, 61PC or 61PD, ie a statement describing (in summary form or otherwise) the relationship between the newspaper’s publisher and the other media entity. The description of the relationship may be a simple statement to the effect that there is a cross-media relationship between the newspaper’s publisher and the other media entity.
How statement is to be published
A disclosure statement under subsection (2) or (3) must be published in a way that will adequately bring it to the attention of a reasonable reader of the trigger material referred to in subsection (1) (see subsection (4)).
As for other provisions, subsection (5) will allow regulations to specify alternative requirements which will satisfy subsection (4).
Period of grace
The same 14-day grace period applicable to broadcasters also applies to newspaper publishers (subsection (6)).
Enforcement
As newspapers are not subject to the licensing regime in the BSA, enforcement of the disclosure requirement is by way of a criminal offence, rather than through a licence condition as for broadcasters (subsection (7)).
The maximum penalty for a newspaper publisher is the same as that applicable to a commercial television licensee for the offence of breach of a licence condition, ie 2,000 penalty units or $220,000 (see existing subsection 139(1) of the BSA). This reflects the significant influence that newspapers exert on public opinion.
Section 61PF is designed to allow the disclosure requirements in new Subdivision BA to be read down in the event that any of the provisions were found by High Court to infringe the constitutional doctrine of implied freedom of political communication. Section 61PF is a necessary safeguard because the extent of the doctrine is uncertain.
The disclosure provisions for television and newspapers (sections 61PA and 61PE), and the default disclosure provisions for radio (section 61PC), are triggered when there is a broadcast or publication of material by a licensee or publisher that is wholly or partly about the business affairs of another media entity included in the set of media operations covered by the same exemption certificate as the licensee or publisher.
Section 61PG elaborates the concept of material which is wholly or partly about the business affairs of a media entity. It does not limit the ordinary meaning of the concept, but provides clarification in areas of uncertainty.
Matter or material about business affairs – what is included and excluded
Paragraph 61PG(1)(a) provides that material about business affairs includes material that, considering the nature of the material and the way in which it is presented, could reasonably be considered to be at least partly broadcast or published with the aim of:
• promoting any material which is (or will be in the future) broadcast by the licensee or published in the newspaper; or
• otherwise influencing the public to view, listen to or read any material which is (or will be in the future) broadcast by the licensee or published in the newspaper.
Paragraph 61PG(1)(b) excludes the following categories of material:
(i) a journalistic acknowledgment of a program or article as the source of particular information (eg an acknowledgment in a newspaper of a quotation from an interview broadcast on radio or television);
(ii) advertising material, provided that it is clearly identifiable as such (see also subsection (7), which ensures that this provision does not affect the meaning of ‘advertising’ elsewhere in the BSA);
(iii) a comment in a live broadcast, where the comment could not reasonably have been anticipated;
(iv) a program guide (as defined in subsection (2) below); and
(v) material covered by an determination made by the Minister, by way of disallowable instrument (see subsections (4), (5) and (6) below).
Program guide
A program guide is defined as a schedule of programs provided by television or radio broadcasters. The schedule may be accompanied by brief factual information or comment about particular programs, but no particular service (ie no particular television or radio station or network) may be singled out for special promotion (subsections (2) and (3)).
Exempt matter or exempt material
The Minister may make a written determination, by way of disallowable instrument, that specifies types of material which are excluded from the concept of material about business affairs (subsections (4), (5) and (6)).
New Subdivision C (sections 61Q-61Y) provides for minimum local news and information requirements to be imposed on non-metropolitan commercial radio broadcasting licensees which are subject to an active cross-media exemption certificate.
New section 61Q provides that new Subdivision C applies to a commercial radio broadcasting licence that has a regional licence area (see new section 61B above).
This section provides definitions of what a commercial radio broadcasting licensee must do to meet the:
• minimum service standards for local news (subsection 61R(1)),
• minimum service standards for local community service announcements (subsection 61R(2)); and
• minimum service standards for emergency warnings (subsection 61R(3)).
Local news (subsection 61R(1))
New subsection 61R(1) provides that the minimum service standards for local news are met during a particular week if during that week the licensee broadcasts either:
(a) at least five local news and weather bulletins (each of which adequately reflects matters of local significance) that are broadcast during prime-time hours (see new section 61B above) on different days during the week; or
(b) six or more local news and weather bulletins, where:
(i) at least five of the bulletins are broadcast on different days during the week; and
(ii) at least five of the bulletins are broadcast during prime-time hours; and
(iii) the bulletins, when considered together, adequately reflect matters of local significance.
