commercial radio inquiry · 2009. 8. 3. · commercial radio inquiry report of the australian...

COMMERCIAL RADIO INQUIRY

Report of theAustralian Broadcasting Authority

Hearing into Radio 2UE Sydney Pty Limited

February 2000Sydney

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ISBN 0 642 27032 5

Commonwealth of Australia 2000This work is copyright. Apart from any fair dealing for the purpose of private study, research,criticism or review, as permitted under the Copyright Act 1968, no part may be reproduced ortransmitted, in any form, or by any means or process, without the written permission of the publisher.

Published byAustralian Broadcasting Authority201 Sussex StreetSydney NSW 2000.

Printed by Pink Panther, Sydney.

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Terms Of Reference

TERMS OF REFERENCE FOR THE HEARING BY THE AUSTRALIANBROADCASTING AUTHORITY UNDER DIVISION 3 OF PART 13 OF THEBROADCASTING SERVICES ACT 1992

WHEREAS the Broadcasting Services Act 1992 (‘the Act’):

Ø includes within its objects

(i) to encourage providers of commercial broadcasting services to beresponsive to the need for fair and accurate coverage of matters of publicinterest; and

(ii) to encourage providers of broadcasting services to respect communitystandards in the provision of program material;

Ø charges the Australian Broadcasting Authority with the responsibility formonitoring the broadcasting industry; and

Ø confers on the Australian Broadcasting Authority a range of functions and powersthat are to be used by the Australian Broadcasting Authority in a manner that, inits opinion, will produce regulatory arrangements that are stable and predictableand deal effectively with breaches of the rules established by the Act;

AND WHEREAS:

Ø Radio 2UE Sydney Pty Ltd (‘the licensee’) holds a commercial radiobroadcasting licence granted under the Act last renewed on 23 August 1996;

Ø John Laws and Alan Jones are presenters on Radio 2UE;

Ø on 20 July 1999 the Australian Broadcasting Authority commenced anInvestigation under Division 2 of Part 13 of the Act into matters relating toagreements, arrangements or understandings entered into by or on behalf of thelicensee, John Laws or any other presenter on Radio 2UE; and

Ø on 6 August 1999 the Australian Broadcasting Authority widened the terms of theinvestigation to include matters relating to agreements with certain presenters onRadio 6PR Perth and Radio 5AD and 5DN Adelaide;

TAKE NOTICE that for the purposes of the performance of its functions:

Ø to suspend and cancel licences and to take other enforcement action under theAct;

Ø to collect fees payable in respect of licences;

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Ø to monitor compliance with codes of practice;

Ø to develop program standards relating to broadcasting in Australia; and

Ø to monitor, and report to the Minister on, the operation of the Act;

the Australian Broadcasting Authority will conduct a Hearing under Division 3 of Part 13 ofthe Act for the purpose of making findings in relation to the following matters:

1.1 John Laws

(i) What were the circumstances in which agreements (including contracts,arrangements or understandings) were made between John Laws (and/or personsor corporations acting for him or related to him) and the following corporationsor associations (and/or persons or corporations acting for them or related tothem):

Ø Australian Bankers’ Association;

Ø Australian Record Industry Association Ltd;

Ø Australian Trucking Association;

Ø Cable and Wireless Optus Limited;

Ø Foxtel Management Pty Limited;

Ø NRMA Limited;

Ø Qantas Airways Limited;

Ø RAMS Home Loans Pty Ltd;

Ø Registered Clubs Association of New South Wales;

Ø Sony Music Entertainment (Australia) Limited;

Ø Star City Limited;

(‘the Laws agreements’)?

(ii) What were the full terms of the Laws agreements?

(iii) What was the extent of the licensee’s knowledge of the Laws agreements andthe implementation of the Laws agreements?

(iv) What was the effect of any conduct of John Laws in giving effect to the Lawsagreements on the content of programs broadcast by the licensee in the periodbetween 5 October 1992 and 20 July 1999?

(v) Has any conduct of John Laws in giving effect to the Laws agreements led toany failure by the licensee to comply with the standard of conduct required byCommercial Radio Code of Practice Code 2 ‘News and current affairsprograms’?

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(vi) Has any conduct of John Laws in giving effect to the Laws agreements led toany failure by the licensee to comply with the standard of conduct required byCommercial Radio Code of Practice Code 3 ‘Advertising’?

(vi)(a)Has any conduct of John Laws in giving effect to the Laws agreements led toany failure by the licensee to comply with the requirements of clause 4 ofSchedule 2 to the Act through the broadcasting by the licensee of ‘politicalmatter at the request of another person’ without the licensee:

(a) broadcasting the particulars required under subclause 4(2); and

(b) keeping the records required under subclause 4(3)?

(vii) What consideration was paid to:

(a) John Laws (or persons or corporations associated with him) pursuant tothe Laws agreements;

(b) the licensee pursuant to the Laws agreements?

1.2 Alan Jones

(viii) What were the circumstances in which agreements (including contracts,arrangements or understandings) were made between Alan Jones (and/orpersons or corporations acting for him or related to him) and the followingcorporations or associations (and/or persons or corporations acting for them orrelated to them):

Ø Cable and Wireless Optus Limited;

Ø Colonial State Bank;

Ø Qantas Airways Limited;

Ø Sony Music Entertainment (Australia) Limited;

Ø Walker Corporation Limited;

Ø Walsh Bay Finance Pty Limited;

Ø Warner Music Australia Pty Ltd.

(‘the Jones agreements’)?

(ix) What were the full terms of the Jones agreements?

(x) What was the extent of the licensee’s knowledge of the Jones agreements andthe implementation of the Jones agreements?

(xi) What was the effect of any conduct of Alan Jones in giving effect to the Jonesagreements on the content of programs broadcast by the licensee in the periodbetween 5 October 1992 and 20 July 1999?

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(xii) Has any conduct of Alan Jones in giving effect to the Jones agreements led toany failure by the licensee to comply with the standard of conduct required byCommercial Radio Code of Practice Code 2 ‘News and current affairsprograms’?

(xiii) Has any conduct of Alan Jones in giving effect to the Jones agreements led toany failure by the licensee to comply with the standard of conduct required byCommercial Radio Code of Practice Code 3 ‘Advertising’?

(xiii)(a) Has any conduct of Alan Jones in giving effect to the Jones agreements ledto any failure by the licensee to comply with the requirements of clause 4 ofSchedule 2 to the Act through the broadcasting by the licensee of ‘politicalmatter at the request of another person’ without the licensee:

(a) broadcasting the particulars required under subclause 4(2); and

(b) keeping the records required under subclause 4(3)?

(xiv) What consideration was paid to:

(a) Alan Jones (or persons or corporations associated with him) pursuant tothe Jones agreements;

(b) the licensee pursuant to the Jones agreements?

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Panel Members

Under section 191 of the Act, the Authority is to be constituted for the purposes of a hearingby a panel consisting of such members as the Chairperson directs.

On 19 October 1999 the Chairperson, Professor David Flint and Mr Michael Gordon-Smithcommenced hearing evidence.

On 8 November 1999 the Chairperson was unable to continue with the hearing and, pursuantto section 193(1)(b) of the Act, reconstituted the panel. The reconstituted panel consisted ofMr Michael Gordon-Smith as the presiding member, and Ms Kerrie Henderson and Mr IanRobertson.

Mr Michael Gordon-Smith

Appointed 15 September 1997 for three years.

For almost six years, from 1992-97, Mr Gordon-Smith was the Executive Director of theScreen Producers Association of Australia (SPAA). During this time he was a trustee of theindustry superannuation fund, JUST Super and a member of its investment committee. Hewas also a director of the AudioVisual Copyright Society. Before joining SPAA,Mr Gordon-Smith held policy advising and management positions in a number of FederalGovernment departments.

Ms Kerrie Henderson

Appointed 17 February 1995 for five years.

From 1994 to mid-1997, Ms Henderson was also Director, Leadership Programmes with TheSt James Ethics Centre. Ms Henderson consults in the area of cross-cultural business ethics.She also works in the area of cross-cultural business management and expatriate training,with a particular emphasis on Indonesia. Ms Henderson practised as a commercial lawyer inSydney from 1980 to 1993.

