"Urgent action” required – media reform submissions revealed

By AdNews | 31 March 2016

The government’s media reform package is up for debate, with broadcasters appearing before the Senate Environment and Communications Committee today.

The bill proposes to amend the Broadcasting Services Act 1992 and repeal the '75% reach' rule and the 'two out of three cross-media control' rule along with adding additional local programming obligations for regional broadcasting licensees.

The submissions are jam-packed with deep concerns, contentious woes and a plethora of ideas and views on what is needed.

In Seven's submission it said removing the two out of three rule with no corresponding consideration of the minimum voices impacts, in effect, allows for only one major national deal to occur. It referenced the two most widely speculated deals, being the Nine/Southern Cross deal and the Ten/News deal, which is said would both reduce the voices in Adelaide to the permitted minimum voices.

“So presumably it would be a case of “first in, best dressed” before the gate closed on any future M&A activity,” it said.

“Although Minister Fifield has claimed on many occasions to be “deal agnostic”, changing some of the rules without looking at all of them in their entirety could result in a benefit for only a limited set of media players.”

Seven also added that “urgent action” is required to remove broadcasting licence fees to reflect these market changes and rebalance the regulatory playing field, saying that

While AdNews is bringing you the live updates as they come through, a refresh of the positions of the major stakeholders, as outlined in their submission to the inquiry is below:

Foxtel:

  • The 75% audience reach rule and two out of three cross-media control rule’ are outdated/prevent optimisation
  • Foxtel is strongly opposed to repeal of any media control rules in isolation. Therefore, doesn’t support passage of the bill at this time. Media reform is needed but should be holistic
  • The anti-siphoning scheme is analogue-era regulation
  • Regulation should not impede competition
  • Fair competition will enable Foxtel to invest more in sports

Ten Network:

  • The two out of three rule is outdated, has been overtaken by technology and is threatening diversity and hurting Australian media companies
  • Ten supports the Media Reform Bill 2016 which repeals the 75% audience reach rule and the two out of three’ cross-media ownership rule
  • Removal of both the ownership rules and the broadcasting tax is urgently needed to maintain a strong Australian voice and protect diversity
  • Removing the licence fee in addition to removing outdated ownership regulations would allow Ten to invest millions of additional dollars in local content
  • Ten supports the removal of all media ownership rules in the BSA. However, this bill only removes two.

Seven West Media:

  • Seven sees a “great danger” in addressing these matters in a piecemeal manner.
  • Seven has neither sought nor opposed changes to media ownership rules. However has pointed out that the current approach is unduly narrow
  • Related matters, such as anti-siphoning, can become trade-offs later down the track for changes legislated now
  • Seven needs to understand the true price of these media ownership changes before it can decide whether this price is the right one.
  • No clear consumer benefit from merger and acquisition activity that may follow removal of the 75% reach rule or the two out of three rule has been articulated.
  • The television licence fee should be well up in the priorities for review. A reduction in licence fees would therefore be the most effective mechanism to support Australian content as well as ongoing local news production.

Nine Entertainment Co:

  • Nine submits conditional support for the proposed changes to the 75% reach and two out of three rules as a path to reform. However, they should not impose additional regulation with regard to local content
  • Licence fee relief is the immediate and pressing issue for Nine and for ongoing investment in the Australian production industry
  • Real media reform must address the role of the public broadcasters in meeting public policy objectives for today’s media landscape.
  • Technology is making the current policy framework redundant
  • Licence fee relief will drive increased investment in Australian content and innovation.

Special Broadcasting Service (SBS):

  • SBS is not directly impacted by the bill as it deals primarily with commercial television, radio and print media. However, the reforms will change the structure of the media industry which may impact SBS’s activities in the medium and longer term 
  • The emergence of potentially five broadcasters with a national footprint, also controlling newspaper and radio assets, means it will be more important than ever for public broadcasters to provide quality, distinctive Australian content and news that is balanced and impartial. 
  • In order to meet the call for increased distinctive, local Australian content, SBS will need to lean more heavily on funding from government than from commercial revenue sources in order to fulfil its Charter of telling Australian multicultural stories. The current levels of Australian content, at 9% of its TV schedule, are already insufficient to adequately meet the Charter

Fairfax Media:

  • In its submission Fairfax outlined that it has a “long standing, consistent and public position regarding the proposed media law reforms”, which is, it believes that the two-out-of-three rule and the 75% reach rule are “outdated, irrelevant and increasingly restrictive”.
    Fairfax explained that the Australian Broadcasting Services Act (BSA) is particularly out of date in a modern media environment, with the publisher outlining that in its opinion the BSA “ does not even recognise the internet let alone the proliferation of internet based delivery systems such as SVOD, TVOD, IPTV or audio subscription services nor the impact of global search engines like Google or social media sites such as Facebook and Twitter.”
  • The publisher said that while both free-to-air TV and publishers are being hit by digital disruption, newspapers have faced rapid revenue declines since the mid-2000s due to the internet. It said: “This will inevitably lead to a reduction in the ability of publishers to invest in quality content, particularly in regional areas where digital economies of scale are very low.”
  • It also said that players such as the likes of Google and Facebook receive the “bulk” of adspend adding: “Neither Google nor Facebook invest in the creation of local content, particularly news journalism content.”
  • Fairfax concluded by saying: “Global companies are operating increasingly in Australia without similar restriction. The rules around diversity of voice are irrelevant because consumers can use the internet to access any voice on any subject they want, including new offerings from global players.”

