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Current Issues

Social Policy Group

Media Ownership Regulation in Australia

Introduction

Although Australia's media ownership laws have remained unchanged for almost a decade, debate on the desirability of reform has continued unabated. This debate has been fuelled by the impact of new media technologies, a number of inquiries proposing regulatory changes, and the self-interest of those media organisations that report the controversy. The major effect of the laws is to prevent the common ownership of newspapers, television and radio broadcasting licences that serve the same region. The purpose of the legislation is to encourage diversity in the ownership of the most influential forms of the commercial media: the daily press and free-to-air television and radio. The justification for the rules is that the effective functioning of a democracy requires a diverse ownership of the daily mass media to ensure that public life be reported in a fair and open manner.

This brief provides background on the issue, together with links to relevant sites and documents.

The Constitutional Position

The Commonwealth's legislative controls on media ownership can be divided into two broad categories:

Thus while the Commonwealth is able to impose prescriptive conditions on broadcasting licensees, its legislative reach over print media ownership is largely limited to general competition law and foreign acquisitions.

The Australian Broadcasting Authority

The administration of the Broadcasting Services Act is the responsibility of the Australian Broadcasting Authority (ABA). The Corporate Plan and Annual Reports of the ABA are available from this page. The latter contain detailed descriptions of the activities of the Authority, which cover the following broad areas:

The ABA's news releases, publications, submissions and other documents can be obtained from this page. Links to other ABA pages dealing with various aspects of ownership regulation are given in the sections below.

Media Ownership Controls

The specific controls over media ownership contained in the Broadcasting Services Act 1992 are as follows.

Television

A person must not control television broadcasting licences whose combined licence area exceeds 75 per cent of the population of Australia, or more than one licence within a licence area (section 53). Foreign persons must not be in a position to control a licence and the total of foreign interests must not exceed 20 per cent (section 57). There are also limits on multiple directorships (section 55) and foreign directors (section 58).

 Radio

A person must not be in a position to control more than two licences in the same licence area (section 54). Multiple directorships are also limited (section 55).

Cross-Media Control

Under section 60 a person must not control:

There are also similar limits on cross-media directorships (section 61).

Subscription Television Broadcasting Licences

A foreign person must not have company interests exceeding 20 per cent in a broadcasting subscription licence, and the total of foreign company interests in any licence must not exceed 35 per cent (section 109).

The ABA maintains a page which summarises the ownership and control limitations of the Broadcasting Services Act.

 Foreign Investment in the Media

There are a number of controls on foreign investment in the media in addition to those contained in the Broadcasting Services Act. All direct (ie. non-portfolio) proposals by foreign interests to invest in the media sector irrespective of size are subject to prior approval under the Government's foreign investment policy. Proposals involving portfolio share holdings of five per cent or more must also be approved.

The maximum permitted aggregate foreign (non-portfolio) interests in national and metropolitan newspapers is 30 per cent, with a 25 per cent limit on any single foreign shareholder. The aggregate non-portfolio limit for provincial and suburban newspapers is 50 per cent.

Details of the Government's foreign investment policy with regard to the media can be obtained from Appendix A of the Annual Report of the Foreign Investment Review Board.

Background to the Media Ownership Rules

In August 1985 the then Minister for Communications, the Hon. Michael Duffy, directed the Forward Development Unit of the Department of Transport and Communication to undertake a study of the ownership and control rules for commercial television. The resulting report Ownership and Control of Commercial Television: Future Policy Directions (August 1996) proposed various options for imposing limits on cross-media ownership.

On 27 November 1986 the Minister issued a Press Release detailing the government's proposed changes to the ownership and control provisions of commercial television licences. In summary, the proposals involved the replacement of the existing 'two station rule' with an audience reach rule, which limited any person to controlling interests in licences serving a maximum of 75 per cent of the population. In addition, cross-media restrictions were to be imposed which were designed to prevent a person from controlling both a television licence and a newspaper published 4 times per week and having more than 50 per cent of its circulation in the same area served by the television licence.