Mr Ian Robertson

Appointed 23 July 1997 for three years.

Mr Robertson is the Managing Partner of the Sydney office of law firm, Holding Redlich. Hepractises commercial and intellectual property law with emphasis on the film, television,telecommunications, advertising and publishing industries.

Mr Robertson is a director of Cinemedia Corporation, an Advisory Board member of theMedia and Telecommunications Policy group at Royal Melbourne Institute of Technology,

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and a former director and Deputy Chairman of Film Australia Limited. He is also a formerdirector and senior executive of the national audio and video production and post productioncompany, AAV Australia Pty Ltd, and the former Corporate Solicitor of David Syme & CoLimited, publisher of the Age.

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CONTENTS

TERMS OF REFERENCE.................................................................................................. III

EXECUTIVE SUMMARY..................................................................................................... 1

The Broadcasting Services Act 1992 (the Act) .................................................................................. 1The Hearing ..................................................................................................................................... 1Agreements Made by Mr Jones and Mr Laws.................................................................................... 2The Commercial Radio Codes of Practice (the Codes) and the Act .................................................... 3Recommendations ............................................................................................................................ 4

1 BACKGROUND TO THE HEARING........................................................................... 7

Original Allegations ......................................................................................................................... 7Talkback Radio in Australia.............................................................................................................. 7Radio Station 2UE............................................................................................................................ 9

2 REGULATION OF COMMERCIAL RADIO CONTENT ............................................. 11

The Broadcasting Act 1942............................................................................................................. 11The Broadcasting Services Act 1992 ............................................................................................... 11The Commercial Radio Codes of Practice ....................................................................................... 12The Trade Practices Act 1974......................................................................................................... 14The Experience In The United States Of America ........................................................................... 15

3 CODE OF PRACTICE 2 – NEWS AND CURRENT AFFAIRS PROGRAMS.............. 17

Relevant Available Facts ................................................................................................................ 17Accuracy / Newsworthiness............................................................................................................ 18Advertising .................................................................................................................................... 19The Trade Practices Act 1974 and the Presentation of Current Affairs Programs in aMisleading Manner......................................................................................................................... 20Knowledge of Commercial Interests ............................................................................................... 21The Need For Disclosure ................................................................................................................ 24

4 CODE OF PRACTICE 3 – ADVERTISING................................................................ 27

Meaning Of ‘Advertisements’......................................................................................................... 27Presentation And Context ............................................................................................................... 30

5 MR JONES’ AGREEMENTS AND HIS ON-AIR CONDUCT...................................... 31

Optus ............................................................................................................................................. 31Walsh Bay Finance Pty Limited (Walsh Bay Finance)..................................................................... 40Mr Jones’ Evidence and Submissions.............................................................................................. 42

6 MR LAWS’ AGREEMENTS AND HIS ON-AIR CONDUCT ....................................... 47

Australian Bankers’ Association (Bankers’ Association) ................................................................. 47Australian Trucking Association (Formerly Known As The Road Transport Forum)........................ 53Registered Clubs Association Of NSW (RCA) ................................................................................ 59Star City Entertainment Pty Limited (Star City)............................................................................... 61Mr Laws’ Evidence and Submissions.............................................................................................. 64

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Conclusions.................................................................................................................................... 65

7 RADIO 2UE SYDNEY PTY LIMITED AND MESSRS JONES AND LAWS’AGREEMENTS..................................................................................................................67

2UE’s Knowledge of the Agreements ............................................................................................. 67NRMA Draft Contract .................................................................................................................... 68December 1998 E-mails Regarding The Bankers’ Association......................................................... 71Knowledge of Mr Jones’ Optus Agreement..................................................................................... 74Conclusions.................................................................................................................................... 77

8 2UE CODES BREACHES .........................................................................................79

Compliance with clause 2.2(d) of the Commercial Radio Codes of Practice ..................................... 79Compliance with Clause 3.1(a) of the Commercial Radio Codes of Practice .................................... 79

9 POLITICAL MATTER................................................................................................80

Background.................................................................................................................................... 80Compliance with Sub-Clause 4(2) of Schedule 2 to the Act ............................................................. 81

10 RECOMMENDATIONS TO THE AUTHORITY...........................................................90

Disclosure of Commercial Agreements ........................................................................................... 90Paid Advertisements Distinguishable From Other Program Matter................................................... 93Duration of Conditions ................................................................................................................... 94Draft Conditions............................................................................................................................. 95

SCHEDULE 1: PARTICIPANTS IN THE HEARING.........................................................101

SCHEDULE 2: WITNESSES............................................................................................102

SCHEDULE 3: EXHIBIT LIST..........................................................................................103

SCHEDULE 4: SUBMISSIONS RECEIVED.....................................................................110

SCHEDULE 5: PEOPLE MENTIONED IN THE REPORT ................................................112

SCHEDULE 6: CURRENT CONTROLLERS OF RADIO STATION 2UE..........................117

SCHEDULE 7: RATINGS OF RADIO STATION 2UE.......................................................118

Radio audience information .......................................................................................................... 118Results ......................................................................................................................................... 118NOTES: ....................................................................................................................................... 125

SCHEDULE 8: MR JONES’ AGREEMENTS ...................................................................126

Optus Administration Pty Limited (Optus) .................................................................................... 126QANTAS Airways Limited (QANTAS)........................................................................................ 130State Bank Of NSW (State Bank).................................................................................................. 131Walsh Bay Finance Pty Limited (Walsh Bay Finance)................................................................... 134Walker Corporation Limited (Walker Corporation) ....................................................................... 135

SCHEDULE 9: MR LAWS’ AGREEMENTS.....................................................................137

Australian Bankers’ Association (Bankers’ Association) ............................................................... 137Australian Trucking Association (Formerly Known As The Road Transport Forum)...................... 141Foxtel Management Pty Limited (Foxtel) ...................................................................................... 143NRMA Limited (NRMA) ............................................................................................................. 145

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Optus Administration Pty Limited (Optus) .................................................................................... 147Qantas Airways Limited (Qantas) ................................................................................................. 149RAMS Home Loans Pty Limited (RAMS) .................................................................................... 151Registered Clubs Association Of NSW (RCA) .............................................................................. 152Star City Entertainment Pty Limited (Star City)............................................................................. 153

SCHEDULE 10: 2UE’S KNOWLEDGE OF MESSRS JONES AND LAWS’AGREEMENTS............................................................................................................... 155

Chronology .................................................................................................................................. 1552UE Submissions ......................................................................................................................... 159

SCHEDULE 11: CONDUCT ON THE ALAN JONES BREAKFAST SHOWINVOLVING BREACHES OF CLAUSE 2.2(D) OF THE COMMERCIAL RADIOCODES OF PRACTICE BY RADIO 2UE SYDNEY PTY LIMITED................................... 165

COLONIAL STATE BANK.............................................................................................. 165

Rockdale Council Educating The Elderly In The Use Of Electronic Banking................................. 165Interview Of Paul Tissot Regarding Colonial State Bank Branch At Coles Supermarket DeeWhy ............................................................................................................................................. 168

WALSH BAY FINANCE PTY LIMITED ........................................................................... 171

Mr Jones Discusses An Article By Piers Akerman From The Telegraph ........................................ 171Development Proposal Of Mirvac And Transfield For Walsh Bay ................................................. 176Interview with Mr Bob Carr, NSW Premier .................................................................................. 177Rallies Against the Walsh Bay Development................................................................................. 182