A ‘local news and weather bulletin’ may be a bulletin that incorporates news other than local news.
In addition, new section 61S (see below) provides for the ABA to define the term local.
Local community service announcements (subsection 61R(2))
New subsection 61R(2) provides that the minimum service standards for local community service announcements are met during a particular week if, during that week, the licensee broadcasts one or more local community service announcements (as defined in new section 61B above).
The definition of local is dealt with in new section 61S below.
Emergency warnings (subsection 61R(3))
New subsection 61R(3) provides that the minimum service standards for emergency warnings are met during a particular week if, during that week:
(a) on one or more occasions the licensee was asked by an emergency service agency (see new section 61B) to broadcast emergency warnings, and the licensee broadcast those warnings as and when asked to do so by those emergency agencies; or
(b) there was no time during the week when an emergency service agency asked the licensee to broadcast an emergency warning.
Subsection 61S(1) provides that the ABA may define by written instrument what is meant by the expression local for the purposes the application of Subdivision C, or of a specified provision of Subdivision C, to a specified licence area.
Subsection 61S(2) provides that in making an instrument, the ABA must have regard to the areas where separate programming is provided, and any such other matters as the ABA considers relevant. A note after subsection 61S(2) observes that program includes advertising or sponsorship matter, as defined in subsection 6(1).
Subsection 61S(3) provides that an instrument the ABA makes under this section is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.
New section 61T defines the term benchmark year, which is used in new sections 61U and 61V below in relation to existing levels of local news and information.
The section provides that:
(a) if a single cross-media exemption certificate is in force in relation to the licence, the benchmark year is the 52-week period ending on the Saturday before the day on which the application was made; and
(b) if two or more certificates are in force in relation to the licence, the benchmark year is the 52-week period ending on the Saturday before the first of the applications was made.
New section 61U is intended to assist the ABA in determining:
• whether or not the licensee is meeting the minimum service standards for local news (see new subsection 61R(1) above); and
• (if the licensee is meeting those standards) the actual level of local news being provided by the licensee.
If the licensee meets the minimum standards, new section 61V requires the licensee to maintain its existing levels of local news and information (see below). If the licensee does not meet the minimum standards, new section 61W requires the licensee to do so (see below).
As section 61U is a reporting requirement to establish the levels of local news prior to issue of a cross-media exemption certificate, it only operates when a certificate becomes active in relation to a commercial radio broadcasting licence (new subsection 61U(1)).
New subsection 61U(2) provides that the ABA must, by written notice to the licensee, require the licensee to give the ABA a statement that specifies whether or not the licensee met the minimum service standards for local news (see new section 61R) during each week of the benchmark year (see new section 61T).
Provision of a statement is a condition of the licence (new paragraphs 7(1)(q) and 8(1)(j) of Schedule 2 to the BSA, inserted by items 12 and 15 below).
If the licensee meets the minimum standards, the licensee is required to provide further information in order to measure the existing levels of local news and current information (paragraph 61U(2)(b)). Specifically, the licensee in that case is required to include in its statement to the ABA the licensee’s reasonable estimates of the following:
• the average weekly number of local news and weather bulletins broadcast by the licensee during the benchmark year (new subparagraph 61U(2)(b)(i)); and
• the average weekly number of minutes of local news and weather bulletins broadcast by the licensee during prime-time hours during the benchmark year (new subparagraph 61U(2)(b)(ii)):
• the average weekly number of minutes of local news and weather bulletins broadcast by the licensee outside prime-time hours during the benchmark year (new subparagraph 61U(2)(b)(iii)).
New subsection 61U(3) provides that the notice given by the ABA under new subsection 61U(2) must require the statement to be given to the ABA within 28 days after the notice is given, and must identify the benchmark year.
New subsection 61U(4) provides that the ABA must make statements it receives under this section available for inspection on the Internet.
The ABA may rely on the benchmark numbers provided by the licensee (new subsection 61U(5)).