These proposed changes were introduced by the Broadcasting (Ownership and Control) Act 1987 which amended the Broadcasting Act 1942. Under this legislation, a person owning a television licence could not own more than 15 per cent of a newspaper published 4 days per week which had more than 50 per cent of its circulation in the same area as that of the licence. However, a newspaper proprietor was restricted to owning just 5 per cent of a television licence in the same area. In order to effect passage of the Bill through the Senate, the Government reduced the maximum population reach for television licences from 75 per cent to 60 per cent. According to the then Minister for Communications, the Hon. M. Duffy MP, the cross-media rules were introduced in order to:

Further changes to cross-media regulation were contained in the Broadcasting (Ownership and Control) Act 1988. This Act extended limits on cross-media ownership to radio licences. The owner of a radio licence could not own more than 15 per cent of a television licence serving substantially the same market and 15 per cent of a newspaper published 4 days per week and with more than 50 per cent of its circulation in the same area serviced by the radio licence. Similarly, the owner of a television licence was restricted to owning 15 per cent of a radio licence serving substantially the same market, while a newspaper proprietor could own up to 15 per cent of a radio licence.

Other minor changes to the media ownership rules were introduced by the following legislation.

The Broadcasting Services Act 1992 was a complete rewrite of the Broadcasting Act 1942 (repealed by the Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992). The Broadcasting Services Act 1992 (the Act) imposed a new regime of regulation on the ownership and control of commercial radio and television broadcasting licences. Although little was made of it at the time, this Act altered the limits on cross-media ownership for a newspaper proprietor from 5 per cent of a television licence to 15 per cent, by virtue of the definition of 'control'. Other cross-media limits introduced by earlier legislation remained the same.

The Concept of Control and the Role of the ABA

Definition of Control

The focus of cross-media ownership limits under the Act is on control. Section 6 of Schedule 1 of the Act provides a simple '15 per cent' rule for establishing whether a person has control of a company. If a person has company interests (for example voting, shareholding, or dividend interests) in a company exceeding 15 per cent, then in the absence of proof to the contrary the person is deemed to be in a position to exercise control of the company. This section does not apply where another person who is not an associate of the first person has interests in the company exceeding 50 per cent. The Schedule also makes it clear that a person can be in control of a company with less than 15 per cent. For example, a holding of 10 per cent would constitute control if no other persons had more than 2 per cent and such other persons did not act in concert. Alternatively, a holding of 51 per cent might not constitute control if the holder had given undertakings to a lender. In such circumstances the lender (with no direct company interests) might be in a position of control. The '15 per cent' rule does not only apply to interests held directly in a company. Section 7 of Schedule 1 provides for it to be applied to a succession or chain of companies.

ABA Prior Opinions

Under section 74 of the Broadcasting Services Act, the ABA is able to provide prior opinions to persons who may be affected by the ownership and control provisions. This service helps provide a degree of regulatory certainty in areas where breaches of the Act could result in severe financial penalties. The ABA maintains a Prior Opinions Page which discusses control issues and explains the service.

ABA Investigations

The ABA has also conducted a number of investigations into control issues. Reports of these inquiries are available from this ABA page. Some of the major findings on ownership and control include:

Other ABA news releases on ownership issues since 1994 can be obtained from this page.

Notification Provisions

The ABA's page on Notification Provisions explains the requirements for broadcasting licensees to provide annual information on ownership matters, as well as notifying the ABA of any changes in control. These requirements are necessary to ensure the effective administration of the ownership and control provisions of the Act.

Major Media Companies

Sources of Information

There is no official, comprehensive list of media proprietors and their assets available online. The ABA publishes Current Controllers of a Broadcasting Licence which contains a list of all commercial radio and commercial television broadcasting licences and the persons currently in a position to exercise control of each licence, as defined by the Act. This is only available in hard copy.

The ABA also maintains an Associated Newspapers Register to assist it in monitoring compliance with the cross-media provisions of the Act. The register lists newspapers together with the commercial radio and television stations that serve the same areas, in terms of section 59 of the Act.