QANTAS AIRWAYS LIMITED......................................................................................... 183

Proposed Shame Campaign .......................................................................................................... 183Sacked Apprentices ...................................................................................................................... 185‘Open Skies’ Aviation Policy, 18 February 1999........................................................................... 187‘Open Skies’ Aviation Policy, 19 February 1999........................................................................... 189Flight Attendants Sacked for Stealing ........................................................................................... 191‘Open Skies’ Aviation Policy, 24 February 1999........................................................................... 193‘Open Skies’ Aviation Policy, 12 March 1999............................................................................... 195Thai Flight Attendants .................................................................................................................. 197‘Open Skies’ to be Granted to American Airlines, 1 June 1999...................................................... 199‘Open Skies’ Aviation Policy, 2 June 1999 ................................................................................... 201‘Open Skies’ Aviation Policy, 4 June 1999 ................................................................................... 202Reasons Against Proceeding with the Badgerys Creek Airport Proposal ........................................ 204Interview Regarding the Badgerys Creek Airport Proposal, 1 July 1999 ........................................ 206

OPTUS ADMINISTRATION PTY LIMITED...................................................................... 212

Interview with Mr Cousins, 17 January 1996 ................................................................................ 212Interview with Mr Cousins, 14 March 1996 .................................................................................. 216Interview with Mr Cousins, 27 June 1996 ..................................................................................... 220Interview with Mr Cousins, 9 October 1996.................................................................................. 223Strengthening Competition In Telecommunications ...................................................................... 227Optus Sports Vision...................................................................................................................... 228Optus UpDate............................................................................................................................... 230Mobile Phone Call Drop Out ........................................................................................................ 233Interview with Mr Anderson......................................................................................................... 235Half-Yearly Result........................................................................................................................ 237

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Cable & Wireless Optus – AAPT Takeover, 1 June 1999 at 5:30 am ............................................. 239Cable & Wireless Optus – AAPT Takeover, 1 June 1999 at 6:30 am ............................................. 240Local Calls ................................................................................................................................... 242

SCHEDULE 12: CONDUCT ON THE JOHN LAWS MORNING SHOW INVOLVINGBREACHES OF CLAUSE 2.2(D) OF THE COMMERCIAL RADIO CODES OFPRACTICE BY RADIO 2UE SYDNEY PTY LIMITED.......................................................245

REGISTERED CLUBS ASSOCIATION OF NEW SOUTH WALES ..................................245

General Community #1................................................................................................................. 245General Community #2................................................................................................................. 248It Has a Big Effect ........................................................................................................................ 249Who Really Pays .......................................................................................................................... 252Keep the Money Local.................................................................................................................. 253Big Tax Increase #1...................................................................................................................... 255Big Tax Increase #2...................................................................................................................... 256Comments on Labor’s Gambling Policy ........................................................................................ 258

QANTAS AIRWAYS LIMITED .........................................................................................261

Interview with Mr Gillies.............................................................................................................. 261Sacked Apprentices ...................................................................................................................... 266

STAR CITY ENTERTAINMENT PTY LIMITED.................................................................269

Neglected Child at the Canterbury Leagues Club........................................................................... 269Mr Kennett’s Comments on Star City............................................................................................ 273

AUSTRALIAN TRUCKING ASSOCIATION (FORMERLY KNOWN AS THE ROADTRANSPORT FORUM)....................................................................................................275

Interview with Mr Scully .............................................................................................................. 275Giveaways.................................................................................................................................... 281Public Meetings............................................................................................................................ 284Tar and Taxes Tour ...................................................................................................................... 287Interview with Mr Vaile................................................................................................................ 290

NRMA LIMITED...............................................................................................................295

Wollongong Insurance Claims ...................................................................................................... 295Interview of Mr Whitlam, 22 February 1999 ................................................................................. 298Interview of Mr Whitlam, 23 June 1999........................................................................................ 302

FOXTEL MANAGEMENT PTY LIMITED..........................................................................308

Rebroadcast of Free to Air Television Signals By Pay Television .................................................. 308

AUSTRALIAN BANKERS’ ASSOCIATION .....................................................................313

Interview with Mr Aveling, 19 February 1999............................................................................... 314Interview with Mr Aveling, 22 February 1999............................................................................... 318Interview with Mr Aveling, 2 March 1999 .................................................................................... 319Electronic Cash Transfers and Cheque Clearance .......................................................................... 322Cheque Clearance Times Reduced ................................................................................................ 325Fees and Charges.......................................................................................................................... 327State Taxes on Banking and the Introduction of the GST............................................................... 331

RAMS HOME LOANS PTY LIMITED...............................................................................333

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Interest Rate Cut........................................................................................................................... 333Fees Are Good For You................................................................................................................ 336Social Contract ............................................................................................................................. 338ATM Usage.................................................................................................................................. 340Westpac Down to 16% ................................................................................................................. 341St George Brochure ...................................................................................................................... 343Bank Fees..................................................................................................................................... 345Commonwealth Bank ................................................................................................................... 348

SCHEDULE 13: CONDUCT ON THE ALAN JONES BREAKFAST SHOWINVOLVING BREACHES OF CLAUSE 3.1(A) OF THE CODES BY RADIO 2UESYDNEY PTY LIMITED................................................................................................... 351

COLONIAL STATE BANK.............................................................................................. 351

Rockdale Council Educating The Elderly In The Use Of Electronic Banking................................. 351Interview Of Paul Tissot Regarding Colonial State Bank Branch At Coles Supermarket DeeWhy ............................................................................................................................................. 353

OPTUS ADMINISTRATION PTY LIMITED...................................................................... 355

Interview with Mr Cousins, 14 March 1996 .................................................................................. 355Interview with Mr Cousins, 27 June 1996 ..................................................................................... 359Optus Sports Vision...................................................................................................................... 361Mobile Phone Call Drop Out ........................................................................................................ 363Optus UpDate............................................................................................................................... 364Half-Yearly Result........................................................................................................................ 367Local Calls ................................................................................................................................... 368

SCHEDULE 14: CONDUCT ON THE JOHN LAWS MORNING SHOW INVOLVINGBREACHES OF CLAUSE 3.1(A) OF THE CODES BY RADIO 2UE SYDNEY PTYLIMITED ......................................................................................................................... 371

NRMA LIMITED .............................................................................................................. 371

Wollongong Insurance Claims ...................................................................................................... 371Interview with Mr Whitlam .......................................................................................................... 373

AUSTRALIAN BANKERS’ ASSOCIATION..................................................................... 376

Story on Competition in Banking.................................................................................................. 376Cheque Clearance Times Reduced ................................................................................................ 378Fees and Charges.......................................................................................................................... 380

REGISTERED CLUBS ASSOCIATION........................................................................... 383

General Community #1................................................................................................................. 383General Community #2................................................................................................................. 386It Has a Big Effect ........................................................................................................................ 387Keep the Money Local.................................................................................................................. 389Big Tax Increase........................................................................................................................... 391

AUSTRALIAN TRUCKING ASSOCIATION .................................................................... 393

Giveaways.................................................................................................................................... 393Public Meetings............................................................................................................................ 395Tar and Taxes Tour ...................................................................................................................... 397

RAMS HOME LOANS PTY LIMITED .............................................................................. 399

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Interest Rate Cut........................................................................................................................... 399Fees are Good For You................................................................................................................. 401Social Contract Broadcast ............................................................................................................. 403ATM Usage.................................................................................................................................. 404Westpac Down to 16% ................................................................................................................. 405St George Brochure ...................................................................................................................... 407Bank Fees..................................................................................................................................... 408Soaring Bank Fees ........................................................................................................................ 410

SCHEDULE 15: POLITICAL MATTER ............................................................................413

Licence Requirements................................................................................................................... 413Australian Bankers’ Association ................................................................................................... 416Registered Clubs Association of New South Wales ....................................................................... 419Road Transport Forum.................................................................................................................. 427Foxtel Management Pty Limited ................................................................................................... 435

SCHEDULE 16: RADIO PROGRAM STANDARDS / ADVERTISING CONDITIONSVS CODES OF PRACTICE..............................................................................................443

Notes to Radio Program Standard 8 .............................................................................................. 445

SCHEDULE 17: RELEVANT CONTRACT PROVISIONSERROR! BOOKMARK NOT DEFINED.

Mr Jones’ Contracts With Sponsors ...................................................Error! Bookmark not defined.Mr Laws’ Contracts With Sponsors....................................................Error! Bookmark not defined.

