content, consolidation and clout · content, consolidation and clout communications law centre 2006...

Content, Consolidation

And Clout

How will regional Australia be affected by media ownership changes?

A report by the Communications Law Centre 2006

Funded by a Faculty Grant from the University of New South Wales, 2005

Acknowledgements The authors would like to thank all those in Wollongong, Launceston, Townsville and Toowoomba who participated in the focus groups for this study, and the academics, commentators and journalists who gave us their time and insights. Special thanks go to: Elizabeth Beal, Philip Bell, Ginger Briggs, Lesley Hitchens, Jock Given, Julie Hillocks, Geoff Lealand, Julie Miller, Nick Moustakas and Julian Thomas. Analysis of media companies and a draft of some sections of Chapter Four were provided by Danny Yap as part of a placement for the University of New South Wales Law School social justice internship program. The Faculty Research Grants Committees of the Faculty of Law and the Faculty of Arts and Social Sciences at UNSW provided funding for the initial part of this project including the field work in regional centres. The project was completed by the authors following the closure of the Communications Law Centre at UNSW in June 2005. The CLC continues its policy, research and advocacy work through its centre at Victoria University.

About the authors Tim Dwyer is Lecturer in Media Policy and Research at the School of Communication Arts, University of Western Sydney. Derek Wilding was Director of the Communications Law Centre from 2000 to 2005. Before that he worked for the Media, Entertainment and Arts Alliance and at Queensland University of Technology. He is currently a Principal Policy Officer with the Office of Film and Literature Classification. Helen Wilson is Adjunct Research Fellow with the Communications Law Centre. She was Associate Professor in the School of Humanities, Media and Cultural Studies at Southern Cross University, and is currently editor of Media International Australia incorporating Culture and Policy. Simon Curtis was Clayton Utz Senior Research Officer at the Communications Law Centre from April 2004 to July 2005. He is currently a researcher at the Faculty of Law, UNSW, on a project examining self-regulation in the communications sector. Any views expressed in this report are those of the authors and not of the organisations for which they work. Communications Law Centre The Communications Law Centre is an independent, non-profit, public interest organisation specialising in media, communications and online law and policy. In Victoria, the Communications Law Centre is a research unit of Victoria University.

Director: Elizabeth Beal Level 1, 283 Queen Street Melbourne VIC 3000 PO Box 14428 Melbourne VIC 8001

Phone +61 (0)3 9600 3841 Fax +61 (0)3 9670 7902 Email [email protected] Web www.comslaw.org.au

© Communications Law Centre Limited 2006 ABN 89 003 623 630 ISBN 1-875538-35-6 All rights reserved. Without limiting the rights under copyright preserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the Communications Law Centre. The cartoon on the front cover is by Reg Lynch

CONTENT, CONSOLIDATION AND CLOUT

COMMUNICATIONS LAW CENTRE 2006

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Contents Acronyms & abbreviations iii List of tables and figures iii

Executive summary v

Key findings xxiv

1 Introduction 1

1.1 Media ownership and regional Australia 3

1.2 Current media ownership 4

1.3 Outline of the report 9

2 Rationales and realities of Australian media ownership regulation 11

2.1 The rationales of media ownership regulation 12 2.1.1 Media influence 13 2.1.2 Content choice: the new diversity? 15

2.2 Continuity and change in Australian media ownership regulation 22 2.2.1 Media ownership regulation 1923-1986 22 2.2.2 Regulatory changes 1987-1988 25

2.3 Current media ownership laws 26 2.3.1 Cross-media and media concentration 26 2.3.2 Limits on foreign ownership 28

2.4 Convergence, competition and regulatory change 29 2.4.1 Revisiting the Productivity Commission’s Broadcasting Report 30 2.4.2 The Broadcasting Services (Media Ownership) Bill 2002 34 2.4.3 Increasing role of competition regulation 36 2.4.4 Proposals for deregulation 39

3 Media ownership, networking and local content provision 44

3.1 Equalisation and local content 45

3.2 ABA Investigations: Localism policies in regional TV 48 3.2.1 First ABA Report, August 2002 48 3.2.2 Second ABA Report, June 2004 53

3.3 Existing content sharing practices 54

3.4 Anticipated legislative reform and preserving local content 56

4 Media mergers and regional consequences 58

4.1 Introduction 58 4.1.1 Review of regional media ownership – methodology 59

4.2 Potential changes in ownership 63 4.2.1 Macquarie Bank 63 4.2.2 APN News and Media 63 4.2.3 Rural Press 64 4.2.4 Southern Cross Broadcasting 64 4.2.5 Prime Television 65 4.2.6 WIN Corporation 65 4.2.7 West Australian Newspapers 66

4.3 Impact on services in selected regional areas 66 4.3.1 Possible mergers 66



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4.3.2 Effects on diversity 71

4.4 Impact on services in other regional markets in Australia 75

4.5 Conclusion 79

5 Case studies of regional media issues 82

5.1 Wollongong 83 5.1.1 Power and the city 83 5.1.2 Major media 86 5.1.3 Advertising and competition 96 5.1.4 Media ownership 97 5.1.5 Summary 98

5.2 Townsville 99 5.2.1 The Townsville Bulletin 100 5.2.2 Television 102 5.2.3 Radio 104 5.2.4 Summary 105

5.3 Launceston 105 5.3.1 The Examiner 107 5.3.2 Advertising 112 5.3.3 Television 113 5.3.4 Radio 114 5.3.5 Media ownership 115 5.3.6 Summary 115

5.4 Toowoomba 115 5.4.1 The Toowoomba Chronicle 117 5.4.2 Television 122 5.4.3 Radio 123 5.4.4 Media ownership 124 5.4.5 Summary 124

5.5 Observations and comments 125

6 International developments in ownership and content regulation: New Zealand, the United Kingdom, Canada and the United States

128

6.1 New Zealand 129

6.2 United Kingdom 132 6.2.1 Broadcasting Act 1996 132 6.2.2 Communications Act of 2003 135 6.2.3 The Public Service Broadcasting Review 140

6.3 Canada 144 6.3.1 Legislative and regulatory framework 145 6.3.2 Media ownership consolidation 150 6.3.3 Canada’s approach to maintaining media diversity 151

6.4 United States 157 6.4.1 Legislative and regulatory framework 159 6.4.2 FCC order and Appeals Court response 160

6.5 Australia compared 162

7 Conclusion: content, consolidation and clout 165

References 172



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Acronyms and abbreviations ABA Australian Broadcasting Authority ABT Australian Broadcasting Tribunal ACCC Australian Competition and Consumer Commission ACMA Australian Communications and Media Authority BDU Broadcasting Distribution Undertaking (Can) BSA Broadcasting Services Act 1992 (Cth) CBSC Canadian Broadcasting Standards Council CROC Crown-Owned Company (NZ) CRTC Canadian Radio-television and Telecommunications Commission DCITA Department of Communications, Information Technology and the Arts FATA Foreign Acquisitions and Takeovers Act 1975 (Cth) FCC Federal Communications Commission (US) FDU Forward Development Unit

