Media reforms: Proposed changes to media ownership laws

The Federal Government has recently committed to making reforms to certain media ownership laws under the Broadcasting Services Act 1992 (Cth) (Act).

Although no formal announcement or proposed legislation has been released by the Government, the Minister for Communications, Senator Mitch Fifield, has stated that the Government intends to seek amendments to abolish the so called ‘reach rule’ and the ‘two out of three rule’¹.

Reach rule

Under the reach rule, a person must not be in a position to exercise control of commercial television broadcasting licences whose combined licence area populations exceed 75% of the population of Australia².

The current licensing regime allows a person to control a commercial television broadcasting licence in each of the mainland capital cities³, however because of the geographic population spread they would not be able to also control licences throughout all of regional Australia. This has meant that in order to be able to provide consistent programming across Australia, program networks have been established between the holders of different commercial television broadcasting licences (for example, the network between Nine Entertainment and WIN Corporation).

When introduced, the reach rule was considered important given the significant influence television was able to have on community views through the dissemination of news and other information of social and political importance. With the proliferation of information sharing and distribution platforms which are not bound by geographic constraints (such as the internet), the reach rule has become increasingly redundant. This was most recently illustrated when WIN Corporation took legal action against Nine Entertainment to prevent Nine Entertainment from using the internet to stream its television channels and content into regional Australia⁴.

It has been reported that as part of the arrangements to abolish the reach rule, legislation will be introduced to alleviate concerns that removal of the reach rule may negatively impact the amount of local content shown in regional areas⁵. This is expected to be implemented through the introduction of a points based system, similar to the system used under the Broadcasting Services (Additional Television Licence Condition) Notice 2014 (Cth).

Two out of three rule

Under the Act, transactions that result in an ‘unacceptable 3-way control situation’ coming into existence are prohibited⁶.

An ‘unacceptable 3-way control situation’ exists in relation to the licence area of a commercial radio broadcasting licence (first radio licence area) if a person is in a position to exercise control of:

• a commercial television broadcasting licence, where more than 50% of the licence area population of the first radio licence area is attributable to the licence area of the commercial television broadcasting licence;
• a commercial radio broadcasting licence, where the licence area of the commercial radio broadcasting licence is, or is the same as, the first radio licence area; and
• a newspaper that is associated with the first radio licence area⁷.

The prohibition essentially bans organisations from controlling all three of a newspaper, television and radio station in the same market (i.e. they can only control a maximum of two). Given the prohibition is based on mediums, it has also been seen as increasingly redundant as new technologies become more prevalent.

Removing the two out of three rule is seen as more controversial than removal of the reach rule, given potential concerns that it may lead to a reduction in diversity of media coverage with media ownership becoming more concentrated.

Anti-siphoning

In signalling the intended changes to the Act, Senator Fifield did not make reference to any changes to the anti-siphoning laws or the current list of events that are subject to the regime.

The anti-siphoning regime restricts holders of a subscription television broadcasting licence from acquiring the right to televise certain sporting events that are specified on the ‘anti-siphoning list’ on the licensee’s subscription television service unless the right to televise those events has first been acquired by:

• a national broadcaster (e.g. ABC or SBS); or
• a commercial television broadcasting licensee with reach to more than 50% of the Australian population⁸.

The Productivity Commission, media organisations and content owners have criticised the anti-siphoning regime as being overly burdensome and as an anti-competitive restriction on subscription television broadcasters and content owners⁹. The former Government proposed various reforms to the Act, however these proposed amendments were not ultimately passed into law.

Comments

It is not clear yet exactly what changes will be made to the Act, with legislation expected to be put to the Parliament on 15 March 2016 in the hope of being passed before the next Federal election¹⁰.

A likely consequence of changes to the reach rule and the two out of three rule is a change in the ownership of media interests in Australia.

Changes to the anti-siphoning rules are more controversial and it is now not expected that any changes to the underlying regime will be proposed before the next Federal election.

¹ABC Television, ‘Major media mergers on the cards following introduction of reform legislation’, Lateline, 23 February 2016 <www.abc.net.au/lateline/content/2015/s4412387.htm>.
²Section 53(1) of the Broadcasting Services Act 1992 (Cth).
³The licence area of Sydney, Melbourne, Brisbane, Perth and Adelaide is 66.70%. Statutory Control Rules, Australian Communications and Media Authority <www.acma.gov.au/Industry/Broadcast/Media-ownership-and-control/Ownership-and-control-rules/statutory-control-rules-media-ownership-control-acma> at 24 February 2016.
⁴Max Mason, ‘Bruce Gordon’s WIN takes Nine to court over streaming’, The Sydney Morning Herald (Sydney), 10 February 2016 <www.smh.com.au/business/media-and-marketing/bruce-gordons-win-takes-nine-to-court-over-streaming-20160210-gmqjg1.html>.
⁵Matthew Knott & Dominic White, ‘Media reform: Turnbull cabinet approves new laws, paving way for mergers and acquisitions’, The Sydney Morning Herald (Sydney), 23 February 2016 <www.smh.com.au/federal-politics/political-news/media-reform-turnbull-cabinet-approves-new-laws-paving-way-for-mergers-and-acquisitions-20160222-gn0t56.html>.
⁶Sections 61AMA and 61AMA of the Broadcasting Services Act 1992 (Cth).
⁷Section 61AEA of the Broadcasting Services Act 1992 (Cth).
⁸Section 99(1) and Item 10(1)(e) of Pt 6 of Sch 2 of the Broadcasting Services Act 1992 (Cth).
⁹Productivity Commission, Annual Review of Regulatory Burdens on Business: Social and Economic Infrastructure Services (2009) 157-158.
¹⁰ABC Television, ‘Major media mergers on the cards following introduction of reform legislation’, Lateline, 23 February 2016 <www.abc.net.au/lateline/content/2015/s4412387.htm>.