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TABLE OF FINDINGS

Finding Number 1 can be found on page 36

Finding Number 2 37

Finding Number 3 39

Finding Number 4 41

Finding Number 5 43

Finding Number 6 44

Finding Number 7 45

Finding Number 8 45

Finding Number 9 45

Finding Number 10 46












Finding Number 22 can be found on page71





















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Acknowledgements

The Panel wishes to acknowledge the work of the staff of the Australian BroadcastingAuthority and the Australian Government Solicitors office in the conduct of the hearing andthe preparation of the report. In particular, the Panel wishes to thank Mr Marcus Bezzi andMs Suzie Brown of the Australian Government Solicitors office, and Mr John Corker,Mr Leon Atkinson-MacEwen, Mr Gavin Bowman, Ms Patricia Murphy and Mr David Smithof the Australian Broadcasting Authority.

The Panel also wishes to acknowledge the work of counsel assisting the Authority, Mr JulianBurnside QC, Mr Stephen Gagelar and Mr Geoffrey Kennett.

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Introduction

This report contains the findings of the Australian Broadcasting Authority hearingconducted between 19 October and 3 December 1999 into various allegations concerning theeffect on the program content of Radio Station 2UE of contractual arrangements entered intoby Mr Alan Jones and Mr John Laws.

The report examines, in turn:

♦ the background to the hearing ;

♦ the relevant Commercial Radio Codes of Practice and the principles which underpinthem;

♦ the contractual arrangements entered into by Mr Alan Jones, the effect of thosecontractual arrangements on the on-air conduct of Mr Jones, and whether there was anybreach of the Commercial Radio Codes of Practice and / or 2UE’s licence conditions asa result;

♦ the contractual arrangements entered into by Mr John Laws, the effect of thosecontractual arrangements on the on-air conduct of Mr Laws, and whether there was anybreach of the Commercial Radio Codes of Practice and / or 2UE’s licence conditions asa result; and

♦ the extent of the licensee’s knowledge of the existence and effect of these contractualarrangements, and whether there was any breach of the Commercial Radio Codes ofPractice and / or 2UE’s licence conditions as a result.

The report concludes with a brief summary of findings and with recommendations for furtheraction by the Authority.

February 2000

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Executive Summary

THE BROADCASTING SERVICES ACT 1992 (THE ACT)Section 4(1) of the Broadcasting Services Act 1992 (the Act) provides:

The Parliament intends that different levels of regulatory control be applied across the range ofbroadcasting services according to the degree of influence that different types of broadcastingservices are able to exert in shaping community views in Australia.

Object 3(g) of the Act states:

to encourage providers of commercial and community broadcasting services to be responsiveto the need for a fair and accurate coverage of matters of public interest and for an appropriatecoverage of matters of local significance.

The Explanatory Memorandum to the Act records:

… the reference in this object to a fair and accurate coverage of matters of public interestrecognises that for most people broadcasting is a major source of information on issues andevents in the world … It is intended that, in the reporting of events and the presentation ofissues, providers of broadcasting services will report the facts and facilitate the presentation ofthe range of views on any particular issue. This does not mean, however, that broadcasters willbe required to give equal time to every view on any particular subject.

THE HEARINGTalkback radio is an influential medium, and 2UE was probably the most listened-to talkformat radio station in Australia during the 1990s. Mr Alan Jones and Mr John Laws are itsmost successful presenters. During this period, they were often the top-rating and arguablythe most influential talkback radio hosts in Australia.

On 12 July 1999 the ABC program ‘Media Watch’ broadcast a story concerning an allegedfinancial agreement between 2UE presenter Mr John Laws and the Bankers’ Association.The ‘Media Watch’ story received widespread media coverage.

The Australian Broadcasting Authority (the Authority) announced on 15 July 1999 that itwould be using its formal powers under the Act to:

♦ conduct an inquiry into the issues raised by the ‘Media Watch’ program, and

♦ determine whether the allegations, if correct, involved breaches of the Act, of 2UE’slicence conditions or of the Commercial Radio Codes of Practice (the Codes).

After further allegations appeared concerning financial arrangements between 2UE’sbreakfast program presenter Mr Alan Jones and commercial interests, the scope of theAuthority inquiry was widened to include other 2UE presenters and other radio stations.

On 6 September 1999, as part of the inquiry, the Authority announced it would conduct ahearing into:

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♦ the nature and operation of Mr Jones’ and Mr Laws’ agreements;

♦ whether these contracts had had any effect on the content of programs; and

♦ whether this involved any breaches by 2UE of the conditions of its licence under the Act,or of the Codes.

For the purposes of a hearing, the Authority is constituted by a panel. The Panel for thishearing comprised the Chairman of the Authority, Professor David Flint, and Mr MichaelGordon-Smith. It was later reconstituted on 8 November 1999, following the Chairman’sinability to continue with the hearing. The Panel then comprised Mr Gordon-Smith aspresiding member, Ms Kerrie Henderson and Mr Ian Robertson.

The Panel sat and heard evidence and submissions on 19-22 October 1999, 25-29 October 1999,8-12 November 1999, 17-19 November 1999 and 2-3 December 1999, atotal of 19 sitting days.

The Act requires the Authority to report on hearings. This report is a report of the Authorityas constituted by the Panel. It sets out the findings of the Panel as a result of the hearing, andthe Panel’s recommendations to the Authority.

AGREEMENTS MADE BY MR JONES AND MR LAWSThe Authority sought documents from relevant persons and companies for the periodbetween 5 October 1992 (the date of commencement of the Act) and 20 July 1999. Duringthat period, Mr Jones and Mr Laws had agreements with a range of commercial entities,some of which were not examined in the hearing.

The following agreements of Mr Jones were examined in some detail:

♦ Optus Administration Pty Limited (Optus);

♦ QANTAS Airways Limited (QANTAS);

♦ State Bank of New South Wales (State Bank);

♦ Walsh Bay Finance Pty Limited (Walsh Bay); and

♦ Walker Corporation Limited (Walker Corporation).

The following agreements of Mr Laws were examined in some detail:

♦ the Australian Bankers’ Association (Bankers’ Association);

♦ the Australian Trucking Association (formerly the Road Transport Forum);

♦ Foxtel Management Pty Limited (Foxtel);

♦ NRMA Limited (NRMA);

♦ Optus Administration Pty Limited (Optus);

♦ QANTAS Airways Limited (QANTAS);

♦ RAMS Home Loans Pty Limited (RAMS);

♦ the Registered Clubs Association of NSW (Registered Clubs); and

♦ Star City Entertainment Pty Limited (Star City).

All of these agreements included terms relating to the on-air conduct of the presenters.

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The Panel has concluded that the existence of these agreements, and the conduct of thepresenters in giving them effect, has influenced the content of programs broadcast by thepresenter – in some cases, directly.

THE COMMERCIAL RADIO CODES OF PRACTICE (THECODES) AND THE ACTNeither the Codes nor the conditions imposed on licensees under the Act specifically addresscommercial arrangements entered into by presenters.

The stated purpose of Code 2 is ‘to promote accuracy and fairness in news and currentaffairs programs’. Clause 2.2(d) of the Codes provides:

In the preparation and presentation of current affairs programs, a licensee must ensure that:

…

(d) viewpoints are not misrepresented, and material is not presented in amisleading manner by giving wrong or improper emphasis, by editing outof context, or by withholding relevant available facts …

Clause 3.1(a) of the Codes provides:

Advertisements broadcast by a licensee must:

(a) not be presented as news programs or other programs.

Under sub-section 42 (2) (together with Clause 4 of Schedule 2) of the Act, it is a conditionof all commercial radio licences that:

If a broadcaster broadcasts political matter at the request of another person, the broadcastermust, immediately afterwards, cause the required particulars in relation to the matter to beannounced in a form approved in writing by the Authority.

Findings

The Panel has found that:

w 2UE breached the Act on five occasions;

w 2UE breached Code 2 of the Commercial Radio Codes ofPractice on sixty (60) occasions; and

w 2UE breached Code 3 of the Commercial Radio Codes ofPractice on thirty (30) occasions.