(part of the former Department of Communications) MCH Ministry for Culture and Heritage (NZ) NZOA New Zealand On-Air Ofcom Office of Communications (UK) PC Productivity Commission PSB Public Service Broadcasting (UK)

List of tables and figures Tables

1. Percentage of national daily press circulation 52. Percentage of national television audience reach 53. Percentage of national radio audience reach 64. Regional media companies examined in this report 62 5. Impact of forecast mergers on markets in regional Australia 77 Figures

1. Companies with significant investments in metropolitan television and newspapers

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2. Companies with significant investments in regional media 83. Current ownership and potential mergers in four regional markets

(Wollongong, Townsville, Launceston and Toowoomba) 68



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© COMMUNICATIONS LAW CENTRE 2006

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Executive summary

Media ownership and local content The current context for media ownership reform – and in particular, the bundling of ‘Regional Service Protections’ with the dismantling of the cross-media rules – needs to be seen in the context of far-reaching decisions in media policy made in the 1980s and the short-term gains of media policy in the 1990s. The most significant regional media policy decisions of the 1980s were ‘equalisation’ of television markets (so that most regions were supplied with three commercial services) and ‘aggregation’ of a large number of small regional markets in Queensland, New South Wales and Victoria into a small number of large geographical zones. These were accompanied by the replacement of the two-licence cap with the 75% national reach rule for television and the introduction of rules preventing cross-media holdings of commercial television, commercial radio and major newspapers in the same market. These decisions have, in most cases, resulted in extra television services provided by three regional television networks. However, a by-product has been the national syndication of programs and a loss of local television content in some areas that mirrors the loss of local content on regional radio. Networking and local content provision The report of the House of Representatives Standing Committee on Communications, Transport and the Arts, Local Voices: An inquiry into regional radio (September 2001), drew attention to the decline of local radio programming. The committee made a number of relevant recommendations in relation to access and diversity, local radio and commercial viability, the role of radio in emergency situations, and digital



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broadcasting services. Shortly after this report, community concern over the closure of regional television news services triggered two ABA investigations. The ABA’s first investigation (in 2001-2002) covered the aggregated markets in Queensland, New South Wales and Victoria. The ABA found that not all licensees in these markets were providing an appropriate coverage of matters of local significance, and therefore were failing to fully meet their obligation under the Broadcasting Services Act 1992. The curious absence of any specific individual responsibility on the part of licensees for local content needs to be understood in the context of deregulation, via the Broadcasting Services Act, of a number of policy settings in relation to programming and licensing of Australian broadcasting. In particular, the Act deregulated the existing localism requirement by introducing a statutory licence condition applying to all licensees. The previous broadcasting legislation (Broadcasting Act 1942) obliged each licensee to be responsible for this standard of provision in relation to its own service.

Accordingly, the ABA proposed an additional condition on all 13 regional licensees in the four aggregated markets. This condition would require them to broadcast a minimum amount of programs about matters of local significance to each sub-market. The scheme has had some success. While broadcasters in some local areas in regional Queensland and Victoria have only barely met the minimum weekly requirement, others in local sub-markets within some licence areas in Northern New South Wales and regional Victoria have almost trebled the 120 point average requirement. The ABA’s second report (in 2003-2004) focused on the remaining non-aggregated regional and rural television broadcasting market. While the geographic reach of these markets is much wider, their population and population densities are generally much smaller. The ABA found that at least one commercial television broadcasting service provided local news and information programs and concluded that it would be inappropriate to require licensees to provide additional material of local significance, at least at that time. Against this background, the proposals for regulatory change released by the Minister for Communications, Information Technology and the Arts in March 2006 would remove the cross-media rules and replace them with a ‘safety-net’ test that permits mergers in regional markets only in circumstances where at least four commercial media players would remain. This initiative is tied to a package of ‘Regional Service Protections’ which includes:

legislation confirming the operation of the local content licence conditions imposed by ACMA on regional broadcasters;

continued monitoring by ACMA of local news and programming output by regional commercial broadcasters and possible allocation of new licences if diversity is reduced through format changes; and

monitoring of local content in areas not covered by the current licences and on commercial radio.

In presenting these regional ‘protections’, the discussion paper expressly recognises the difficulties of providing adequate television services to residents of regional Australia. But it gives little consideration to the impact in those markets of mergers of



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the existing media companies. Rationales and realities of Australian media ownership regulation Regional media in Australia is already highly concentrated. In mid-2005, four companies (News Corporation, John Fairfax Holdings, Rural Press and APN News and Media) controlled all but seven of the 36 regional daily newspapers in Australia. Three regional television networks (WIN Corporation, Southern Cross Broadcasting and Prime Television) held all but four of the 39 non-metropolitan commercial television licences in Australia. There was more competition in regional radio, although in mid-2005 three networks (Macquarie Regional Radioworks, Broadcast Operations, and Grant Broadcasters) accounted for 132 (61%) of the 215 regional commercial radio licenses. Nonetheless, and despite the ‘Regional Service Protections’ of the 2006 discussion paper, the philosophy underpinning the latest policy developments relies on a theory of proliferation of media sources in a digital age. While major media policy decisions of the late 1990s (including the Australian models for digital television) have themselves constrained the growth of new services, the advent of pay TV (also a policy decision of the 90s) and the growth in Internet and broadband services are seen as justifications for removal of the cross-media rules and the answer to a potential loss of diversity. It is in this environment that the concept of diversity has been refashioned to refer to a multitude of pieces of information – a proliferation of data – much of which is recycled and offered as a source in its own right, and much of which originates overseas or is anecdotal in nature. These arguments fit with a transition from structural regulation of media ownership – via the cross-media rules – to content regulation. A principle underpinning efforts at media reform since 1996 is that consolidation between the influential traditional media companies poses no threat to diversity because news and information are freely available elsewhere. The evidence for this claim appears to be found on the Internet sites of existing media companies, overseas pay TV channels and soon-to-appear datacasting services. The Productivity Commission’s recommendations in 2000 for a phased approach to deregulation, structured around encouraging genuine competition in new services and the removal of barriers to entry in traditional media, were largely ignored in policy terms. Instead, an attempt to dismantle the current system was attempted in 2002/2003, based on proposals for merged companies that would retain separate editorial arrangements. Since that time, the ACCC has hovered at the margins of media regulation. Recent indications are that the ACCC will change its approach to the definition of media markets to look across media platforms. However, nothing concrete has emerged from the Commission.



