Regulation of Media Ownership

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Introduction

The Rules, Past and Current The Changing Shape of the Media Industry The Time Line for future Reform Ownership Effects

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Early Rules 1935 – law restricted multiple ownership of

commercial stations 1942 – Newspapers had acquired 44% of commercial

stations 1951 – Non citizens can’t control commercial stations 1956 – 1986 - two TV stations per interest limit 1986/87 cross media rules first introduced. “Cant be

queen of screen and prince of print.” Grandfathering rules first introduced 1965-1984, then

1987.

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Some Key Concepts

Actual Control In a position to exercise control Newspaper Company interests Tracing of interests Overlapping licence areas

The Pre-2007 RulesPrint TV Pay TV Radio and other

Foreign Ownership

Investments are subject to prior Federal Government approval

- 25% limit for any single foreign shareholder (30% in aggregate).

- 50% limit for provincial and suburban newspapers.

- prohibition on foreign control.

- 15% limit for single foreign shareholder.

- 20% aggregate limit.

- 20% limit on foreign directors.

- no control prohibition.

- 20% limit for single shareholder.

- 35% aggregate limit.

- BUT de facto foreign ownership has been achieved.

Foreign limits repealed in 1992.

Cross Media Rules

A person (foreign or Australian) cannot control:- a TV or radio licence AND a newspaper associated with the same licence area.- a TV AND radio licence in the same licence area.There are corresponding limits on directorships of companies which control those licences.

Competition Rules

Prohibit mergers or acquisitions which would substantially lessen competition in a market for goods or services in

Australia. The ACCC pro-actively monitors M&A activity.

Media Concentration

Competition rules only. Licence(s) must not exceed 75% of Australia's

population.

Competition Rules only. Must not control more than 2 licences in the same area.

Industry Structure

Print TV Pay TV Radio

4 major Print Groups (News, Fairfax, Rural Press, ACP)

3 Networks/Affiliated Regional Groups

1 Major Metro1 Major Regional

Several Networks of varying size

1 Metro and 1 Regional with major foreign investment

1 Network with major foreign economic interest

All have substantial foreign investments

2 of 4 Major Groups 100% foreign

The New RulesPrint TV Pay TV Radio and

other

Foreign Ownership

Investments are subject to prior Federal Government approval.

Cross Media Rules

5 Metro Voices/ 4 Regional Voices.

Competition Rules

Prohibit mergers or acquisitions which would substantially lessen competition in a market for goods or services in Australia. The ACCC pro-actively monitors M&A activity.

Media Concentration

Competition rules only.

Licence(s) must not exceed 75% of Australia's population.

Competition Rules only.

Must not control more than 2 licences in the same area.

Two RulesMedia Diversity

Rules

Statutory ControlRules

5 Media Groupings (Sydney, Melbourne, Brisbane, Adelaide, Perth): Section 61AB(1)

1 TV Licence/area: Section 53(2)

75% TV audience reach: Section 53(1)

No TV or radio/datacasting transmitter: Sections 54A and 54B

2 radio licences/area

4 Media Groupings elsewhere: Section 61AB(2)

Directorship equivalents

Limit on control of 2 out of 3 for commercial radio/TV/print: Section 61AEA

Structure

Register

Protective Advantages

Reporting Obligations

Unacceptable Media Diversity Situation

Key Definitions

Sections 61AC and 61AE

Points Test

Sections 61AU to 61AZH Section 61AB

Section 61AN(4)

Points Test: Section 61AC

Radio Licence Area 50% radio/TV overlapNo radio overlap

Media Operation Any of radio/TV/Associated newspaper

Media Grouping Control test applies

Points Test

State Newspaper Television Radio Total

Sydney 2 3 8 13

Melbourne 2 3 7 12

Brisbane 1 3 4 8

Reporting Obligations

Penalties: sections 63 and 64 Media Groups Protected: section 61AN(4) First Mover Advantage for innocent breaches:

section 61AN(7) and (8) Prior approval: sections 61AJ and 61AMC

Prior Approval

ACMA 30 days for further information No decision making time limit – 45 day/best

endeavours One month

Undertakings

2 years for unacceptablemedia diversity

12 months for unacceptable 3-way control

The Register

Initial entry/asap after 1/2/07: sections 65, 61AU and 61AY

New media group: section 61AZ Conditional entries: section 61AZD Unconfirmed entries: section 61AZE Time of essence

Remedial Directions: Sections 61AN and 61ANA Not to registered controller: section 61AN(4) Period of up to 2 years/12 months

Extension for compliance available: section 61AP

Good faithReasonable precautions

Flagrant = 1 month

The Time Line

HDTV/ABC/SBS Multichannel

2007

Relax Media Ownership

Auction of 2 digital channels

Anti-Siphoning Use it or Lose it

SD Multichannel

Full Anti-Siphoning Review

2009 2010-12

Analogue Switchoff

Full Multichannel

Digital Radio Introduction

New Digital Channels

Channel AMust be:

DatacastingNarrowcastingCommunity televisionFor domestic reception

Must be digital

Not available for FTA broadcasters

Channel BMust not be:

Commercial broadcasting or re-transmission service or subscriptiontelevision for domestic digital television reception

Not controlled by commercial or national broadcasting if for domestic television reception

Cross-Media DisclosureCommon control

TV

Radio Newspaper

• Commercial television broadcast: section 61BB

• Business affairs disclosure – commercial radio: section 61BD

• Regular disclosure – commercial radio: section 61BE

• Disclosure by newspaper publisher: section 61BF

Licence Conditions

Regional TV In aggregated markets: section 43A To broadcast minimum levels of material of local

significance Prime, Southern Cross, WIN, NBN, Seven

Licence Condition: Commercial Radio Regional Radio

Trigger event: section 61CB Licence must maintain minimum levels (section

61CD) for local news, weather, community service announcements, emergency warnings

Licensee to submit local content plan for approval: section 61CF

Local content condition: section 43C Local presence condition if trigger event occurs:

section 43B

Regional Radio Trigger Event change of control

Minimum standards News (5) weather (5), community services (1),Emergencies

Local Content Plan Local presence condition

ACMA Approval

Annual Compliance Report

Effects: Television

KKRSeven Network Conversion50% Convertible Notes

Creation of separate PBL Media Group

Nine Network Further 25%50% Convertible Notes

CanwestTen Network Sought whole of Network sale1992

50% Convertible Notes

Acquired STW Perth and NWS AdelaideWin Television

Canwesttoconvert

CVC

Effects: Radio

DMG1. Macquarie Media Phase One

Undertaking to divest various licences

acquired

SouthernCross

2. Macquarie Media/ Fairfax

Macquarie Media to acquire television

Undertaking to divest 12 radio licences

Fairfax to acquire radio

Effects: Newspapers

FairfaxRural Press

Southern Cross Radio 2CH/3AW

merger

Industry Structure

Print TV Pay TV Radio

3 major Print Groups, one with radio holding

3 Networks/Affiliated Regional Groups

1 Major Metro1 Major Regional

Several Networks of varying size(2 fewer networks), one with regional TV

1 Metro and 1 Regional with major foreign investment

All metro networks have major foreign economic interest

All have substantial foreign investments

2 of 4 Major Groups 100% foreign