The Panel is of the view that listeners are entitled to assume that there are no significantcommercial arrangements between presenters and persons who are the subject of broadcastsunless such arrangements have been disclosed.

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The agreements entered into by Mr Jones and Mr Laws with corporations and associationswhich oblige them to provide services on-air have contributed to a substantial failure by thelicensee to comply with the conditions of its licence and with the standards of conductrequired by Codes 2 and 3.

The Panel has formed a preliminary view that remedial action is necessary to ensure 2UE’scompliance with the Act and the Codes and, in particular, to ensure the effective disclosureof the commercial agreements between presenters, their producers and sponsors.

RECOMMENDATIONSThe Panel has recommended that the Authority considers the imposition of two additionalconditions on 2UE’s licence. These are proposed to commence operation on 3 April 2000for three (3) years.

The proposed first condition would require on-air and off-air disclosure of relevantcommercial agreements and requires the Licensee to develop and implement a compliancetraining program.

All staff of the Licensee must at least twice in the first year of the condition and at least onceevery year thereafter undertake a training program concerning the obligations imposed onthe Licensee by the Act, each code and the new disclosure condition. This acknowledgesthat the Panel has found breaches of Code 2 and 3 and breaches of clause 4(2) of Schedule 2to the Act. Clause 4(2) of Schedule 2 to the Act requires the name and address of the personwho authorised the broadcasting of political matter to be disclosed at the time of broadcast ofthe political matter.

The proposed on-air requirement is that a Disclosure Announcement be broadcast at the timeof and as part of the broadcast of any material:

(a) broadcast pursuant to a Commercial Agreement;

(b) in which the name, or products or services, of a Sponsor are mentioned;

(c) in which an agent, employee, or officer of a Sponsor is interviewed; or

(d) in which a Presenter expresses an opinion or makes a comment on an issue:

(i) which directly affects the business of a Sponsor; or

(ii) in which a Sponsor has a direct financial interest.

A Disclosure Announcement need not be broadcast if the material broadcast is:

(a) part of a news bulletin;

(b) an advertisement broadcast pursuant to an agreement between the Licenseeand the advertiser provided that the advertisement is not presented in amanner whereby a reasonable listener would be entitled to assume that theadvertisement is the reporting of news or is the expression of opinion oreditorial comment by the Presenter or the Licensee.

5

The proposed off-air disclosure obligation would require 2UE to maintain a public register ofthe commercial agreements of presenters and producers, and provide this register to theAuthority. This register must be available on 2UE’s website.

The second proposed condition would require the Licensee to ensure that paidadvertisements are readily distinguishable from other program matter. This is to ensure thatlisteners are able to clearly distinguish paid messages from other messages.

7

1 Background to the Hearing

ORIGINAL ALLEGATIONSOn 12 July 1999 the ABC program ‘Media Watch’ broadcast a story concerning an allegedfinancial agreement between 2UE presenter John Laws and the Bankers’ Association (anorganisation representing the major Australian banks). Briefly, the arrangement was said tohave involved Laws making positive on-air comments about the banks over and above paidadvertisements, and also involved the airing of a segment concerning banking issues called‘The Whole Story’. The program also stated that prior to this agreement Mr Laws had been astrong critic of the banks.

The ‘Media Watch’ story received widespread media coverage. The Australian BroadcastingAuthority (the Authority) announced on 15 July 1999 that it would be using its formalpowers under the Broadcasting Services Act 1992 (the Act) to conduct an inquiry into theissues raised by the ‘Media Watch’ program. The inquiry was constituted in order todetermine whether the allegations, if correct, involved breaches of the Act, of 2UE’s licenceconditions or of the Commercial Radio Codes of Practice (the Codes).

After further allegations appeared in the media concerning financial arrangements between2UE’s breakfast program presenter Alan Jones and commercial interests, the Authorityannounced that it would be widening the scope its inquiry to include 2UE broadcasters otherthan John Laws. The Authority issued notices under section 173 of the Act requiring variouspersons to produce relevant documents to the Authority.

As part of the inquiry process, the Authority decided that a Panel (comprised of members ofthe Authority) would conduct a public hearing into certain of the above-mentionedallegations as they related to Mr Laws, Mr Jones and 2UE. Pursuant to section 188 of theAct, a Notice of Public Hearing appeared in the Sydney Morning Herald on7 September 1999.

The hearing commenced on 19 October 1999 and concluded on 3 December 1999. The fullterms of reference for the hearing can be found in Schedule One.

TALKBACK RADIO IN AUSTRALIA

Characteristics

Talkback radio1 in Australia generally consists of a mix of telephone calls from listeners,pre-arranged interviews (often with politicians and others involved directly in issues ofcurrent interest), editorials, station or program promotions, commentary, advertisements,regular spots (such as ‘The Whole Story’ on ‘The John Laws Morning Show’), newsbreaksand music.

1 The Macquarie Dictionary defines talkback radio as ‘a radio program in which members of the public

participate by telephone’.

8

All of the mainland state capital cities in Australia have commercial AM radio stations usingtalkback as an important part of their format: for example, 2UE and 2GB in Sydney, 3AW inMelbourne, 4BC in Brisbane, 5AA and 5DN in Adelaide and 6PR in Perth.

While one of the primary purposes of talkback-oriented programs is to entertain, this doesnot preclude such programs from also being informative. The Authority has always taken theview that talkback programs can properly be regarded as current affairs, that is, programsfocussing on social, economic or political issues of current relevance to the community.

The Authority has conducted a number of investigations into talkback programs and assessedthese programs against those clauses of the Codes that deal with current affairs programs.2

The licensees of the programs under investigation have accepted this method of assessment,as has the Federation of Australian Radio Broadcasters.

The personalities and opinions of talkback presenters tend to dominate the programs theyhost. The success of talkback hosts largely depends on their ability to talk easily on a widerange of issues and topics (including those of a social, political and economic nature) and toelicit responses from callers and would-be callers. This can lead to difficulties indistinguishing between the various elements of a talk-oriented program, such asadvertisements, commentary, and the reporting of factual material.

Power And Influence

The fact that the programming of one of Sydney’s most consistently popular radio stations,2UE,3 is substantially talkback-oriented, provides convincing evidence of the continuingpopularity of talkback radio.4

The success of talkback radio format may be attributed to many factors, including:

♦ the opportunity provided by talkback radio for people directly and (usually)anonymously to express themselves to a large audience;

♦ the perception that talkback radio is spontaneous and unpredictable; and

♦ talkback radio’s ability to provide company and keep people in touch with the views ofothers.

Mr John Brennan, 2UE’s former Program Manager, stated that Mr Laws and Mr Jones were‘the two most powerful men in the country, after the Prime Minister’.5 Former PrimeMinister The Hon. Paul Keating has been quoted as saying ‘Forget the Press gallery in

2 For example:

ABA Investigation 265 (96/0149 – 2MW – Steve Schumanski);ABA Investigation 553 (98/0207 – 2UE – Alan Jones);ABA Investigation 559 (97/0677 – 2UE – John Laws);ABA Investigation 561 (98/0268 – 2UE – Stan Zemanek);ABA Investigation 567 (98/0300 – 2GB – Mike Gibson);ABA Investigation 619 (98/0486 – 3AW – Steve Price); andABA Investigation 651 (98/0923 – 5AA – Bob Francis).

3 Of the eight Sydney radio audience surveys conducted by ACNielsen from August 1998to September 1999, 2UE proved to be the most listened-to Sydney commercial radio station in five of theeight surveys, the second most listened-to (behind 2DAY FM) in two of the surveys, and the third mostlistened-to (behind 2DAY and 2MMM) in the remaining survey.

4 Refer to section ‘Ratings‘ on page 9 and Schedule Seven5 Talkback – Emperors of the Air; Phillip Adams and Lee Burton; Allen & Unwin; 1997.