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Current proposals This, then, is the background to the release of the current Minister’s own proposals for far-reaching regulatory change. The core elements of the new regime include:

the concentration rules, limiting ownership to one commercial television station in each market and two commercial radio stations, will remain;

the 75% national reach rule will remain; the limits on foreign investment contained in the Broadcasting Services Act

will be removed, as will the newspaper-specific aspects of the Foreign Investment Policy, with the media sector retaining its ‘sensitive sector’ status and the Treasurer retaining prior approval over all proposals for direct investment in the sector by foreign interests;

the cross-media rules will be replaced with a numerical diversity test that requires there to be at least five commercial media groups in a metropolitan market and at least four commercial media groups in a regional market.

These changes in media ownership rules are linked to changes in the regulation of digital television services. Despite the potential for significant further concentration resulting from the removal of the cross-media rules, the discussion paper – even the sections on media ownership – emphasises the importance of new services and new players. On close examination, this enthusiasm for new players and services is difficult to maintain. The digital television proposals may amount to little more than expanded datacasting services, short-form content for mobile phones, or an extra mechanism by which Foxtel can reach television audiences. Also, the media ownership proposals demonstrate a willingness of the part of the government to ensure that the largest existing players can consolidate to an extent that could seriously erode the capacity of any new entrants to compete when analogue services are switched off and the moratorium on new commercial licences expires, probably in 2012. In selling the proposals following the release of the discussion paper in March 2006, the Minister emphasised (in an interview on Inside Business) the ‘protections’ that the legislation would enshrine: ‘…it’s not a matter of let it rip. It’s a relaxation with significant safeguards and associated new services’. And, in an interview for The 7.30 Report, the Minister sought to reassure the public that ‘we’re very serious about having a floor under which diversity can’t go any lower, in other words, the number of players can’t get any lower’. For metropolitan markets, this ‘floor under which diversity can’t go any lower’ could mean a reduction of more than 50% of the number of players in the market. The effects in regional areas – and the view of residents in four regional markets – are the subject of our research.



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Potential media mergers and regional consequences Based on reports from financial analysts and business journalists, an analysis of possible media mergers and their effects on other regional markets shows that there could be substantial change to the media ownership arrangements in regional Australia if the cross-media rules are replaced by a ‘minimum number of players’ rule, as proposed by the Minister in her March 2006 discussion paper. Potential results of the removal of the cross-media rules in four regional markets are set out below. Wollongong Company 1 The Illawarra Mercury, Southern Cross TV

[Fairfax acquires Southern Cross] Company 2 WIN TV, i98FM Company 3 Prime TV Company 4 WAVE FM [Grant Broadcasters] The ‘minimum number’ test would allow Fairfax to acquire Southern Cross. It could have the effect of blocking any of the existing television licensees from acquiring the radio licences of Grant Broadcasters. However, there has been no indication that any of those companies would seek to acquire the independent regional radio network, which in any event is privately owned. A potential overall result for Wollongong is that the six media assets currently held by five different players could, following mergers permitted under the government’s proposals, be held by four players. Townsville Company 1 The Townsville Bulletin, Seven Network

[News acquires Seven] Company 2 4TO, HOT FM, WIN TV

[Macquarie Bank acquires WIN] Company 3 Southern Cross TV Company 4 Mix FM, Sea FM [Prime] The ‘minimum number’ test would allow News to acquire Seven and Macquarie Bank to acquire WIN. It would block those merged companies and Southern Cross from acquiring the MIX FM and Sea FM radio licences, however there is no indication that any of those companies would seek to acquire the six regional radio licences held by Prime in Queensland, including the two stations in Townsville. A potential overall result for Townsville is that the eight media assets currently held by six different players could, following mergers permitted under the government’s proposals, be held by four players.



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Launceston Company 1 The Examiner, Southern Cross TV, digital TV joint venture

[Rural Press acquires Southern Cross] Company 2 7LA, WIN TV, digital TV joint venture

[Macquarie Bank acquires WIN] Company 3 7EX [TOTE Tasmania] The ‘minimum number’ test would have a significant effect in Launceston: given that there would be a requirement for four separate players in the market, either the acquisition of Southern Cross by Rural Press or the acquisition of WIN by Macquarie Bank would be blocked. This means that a possible future scenario for Launceston under a ‘minimum number’ test could be: Company 1 The Examiner, Southern Cross TV, digital TV joint venture

[Rural Press acquires Southern Cross] Company 2 WIN TV, digital TV joint venture Company 3 7LA [Macquarie Bank] Company 4 7EX [TOTE Tasmania] Alternatively, if Macquarie Bank moved first to acquire WIN, the acquisition of Southern Cross by Rural Press would be blocked. A potential overall result for Launceston is that the six media assets currently held by five different players could, following mergers permitted under the government’s proposals, be held by four players. Toowoomba Company 1 The Chronicle, Seven Network

[APN acquires Seven] Company 2 WIN TV, 4GR and CFM

[Macquarie Bank acquires WIN] Company 3 Southern Cross TV Company 4 4AK, 4WK [Broadcast Operations] The ‘minimum number’ test would allow APN to acquire Seven and Macquarie Bank to acquire WIN. Although unlikely, a further move by APN/Seven to acquire the Broadcast Operations radio licences would be blocked by the ‘minimum number’ rule, since it would result in only three players in the market. For the same reason, the ‘minimum number’ rule would also prevent Southern Cross from acquiring the radio licences of Broadcast Operations. Whether Macquarie Bank acquired Southern Cross or WIN, it would be unable to acquire the licences of Broadcast Operations because of the existing two-to-a-market radio concentration rule. In any event, Broadcast Operations is a privately-held company and there has been no indication that its owner, Bill Caralis, anticipates the sale of the network. A potential overall result for Toowoomba is that the eight media assets currently held by six different players could, following mergers permitted under the government’s proposals, be held by four players.



