Media reforms must ditch two-out-of-three or face defeat, lobbyists warn

Arvind Hickman
By Arvind Hickman | 10 March 2017
Lobbyists in Canberra hold slim hopes for media reforms to pass through Parliament.

The government's media reform package will be scuttled unless it strips back a provision to relax rules around cross-media ownership, political lobbyists speaking to AdNews have warned.

The media industry and politicians agree on the need to remove the 75% reach rule, which will allow regional and metropolitan media organisations to merge operations, but the government doesn't have the Senate numbers to push through a provision to abolish the two-out-of-three rule, which prevents media moguls from owning a newspaper, TV station and radio station in a single market.

This part of the package, opposed by Labor and the Greens, requires almost total crossbench support for it to pass.

Senate road blocks

Lobbyists close to developments in Canberra, who have spoken to AdNews on the condition of anonymity, say South Australian senator Nick Xenophon and Pauline Hanson are unlikely to vote in favour of the package in its current state, potentially scuttling the 'once in a generation' reforms.

“It's getting close to decision crunch time and the government has to decide whether or not it wants the media ownership laws through the parliament in the next two sitting weeks or then it will be delayed until after the budget in the middle of the year,” a lobbyist says.

“There are two main decisions that need to be made. Most of the Parliamentarians and media organisations think the reach rule should go. That one is not terribly difficult.

“The one that is the problem is the two-out-of-three rule, where you can't own TV, radio and print in the same market. As of now, [Seven West Media chairman] Kerry Stokes in particular is strongly against any change to that.

“As of now, Labor and the Greens are not supporting that change, senator Hanson and her team is not going to support and senator Xenophon is sceptical about the changes.”

When pressed on why Stokes opposes the two-out-of-three rule, the lobbyist believes it is because the media baron is comfortable with where Seven West Media is positioned.

“A couple of the other major networks might be thinking of merging with various affiliates and that would be expensive for somebody and I don't think Mr Stokes is interested in that game because he is doing alright as he is,” the lobbyist says. “He has an advantage right now whereas others are trying to scratch around and do deals everywhere.”

Seven West Media tells AdNews it has always held the view that it favours a comprehensive reform package that also tackles licence fee and spectrum costs rather than a package that deals with “one aspect or another”.

“We need comprehensive reform and we have been consistent in our view that we will consider the entire package of reforms,” a spokesperson says.

“We need an entire reform package that secures a relevant and vibrant media sector, provides reform from onerous licence fees in the face of global competitors who do not pay their way in Australia, and a package that allows the sector to grow, compete and deliver content relevant to Australians.”

To that effect, all free-to-air commercial broadcasters have been lobbying to cut the draconian broadcast licence fees, which are among the highest in the developed world.

Few options

This leaves communications minister Mitch Fifield with two options – try to convince crossbench powerbrokers to change their views (which is increasingly unlikely) or remove the two-out-of-three rule from the package.

Fifield has previously resisted calls to water down the bill, but may be left with little choice. AdNews has approached Fifield to clarify his position.

“So it may well be that 50% of something is better than 100% of bugger all,” another lobbyist puts it. “As it stands if [the rules] are both together it would go down and the second one separately would go down. The government has to decide does it put two up at the same time, or does it put one up or does it do nothing.”

At the heart of the issue are concerns that abolishing rules around cross-media ownership could impact upon the diversity and quantity of regional news.

To appease National representatives among Coalition ranks, Fifield inserted clauses to protect local news production that will effectively boost the volume of local content under the current rules.

The issue is fuelled by a shrinking regional ad market, but ignore the commercial reality that local news is a magnet for local advertisers. It's part of the reason Nine is opening up regional bureaus across the country.

“There's fears that some of the smaller regional players will just get swallowed up by the metropolitan people. The National Party has adjusted their thinking on this and there's a bit of protection from the bush there,” a lobbyist explains.

Parliament upper house

The government lacks the numbers in Parliament's upper house.

Crossbench concerns

There are other concerns that crossbenchers would like to see addressed in the package.

Xeonophon wants the government to take measures to dilute the power of Facebook and Google, which have the largest slices of the digital advertising market.

The powerful South Australian senator recently told The Australian he wants a 'super tax' to apply to the digital media companies and would like broadcast licence fees abolished.

Hanson is believed to be concerned about foreign ownership of local media, particularly from Chinese investors. She would like to see protectionist rules introduced to keep local media players in Australian hands.
“Having watched this for 30 years, it's strange how players can come in and out and shift their positioning, but as of now nobody is quite sure where this will end up,” a lobbyist says.

“A lot of the media players are walking in and out of Parliament House and having cups of coffee at Aussies Cafe with backbenchers and crossbenchers to try to get some agreement to their positions. They're failing.”

AdNews understands that the other major media companies, aside from Seven West Media, are broadly in favour of the package, but the “Kerry Stokes view” will prevail because of unease in Canberra about “giving some media players greater clout”.

If the bill is defeated, lobbyists warn it could be another decade or generation before media reforms are re-visited in Parliament.

“It's built up a head of steam now and if it goes down it will be a long time before the politicians touch it again,” a lobbyist adds.

Both houses of parliament have two sitting weeks from 20 March and lobbyists say the fate of the bill will be determined by middle of the year.

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