9

Canberra. If you educate John Laws, you educate Australia’.6 At a dinner celebrating MrLaws’ 40th anniversary in Australian radio, Mr Keating also said that the voice of Mr Laws‘carries more authority than I think any other in radio does’. In an on-air interview with3AW’s Neil Mitchell on 3 December 1999, Prime Minister John Howard said ‘I think youget more out of this type of exchange (talkback radio) than just about any other kind ofmedia contact between a member of parliament and a journalist’.7

‘The John Laws Morning Show’ is syndicated through 2UE’s Sky Radio Division and, as at28 June 1999, was being broadcast on 77 radio stations throughout Australia,8 to a potentiallistening audience of over 10 million people.

The opinions of such announcers carry considerable weight with many listeners, particularlyregular ones. Advertisements read live-to-air by these announcers (especially if theadvertisement includes an explicit personal endorsement from the announcer) are worthmore to advertisers than pre-recorded advertisements, due to the perceived authority of thehost when talking about the product being advertised.9

RADIO STATION 2UERadio 2UE Sydney Pty Limited (‘2UE’) is the licensee of the commercial radio broadcastingservice broadcasting under the licence with call sign 2UE (‘the licence’). A list of the currentcontrollers of 2UE can be found in Schedule Six.

Ratings

2UE has maintained consistently high ratings in Sydney over a period of some years. Forexample, the ratings released in December 1999 indicated that 2UE was in third place overall(in the previous survey period it had been in second place overall).10

Mr Jones’ program has been rated number one in Sydney for 62 consecutive surveys over aperiod of eight years. The program regularly commands in excess of twenty per cent of theSydney market.11

In rating surveys, Mr Laws has been rated number one in four different decades, in 25different years and on three Sydney radio stations. Mr Laws has been rated in 162 surveysand has been placed first in 104 of them.12 Ratings figures released December 1999 showedMr Laws remained third in mornings.13

For more detail on the ratings of 2UE, see Schedule Seven.

6 ‘Talkback – Emperors of the Air’; Phillip Adams and Lee Burton; Allen & Unwin; 1997.7 As reported by Gabrielle Chan in The Australian on 6 January 2000.8 29 stations in NSW, 16 in Queensland, 10 in Western Australia, 9 in Victoria, 5 in South Australia, 5 in

Tasmania, 2 in the Northern Territory and 1 in the ACT.9 A comparison of the rates charged for these two different forms of advertising indicates the premium paid

for live reads over pre-recorded commercials.10 Sydney Morning Herald, December 8 1999, p. 1011 Exhibit 69, p. 21 and Sydney Morning Herald, December 8 1999, p. 1012 Exhibit 69, p. 2313 Sydney Morning Herald, December 8 1999, p. 10

10

Codes Compliance History

Since October 1993, the Authority has commenced 11 investigations into possible breachesby 2UE of either the Act, a licence condition or a code of practice (one of theseinvestigations is yet to be finalised). Of the ten completed investigations, two resulted in afinding that a code of practice had been breached: one breach related to complaints handling,the other to clause 2.2(a) of the Codes (accurate presentation of factual material in a currentaffairs program).14

Representatives of the Authority (including the Deputy Chairman) met with on-air presentersand staff of 2UE in July 1998. This meeting sought to address a number of issues which hadarisen as a result of 2UE’s interpretation of the Codes of practice dealing with complaintshandling procedures and, in particular, 2UE’s view as to what constituted a valid complaint.

14 In Attorney-General for the State of New South Wales v Radio 2UE Sydney Pty Limited & John Laws, both

2UE and John Laws were found guilty of a serious contempt of court. Mr Laws had made on-air commentsregarding a trial that was still proceeding but which he mistakenly believed had ended as a result of a pleabargain. While the contempt of court issue was a matter outside the Authority’s jurisdiction, the Authorityinvestigated the broadcast in order to determine whether there had been a breach of Code of Practice 2. Atthe conclusion of its investigation the Authority determined that the licensee of 2UE had breached Code2.2(a) as it had not ensured that the factual material presented by Mr Laws during the broadcast wasaccurate. The veracity of the material had not been adequately checked and it should not have beenbroadcast without such checking having taken place.

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2 Regulation of Commercial Radio Content

THE BROADCASTING ACT 1942Under the Broadcasting Act 1942, the content of commercial broadcasting services wasregulated by mandatory standards.15 These were developed, in consultation with the industryand the public, by the Authority’s predecessors - the Australian Broadcasting Control Board(ABCB) and the Australian Broadcasting Tribunal (ABT). These standards applied to asection of the broadcasting industry as a whole (eg. commercial radio or commercialtelevision) rather than to individual licensees.

A member of the public who was concerned about a possible breach of a standard couldcomplain to the ABT about the matter.16 If the complainant required the ABT to initiate apublic inquiry into whether the ABT should exercise one of its substantive powers (eg. byrevoking a broadcast licence), then the ABT was obliged to do so.

Radio Program Standard (RPS) 5 dealt with news programs while RPS 8 dealt with currentaffairs programs. Radio Advertising Conditions (RAC’s) dealt with advertisements oncommercial radio. These standards and conditions were treated in the same way and carriedthe same weight. A table comparing RPS and RAC with the current Codes can be found atSchedule 16.

THE BROADCASTING SERVICES ACT 1992The Act, which came into force on 5 October 1992, established a new framework for theregulation of program content issues. With the commencement of the Act, the ABT wasabolished and the Authority took over the role of broadcasting regulator.

Under the Act, the primary responsibility for ensuring that programs reflect communitystandards and for handling complaints about program content now rests with thebroadcasters themselves.17 The former system of program standards determined by the ABTwas replaced by a system of industry-developed codes of practice. Compulsory standardswere, however, retained for Australian content on television and children’s televisionregulation.

Section 123 of the Act lists those matters to which codes must relate. This list broadlycorresponds to the matters covered in the previous ABT standards and includes promotingaccuracy and fairness in news and current affairs programs and such other matters relating toprogram content as are of concern to the community.

15 Standards were defined as rules relating to programs or advertisements and having the force of a licence

condition.16 But only if the complaint was ‘legitimate’ (ie, not frivolous, vexatious or an abuse of the complaints

process)17 Subsection 123(1) of the Act states that it is the intention of Parliament that industry groups representing

commercial broadcasting licensees (which includes commercial radio broadcasting licensees) ‘develop, inconsultation with the Authority and taking account of any relevant research conducted by the Authority,codes of practice that are to be applicable to the broadcasting operations of each of those sections of theindustry’.

12

Subsection 123(4) of the Act states that the Authority must include a code of practice in theRegister of Codes of Practice if it is satisfied that:

♦ the code of practice provides appropriate community safeguards for the matters coveredby the code; and

♦ the code is endorsed by a majority of the providers of broadcasting services in thatsection of the industry; and

♦ members of the public have been given an adequate opportunity to comment on thecode.

The Act gives the Authority responsibility for monitoring the broadcasting industry. Thisincludes monitoring compliance with codes of practice and monitoring the effectiveness ofthese codes in reflecting prevailing community standards and concerns. The Authorityinvestigates complaints from the public that relate to a potential breach of a licence conditionor the Act, as well as unresolved complaints from the public that relate to a code or codes ofpractice.

With regard to a breaches of licence conditions or the Act, the Authority has various powersincluding, in certain circumstances, the power to:

♦ issue a notice requiring the offending broadcaster to take action to ensure compliance; or

♦ refer the matter to the Director of Public Prosecutions; or

♦ suspend or cancel a licence; or

♦ impose an additional condition on the licence.

It should be noted that a breach of a code of practice is not a breach either of a licencecondition or of the Act. In an appropriate case, the Authority has the power under section 43of the Act to vary or revoke a condition of a broadcaster’s licence or impose an additionalcondition on the licence.

Schedule 2 of the Act sets out a number of mandatory licence conditions relating to content,including rules governing election advertising and the broadcasting of political matter. Whilethe Authority cannot alter these mandatory conditions, it does have the power under the Actto impose additional conditions.

If the Authority is satisfied that there is convincing evidence that a particular code is notoperating to provide appropriate community safeguards, section 125 of the Act gives theAuthority the power to determine a standard in relation to the matter. A standard determinedin this way becomes a condition of licence for all licensees within the relevant section of thebroadcasting industry.