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In the scenarios presented above covering four regional markets, the ‘minimum number’ test would allow consolidation in all markets. In Toowoomba, the number of separate players could be reduced from eight to four; in Wollongong and Townsville, the number of separate players could be reduced from six to four; while in Launceston the reduction could be from five to four. In all cases, it can be said that the existing ‘concentration’ rules (ownership limits of one television licence to a market, two radio licences to a market) are more effective than a ‘minimum number’ test in preventing serious consolidation of media interests. While the above analysis covers four markets in regional Australia, a further analysis shows the flow-on effects of some of these mergers in other markets. In Wollongong a merger between Fairfax and Prime would result in co-ownership of the local paper and one of the television stations; a similar effect would occur in Newcastle in New South Wales and in Warrnambool in Victoria. Similarly, a merger between Rural Press and Southern Cross would affect a number of markets besides Launceston where the local paper could merge with one of the television stations. In fact, the implications for some of these areas would be more serious than for Launceston. In towns such as Dubbo in New South Wales and Ballarat in Victoria, there are three commercial television operators and two commercial radio operators, meaning that the reduction in diversity could be from six players to four, rather than from five players to four, as in Launceston. The tables involving Macquarie Bank indicate just how far-reaching these mergers could be. The problem for policy makers is that the ‘minimum number’ test is not consistent in its results. This test would not prevent the local newspaper and one of the commercial television stations combining in Wollongong, where the leading radio station is already co-owned by the dominant local television network; and it would not prevent the two most popular radio stations and the most identifiably local and relevant television station in Toowoomba being co-owned by the company that owns the local newspaper. In fact, in all the markets considered here, the ‘fourth player’ in a post-merger scenario is the holder of one or two radio stations that are not the market leaders. This inconsistency in outcomes arises because the ‘minimum number’ test gives the same status to a company that controls two minor radio stations as a company that controls the major newspaper, television station and radio stations in the same market. The test, by its nature, only counts the number of companies currently operating in any market without considering the corporate profiles of those companies and their operations within the communities they serve. It that sense, it resembles the tests under trade practices law – at least as we know them to date – in that it does not look at the effect of media mergers on the local news culture. It also suggests that the importance of local daily newspapers – a matter emphasised by residents of the four regional areas we visited – has been underestimated in the government’s proposal. Case studies of regional media issues



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A number of generalisations can be made on the basis of the case studies of Wollongong, Townsville, Launceston and Toowoomba:

Citizens’ knowledge of media ownership is scant. They generally don’t remember ownership changes and they associate television ownership with network affiliation.

When asked about the local media they talk about the local newspaper almost

obsessively, though they see its performance as flawed. They value local television news on the basis of its publicity of community

events, not journalistic value.

They are aware of editorial changes in newspapers instigated by different editors.

They are aware that the quality of journalism is likely to be lower than in metro

papers, because journalists may be inexperienced and transient.

They are aware of the difference between media power and market power.

They are aware of the influence of major advertisers, particularly when advertisers are seen to have economic and political power.

They are also aware of the difficulties for local businesses in meeting the high

costs of advertising with media companies that hold substantial market power.

They see media elites as part of local power elites and readily cite cases of revolving doors between journalism and working for local politicians or companies.

They are very aware of the potential for corruption through the lack of

transparency in this connection.

They are also aware of direct exercises of power by a media organisation that holds disproportionate media power

What worries them about ownership deregulation is the increased chance of

corruption and the misuse of media power through the loss of safeguards.

Some look positively on the prospect of takeovers, providing they can be used as a means of improving the quality of journalism.

They value ABC local radio as a credible alternative to the journalism of the

daily paper.



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The local media mix Those who engage in public life in some way have all developed a critical awareness of the media’s various roles in the local community, both in setting public agendas and in supporting particular business activities and organisations. All the discussions spontaneously focused on the press, with the local daily newspaper synonymous for most with local media, and ABC radio close behind. A few radio stations were seen as active sources of local views, but television was generally seen to have greater value as an instrument of publicity and marketing support, rather than for any contribution to local knowledge and debate.

Bridget, Launceston: … I find it interesting that none of us have talked about the all-pervasive power of television. It’s The Examiner we’re all concerned with. …But there’s nothing very meaty. Television news is effectively an entertainment medium.

Julie, Toowoomba: ... Southern Cross doesn’t really cover news – more like new exhibition at the Cobb and Co Museum, local production of A Midsummer Night’s Dream at USQ etc. Seven has no local news, but it does weather. The weather on WIN covers a really strange area. It’d be logical to cover Toowoomba, Warwick, Stanthorpe, Oakey, Dalby and Goondiwindi. Instead, it covers Toowoomba, Townsville, the whole state.

Mary, Toowoomba: If you watch WIN then switch over to the next channel you feel like you’re being told you’re stupid, it’s so light on, even the production side of it. I’m not saying necessarily the content, local content is local content, you’ve only got a small number of people geographically. Even the production itself is really light-on. Denis, Townsville: It’s like being in a cocoon. You don’t know what’s going on outside Townsville…. We should have a proper news service where we’re getting all of the north. You don’t get anything about Mackay or Cairns.

In Toowoomba, the commercial radio stations provide local information (for example a gardening talk-back show on 4GR) but the news services are minimal, and the sector is not seen as having great impact, although the main presenter, as in Townsville, ‘seems to be everywhere’. Several people (not just the media academics interviewed) described the radio news services as ‘rip and read’ from the Chronicle, although they remembered 4GR as having a good local service. As in all the case studies, ABC regional radio was singled out for praise:

Peter, Toowoomba: ... There’s no doubt about it, the ABC in its regional services, is vastly superior to everybody in being a transmitter of quality information – and discussion, phone-in etc. I’ve walked this town as part of my job and people stopped you, telling you about listening to you on the ABC.

Though their knowledge of media ownership companies and regulation was low, participants were much better informed about editorial changes and noted the comings and goings of editors and journalists and the impact this made on media output. Many had personal dealings with media people, feeling free to approach them with criticism or suggestions.



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Upholding standards and exposing corruption While there were criticisms of television news, the vitriol among participants was saved for the quality of journalism at the local paper. In Toowoomba, one participant, Mary, in reflecting on the discussion at the end of the focus group, commented that the feeling of being ‘desperately let down by the local newspaper’ had dominated discussion. Other participants in this and other locations drew attention to problems with professionalism and commitment, while others spoke of disinterest on the part of journalists, or even inability to do the job.

June, Wollongong: I’m convenor of the Illawarra Escarpment Coalition (IEC) and have been for the last nine years ... I was asked to go out on the site of the sale of one of the mining lands in the northern suburbs. I felt that the girl sent by the Northern Leader was unable to deal with the subject matter. She knew nothing about it. I tried to explain what had been happening but she misquoted me and put the local Labor candidate’s words in my mouth … Peter, Toowoomba: If you go back 3 years there was no classified graded journalist on the paper’s staff for a period of several months, then they got in a few cadets and lost more experienced people… It comes through that somehow there isn’t a journalistic ethos, an investigative ethos – I don’t mean sensational ethos – I mean a willingness to pursue the story and to get behind the half-true headline.