Subsections 61U(6), (7) and (8) provide definitions for the applicable benchmark number for the purposes of new paragraphs 61V(1)(e), (f) and (g) (see below). The applicable benchmark numbers correspond to the estimated numbers provided by the licensee under subparagraphs 61U(2)(b)(i), (ii) and (iii). However, if the ABA is satisfied that an estimated number is significantly inaccurate, the ABA may make its own estimate, which becomes the applicable benchmark number.
New sections 61V and 61W operate to require certain levels of local news and information to be maintained by commercial radio broadcasting licensees for which a cross-media exemption certificate is active.
In summary, the sections operate to ensure that, if the licensee was meeting the minimum service standards for local news (see new section 61R) for the year prior to the application for the cross-media exemption certificate being made, then the licensee will be required to maintain its existing levels of local news and information during the currency of the certificate. If, however, the licensee was not meeting the minimum standards for the year prior to the application for the exemption, then the licensee will be required, after a period of grace, to meet the minimum standards during the currency of the certificate.
Compliance with a requirement of section 61V or 61W is a condition of the licence (new paragraph 8(2)(d) of Schedule 2 to the BSA, inserted by item 16 below).
New section 61V deals with those licensees that were meeting the minimum standards prior to the application for the certificate being made. New paragraphs 61V(1)(a), (b) and (c) require that, if:
• a cross-media exemption certificate is active in relation to a commercial radio broadcasting licensee; and
• the licensee has satisfied the ABA in its statement, made under new subsection 61U(2), that it met the minimum service standards for local news during each week in the benchmark year;
then the ABA must notify the licensee in writing of the requirements of new paragraphs 61V(1)(d)-(m).
These requirements, outlined in more detail below, relate to local news and weather bulletins (paragraphs 61V(1)(d)-(g)), local community service announcements and emergency warnings (paragraphs 61V(1)(h) and (i)), and record-keeping and reports (paragraphs 61V(k)-(m)).
The effect of new subsection 61V(2), in combination with new paragraph 61V(1)(a), is that a requirement under new subsection 61V(1) applies to the week beginning on the first Sunday after the notice was given, and then to every subsequent week during the period in which the cross-media exemption certificate is active.
Local news and weather bulletins (paragraphs 61V(1)(d)-(h))
The notice issued by the ABA under new subsection 61V(1) must require the licensee to:
• meet or exceed the minimum service standards for local news each week (new paragraph 61V(1)(d)); and
• ensure that the number of local news and weather bulletins broadcast each week does not fall below the applicable benchmark number (new paragraph 61V(1)(e) – refer to new subsection 61U(6)); and
• ensure that the total number of minutes of local news and weather bulletins broadcast by the licensee each week during prime-time hours does not fall below the relevant applicable benchmark number (new paragraph 61V(1)(f) – refer to new subsection 61U(7)); and
• ensure that the total number of minutes of local news and weather bulletins broadcast by the licensee each week outside prime-time hours does not fall below the relevant applicable benchmark number (new paragraph 61V(1)(g) – refer to new subsection 61U(8)).
These requirements are intended to ensure that the level of local news that a licensee is broadcasting does not decline after a cross-media exemption certificate is issued in relation to that licensee.
Local community service announcements and emergency warnings (paragraphs 61V(1)(h) and (i))
The notice issued by the ABA under new subsection 61V(1) must require the licensee to ensure that the minimum service standards for local community service announcements (as defined by new subsection 61R(2)) are met or exceeded each week (new paragraph 61V(1)(h)).
The notice must also require the licensee to ensure that the minimum service standards for emergency warnings (as defined by new subsection 61R(3)) are met each week (new paragraph 61V(1)(i)).
Record-keeping and reports (paragraphs 61V(1)(j)-(m))
The notice issued by the ABA under new subsection 61V(1) will also require the licensee to:
• keep specified records in relation to local news and weather bulletins, local community service announcements and emergency warnings that are broadcast by the licensee (new paragraph 61V(1)(j));
• maintain those records for a specified period of time (new paragraph 61V(1)(k));
• make available to the ABA on request any such record, whether or not the licensee is at the time of the request under an obligation to retain the record (new paragraph 61V(1)(l); and
• give the ABA, at intervals specified in the notice, reports with specified information on the local news and weather bulletins, local community service announcements and emergency warnings that are broadcast by the licensee (new paragraph 61V(1)(m)).