News Corp:

  • News Corp agreed with Fairfax explaining that it believes “the current legislative framework governing media ownership and control is anachronistic as the market and technological developments have delivered massive changes in the media environment and delivered enormous choice to consumers.”
  • Where the two publishers differ however is that News believes the Government should pursue the removal of all five media ownership and control rules – the 75% reach rule, the two-out-of-three rule, the 5/4 rule, the one to a market rule, and the two to a market rule. News also supports change to the anti-siphoning regime legislation.
  • News says that “true reform of these two pillars of Australia’s media laws (media ownership and control, and anti-siphoning) would significantly contribute to macroeconomic reform in Australia.”
  • In its submission, News says it supports the Broadcasting Legislation Amendment (Media Reform) Bill 2016.

Southern Cross Austereo:

  • Southern Cross Austereo's (SCA) submission is focused on local content, noting that the broadcaster is part of the Save our Voices campaign which saw it and other regional networks - Prime Media, Win and Imparja - join forces on “outdated” media laws.
  • Audience reach rule: SCA notes that it supports the abolition of the 75% audience reach rule on the basis that the internet has reduced its relevance. It says it results in regional broadcasters in effect “acting as broadcast re-transmitters for the metropolitan networks”.
  • SCA also pointed to digital technology as allowing metro networks to stream context “with no regard to the exclusive broadcast licence area and regardless of any cannibalisation this may cause to viewing”. It also doesn't extend to international operators like Netflix and YouTube.
  • It says the abolition will boost local content as it will enable national broadcasters to be formed where the regional part of the business is not merely a re-transmitter of the city signals. 
  • Cross-media control rule: SCA supports the abolition of the cross-media rules noted it is designed for an era where newspaper, radio and television were the only sources of news. It says it needs to be updated in a world where Australians no longer rely on these forms of media for content.
  • Local content: While SCA agrees with the provision of a trigger event in the provision of local programming requirements it does not support the definition of a trigger event as occurring on a change of control. It believes it should be determined by a change of majority ownership.

Prime Media Group

  • Similarly to SCA, Prime, which is also part of the Save our Voices campaign, supports the abolition of the 75% reach rule and the cross-media ownership rule.
  • Prime notes: “Regional broadcasters, including Prime do not own any intellectual property, except the local news services they produce. They do not have the capacity, flexibility or scale to innovate or respond to the rapidly evolving media landscape. Prime cannot use the content it receives from the Seven Network or Network Ten under the affiliation arrangements to introduce streaming or catch up services”. With the reach rule abolished it opens up opportunities for regional and metro broadcasters to merge.
  • It also says with the bulk of population growth likely to be in metropolitan licence areas, it is possible that the 2016 census will show that two of the three metro networks could be in reach of the reach rule with their current licences.
  • Prime also wants a redefinition of the trigger even in local content requirements with questions surrounding the difference between deemed control and actual control. In addition, Prime says the legislation only assumes control can be from a metro licence perspective.

WIN Network

  • In its submission, regional network WIN is supportive of the abolishment of the 75% audience reach rule and two-out-of-three rule, claiming that both are “outdated”.
  • WIN explains that media is now global, so people can source media from a range of different outlets, noting that these rules were created when TV, radio and press were the main sources of information.
  • WIN also outlined that 98% to 100% of its broadcast content is acquired from Nine, Ten and Seven, meaning they face the high cost of acquiring content, but also broadcasting it across such a vast geographic area.
  • It's for these reasons that WIN believes that the two-out-of-three and the reach rules need to be abolished, because otherwise regional broadcasters will struggle to survive. In order to continue on they need to have the opportunity to acquire, merge, partner or sell into a metropolitan broadcaster.

Media, Entertainment and Arts Alliance (MEAA):

  • MEAA supports the removal 75% reach rule and the extension of local content requirements following trigger events.
  • However the MEAA does not support the removal of the cross-media control rule, noting it sees the bill's dominant focus as relieving the regulatory burden on entities rather than benefiting media diversity.
  • It urges the government to defer the bill noting its concern that the government has not fully considered how diversity will be fostered under a “partially reformed” system.
  • The MEAA supports a single platform-neutral 'converged regulatory' overseeing a common regulatory regiment; a recommendation from the Convergence Review. That approach would see a 'minimum number of owners' rule and a 'public interest' test replacing a suite of rules.

Australian Subscription Television and Radio Association (ASTRA):

  • While ASTRA supports regulation of the media industry, it does not support the bill noting it is “operator-specific” regulation which it says will “entrench the competitive advantages enjoyed by FTA television networks”.
  • It points to anti-siphoning rules as “as much of a relic of the analogue era” as the other reforms being discussed. It says there is nothing in the rules preventing an “over the top” streaming service like Netflix acquiring sports rights, calling Optus's acquisition of the EPL broadcast and digital rights proof “this is no longer a hypothetical argument”.
  • ASTRA argues that holistic media reform would leave consumers better served by an “open and competitive” marketplace.

Institute of Public Affairs (IPA):

  • IPA supports the changes noting it has long argued media is over-regulated and that doing so can constitute a threat to freedom of speech.
  • However it calls for deeper regulatory change, noting government is yet to come to terms with the consequences of technological change in the media sector. It notes the original idea behind the Gillard government's Convergence Review was correct in approaching regulation on a functional basis rather than legacy arrangements.
  • It did question local content requirements saying the rules are a symptom of the deeper regulatory challenge facing any government” wishing to modernise media.

Check out the full submissions here.

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