June, Wollongong: One of the major problems is the continually changing journalists in local print as well as local TV. It takes time to build up an understanding of local dynamics and the history of issues and places. With little experience, young journalists are thrust into major issues without the experience or time to research the issues. This doesn’t provide well-informed journalism. It serves neither the community, the development of the journalist or the organisation which employs them.

Julie, Toowoomba: They use the same template used for all APN newspapers e.g. the ‘Work Search’ section features people from places as far off as Gympie. I suspect that a Leggo competition was run for a whole series of APN newspapers. They misspelled Toowoomba so the ad obviously wasn’t written here.

Mary, Toowoomba: It’s real estate, real estate, real estate. Oh, and cars! Newspapers seem to be one big brochure, with community content drifting out to pages 5 to 7, then a mock up of the local news that they’ve picked up from the Internet or whatever. You’ve read them 1000 times during the day if you look at different sources, then advertising, advertising, advertising. So I feel like when you buy it you’re actually losing the heart and soul of a country town without the one main thing reporting it, by losing your local identities, local stories, investigative journalism, the good mix, the overall community thing. I think you’re paying $1.05 for a brochure that otherwise gets dropped into your mailbox for nothing. And the alternative newspaper, the Mail, could actually be worse.

Perhaps the most revealing comment came out of a discussion on the coverage of what participants felt ought to be headline issues in Toowoomba:

Mary, Toowoomba: We’ve had two big stories in the last couple of months and none of them have received in-depth analysis. One was a triple murder, which I learned more about from watching the state news than from reading the local paper. The other is a council plan to treat effluent and put the clean water back into our dams. That’s a story with national impact, but nothing … In the Chronicle I saw five people



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photographed, asked in the street, vox pops, ‘would you drink recycled effluent?’ ‘No, no way I’m going to!’ And that’s their little quote. That’s the analysis we’ve had. We’ve had a bit of a report of the situation, with a flow chart of pipes and dams. But if the Chronicle was doing its job properly that’s a very big story, of crucial significance to our survival as a community, water, and nothing has been done about it… We actually know more about Sydney’s desalination plant.

This perceived failing of the media source that participants saw as the major source of local news had even more serious implications. Participants felt that the local paper was probably not up to the task of maintaining the integrity of the local public sphere. Such integrity is seen to mainly depend on a strong editor and good journalists responsive to the local community. As a result, there was little confidence in local media fulfilling its role of exposing corruption.

Q: How would they deal with corruption? Mary, Toowoomba: They wouldn’t uncover it, but they’d tell you a lot about it for months and months afterwards but they wouldn’t uncover it. I don’t think the Chronicle would be capable of uncovering it. They won’t crack a story. But they’ll add to it ad nauseam. Anne, Toowoomba: They won’t spend time to understand the issues. Media academic, Toowoomba: ... I noticed a difference when APN took over in 1988. They did go in hard against local magnate, Berghoffer who was a local councillor and state MLA at the same time and involved in big local property deals. The paper served as an important source of public debate on this issue. Now I doubt that the Chronicle would fulfil this role. Subsequently there’s been a reduction in reporting coverage and they seem to be more interested in fitting the APN model with an emphasis on localism and lifestyle. David, Townsville: I go to Cairns regularly and I get the Cairns Post. They seem to watch the council like a cat watches a mouse. If there’s anything up in Cairns Council that seems a bit bodgy or dodgy the paper’s there straight away exposing it for all to see.... The paper would appear to be the people’s watchdog up in Cairns. It’s totally different to the Townsville Bulletin. Here it seems very cosy.

As an extension of this, participants expressed concern about the degree to which the paper was associated with other local power elites. In Wollongong, one participant, Marcel, was an environmental activist, involved in the long running campaign to try to stop coastal development by the company Stockland at Sandon Point. In a 2002 email, he complained about the Illawarra Mercury’s coverage of the tense situation at the site as development began:

On Saturday the 29th August 2002 we held a major public rally at Sandon Point. Over 600 people attended. Politicians and aspiring Lord Mayors were also in attendance, all keen to speak and impress their thoughts on the audience. WIN TV covered the event on the local nightly news. But alas... no Illawarra Mercury.

He comments in retrospect about a complaint to the editor:

Marcel: He replied by pointing out that a report of the rally was filed but discarded supposedly for lack of space. …. He was correct in pointing out that the total overall coverage was fairly balanced. However this is a little bit like the referee evening up



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the penalty count near the end of a footy game when the result is beyond doubt. … the Stockland media machine employed Janine Cullen from about April 2002. Janine was married to Peter Cullen who was the former editor of the Illawarra Mercury. He is now deceased. However, I’m sure that Janine with all of her connections within the Mercury would still have exercised quite a deal of influence. …Thankfully WIN TV and the Northern Leader have kept people informed.

In some cases, the power resided with advertisers:

Sarah, Launceston: My most serious concern with this paper [The Examiner] is it seems to be very much at the behest of advertisers to some degree, particularly Gunns Limited. It’s a very wealthy company and I’m very concerned that there’s biased media because of the power of that company. There was this thing on Media Watch. They’ve done other things in the past and I’ve complained to the Press Council.

Linda, Townsville: Part of the Bully’s success is from the huge real estate sections. I used to work in that industry and I know you don’t need to advertise that much. You don’t need to pay for all that advertising. I know there are some dodgy dealings in the local real estate industry, but if I wanted to write a story about it I couldn’t get it published.

For most participants, it was control at the editorial level that concerned them and the close relationship between media elites and local power elites. Despite all its perceived shortcomings, participants still valued the local paper. In Toowoomba, Mary commented that ‘the community needs to be represented by a newspaper because without it you don’t have a community. And that’s all there is to it – even if it’s a bad one. It’s still a newspaper. We’d actually be worse off without a bad Chronicle’. Everyone agreed with this and Peter said, ‘it would be a tragic affair if the Chronicle did not survive and get better.’ In Launceston, the history of close association between The Examiner and Gunns, and the latter’s subsequent rise to regional and statewide power, overwhelmingly taint the newspaper’s identity for focus group participants. At the same time they value its commitment to the local area. One said ‘Even though I’d like to see some opposition to them I still religiously get The Examiner every day’. Competition and advertising The low quality of local media was linked by participants to the lack of competition, and this extended to the experience of businesses when placing advertisements in local media:

Jean, Toowoomba: I feel that it’s partly a drop in standards but also it’s partly self-satisfaction because what we have here is a monopoly with our local newspaper, advertising wise, everything. They run a monopoly and they know it.

