Chapter 2
Overview of the current framework and the changes proposed in the bill
2.1
This chapter provides background information on the current media
ownership and control framework in Australia and local programming
requirements. This chapter also outlines the proposed amendments contained in
the bill, key concepts used in the bill and the rationale for the proposed
changes.
The current media
ownership and control framework in Australia
2.2
Australia's media control and ownership regulatory framework is contained
in Part 5 of the Broadcasting Services Act 1992 (BSA), which is
administered by the Australian Communications and Media Authority (ACMA). The
merger and acquisition provisions of the Competition and Consumer Act 2010
(CCA) and the Foreign Acquisitions and Takeovers Act 1975 also apply to
media transactions. This section discusses relevant aspects of these laws
in turn.
Broadcasting Services Act
requirements
2.3
The BSA framework comprises five rules that limit the 'control'[1]
of commercial broadcasting services (television and radio) and newspapers
associated with the licence areas.[2]
The five rules are listed below:
-
The '5/4' rule (applies to television, radio and
newspapers)—this rule, which is also known as the 'minimum voices rule', is a
requirement that at least five independent media operations or media
groups must be present in the mainland state capital cities and at least four
must be present in regional commercial radio licence areas.
-
The '75 per cent audience reach' rule (applies to television)—a
person, either in their own right or as a director of one or more companies,
must not be in a position to exercise control of commercial television
broadcasting licences whose total licence area population exceeds 75 per cent
of the Australian population.
-
The '2 out of 3' cross-media control rule (television,
radio and newspapers)—mergers cannot involve more than two of three regulated
media platforms (commercial television, commercial radio and associated
newspapers) in any commercial radio licence area.
-
The 'one-to-a-market' rule (television)—a person, either
in their own right or as a director of one or more companies, must not be able
to exercise control of more than one commercial television broadcasting licence
in a licence area.
-
The 'two-to-a-market' rule (radio)—a person, either in
their own right or as a director of one or more companies, must not be able to
exercise control of more than two commercial radio broadcasting licences in the
same licence area.[3]
2.4
The 75 per cent audience reach rule and the 2 out of 3 cross-media
control rule are of direct relevance to the bill and are discussed further
below.
75 per cent audience reach rule
2.5
The 75 per cent audience reach rule applies to commercial television
broadcasting. It prevents a person, either in their own right or as a
director of one or more companies, from being in a position to exercise control
of commercial television broadcasting licences whose combined licence area
populations exceed 75 per cent of the Australian population.[4]
The rule was first introduced as a 60 per cent reach rule in 1987, and was
increased to the 75 per cent threshold in 1993.[5]
2.6
In a paper published in June 2014, the Department of Communications
observed that two of the three major metropolitan commercial television
networks, Seven and Nine, are close to the 75 per cent audience reach
threshold. The latest figures for combined audiences are as follows: Seven
(73.81 per cent),
Nine (73.55 per cent) and Ten (66.70 per cent).[6]
2.7
For regional networks, which are generally affiliated with a
metropolitan counterpart, the audience figures in 2014 were as follows: Prime
(24.33 per cent), WIN Network (25.15 per cent) and Southern Cross (34.11 per
cent).[7]
2.8
Organic population growth does not result in the threshold of
75 per cent of the Australian population being contravened.[8]
However, the current audience reach of the metropolitan networks and the
application of the 75 per cent audience reach rule means that 'no
metropolitan network can take over a regional network (acquiring all licences)
without divesting one or more commercial television licences'.[9]
2 out of 3 rule cross-media control
rule
2.9
This rule prohibits a person from controlling more than two of the three
types of regulated media platforms (that is, a commercial television
broadcasting licence, a commercial radio broadcasting licence and an
associated newspaper) in any one commercial radio licence area. The 2 out of 3
rule was introduced in 2006.
2.10
In its June 2014 paper, the Department of Communications observed that
there are 'a number of companies that control the maximum allowable two
regulated media platforms in a commercial radio licence area'. Under the 2 out
of 3 rule, 'those companies would not be permitted to acquire a third media
platform in these markets'. The paper used Fairfax's platforms in the Sydney
market to illustrate this point:
For example, Fairfax Media would not be permitted to acquire
a commercial television licence in Sydney or Melbourne (unless it were to
divest its commercial radio or associated newspaper holdings in the relevant
licence area).[10]
2.11
Companies that control the maximum allowed number of regulated media
platforms in a commercial radio licence area (as at June 2014) are listed at Table
2.1.