THE COMMERCIAL RADIO CODES OF PRACTICEThe Federation of Australian Radio Broadcasters Limited (FARB) is the industry group thatrepresents commercial radio stations in Australia. FARB, in consultation with the ABT,developed draft codes of practice during 1992 which were endorsed unanimously by FARBmember stations in October of that year. The draft codes were submitted to the Authority forregistration in March 1993, registered by the Authority on 17 May 1993, and came into forceon that date.

The six codes covered the following areas:

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♦ programs unsuitable for broadcast;

♦ news and current affairs programs;

♦ advertising;

♦ Australian music;

♦ complaints handling; and

♦ interviews/talkback programs.18

These codes dealt with the areas covered by the superseded Radio Program Standards andRadio Advertising Conditions, apart from the complaints handling code which did not relatedirectly to any previous ABT standard.19

Unlike the former Radio Program Standard, however, the code for news and current affairsdoes not include a definition of current affairs programs, as FARB believed such a definitionwas unnecessary.20 FARB indicated at that time, however, that it would be open to the ideaof including such a definition in the context of guidelines.21 The superseded Radio ProgramStandard 8.3 defined a current affairs program thus:

In this standard, ‘current affairs program’ means a program focussing on social, economic orpolitical issues of immediate relevance to the community, including interviews andcommentaries dealing in depth with news items.

Regarding this definition, the ABT’s December 1991 ‘Inquiry into Accuracy, Fairness andImpartiality in Current Affairs Programs on Television and Radio; Decisions and reasons;IP/89/48’ stated that:

The standard, as it is now presented, includes a definition of the meaning of ‘current affairsprograms’. Apart from mainstream current affairs programs, this may include, but is notlimited to, programs such as news and current affairs specials, talkback radio [emphasisadded], documentaries and magazine-style programs. However, the standard will only apply tothese programs when they focus on social, economic or political issues of immediate relevanceto the community.

In 1998 FARB began the process of revising its codes for the first time. After thecommencement of the Authority’s investigation into 2UE and other talkback stations, theAuthority advised FARB it would be difficult for the Authority to satisfy itself that revisedcodes dealing with news, current affairs and talkback programs (Code of Practice 2) andadvertising (Code of Practice 3) provided adequate community safeguards.

After discussions between the Authority and FARB it was agreed that, rather than delay theregistration of all the revised codes, FARB would submit to the Authority for registrationonly those codes not affected by the Authority’s investigation. The Authority registered theserevised codes on 21 October 1999. As a result, the original Codes of Practice 2 and 3 remainin force. The Authority will not consider revisions to these codes until the Authority’sinvestigations into 2UE and other talkback stations are completed.

18 This code only relates to the prevention of the unauthorised broadcast of statements by identifiable persons.19 As indicated on page 11 of this report, a table comparing the Radio Program Standards and Radio

Advertising Conditions applicable under the Broadcasting Act 1942 with the relevant current Codes ofPractice dealing with these areas can be found at Schedule 16.

20 Letter from FARB to the Communications Law Centre, 4 March 1993.21 Letter from FARB to the Communications Law Centre, 4 March 1993.

14

THE TRADE PRACTICES ACT 1974Section 65A of the TPA states, in part:

(1) Nothing in section 52 … applies to a prescribed publication of matter by aprescribed information provider, other than:

(a) a publication of matter in connection with:

(i) the supply or possible supply of goods or services;

(ii) the sale or grant, or possible sale or grant, of interests in land;

(iii) the promotion by any means of the supply or use of goods orservices; or

(iv) the promotion by any means of the sale or grant of interests inland;

where:

…

(vi) the publication was made on behalf of, or pursuant to a contract,arrangement or understanding with:

(A) a person who supplies goods or services of that kind, orwho sells or grants interest in land, being interests of thatkind; or

(B) a body corporate that is related to a body corporate thatsupplies goods or services of that kind, or that sells orgrants interests in land, being interests of that kind; or

(b) a publication of an advertisement.

(2) For the purposes of this section, a publication by a prescribed information provideris a prescribed publication if:

(a) in any case – the publication was made by the prescribed informationprovider in the course of carrying on a business of providing information;or

(b) in the case of a person who is a prescribed information provider by virtue ofparagraph (a), (b) or (c) of the definition of ‘prescribed informationprovider’ in subsection (3) (whether or not the person is also a prescribedinformation provider by virtue of another operation of that definition) – thepublication was by way of a radio or television broadcast by the prescribedinformation provider.

(3) In this section:

‘prescribed information provider’ means a person who carries on a business ofproviding information and, without limiting the generality of the foregoing, includes:

(a) the holder of a licence granted under the Broadcasting Services Act 1992 …

15

Accordingly, section 52 of the TPA applies to a holder of a licence granted under the Act insituations where that licensee is broadcasting advertising or promotional material. In suchsituations the licensee cannot rely on the exemption at section 65A of the TPA.

A contravention of section 52 of the TPA may result in the Court granting an injunction(section 80 of the TPA) or ordering the person involved in the contravention to discloseinformation specified by the Court (section 80A of the TPA). A person who suffers loss ordamage as a result of a contravention of section 52 of the TPA may recover that loss ordamage by action against the person involved in the contravention (section 82 of the TPA).

While noting the remedies that are available under the TPA for false and misleading conduct,the Panel is of the view that, with the exception of the remedy outlined at section 80A of theTPA, these remedies appear to have limited practical application to the subject matter of thishearing. The Panel is of the view that remedies under the Braodcasting Services Act aremore applicable in this situation.

THE EXPERIENCE IN THE UNITED STATES OF AMERICAThe Panel notes that in the United States, specific regulations exist covering the disclosure ofpayments made for the purpose of influencing material in a broadcast program.22 The USapproach indicates that, as far as payment (or other valuable consideration) for the inclusionof broadcast material is concerned, disclosure is fundamental.

The Communications Law Centre in its written submission to the inquiry also referred to theUS experience:

Working under the long-standing principle that the listening public is ‘entitled to know bywhom they are being persuaded’ the Communications Act of 1934 expressly prohibits theundisclosed payment or acceptance of money or other valuable consideration in exchange forthe inclusion of material in a broadcast program; otherwise known as ‘payola’. Whether thevaluable consideration is cash, cars, free travel given to a disk jockey, talk-show host orprogram director with the understanding of influencing the material broadcast, the payment hasgot to be disclosed to the station. Similarly the station, if it broadcasts the material, mustdisclose the ‘sponsorship’ to its listeners. Persons who engage in ‘payola’ are subject tocriminal penalties of one year in jail and $10,000 per offence. Stations are subject to sanctionsfrom the FCC if they fail to exercise reasonable diligence in ensuring that their employees orothers with whom they deal do not engage in payola and that any sponsored broadcast isidentified as such. Sections 317 and 507 of the Communications Act of 1934 work in tandemto impose prohibitions and penalties on licensees and employees and hidden sponsors for non-disclosure of payments.

The sponsorship rules require that any material broadcast in exchange for money, services orvaluable consideration be accompanied by sponsorship identification or disclosure. Theannouncement must clearly advise the audience that the time was purchased and whopurchased it. An announcement is not required where services or property were furnished freeor for a nominal charge unless the item was furnished in exchange for prominent display of theproduct’s name or trademark beyond that reasonably related to the use in the broadcast. Thecourts have held that the rules apply to all broadcast matter…

22 For example, the penalties for violating section 508 of the US Communications Act of 1934 (relating to

payments to radio station personnel or to influence the production or preparation of radio programs) includea fine of not more than $10,000 or imprisonment for not more than one year, or both.

16

In the area of political broadcasts and broadcast matter involving the discussion of acontroversial issue of public importance, the FCC has adopted tighter requirements forsponsorship disclosure. As the Commission stated:

The obligation upon the licensee to disclose, and the right of the listening and viewing publicto know by whom they are being persuaded, is greater in the area of political and controversialissue programs than it is the case of commercial programs…

Thus for political broadcasts or broadcast matter involving a controversial issue of publicimportance the FCC requires more frequent and more thorough identification of the sponsor,and greater specificity of the furnishing material. Stations must exercise reasonable diligence indetermining the true identity of those sponsoring the program, or on whose behalf the politicalprogramming was broadcast.23

23 A full Transcript, of the submission made by the CLC on 19 November 1999 at the ABA hearing can be

located on the ABA’s website at www.aba.gov.au/whats_new/pdf/19nov.pdf.