From an advertiser’s point of view The Examiner’s record in Launceston was seen as mixed. A participant involved in the industry said:

… it’s not what you know, it’s who you know that enables you to get your point of



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view through in those areas. In terms of our dealing with those (editorial) people we’ve had some conflicts over things they’ve said about the industry we’re in… We’ve used our advertising dollar muscle to say we’re not going to do this. I know that in my past life with a major chain we’ve done that a couple of times, stopped our advertising… We stopped for a little while but not too long because you can’t afford to. They know that as well.

This experience of market power is heightened in Wollongong, where WIN has cross-ownership of the highest rating television and radio services and the major event venue. This gives it what competitors see as an unfair advantage. Furthermore, if WIN, for argument’s sake, were to take over the Illawarra Mercury, this would make a situation competitors and advertisers already find disadvantageous into one that gave them very little market power. Informants point to the question of who has ‘clout’ in a place as the key issue. The vernacular term suggests both a recognition of power and a questioning of its legitimacy. Citizens do not particularly distinguish between the clout of media owners and that of other power elites. In Wollongong, people regard WIN, the Mercury, the ALP, property developers such as Stockland and the South Coast Labor Council, for example, as having clout. All are seen as having unfair advantages in some respect, and any links between them would be likely to increase this. Discussion by participants on the clout that WIN exercises in Wollongong appeared to confirm the tone of comments made by Janet Cameron, CEO of Grant Broadcasters (owner of the rival station WAVE FM) to Senate Committee hearings on the Media Ownership Bill in May 2002. When asked to comment on Wollongong’s unique cross-ownership market she responded:

Yes, it’s a very difficult environment to work in ... The television station has enormous clout. It is the heritage station in Wollongong. It is the number one station – it is the Nine affiliate – and it really is the station that everybody in Wollongong wants to be associated with because they have been associated with it for a very long time. The station is able to use that clout. The entertainment centre is the WIN Entertainment Centre. The sports arena, where the major league games are played, is the WIN stadium. What tends to happen? I will give you a recent experience. The Australia Day Council wanted to use our radio station to promote and present the fireworks on Australia Day. WIN said ‘No. If you want to use WIN you have to use i98’. I could give you a dozen examples. In most cases people back off. Since WIN has had the sponsorship of the Wollongong Entertainment Centre we have not had any association with any artists that come to Wollongong. (Senate Hansard, 22 May 2002).

One advertiser, when asked what implications he saw for his business if cross-ownership rules were relaxed, alluded to the ‘potential for less rather than more opportunities’ and noted that his company had ‘yet to really see any significant negotiable gains via the WIN/i98fm link’. These comments provide an indication, in the one market in Australia where the leading television station and the leading radio station are owned by the same company, of the difficulties faced by competitors in markets where there is cross-media ownership. Media ownership



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On the subject of media ownership, only media workers and academics showed particular concern about the impact of proprietors, such as the Murdoch or Fairfax organisations appointing people to manage the newspapers in line with company policy. This group sees the deregulation of ownership as dangerous because of the power that is likely to accrue to the major players. Many point to the particular susceptibility of the Fairfax organisation to a predatory takeover. Rupert Murdoch’s control through News Corporation’s ownership of the majority of press circulation in Australia is not necessarily evident to readers and citizens as those newspapers have a long history and are deeply entrenched in the community and market. However, media academics saw great danger in allowing News Corporation to own television services as well as the substantial press holdings. Media academics are concerned about media power, while citizens are more concerned about the fairness and transparency of political power, in which media organisations and personnel can be major players, either through revolving doors, social networks or editorial decisions. In Toowoomba, no one was concerned about cross-ownership. The sense was that local media is so bad that it really could not get any worse and anything that might help improve investment in the local community would be welcome:

Mary: If people are upset about one person owning it all, I’d say bring it on if they’re going to police that and break it into those local, regional and national content – and then international. There needs to be some kind of business angle so local journalists feel they’re part of a bigger picture, trained in a better fashion, shipped around offices or whatever. It could only bode well… What I guess is what people fear the most which is one person’s opinion being forced upon everyone. I think that terrifies people. But as far as the actual production, it would be fantastic if the Chronicle actually was part of a Courier Mail, which was part of an Australian company. That’d just make sense so that you do have one source. Peter: That’s spot on, because I don’t think we’re in danger of being sucked in by monopolistic views. I think all of us, or I think a very large proportion of this city that cares about anything, do have regular access to alternative sources, via the Internet, via other magazines and so on and I don’t think monopoly is a problem at all, if only one could find some reason for the Chronicle to attach itself to a particular set of standards. They used to, I really think we should be careful not to denigrate the Chronicle historically because of the history of fine editors and fine work and a very responsible newspaper in days gone by.

In Launceston and Wollongong, where there was a history of cross-media ownership, focus group participants warned of the problems (editorial and advertising) that can arise from undue concentration of ownership. The Launceston participants were unanimous in their condemnation of Edmund Rouse’s past ownership of print, television and radio, collapsing his criminal conviction with his business practices. They expressed abhorrence of any change in regulation that might allow a repeat of such a situation. Wollongong participants also saw dangers in monopoly ownership if, as they had good reason to suspect, the local media are implicated in local power structures, as the potential for corruption increases. As long as the ABC provides a credible alternative forum to the local newspaper, this may allay many people’s fears, although the security and robustness of local radio can never be guaranteed in an unsympathetic political climate where there are many demands on the organisation. In summary, the regulatory argument that a plurality of owners will lead to a diversity of voices is not supported by these case studies, for commercial radio and television



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make a limited contribution only to citizen discourse. Furthermore, examples have been cited of a common owner (e.g., News Corporation) allowing different editorial policies. But there is a problem with regional news in Australia. People are deeply dissatisfied with the quality of local media. Further, there is demonstrated experience of the problems that undue concentration of power can create for smaller communities. In this case, it is appropriate to ask whether further consolidation will further damage local news cultures and, by extension, the communities in which they operate. International developments in ownership and content regulation: New Zealand, United Kingdom, Canada and the United States All of the nations examined in this report (Australia, New Zealand, the United Kingdom, Canada and the United States) have in the past two decades responded to the pressures of neo-liberal market policies now pervading the global economy. Although there are strong pressures to further liberalise ownership policies where they are retained (Australia, the UK and the US), and on top of already significant dilution in the UK particularly since 2003, these nations have retained core aspects of their ownership regimes. In contrast, the lack of foreign ownership restrictions in New Zealand has resulted in all major media in private hands being held by foreign corporations. This is a very different situation to the UK or Australia, where, especially in Australia’s case, the debate has been focused on the possibility of introducing diversity into our concentrated media landscape. The lack of cross-media regulation in New Zealand leaves it exposed to on-going reconfigurations in what is after all, a relatively small media market. In the event of changes to ownership laws in Australia, there may be flow-on impacts in New Zealand, where Australian companies own a large proportion of media assets. The steady increases in local content (and subsidy for its production at a regional level) indicates its perceived importance to New Zealanders, at a time when their media is still recovering from the ravages of deregulatory policies. In the UK, the 2003 Act has continued the liberalisation of media ownership. Yet the British Government has retained key restrictions on cross-media ownership, with caps of 20% on national and regional television and newspaper cross-ownership. Radio ownership rules provide for a default setting of a minimum of ‘three voices’ (television, radio, newspapers), and provide that there will be at least two local radio stations in addition to the BBC. The UK established a public interest considerations test in the 2003 legislation. On the face of it, deregulation of their regional television ownership has dramatically concentrated ownership with a single dominant regional television network provider, ITV plc – in effect allowing a monopoly. On the other hand, the strength of the public service requirements now regulated by Ofcom is that there is an obligation to comply with programming quotas in key genres such as news and current affairs. In this regard, rules for regional television production and programming, and independent production quotas, effectively ensure safety net levels of production.