The best source of information on current media ownership is the 'Media Ownership Update' published in February issue of the journal Communications Update each year. This contains:

Although this data is not available online, the Communications Law Centre (which publishes the journal) has a website containing much interesting information on media ownership issues. Their Media Ownership page provides links to legislation, articles, submissions and other resources.

The Australian interests of the major media companies are summarised below. The circulation and audience reach figures have been taken from the February 2000 Media Ownership Update. It should be noted that the potential audience reach figures for each broadcaster refer only to the audience of the stations they control, and not the total audience of a network eg. the stations owned by PBL (Nine) have an audience of 51.5 per cent of the population, but the Nine Network is available throughout most of the country because many stations not owned by PBL carry the signal. Such affiliated stations pay a negotiated proportion of their advertising revenue to the major networks.

News Ltd

News Ltd is an Australian subsidiary of News Corporation (Chairman, Mr Rupert Murdoch). It has interests in more than one hundred national, metropolitan, regional and suburban newspapers throughout Australia. A list of the major titles can be obtained from this page. In terms of its share of circulation, it has:

Other News Ltd. media interests are AAP Information Services (jointly controlled with Fairfax), a 25 per cent stake in Foxtel (pay TV) and News Interactive (online).

Publishing & Broadcasting Ltd (PBL)

Publishing and Broadcasting Limited (Chairman, Mr James Packer) is an Australian media and entertainment company which owns the Nine Network and the magazine publisher, Australian Consolidated Press. PBL controls three metropolitan and one regional television licences, giving it a reach of 51.5 per cent of the potential audience. In pay TV, it has a 25 per cent interest in Foxtel and a 33 per cent stake in Sky News. It publishes 64 magazines and its share of the circulation of the top thirty Australian magazines is 41.5 per cent. It has a joint online venture (ninemsn) with Microsoft Corporation. The largest shareholder in PBL is Consolidated Press Holdings (Mr Kerry Packer).

John Fairfax Holdings Ltd

John Fairfax Holdings Ltd (Chairman, Mr Brian Powers) is an Australian publishing group. Major shareholders include the FXF Trust (15 per cent), which is controlled by Consolidated Press Holdings (Mr Kerry Packer), Bankers Trust Australia Ltd (8 per cent) and Tyndall Australia Ltd (10 per cent). The latter two companies have their voting power limited to five per cent under foreign investment policy. The Treasurer has issued a press release on this matter. Fairfax has also been the subject of two ABA investigations with regard to its relationship with Mr Kerry Packer. Fairfax newspapers have the following circulation shares:

Other Fairfax interests are AAP Information Services (jointly controlled with News Ltd), three magazines, and the Fairfax Interactive Network (online).

Telstra Corporation Ltd

Telstra Corporation (Chairman, Mr Bob Mansfield) owns most of Australia's telecommunications infrastructure, 50 per cent of the pay TV operator Foxtel, and Big Pond Internet Services. The major shareholder is the Commonwealth Government (51 per cent).

APN News and Media

APN News and Media has extensive interests in regional newspapers, commercial radio, outdoor advertising, pay television and digital media. Its largest shareholder is Independent News and Media PLC of Dublin, Ireland (Chairman, Dr A.J.F. O'Reilly). The Australian Radio Network is controlled by APN and Clear Channel Communications (a US public company). It has eight metropolitan and four regional stations, with a potential audience of 52.6 per cent of the population. The Australian Radio Network also has a joint venture with Australian Capital Equity and the Special Broadcasting Service called Pan TV, which produces the pay TV channel World Movies. APN newspapers have the following circulation shares:

APN also has fifty non-daily newspapers.

Rural Press Limited

Rural Press Limited (Chairman, Mr John B. Fairfax) publishes over 150 regional newspapers and magazines, including the Canberra Times. It has 14.9 per cent of the circulation of daily regional newspapers. The company also controls five radio licences in South Australia and Star FM in Ipswich, Queensland. The largest shareholder is Marinya Media, the private company of John B. and Tim Fairfax.

Seven Network

The Seven Network Ltd (Chairman, Mr Kerry Stokes) controls five metropolitan and one regional television licences, with a potential audience reach of 72.1 per cent of the population. It also has a number of pay TV interests, including a 33 per cent stake in Sky News. The largest shareholder is Kerry Stokes (34 per cent). The Seven Network's relationship with News Ltd was the subject of an ABA investigation in 1996.