The reporting requirements are intended to ensure that the ABA is able to develop and maintain an impression of the adequacy of the local news and information services in a given local area.
New section 61W deals with those licensees that were not meeting the minimum standards prior to the application for the certificate. It operates in a similar way to new section 61V.
New paragraphs 61W(1)(a), (b) and (c) require that, if:
• a cross-media exemption certificate is active in relation to a commercial radio broadcasting licensee; and
• the licensee has not satisfied the ABA in its statement, made under new subsection 61NB(2), that it met the minimum service standards for local news during each week in the benchmark year:
then the ABA must notify the licensee in writing of the requirements of new paragraphs 61W(1)(d)-(j).
The effect of new subsection 61W(2), in combination with new paragraph 61W(1)(a), is that a requirement under new subsection 61W(1) applies to the week beginning 6 months after the first Sunday after the notice was given, and then to every subsequent week during the period in which the cross-media exemption certificate is active.
Local news and weather bulletins (new paragraph 61W(1)(d))
The notice issued by the ABA under new subsection 61W(1) must require the licensee to ensure that the minimum service standards for local news (as defined by new section 61M(1)) are met or exceeded each week (new paragraph 61W(1)(d)).
Local community service announcements and emergency warnings (new paragraphs 61W(1)(e) and (f))
The notice issued by the ABA under new subsection 61W(1) must require the licensee to ensure that the minimum service standards for local community service announcements (as defined by new subsection 61R(2)) are met or exceeded each week (new paragraph 61W(1)(e)).
The notice must also require the licensee to ensure that the minimum service standards for emergency warnings (as defined by new subsection 61R(3)) are met each week (new paragraph 61W(1)(f)).
Record-keeping and reports (new paragraphs 61W(1)(g)-(j))
The record-keeping and reporting requirements in new paragraphs 61W(1)(g)-(j) are the same as the corresponding requirements in new paragraphs 61V(1)(j)-(m) above.
New section 61X – Revocation of requirement
New section 61X ensures that the requirements placed on a licensee under new sections 61V and 61W only apply when there is a cross-media exemption certificate active in relation to that licence.
New section 61X provides that if a requirement is in force under section 61V or 61W in relation to a commercial radio broadcasting licence, and the ABA is satisfied that there is no active cross-media exemption certificate in relation to the licence, then the ABA must revoke the requirement by written notice to the licensee.
This section provides that new sections 61V and 61W do not, by implication, limit the powers conferred by any other provision of the BSA (eg the power in section 43 to impose additional licence conditions on a commercial radio broadcasting licensee).
Item 5 inserts a new section 63A into the BSA.
New section 63A draws on existing section 63, but applies to persons who become in a position to exercise control of a newspaper which is associated with the licence area of a commercial television broadcasting licence or a commercial radio broadcasting licence.
New subsection 63A(1) provides that if a person is in control of a commercial television broadcasting licence or commercial radio broadcasting licence, and the person becomes aware that the person is also in a position to control a newspaper that is associated with the licence area of that licence, then the person must, within seven days after becoming so aware, notify the ABA in writing of that event.
New subsection 63A(2) provides that the details are to be provided in writing in a form approved by the ABA.
Penalties apply to a breach of this section.
This item also alters the heading of existing section 63 by adding the words ‘of licences’.
Item 5A makes a technical amendment, necessary as a consequence of Item 5B.
Item 5B inserts a new subsection 67(4)(c), which restricts the circumstances under which an approval of a temporary ownership or control breach can be granted by the ABA under section 67. New subsection 67(4)(c) provides that an approval cannot be given if the breach would result from the allocation of a new commercial radio broadcasting licence by the ABA.
Item 5D inserts a new subsection 67(5A) which ensures that any approvals granted under section 67 are granted only for the minimum time necessary to cure the breach.
Where the ABA does not respond by refusing or approving the breach within 45 days of receiving an application under subsection 67(1), the ABA is taken to have approved the breach. Item 5E amends subsection 67(7) to reduce the period of deemed approval from two years to one year.
Item 5F provides for the amendments provided by Items 5B and 5D to apply in relation to applications made under subsection 67(1) after the commencement of this item, and for the amendment provided by Item 5E to apply if the 45-day period referred to in subsection 67(7) ends after the commencement of this item.