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Ofcom’s recent Public Service Review demonstrated a commitment to the importance of local content in regional output, and an awareness of the potential influence of new digital television and broadband distribution technologies on local content provision. In Canada, broadcasting regulators have taken the ‘pragmatic’ approach that, to ensure an appropriate level of Canadian content is maintained on television and radio, and is not overrun by less expensive (and generally more popular) programming from the United States, Canada’s media needs to be allowed to consolidate into larger corporations that can compete with its American rivals. As a counterbalance to increased media ownership concentration and cross-media ownership, Canada’s ‘transaction tax’ on media mergers has provided a significant windfall for the Canadian content production industry. The lack of legislated cross-media ownership and media ownership limits, and the flexibility the CRTC is afforded in its regulation of broadcasting licences, have enabled the growth of large conglomerates such as CanWest with interests in television, radio, subscription broadcasting, newspapers and the Internet. As a result of three major media mergers in Canada during 2000-01, BCE-CTV and CanWest-Global collectively now control over half of Canada’s commercial free-to-air television stations, while 60% of the population get their local newspaper daily from the same company that owns one or more of their local television stations. In the Vancouver/Victoria area, CanWest-Global operates two television stations as well as three daily newspapers. In both Montreal and Quebec City, Quebecor owns the most popular daily newspaper and the most viewed television station. What can be drawn from the Canadian experience is that, despite the best intentions of regulators, it is difficult to avoid increased centralisation of news and current affairs production (and consequent reduction in regional programming) from media companies with significant nationwide cross-media interests, precisely because it is the economies of scale and scope that can be achieved through rationalising operations that makes such mergers attractive. In the US, the largest of national media markets, proposed changes have included increasing the national audience cap from 35% to 45%; allowing single companies to own multiple networks; lifting a ban on cross-ownership, thus allowing a single company to own both a TV station and a daily newspaper in the same market, and easing restrictions on TV station ownership. They have all been rejected for the time being. Although Congress and appeal courts have largely disallowed these proposed rule changes, significantly, the national audience cap has been increased to 39%, up from the previous level of 35%. If nothing else, these compromises indicate the power of media corporations to have their way on Capitol Hill. The provision in the 1996 Telecommunications Act, requiring periodic reviews of ownership rules, has ensured that the deregulatory pressure will be maintained in future years.



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Conclusion: Content, consolidation and clout If there is an indisputable finding from our research, it is that local print media are seen as democratic institutions of paramount importance in sustaining local public spheres. Citizens now feel that their newspapers are letting them down. Corporate pressures are prominent among the reasons for this. If their ownership becomes even more driven by corporate values, as is to be expected from any deregulation, this will further erode these public spheres. At this point in the evolution of Australia’s changing media ecology we do not see the Internet and blogging as substitutes for well-established, widely distributed, commonly valued and professional media outlets. Just as industrial companies and developers must conduct environmental impact studies, we conclude that media regulation must take account of the implications of satisfying particular industry interests for the wider media field and its democratic social context. We offer some specific conclusions, based on the findings of this research project. The regulation of ‘localism’ in the form of the licence condition imposed by the

ABA (now ACMA) on regional television broadcasters is an important means of improving local services. In Townsville, for example, there is now competition in television news, whereas previously there was none. While criticisms have been made of the level of service required under this scheme, our research suggests that these criticisms are probably misplaced. The point is not that the licence condition sets the bar too low; instead, the evaluation of local television news without taking account of other sources of local content risks regulation for the sake of equivalent application of the rules, rather than for the needs of the community. Residents of Toowoomba are unlikely to respond to a boost in the quota for Southern Cross (or even for WIN) – instead, they want improvement in the quality of the Chronicle.

This raises a familiar dilemma for federal parliament: there is no power to regulate

newspapers and, in reality, there is little justification for governments intervening further in the control of newspaper content. Yet the Australian Parliament is preparing to abandon one of the underpinning principles of cross-media regulation in Australia: that we do not intervene and attempt to regulate bias in the print media – instead, we regulate to ensure there is competition. On current proposals, sometime in 2007, Australia will be a country which regulates neither the content of newspapers, nor the number of owners.

Although the importance the Canadians place on foreign ownership does not have

equal application in Australia, there is nevertheless a clear agenda on the part of the Canadian Government to regulate in the public interest. There is a rationale for the Canadian legislation that has its origins in the cultural interests of the community. That this policy benefits certain Canadian companies is a by-product of media policy, rather than its driver. The contrast with Australia could not be more stark.

In setting media policy for the next stage of digital services, we should ensure that

peremptory moves on media ownership do not lead to an even smaller number of players securing control over content rights or other communications platforms, including telecommunications and broadband services.



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Though few of the citizens of regional Australia interviewed in our case studies

made reference to trade practices legislation, they consistently pointed to the lack of competition as a reason for poor quality. Consistently, residents of regional Australia saw the media as a local public sphere or polis, not just a market for local advertisers.

The vernacular term ‘clout’ draws attention to the legitimacy of power, and this is

likely to be different in each polis. Though News Corporation, for example, indubitably has clout in the overall Australian press market, it does not necessarily have such clout in Townsville or Cairns. WIN has clout in Wollongong but much less so in Townsville or Launceston. Gunns have great clout in Launceston. To investigate whether media companies have, or might gain, undue clout in a polis will require understanding its general political and media characteristics, rather than a ‘head count’ of the players in the market.

The ‘minimum number of players’ test proposed by the government will not work

effectively as a safety-net to provide an adequate level of diversity and prevent further consolidation. In Toowoomba, the number of separate players could be reduced from eight to four; in Wollongong and Townsville, the number of separate players could be reduced from six to four; while in Launceston the reduction could be from five to four.