17

3 Code of Practice 2 – News And CurrentAffairs Programs

Code 2 of the Commercial Radio Codes of Practice is as follows:

Purpose: The purpose of this Code is to promote accuracy and fairness in news andcurrent affairs programs.

2.1 News programs (including news flashes) broadcast by a licensee must:

(a) present news accurately;

(b) not present news in such a way as to create public panic, orunnecessary distress to listeners;

(c) distinguish news from comment.

2.2 In the preparation and presentation of current affairs programs, a licenseemust ensure that:

(a) factual material is presented accurately and that reasonable effortsare made to correct substantial errors of fact at the earliest possibleopportunity;

(b) the reporting of factual material is clearly distinguishable fromcommentary and analysis;

(c) reasonable efforts are made or reasonable opportunities are givento present significant viewpoints when dealing with controversialissues of public importance, either within the same program orsimilar programs, while the issue has immediate relevance to thecommunity;

(d) viewpoints are not misrepresented, and material is notpresented in a misleading manner by giving wrong orimproper emphasis, by editing out of context, or bywithholding relevant available facts;

(e) respect is given to each person’s legitimate right to protection fromunjustified use of material which is obtained without anindividual’s consent or other unwarranted and intrusive invasionsof privacy.

RELEVANT AVAILABLE FACTSThe hearing was concerned with whether there had been a breach of clause 2.2(d) of theCodes. In the broadcasts examined in the hearing, the Panel is of the view that:

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♦ the existence of each commercial agreement investigated in this inquiry between eitherMr Jones or Mr Laws and a third party is an ‘available fact’ as the term is used in Clause2.2(d) of the Codes.

♦ if available facts such as these are withheld in circumstances where their disclosuremight affect the listeners assessment of the material broadcast, the presentation of therelevant program material is misleading

The existence of a commercial agreement becomes relevant where the subject matter of thebroadcast concerns, or is favourable to, the person with whom the presenter has acommercial agreement.

In determining what is a relevant available fact, Mr Jones submitted that:

It is not obvious that the existence or content of a commercial arrangement between a presenterand a person mentioned on the presenter’s radio program is a ‘relevant available fact’ withinthe meaning of clause 2.2(d) whenever the presenter mentions that person on air. It will benecessary to look at individual broadcasts to decide whether such a fact is relevant.24

This submission raises the issue of the relevance to the reasonable listener of the connectionbetween the matter broadcast and the particular commercial agreement. The Panel acceptsthat there has to be some connection between the them before the existence of the agreementbecomes relevant but considers that the threshold at which the connection becomes relevantis quite low.

The Panel notes 2UE’s submission that due to the lack of material ‘immediately precedingand succeeding the broadcast … It is impossible to safely conclude that the broadcast mayhave misled listeners without considering contextual detail’. The Panel is of the view that thedisclosure of relevant available facts must be sufficiently linked to the broadcast to ensurethe disclosure forms part of the broadcast. The disclosure and the broadcast must be linked toavoid the broadcast being misleading. If such disclosure had been sufficiently made, itwould have been as part of the broadcasts.

Neither 2UE nor any of the parties to the agreements between Mr Jones or Mr Laws andtheir sponsors tendered any material indicating that adequate disclosure of the existence ofthe agreements was made immediately before, during or after the broadcast of the material.If such material existed, it is reasonable to expect that it would have been tendered.

In any event, the Panel have listened to audio recordings of various broadcasts of entireshows of Mr Laws and Mr Jones. These have been listened by each member of the Panel.25

This has enabled the Panel to obtain a sense of the context within which ‘live reads’, pre-recorded advertisements, interviews and editorial comment existed. Some of the breachesfound by the Panel were broadcast during this period of time.

ACCURACY / NEWSWORTHINESSMr Jones made the following submissions in relation to many of the broadcasts alleged tohave breached clause 2.2(d):

24 Submissions, Mr Jones, para. 28.25 Exhibit 71: All Jones and Laws shows for Tuesday 1 June 1999 to Friday 4 June 1999.

19

There is no dispute as to the accuracy of the facts stated in the broadcast or as to thegenuineness of the opinion expressed.26

The Panel is of the view that the accuracy of the facts stated in any of the broadcasts is notrelevant to whether there has been a breach of clause 2.2(d) in this context. The Panel is alsoof the view that the genuineness of any opinion expressed in any of the broadcasts is notrelevant to whether there has been a breach of clause 2.2(d). The accuracy of facts stated, orthe genuineness of any opinion expressed, in a broadcast is not relevant to whether materialhas been presented in a misleading manner because a relevant available fact has beenwithheld.

2UE, Messrs Jones and Laws and some advertisers also submitted that many of thebroadcasts alleged to have breached clause 2.2(d) were matters of legitimate news, and werereported in other media as such at the time.27 These submissions asserted that as items oflegitimate news, the existence of a commercial agreement between a presenter and anotherperson is not a relevant available fact. The Panel does not accept these submissions. ThePanel is of the view that the existence of the commercial agreement was a relevant availablefact if the broadcast was favourable to the sponsor and is of the view that whether the itemwas also reported in other media is irrelevant.

2UE and Mr Jones also made submissions in relation to interviews conducted withrepresentatives of sponsors of Messrs Jones and Laws. For instance, 2UE submitted that:

many of the statements of opinion emanate from the interviewee. The interest of theinterviewee is made clear from his position. Listeners know by whom they are beingpersuaded.28

While the interviewee’s position may be declared, neither Messrs Jones nor Laws’ interestsare disclosed. The fact of the commercial agreement may affect the nature of the questionsasked of the interviewee, and affect listeners’ perceptions of the questions asked and of theentire interview. Listeners’ views as to whether an interview is ‘hard’ or ‘soft’ may beaffected by the disclosure of a commercial agreement between the interviewer andinterviewee.

ADVERTISINGIn relation to programs for which 2UE received payment, 2UE submitted that this matter wasadvertising, and as such, Code 2 does not apply. The Panel does not accept this submission.Clause 3.1(b) of the Codes provides that advertisements broadcast by a licensee ‘mustcomply with all other Codes of Practice so far as they are applicable’. Where programmatter characterised as an advertisement also has the characteristics of a current affairsprogram, the program may be examined under both Codes.

In relation to some of the broadcasts, 2UE and Messrs Laws and Jones submitted that therewas no evidence that the sponsor caused the material to be broadcast. The intervention of2UE, or the presenter’s producer before material went to air were cited as relevant breaks inthe causal chain. While the intervention in each case must be considered, the Panel is of theview that, if material going to air relates to a sponsor or the business of a sponsor, and there 26 Submission, Mr Jones, para. 172.27 Colonial State Bank Submission, paras 24.2, 24.4; 2UE Submission, paras 6, 41; Submission, Mr Laws,

passim; Submission Mr Jones, paras 59, 140.28 2UE Supplementary Submission: Alan Jones Broadcasts – Breach of Clause 2.2(d) of Code of Practice;

2UE Supplementary Submission: John Laws Broadcasts – Breach of Clause 2.2(d) of Code of Practice

20

exists a relevant commercial agreement between the presenter or their producer and thesponsor for valuable consideration, and the existence of that agreement is not disclosed aspart of the broadcast of that material, then that material is presented in a misleading manner.

THE TRADE PRACTICES ACT 1974 AND THEPRESENTATION OF CURRENT AFFAIRS PROGRAMS IN AMISLEADING MANNERThe Panel received submissions about the meaning that should be attributed to the phrase‘material must not be presented in a misleading manner’ which cited arguments based on theinterpretation of similar phrases in the TPA. The TPA deals with, among other things,misleading or deceptive conduct. Section 52 of the TPA states, in part:

(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading ordec

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