Item 5FA inserts a new section 77A into the BSA, which provides, for the purpose of clarification, that nothing in this Part is to be taken as specifically authorising any act or thing for the purposes of subsection 51(1) of the Trade Practices Act 1974.
Item 5G inserts a new section 78A, which requires the Minister to cause a review of this Part to be conducted before 31 December 2006, and for the report to be tabled in both Houses of the Parliament within 15 sitting days after the completion of the report, and in any case, no later than 30 June 2007.
Item 6 makes a technical amendment, necessary as a result of item 7.
Item 7 inserts a new paragraph 149(2)(c). Subsection 149(1) states that the ABA must investigate a complaint made under section 147, subject to subsection 149(2). Subsection 149(2) details the situations in which the ABA need not investigate a complaint. Currently section 149 deals with complaints that are frivolous, vexatious or are not made in good faith, or that do not relate to an offence against the BSA or the regulations, or a breach of a condition of a licence.
New paragraph 149(2)(c) provides that in the case of a complaint that refers to an alleged breach of the condition referred to in paragraph 7(2)(d), or 8(2)(c) or (d) (relating to new sections 61P (licensee to meet objective of editorial separation), 61V (requirement to maintain existing levels of local news and information) or 61W (requirement to maintain minimum levels of local news and information)), the ABA need not investigate the complaint if the investigation is not warranted having regard to all the circumstances.
New paragraph 149(2)(c) is intended to prevent the ABA from being required to investigate complaints where an investigation is not necessary, for example in a situation where the ABA has already investigated the substantive complaint. The provision is modelled on a similar provision in subparagraph 6(1)(b)(iii) of the Ombudsman Act 1976.
Item 8 adds new subsections (4) and (5) to section 149.
New subsection 149(4) requires the ABA to publish on the Internet the results of investigations that relate to a breach of a licence condition referred to in new paragraph 149(2)(c) above.
However, the ABA is not required to publish results of such an investigation if it is satisfied that publication of the results could substantially prejudice the commercial interests of a person, and that prejudice outweighs the public interest in the publication of the results (new subsection 149(5)).
Item 8A amends section 204 as a consequence of new section 49A above. The amendment makes a decision by the ABA under subsection 49A(8) refusing to exempt a transaction from subsection 49A(6) (see item 1A above) reviewable by the Administrative Appeals Tribunal.
Item 9 inserts details of the appeals that can be made to the Administrative Appeals Tribunal as a result of the new provisions inserted by the Bill. Appeals can be made from the following decisions of the ABA:
• refusal to grant a cross media-exemption certificate (section 61C);
• refusal to vary the conditions of a cross-media exemption certificate (section 61H);
• imposing a requirement on a licensee to maintain existing levels of local news and information (section 61V); and
• imposing a requirement on a licensee to maintain minimum levels of local news and information (section 61W).
Existing section 207 states that the amount of a fee determined under the BSA must not exceed the amount that is estimated to be the cost of processing the application or doing the thing to which the fee relates.
New subsection 207(2), inserted by item 10, states that subsection 207(1) (ie the existing section 207) does not apply to a fee determined under section 61D or 61J. That is, subsection 207(1) does not apply to fees relating to applications for cross-media exemption certificates or fees relating to applications for variations to conditions of cross-media exemption certificates. New subsection 207(3) states that the amount of a fee determined under those sections is not to amount to taxation.
New subsections 207(2) and 207(3) have been added because it is not in the actual processing of applications that the real costs of the cross-media exemption scheme will arise, but rather it is in the ongoing administration of the regime as a whole by the ABA. The amendments to section 207 are necessary in order to make some provision for these ongoing costs to be retrieved from the participants at the outset.
Item 11 makes a technical amendment, necessary as a result of item 12.
Item 12 adds a new standard condition to subclause 7(1) of Schedule 2, applying to all commercial television broadcasting licences. The new licence conditions are that the licensee will comply with the disclosure requirement in section 61PA (see new paragraph 7(1)(pa)).
This new licence condition is added to subclause 7(1), rather than subclause 7(2), because compliance will be a simple matter for the licensee. Accordingly, breach of this condition will be an offence under subsection 139(1), without the need for the ABA to issue a notice under section 141.
The licence suspension and cancellation provisions in Division 3 of Part 10 will also be available, as will the complaint provisions in Division 1 of Part 11 (as amended by items 6-8 above).
