3. Media Ownership - law and impact
The past 12 months have seen a dramatic reshaping of the Australian media landscape, brought on by the passing of new ownership -rules by the Federal Government.
The major aspects of the new rules, which were unveiled in July 2006, were, according to a government press release, a relaxation of -the existing restrictions on cross-media ownership subject to safeguards intended to ensure no fewer than five independent "voices" remained in metropolitan markets and four in regional markets; the opening up of two reserved digital channels for new digital services such as mobile television or new in-home services; legislation to retain licence conditions ensuring local content on regional television in Queensland, NSW and Victoria and extending to Tasmania; protect local radio content in regional markets by requiring commercial radio licensees seeking mergers in regional markets to meet minimum standards for local content including news, community service announcements and emergency warnings; remove the existing foreign ownership restrictions but retain the media industry as a "sensitive sector" under the Government,s foreign investment policy. (In September 2007, the Minister foreshadowed that some of the putative rules applying to local content on regional broadcasters might be relaxed.)
The ACCC was given the brief to ensure competition laws are fully complied with under the general mergers provisions of the Trade -Practices Act 1974, while the Australian Communications and Media Authorit (ACMA) oversees safeguards to ensure diversity and local content, including ensuring transactions comply with the minimum number of media groups requirements.
ACMA was given a range of new powers to regulate broadcasting, including power to seek civil penalties and injunctions and to accept -enforceable undertakings from broadcasters.
Retained were existing licence and reach limits, which provide that a person may control only one commercial television licence or -two commercial radio licences in any licence area, and that a person may not control commercial television licences reaching an audience of more than 75 per cent of Australian population.
On announcing the changes Communications Minister Helen Coonan denied that they would further concentrate media ownership.
What it will do is enable some new investment, it will enable some scale and scope. I do think there is some possibility of new -entrants.
Moves in the marketplace
The response from the business world was dramatic.
First, PBL sold half of the Nine Network and ACP Magazines to a private equity group, CVC Asia Pacific. At the time of writing it is -likely that CVC will lift its share to 75 per cent, taking the Packer name out of Australian media control for the first time in decades.
PBL bought the Newcastle television station NBN while WIN (based in Wollongong) joined the big boys by buying Channel Nine in Adelaide and Channel Nine in Perth.
Kerry Stokes sold a half share in the Seven Network to another private equity group, Kohlberg Kravis Roberts, and used some of the proceeds to lift Seven,s holding in West Australian Newspapers, publisher of The West Australian, to 15.01 per cent.
Fairfax and Rural Press announced a friendly merger under the Fairfax Media banner, reducing the number of major proprietors by one and making the new company the publisher of six metropolitan newspapers, more than 200 regional and community newspapers, more than 30 rural titles and 18 financial publications and websites. Fairfax also launched brisbanetimes.com.au, an on-line newspaper servicing southern Queensland.
Macquarie Media first purchased 13.8 per cent of Southern Cross Broadcasting and later joined with Fairfax in announcing a proposal to acquire, via a scheme of arrangement, the entire company. Under the arrangement, Fairfax will acquire the Southern Cross commercial radio stations, including Sydney's 2UE, Melbourne's 3AW and Magic 1278, Brisbane's 4BC and 4BH and Perth's 6PR and 96FM. In addition, Fairfax will gain Southern Cross's television production and distribution businesses.
Macquarie Media, which owns 87 radio stations across Australia, will get Southern Cross's Channel Ten affiliated television stations in regional Queensland, NSW and Victoria, as well as Seven Network affiliates in Darwin and Tasmania. It will also pick up from Fairfax nine regional radio licences in South Australia and Queensland.
Just how all this movement plays in the medium term is anyone's guess. What is certain is that one major publisher - Rural Press - has disappeared while the merger that caused its disappearance seems to have removed Fairfax from the endangered species list. From being widely seen as prey, the new Fairfax is a predator. It is also a predator with a Fairfax at the helm for the first time since 1989, which augers well for future stability.
However, many are concerned about the long-term intentions of the private equity groups in Seven and PBL, with fears that such pure investment entities might seek short-term exits to counteract debt levels.
On the international scene, News Corporation's takeover of Dow Jones, including acquisition of The Wall Street Journal, caused enormous excitement, with fears expressed for the paper's editorial independence.