The alternative to a ‘minimum number’ approach must be a test that recognises

the difference between media outlets. In the markets we have examined, it is clear that some mergers would result in a profound disruption to the news culture of those communities. Examples of mergers that would damage the public sphere are:

o In Wollongong, the Illawarra Mercury and WIN Television o In Toowoomba, The Chronicle and WIN or 4GR o In Launceston, The Examiner and 7LA or WIN or Southern Cross o In Townsville, the Bulletin and 4TO.

This is not to say that other mergers would not produce adverse results; but equally, it could be the case that other combinations of media assets would have minimal impact on the community. Our conclusion is based on a recognition that there is little competition and, contrary to claims by proprietors that consolidation would raise the standard, we fear that partnerships between the only real sources of local news will have the opposite result – that standards will decline. Our conclusion is that a test for diversity should identify the mergers that matter.

In developing a test that would enable the regulator to examine the nature and

effect of media mergers, a preliminary scoping of the whole market would be necessary to identify the principal sources of local news, other forms of news and local information, and local advertising. The assumption would be that where there is a small number of genuine sources of such content, mergers between those sources would be opposed. Our discussions with residents of four regional communities suggest that authorisations for mergers must take account of factors such as: any commitments to maintain or create newsrooms with resident journalists; the extent to which cross-promotion of merged media outlets might



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harm competition within the market; the availability of equivalent alternative sources of local advertising; other business interests of the company and its connections with other local power elites that might affect editorial practices.

A new role for the ACCC in media regulation needs to evolve. If the ACCC is

unable to adequately test the effects of a proposed merger on a local market for news – as distinct from information or data – then there must be genuine consideration of the kind of test that the Productivity Commission described – a media-specific public interest test. This test must be capable of recognising the difference between a story on forests written by a Launceston journalist and story on forests filed by Reuters.

Before deciding on a new method of regulating media ownership, there should be

public disclosure of the ACCC’s proposed new approach to media mergers. Consideration should be given now to the intersection of competition regulation and the ‘minimum number’ test proposed by the Minister, based on five companies in metropolitan markets and four companies in regional markets.

The opportunity presented by the review of media policy should not be

squandered. If cross-media rules are to be abandoned and foreign ownership restrictions are to be lifted, safeguards are needed to ensure that the quality of regional print and television broadcasting does not follow the path of regional radio. Even allowing for the limits on constitutional power, legislation that facilitates cross-media ownership might, in practice, offer the most effective means of placing conditions on the further growth of media companies that take account of the public interest as well as corporate interests.

How do we regulate for quality? This is a question that demands the attention of

policy-makers. It is a question for now, not for later and it is not answered by further deregulation alone. In this respect, there is similarity between regional media and regional telecommunications. The Estens review of regional telecommunications set the quality-of-service benchmarks for the full privatisation of Telstra. Similarly, an ‘Estens’ approach to regional media might take this as its first principle: no further deregulation until services to the bush are up to scratch.



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Key findings

Our interviews and focus groups in Wollongong, Launceston, Townsville and

Toowoomba reveal a high level of dissatisfaction with local news cultures in regional Australia.

In print media, this is perceived to be a result of cost-cutting and the expansion of

advertising, sport and lifestyle coverage. For broadcast media, while there is a small number of dynamic local radio and television services, national syndication of programming and low production standards mean that regional communities more often see television and radio – with the exception of the ABC – as entertainment media rather than sources of serious news and current affairs.

People in these communities feel very strongly about the role of local media and

particularly, the way they have been ‘let down’ by their local newspaper. Residents of all locations point to the lack of coverage of major local issues. Residents of Toowoomba said they had received more information (through national media sources) on Sydney’s proposed desalination plant than they had on Toowoomba’s proposed water recycling plant.

In some locations, citizens have no confidence in the capacity of local media to

fulfil the traditional role of monitoring the political sphere and exposing corruption. Everone recognised the influence of local editors and the ‘clout’ that some media companies have in their communities. In some cases, people thought that local media were too closely implicated with other local power elites, such as the Labor Council and the ALP in Wollongong or the powerful Gunns corporation in Launceston. People were wary of any moves which would help to consolidate these local power elites and further erode the quality of the local public sphere.



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Despite this, all focus group participants emphasised the crucial role of local media in their communities, particularly the local newspaper. In general, they did not see changes in media owners as a threat to their community; instead, they consistently pointed to a lack of competition as having a direct effect on declining quality. In some locations, participants observed how local companies had a stranglehold on advertising not seen in other locations where there was greater competition.

An analysis of potential media mergers shows that there would be significant

consolidation and fewer players in the market if all cross-media laws were removed. But similar consolidation and reduction could occur under the government's proposed ‘minimum number of players’ test. In the four locations we studied, Toowoomba would see a reduction in the number of separate players from eight to four, while Wollongong and Townsville would go from six to four. Only Launceston would benefit; applying the test there could result in the current five media companies becoming four, rather than three if there were no test at all.

While our survey of local experience of regional media suggests that concerns

about the influence of owners over editorial content are largely misplaced, mergers have the potential to further damage the news culture and the communities that culture serves. Some participants suggested that mergers could be beneficial provided there was some way of providing a genuine guarantee that new owners would be required to invest in the quality and quantity of local coverage.

Our analysis of potential mergers combined with the survey of local views

suggests that some potential merges are likely to have little negative effect on local communities. The problem is that the ‘minimum number of players’ test simply performs a head count of local media companies. It is not able to distinguish between a low-rating horse racing radio station and the crucial source of local news and information – in most cases, the local newspaper. At present, neither is there any guarantee that competition law would provide an adequate safeguard.

A review of overseas approaches to media ownership and local content regulation

indicates that other governments and regulators have developed tests that permit the regulator to make a qualitative assessment of the companies involved and the real effects of proposed mergers. The governments of the US and the UK, while permitting significant liberalisation of ownership laws, have nevertheless retained core limits on cross-media ownership. Other jurisdictions also provide examples of serious commitments to regulatory mechanisms that can enhance regional content.

Against this background, if Australia choses to abandon the current cross-media

laws, there are two options that could continue to protect the public interest, and specifically, the interests of regional Australia:

o Develop a better diversity safeguard than the ‘minimum number’ test, based on qualitative evaluation of the local media market, then package that test with genuine, proactive mechanisms for boosting local content; or o Invest in a more comprehensive approach to the application of trade practices regulation to media mergers so that the public can be assured that their experience of a lack of competition can be accounted for in a trade pratices test. If this test could not be packaged with suitable undertakings on local content, broadcasting law could be used to impose suitable requirements.



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