Item 13 adds a new standard condition to subclause 7(2) of Schedule 2, applying to all commercial television broadcasting licences. The new licence conditions are that the licensee will comply with a requirement applicable to the licensee under new section 61P (licensee to meet objective of editorial separation).
The ABA will be able to issue a notice under section 141 requiring compliance with this condition. Failure to comply with a section 141 notice is a criminal offence (see section 142).
The licence suspension and cancellation provisions in Division 3 of Part 10 will also be available, as will the complaint provisions in Division 1 of Part 11 (as amended by items 6-8 above).
Item 14 makes a technical amendment, necessary as a result of item 15.
Item 15 adds two new standard conditions to subclause 8(1) of Schedule 2, applying to all commercial radio broadcasting licences. The new licence conditions are that the licensee will:
• comply with the disclosure requirement in section 61PC or 61PD (see new paragraph 8(1)(ia)); and
• comply with the requirement in new section 61U to notify the ABA when a cross-media certificate becomes active (see new paragraph 7(1)(j)).
These new licence conditions are added to subclause 8(1), rather than subclause 8(2), because compliance will be a simple matter for the licensee. Accordingly, breach of one of these conditions will be an offence under subsection 139(1), without the need for the ABA to issue a notice under section 141.
The licence suspension and cancellation provisions in Division 3 of Part 10 will also be available, as will the complaint provisions in Division 1 of Part 11 (as amended by items 6-8 above).
Item 13 adds new standard conditions to subclause 8(2) of Schedule 2, applying to all commercial radio broadcasting licences. The new licence conditions are that the licensee will:
• comply with a requirement applicable to the licensee under new section 61P (licensee to meet objective of editorial separation); and
• comply with a requirement applicable to the licensee under new subsection 61V (to maintain existing levels of local news and information) or 61W (to maintain minimum levels of local news and information).
The ABA will be able to issue a notice under section 141 requiring compliance with these conditions. Failure to comply with a section 141 notice is a criminal offence (see section 142).
The licence suspension and cancellation provisions in Division 3 of Part 10 will also be available, as will the complaint provisions in Division 1 of Part 11 (as amended by items 6-8 above).
Schedule 6 to the BSA relates to datacasting services and licences. Part 3 of that Schedule deals with the conditions of datacasting licences. Those conditions currently provide that datacasters are not permitted to transmit sports programs and sports news bulletins (except in very limited ways eg. short extracts of such programs).
These items amend the BSA to permit the datacasting of local sports programs and local sports news bulletins in full. Under the provisions, local sports programs and local sports news bulletins can provide coverage only for local sporting events.
Items 17 and 18 provide for the definitions of local sports news bulletin and local sports program to be provided by new clause 5A.
Item 19 adds new clause 5A to Schedule 6 of the BSA. New clause 5A provides definitions of local sports program and local sports news bulletin, for the purposes of Items 20 and 22, below.
A local sports program is a sports program the sole purpose of which is to provide coverage of, and/or analysis, commentary or discussion in relation to, local sporting events, but does not include a local sports news bulletin.
A local sports news bulletin is a sports news bulletin, the sole purpose of which, is to provide news about one or more local sporting events.
Local sporting events are limited to those events taking place in the area in which the datacaster is authorised (by the relevant radiocommunications licence) to transmit, or relate to a competition in which a team from that area is competing. The definition excludes:
• sporting events that are, or are part of, international or national sporting competitions (defined in sub-clause 5A(6));
• sporting events in the highest level of competition in a State or Territory; and
• sporting events on the anti-siphoning list.
Item 20 inserts a new subclause 14(4) which provides that the condition set out in subclause 14(1) (relating to the broadcast of category A material) does not prevent the licensee from transmitting a local sports program.
Item 21 makes a technical amendment, necessary as a result of Item 20.
Item 22 inserts a new subclause 16(3A) which provides that the condition set out in subclause 16(1) (relating to the broadcast of category B material) does not prevent the licensee from transmitting a local sports news bulletin.
Item 23 makes a technical amendment, necessary as a result of Item 22.
[1] Passive investment may broadly be defined as non-voting interests. The BSA definition of company interests (section 6) includes consideration of shareholding interest, voting interest, dividend interest and/or winding-up interest (section 8). Non-voting shares may be deemed company interests on the basis that they involve one other of these interests.