Ten Group Ltd

The Ten Group Ltd controls five metropolitan television licences, with a potential audience reach of 64.9 per cent of the population. The largest shareholder is CanWest Global Communications (Chairman, Mr Izzy Asper), which holds a 14.9 per cent voting interest and an overall 57.5 economic interest in the company. The Ten Group has been the subject of a number of ABA investigations concerning foreign control.

Southern Cross Broadcasting Australia Ltd

Southern Cross Broadcasting (Chairman, the Hon. Peter Nixon) has one metropolitan and four regional television licences, with a potential audience of 21.5 per cent of the population. It also controls five metropolitan radio licences, with an audience reach of 24.6 per cent of the population. The largest shareholder is the Ten Group Ltd (14 per cent).

Prime Television Ltd

Prime Television (Chairman, Mr Paul Ramsay) has eight regional television licences, with a potential audience of 25.1 per cent of the population. The largest shareholder is Paul Ramsay Holdings Pty Ltd (39 per cent).

Village Roadshow Ltd

Village Roadshow (Chairman, Mr John R. Kirby) controls Austereo Pty Ltd, which has 11 metropolitan and three regional radio licences, giving it a potential audience reach of 62.5 per cent of the population. The largest shareholder is John Kirby, through the Village Roadshow Corporation (47 per cent).

West Australian Newspapers Holdings Ltd

West Australian Newspapers Holdings Ltd (Chairman, Mr T.R. Eastwood) publishes The West Australian and 18 regional newspapers. It has 9.1 per cent of the capital city and national newspaper market, 9 per cent of Australian suburban market and 1.1 per cent of the regional market. It also owns 8 per cent of AAP Information Services. The largest shareholders are Westpac Investment Management Pty Ltd (7 per cent) and Perpetual Trustees Australia Ltd (7 per cent).

WIN Corporation Pty Ltd

WIN Corporation (Chairman, Mr Bruce Gordon) controls one metropolitan and nine regional television licences, with a potential audience of 26.1 per cent of the population. WIN also has one radio station in Wollongong. The major shareholder is Mr Bruce Gordon.

Telecasters Australia Ltd

Telecasters Australia (Chairman, Mr T.D. Downing) controls five regional television licences, with a potential audience of 18.8 per cent of the population. The major shareholder is Permanent Trustee Australia (17 per cent).

Government Reviews and Inquiries

Review of Cross-media Rules and Government Statements

On 1 October 1996 the Government announced a review of the cross-media rules and released an Issues Paper on the subject. Submissions to the review are available from this page.

In October 1999 the Minister for Communications, Information Technology and the Arts indicated that the Government would not be attempting to reform the cross-media rules until the Opposition also supported such a move. A transcript of the Minister's comments is available from this page. The Prime Minister made similar comments in an interview on 1 September 2000, as well as indicating that he had long believed the rules to be anachronistic.

The Productivity Commission Inquiry into Broadcasting

The Productivity Commission Inquiry into Broadcasting was released in April 2000. Part V, 'Diversity, Concentration and Competition', dealt with ownership and control regulation. The Commission recommended:

The Commission also recommended that the cross-media rules be repealed, but only after the following conditions were met:

Competition Regulation and the Media

It has been argued that the media ownership rules in the Broadcasting Services Act should be repealed and that the industry should be treated the same as other areas of the economy ie. be subject to competition regulation through the Australian Competition and Consumer Commission (ACCC). For example, see the article by Michael Warby, 'Media Regulators Consistently Sell Australians Short'.

The major difficulty with this approach is that the merger provision of section 50 of the Trade Practices Act while maintaining competition within markets, would not necessarily maintain plurality and diversity across different markets. This means that a newspaper owner would be able to acquire television and radio stations that served the same region. It was for this reason that the Productivity Commission recommended that the insertion of a media-specific public interest test into the Trade Practices Act be a precondition to the repeal of the cross-media rules. These matters are dealt with at more length in the following documents:

A member of the ACCC, Mr Ross Jones, also discussed some of these issues in the speech, "Telecommunications and broadcasting regulation" (11 February 2000).