Table
2.1: Companies that control the maximum allowable two regulated media
platforms in a commercial radio licence area (as at June 2014)
Company
|
Media platforms
|
Licence areas (RA1)
|
Fairfax
Media
|
Radio
and newspaper
|
Sydney
& Melbourne
|
Seven
West Media
|
Television
and newspaper
|
Perth
|
DMG/News
Corp
|
Radio
and newspaper
|
Sydney,
Melbourne, Brisbane & Adelaide
|
Southern
Cross Austereo
|
Television
and radio
|
26
regional licence areas including Canberra, Gold Coast, Hobart & Newcastle
|
WIN
Corporation
|
Television
and radio
|
Wollongong
|
Source: Department of
Communications, 'Media control and ownership', p. 18.
Application of the Competition and
Consumer Act 2010 to transactions
2.12
Mergers and acquisitions in the media sector are subject to the general
competition law prohibition of anti-competitive acquisitions outlined in the
CCA. Section 50 of the CCA prohibits acquisitions that would have the effect,
or be likely to have the effect, of substantially lessening competition in any
market. The Australian Competition and Consumer Commission (ACCC) administers
the CCA.
2.13
In recent years, the ACCC has reviewed various transactions in the media
sector that were not subject to the BSA media control rules (as they related to
subscription television broadcasting licences and subscription video on demand
services). A list of acquisitions in the media sector considered by the ACCC
since 2006 was provided in response to a question on notice.[11]
The ACCC's approach to assessing mergers in the media sector is discussed in
Chapter 3.
Foreign Acquisitions and Takeovers
Act 1975
2.14
The Foreign Acquisitions and Takeovers Act provides a regime for
ensuring that foreign investment proposals are not contrary to Australia's
national interest. The Act enables the Treasurer to prohibit or impose
conditions of foreign investment proposals. In addition, as the media sector is
considered to be a 'sensitive sector' under the Australian Government's Foreign
Investment Policy, 'all foreign investment in local media over 5 per cent must
be notified to and approved by the Treasurer, who may grant approvals subject
to the parties meeting certain conditions'.[12]
Schedules 1 and 2: Proposed changes to media ownership and control laws
2.15
The bill contains proposed amendments to the BSA that would repeal the
75 per cent audience reach rule and the 2 out of 3 rule cross-media
control rule. These proposed measures are contained in schedules 1 and 2 to the
bill: schedule 1 contains three items that would abolish the 75 per cent reach
rule; schedule 2 contains various items necessary to effect the abolition of
the 2 out of 3 rule.
Rationale for the proposed changes
2.16
The explanatory memorandum (EM) stated that the 75 per cent rule 'does
little to support media diversity as regional viewers essentially receive the
same commercial television programming as metropolitan viewers, due to
affiliation or content supply agreements'. In relation to the proposed
abolition of the 2 out of 3 cross-media control rule, the EM noted that,
as the rule focuses on traditional media platforms, it 'does not take into
consideration the changed media landscape, where consumers access news content from
alternative sources, such as online'.[13]
2.17
If the proposed changes are enacted, consolidation within the commercial
television sector would be possible, subject to the CCA and other relevant
laws.
The EM noted that this would allow 'greater scale in operations, thus allowing
commercial broadcasters to compete in an environment where audiences can
readily access premium content online'.[14]
2.18
The Parliamentary Joint Select Committee on Broadcasting Legislation
recommended the abolition of the 75 per cent audience research rule in 2013.[15]
2.19
One of the key developments in the media market in recent years is the
growth in online streaming of content. Online video-on-demand services provided
by international and domestic businesses distribute products throughout Australia.[16]
In addition, Southern Cross Austereo noted that all three metropolitan
television networks stream television programming 'with no regard for the
exclusive broadcast licence areas and regardless of any cannibalisation this
may cause to viewing or revenue in regional licence areas'.[17]
2.20
The increasing popularity of online news services is another key
development. Australian newspaper companies, and other 'traditional' Australian
media companies, operate websites used by many Australians to access news.
However, international businesses also provide online news services, with
recent entrants in the Australian market including local editions of the Daily
Mail, The Guardian, Huffington Post and BuzzFeed.