It is possible to quantify the possible impact of the repeal of the media ownership rules on individual media markets throughout Australia. The table below details the possible effect of the repeal of the rules on those Australian media markets which have a daily newspaper. This constitutes around 86 per cent of the population. Smaller regional markets without newspapers could also experience a reduction in the number of media owners, as it would be possible for television and radio licences to be controlled by the one entity.

The table compares the minimum possible number of owners under the cross-media rules with the potential minimum ownership if the same markets were only subject to the competition law administered by the ACCC. It assumes that the Commission would:

Effect of the Repeal of the Cross-Media Laws on Australian Media Markets (1)

Australian Media Markets

Licence Area Population As a Percentage of the Australian Population

Ownership under Current Law

Minimum Possible Owners Without Cross- Media Owner-ship Controls

Reduction in Minimum Possible Owner-ship

(%)

Media Outlets per Market

Owners per Market

TV Stations Daily Press Radio Stations Actual Owners Minimum Possible Owners
Broken Hill, Darwin, Kalgoorlie, Mildura, Mt Gambier, Mt Isa

1.70

1

1

2

3

3

1

66.6

Melbourne

17.69

3

2

9

11

10

4

60.0

Hobart

1.21

2

1

3

6

5

2

60.0

Brisbane

8.37

3

1

6

8

7

3

57.1

Adelaide

6.09

3

1

5

7

7

3

57.1

Perth

6.96

3

1

5

6

7

3

57.1

Sydney

18.86

3

2

8

11

9

4

55.5

Newcastle, Maitland

2.66

3

1

4

6

6

3

50.0

Canberra

1.90

3

1

4

7

6

3

50.0

Toowoomba, Warwick

1.76

3

1

3

7

6

3

50.0

Launceston

0.62

2

1

2

5

4

2

50.0

Burnie

0.33

2

1

2

4

4

2

50.0

Wollongong

1.38

3

1

2

6

5

3

40.0

Bendigo

1.01

3

1

1

5

5

3

40.0

Gladstone, Rockhampton

0.84

3

1

2

6

5

3

40.0

Maryborough, Warrnambool

0.74

3

1

1

5

5

3

40.0

Albury, Ballarat, Bathurst, Bundaberg, Cairns, Dubbo, Geelong, Gold Coast, Goulburn, Grafton, Gympie, Lismore, Mackay, Orange, Shepparton, Sunshine Coast, Tamworth, Townsville, The Tweed, Wagga Wagga

14.03

3

1

2

5

5

3

40.0

ALL MARKETS

86.15

53.3

(1) Media markets according to the Associated Newspaper Register maintained by the ABA for the purpose of administering the cross-media rules. Note that the figures refer only to daily newspapers and commercial free-to-air radio and television broadcasters. The Broadcasting Services Act 1992 permits an owner to control two radio licences in the one area, so the number of actual owners is sometimes greater than the minimum possible under the law. The 'Minimum Possible Owners Without Cross-Media Controls' figures assume that the number of broadcasting licences and newspapers remains unchanged.

Convergence and the New Media

Over the last decade or so developments in information technology have enabled the digitalisation and transmission of video, image, sound and text. Television, telecommunications and computer services are becoming integrated, or converging. This process is said to affect the cross-media laws by:

Convergence Review and Digital Television

The broader policy implications of convergence were discussed in the Convergence Review published in May 2000. It defined convergence as 'services sector restructuring enabled by digitalisation' and concluded that the current structure of the broadcasting industry would persist for some years and that, as a result, the corresponding structure of broadcasting legislation will remain sound for some time.

The Convergence Review arose from amendments to the Broadcasting Services Act made to facilitate the introduction of digital television (Schedule 4 of the Act). Its conclusion regarding the media laws was perhaps unsurprising, given that the digital television conversion amendments entrenched the existing structure of the industry in the short to medium term, namely:

Some of these provisions were criticised in the Productivity Commission Inquiry into Broadcasting for their restrictive effect. However, they were enacted by the Parliament in order to provide the television industry with sufficient security to meet the costs of digital conversion. In addition, there is a provision for a review of the usage of the broadcasting service bands to be conducted before 31 December 2005 (section 60 of Schedule 4).

An OECD Paper dealing with policy issues regarding cross-ownership and convergence is available from this page.

New Media Access and Media Diversity

The development of the Internet and the introduction of pay television have added to the diversity of the Australian media sources over the last decade. It could be argued that this has reduced the need for the media ownership rules, which are designed 'to encourage diversity in control of the more influential broadcasting services' (section 3c of the Broadcasting Services Act). Access to the Internet and pay TV has increased considerably over the last few years:

However, new media access is well below the near universal household penetration of free-to-air television and radio, and is still significantly lower than newspaper distribution. The nation's daily newspaper circulation is 3.01 million (2.4 million national/metropolitan and 0.6 million regional dailies). Individual newspaper circulation figures can be obtained from this page, while newspaper readership statistics are available from Roy Morgan Research. There are generally two to three readers for each unit of circulation.

Although new media access is expanding, a closer examination of news sources available on the Internet and pay TV indicates that they are controlled by the traditional media. The only significant new Australian news service provided by the pay TV operators is Sky News Australia. Sky is owned by the existing networks, Seven and Nine, and British Sky Broadcasting. The latter is 40 per cent owned by News Corporation.

The most popular Australian Internet general news sites are also controlled by existing media operators, namely PBL, News Ltd, Fairfax and the Australian Broadcasting Corporation. For example, see the following Internet chart listings:

The only major new operator in Internet news is Telstra Corporation. However, Telstra's Australian news service consists of AAP news stories. AAP Information Services is jointly controlled by News Ltd and Fairfax.

Overseas Media Ownership Regulation

Appendix E of the Productivity Commission Report into Broadcasting contains a brief summary of media ownership regulation in other countries.

The Federal Communications Commission is the authority responsible for regulating media ownership in the United States. In May 2000 the Commission completed its Biennial Review of the Broadcasting Ownership Rules. The review and other documents relating to broadcasting ownership policy are available from this page.

The Department of Culture, Media and Sport is responsible for media ownership policy in the United Kingdom. The Government is currently working on a White Paper on Communications Reform, including media ownership regulation. Issues Papers developed as part of the White Paper process are available from this page. The Independent Television Commission and the Radio Authority are the bodies that license and regulate commercial broadcasting services in the UK.

The Department of Canadian Heritage is responsible for broadcasting policy in Canada. The Canadian Radio-television and Telecommunications Commission is the regulator.

Government Organisations and Media Research Bodies

The Department of Communications, Information Technology and the Arts administers Commonwealth media and communications policy.

The Australian Communications Authority administers the Radiocommunications Act 1992, which provides for the regulation the radiofrequency spectrum.

The Australian Competition and Consumer Commission is the national agency responsible for competition matters. It administers the Trade Practices Act 1974 and the Prices Surveillance Act 1983 and has specific responsibilities with regard to telecommunications under the Telecommunications Act 1997..

The Communications Law Centre is an independent, non-profit, public interest
organisation specialising in media and communications law and policy. Their Media Ownership page provides links to legislation, articles, submissions and other resources.

The Centre for International Research on Communication and Information Technologies provides independent research and education on information and communication services.

The La Trobe University Online Media Program investigates the social and economic implications of Internet-based communications.

Network Insight is an RMIT University research group that deals with the future of media, telecommunications and on-line services with a focus on convergence in East Asia, especially Australia.

The Australian Key Centre for Cultural and Media Policy at Griffith University aims to enhance our understanding of cultural and media policies and processes, and to serve the policy needs of the Australian cultural and media sector.

 

 

E-Briefs are written for Members of Parliament, being located on the Internet they can be read by members of the public, however some linked items are available to Members of Parliament only, due to copyright reasons.

This page was written by Kim Jackson. Any comments to: kim.jackson@aph.gov.au
Last reviewed 25 October 2000 by the Parliamentary Library Web Manager
Commonwealth of Australia