2.21
To illustrate the growth in online news and the range of news websites
available, News Corp Australia provided Neilson data that indicated:
-
there are 41 news websites with over 300,000 unique
visitors/month, and of those, 19 (46 per cent) 'are "international"
or not "traditional" (Australian) media companies';
-
twenty-two (54 per cent) of the news websites have an audience in
excess of one million unique visitors per month, and of those, nine are not
traditional (Australian) media companies; and
-
of the top 10 news websites, News Corp Australia noted that five
are linked to traditional (Australian) media companies, four are not
traditional (Australian) media companies, and one is the ABC.[18]
2.22
The ACCC has also observed that the 75 per cent audience reach rule and
the 2 out of 3 rule appear to be outdated as a result of technological change. The
ACCC's views on this were informed by the review it completed in 2015 of a
transaction involving the Ten Network and Foxtel.[19]
The ACCC's chairman, Mr Rod Sims, noted that streaming activities by the
free-to-air networks made it difficult for their activities to be contained by
the 75 per cent reach rule. Mr Sims also noted that 'had there not been a 75
per cent reach rule, it is possible that other buyers could have met a more
competitive outcome than the one we ended up with'.[20]
2.23
The 2 out of 3 rule was also relevant in the Foxtel–Ten transaction, in
that Foxtel was a buyer that was not one of the three regulated platforms. Mr
Sims explained:
There is a whole lot of content on Foxtel—not just the
obvious sport that we all watch it for but also Sky News and things like
that—yet it was not part of the three. So...[at the time of the review] we made
some comments about whether that rule is limiting perhaps a better outcome in
the media sector and whether it is constraining proper leveraging of platforms.[21]
Schedule 3: Local programming requirements
2.24
Schedule 3 to the bill would insert a new Division 5D in Part 5 of the
BSA that would establish new local programming requirements for regional
commercial television broadcasting licensees. The schedule is divided into two
parts: Part 1 would insert new local programming requirements and Part 2 would
abolish the existing local programming requirements after a transition period.
2.25
The proposed requirements in schedule 3 are intended to address concern
that television sector consolidation enabled by the proposed changes in schedules
1 and 2 to the bill could lead to reductions in local programming.[22]
Existing local content requirements
2.26
Since 2003, as part of licence condition imposed by the ACMA, regional
commercial television broadcasting licensees have been required to broadcast
minimum levels of material of local significance ('local content') in local
areas within specified aggregated markets.[23]
2.27
Under the current licence condition, licensees in four aggregated
markets[24]
and Tasmania are 'required to provide minimum levels of local programming to
specified local areas, with the minimum required levels set by a points
system'. Licensees subject to the licence condition[25]
are required to meet minimum quotas of an average of 720 points per six-week
period and a minimum of 90 points per week. Licensees accumulate points by:
...broadcasting local programming during eligible periods
(6:30am to midnight Monday to Friday, and 8am to midnight on weekends) for
timing periods defined in the [licence condition]. Points are accumulated on a
'per minute' basis, i.e. 1 point for 1 minute of qualifying programming,
with local news programming incentivised through being allocated 2 points
per minute broadcast.[26]
Key aspects of the new framework
2.28
The proposed new local programming requirements will apply additional
local content requirements to regional commercial television broadcasting licences
that are affected by a 'trigger event'. The trigger event is where, 'as a
result of a change in control, a regional commercial television broadcasting
licence becomes part of a group of commercial television broadcasting licences
whose combined licence area populations exceed 75 per cent of the Australian
population'.[27]
Licensees in aggregated markets and
Tasmania
2.29
For affected regional commercial television broadcasting licensees in
aggregated markets and Tasmania, the bill would provide that, in the absence of
a trigger event, the local programming requirements in an aggregated market are
720 points in each timing period and 90 points in each week included
in a timing period.[28]
2.30
Six months after a trigger event occurs, local programming requirements
would increase to 900 points in each six-week timing period and a minimum
120 points each week (that is, an increase of approximately 30 points per
week).
Licensees in non-aggregated markets
2.31
The bill would also introduce local programming requirements to regional
commercial television broadcasting licensees in non-aggregated markets[29]
that are affected by a trigger event. In these instances, at least 360 points[30]
of material of local significance to each local area in each six-week timing
period would be required, with a minimum of 45 points per week. This
requirement would commence six months after a trigger event.[31]
2.32
Although the bill extends local broadcasting requirements to
non-aggregated markets, the EM noted that broadcasts 'to remote areas of
Australia will be excluded given the large geography and lack of large
population centres'.[32]
2.33
Maps of the areas covered by the current local programming requirements
and the proposed changes are at Figure 2.1 and Figure 2.2.
Figure
2.1: Markets covered by current local content requirements
Figure
2.2: Proposed local content requirements after a trigger event
Source:
Department of Communications and the Arts, 'Updating Australia's media laws', www.communications.gov.au/what-we-do/television/media/updating-australias-media-laws
(accessed 22 March 2016).
Changes to point categories for
qualifying programming
2.34
An additional proposed change is the introduction of a three-point
category for material of local significance. Under the proposed changes, 'each
minute of local news programming that depicts people, places or things in the
relevant local area
(ie. is filmed in the local area) will be allocated 3 points'.[33]
The proposed system of 1 and 2 points for other qualifying
programming will 'largely replicate the current material of local significance
points system' currently imposed by the ACMA's licence conditions.[34]
The proposed point system is outlined in the following table.
Table 2.2: Proposed point system for material of local
significance in a local area
Item no.
|
Material
|
Points*
|
1
|
News that:
- is broadcast during an eligible period by a licensee
covered by subsection 61CW(1) or 61CX(1); and
- has not previously been broadcast to the local area
during an eligible period; and
- depicts people, places or things in the local area;
and
- meets such other requirements (if any) as are set
out in the local programming determination.
|
3
|
2
|
News that:
- is broadcast during an eligible period; and
- has not previously been broadcast to the local area
during an eligible period; and
- relates directly to the local area; and
- is not covered by item 1.
|
2
|
3
|
Other material that:
- is broadcast during an eligible period; and
- except in the case of a community service
announcement—has not previously been broadcast to the local area during an eligible
period; and
- relates directly to the local area.
|
1
|
4
|
News that:
- is broadcast during an eligible period; and
- has not previously been broadcast to the local area
during an eligible period; and
- relates directly to the licensee's licence area.
|
1
|
5
|
Other material that:
- is broadcast during an eligible period; and
- except in the case of a community service
announcement—has not previously been broadcast to the local area during an
eligible period; and
- relates directly to the licensee's licence area.
|
1
|
* Points are
accumulated for each minute of material.
Source:
Schedule 3, Part 1, item 1 [proposed new subsection 61CY(3)].
Other amendments
2.35
The bill contains various other measures intended to support the
implementation of the new local programming requirements.
Local programming determination
2.36
Proposed new section 61CZ would provide for the ACMA, by legislative
instrument, to make a local programming determination that prescribes various
matters relevant to the operation of the proposed local programming
requirements, such as the meaning of 'local area' that is used in the points
system.
Compliance reports and
record-keeping requirements
2.37
Proposed new section 61CZB would require licensees affected by a trigger
event to provide compliance reports to the ACMA. The reports would include an
initial report on compliance with the local broadcasting requirements during
the first 12-month period that commences six months after the trigger event. A
second report covering compliance during the subsequent 12-month period must
also be provided. Both reports would need to be provided with 28 days of the
end of the relevant reporting period.[35]
2.38
The bill also includes measures that require licensees to make and keep
audio‑visual records of material of local significance that the licensee
broadcast in its local areas. The records must be kept for 30 days after the
end of each timing period, or a longer period if directed by the ACMA.[36]
Review by the ACMA
2.39
The bill would require the ACMA to conduct a review of the operation of
the statutory local programming requirements and its local programming
determination within 30 months after Royal Assent (that is, 24 months after the
additional obligations take effect).[37]
Minister's ability to give a
direction to the ACMA about the exercise of its powers
2.40
Proposed new section 61CZD would enable the Minister, by legislative
instrument, to give a direction to the ACMA about the exercise of the powers
conferred on it by the new Division 5D (the local programming requirements). However,
a direction could not be given in relation to the review that proposed new
section 61CZC would require.
2.41
The EM includes the following statement about this proposed ministerial reserve
power:
It is proposed that the legislation specifically empower the
Minister to give directions to the ACMA in relation to its powers under the new
provisions. This could include aspects of the local programming notice, or to
direct the ACMA to undertake a review of the provisions earlier than the two
year timeframe set out above. This is designed to allow the ACMA to determine
key parameters and specifics of the local programming arrangements whilst at
the same time preserving a level of control for the Minister. A similar
provision exists in section 121G of the BSA in relation to Australian
programming obligations.[38]
Navigation: Previous Page | Contents | Next Page