David Bushby (Tasmania, Liberal Party) Share this | Hansard source

May I take this opportunity, as the speaker that follows Senator Back, to again acknowledge his contribution to the Senate over the time he has been here and to wish him very well and to thank him for what, once again and as always in this place, was an exceedingly compelling and erudite speech and a very compelling argument. I am sure that he has gone a long way to convincing some of those in this place who might have other thoughts as to where their votes might be that they should actually place their votes where they should be. I think you have convinced Senator Smith, if nothing else.

I also rise to talk on the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 and the Commercial Broadcasting (Tax) Bill 2017. This bill has developed over some time, and there has been a number of iterations and a number of different reforms that have been included in it. I note that the key elements to the package, as it currently stands, include: the abolition of the broadcasting licence fees for television and radio, allowing broadcasters to better compete with other media platforms; the introduction of a price for the use of spectrum by broadcasters that better reflects its use; protecting Australian children by banning gambling advertising during sports broadcast in children's viewing hours; amendments to the antisiphoning scheme and list; a broad ranging and comprehensive review of Australian and children's content; and a $30 million funding package for subscription television to support the broadcasting of women's and niche sports. However, what I intend to focus on primarily on in this bill are those parts of it which address the 75 per cent audience reach rule and the two-out-of-three rule. The reason I particularly intend to focus on that is I had the privilege of chairing the Senate Environment and Communications Legislation Committee inquiry into a predecessor to this bill, which was the Broadcasting Legislation Amendment (Media Reform) Bill 2016, which focussed primarily on those issues.

The environment in which the media operates in 2017 is vastly different to that which existed throughout most of the 20th century. Disruptive use of information technology, particularly internet-based opportunities for distribution of news, ranging from individual bloggers to a plethora of social media options, through to the large media operators running internet-based news services, has seen traditional media business models blown away and totally turned on their heads. It has totally changed how people collate, distribute and consume their news. The changes proposed by the bill are a measured, carefully developed and well thought out response to this changing environment, and I congratulate the minister, who, of course, is sitting in front of me.

The Senate Environment and Communications Legislation Committee conducted a comprehensive inquiry into this bill late last year. At the time, I was the chair of that committee and chaired that inquiry. It followed an inquiry into an earlier version of the bill, which was conducted during the course of the previous parliament. The earlier version of the bill was introduced in the House of Representatives in March 2016. The provisions of that bill were also examined in that parliament by the Senate Environment and Communications Legislation Committee. That committee received 21 submissions and conducted two public hearings. After considering that evidence on 5 May 2016, the earlier committee presented a report recommending:

It is worth noting that the bill only covered situations where a metropolitan broadcaster came to be in a position to control a regional broadcaster. After due consideration of the above recommendation, the earlier committee also moved on to recommend that the bill be passed.

I am pleased to note that, in the iteration of the bill that we looked at late last year, the government accepted the first recommendation of the earlier report. Accordingly, the bill that was introduced on 1 September 2016 differed from the earlier version by amendments that ensured the additional local programming obligations will be triggered if a regional broadcaster came to be in a position to control a metropolitan broadcaster. That showed the willingness of the government at that time to listen to sound argument and to adopt that sound argument into its bill. I think that the bill that is before us in this place today, which incorporates a whole range of other issues that needed to be addressed, also demonstrates the government's willingness to listen to good, sound argument and to act upon that and incorporate that into legislation it seeks to have enacted.

The bill considered by the environment and communications committee late last year was otherwise identical to the bill that was examined by the earlier committee. The more recent inquiry agreed to refer to the evidence received during the earlier inquiry. In addition, the committee wrote to individuals and organisations involved in the earlier inquiry, inviting them to provide updated information. The later committee received 12 submissions and also conducted a public hearing in Sydney. The report of the committee drew on the evidence and the findings of the earlier inquiry plus consideration of the additional evidence received during this inquiry, which means that it had quite a comprehensive range of evidence, both written and oral, from which to draw its conclusions.

My contribution in terms of the details of the bill, as I have mentioned earlier, will focus largely on the two-out-of-three rule and the 75 per cent reach rule and, in doing so, will focus largely on the findings of the inquiry from late last year. I will draw heavily on my chair's report as adopted by a majority of that committee in discussing that.

Let me now turn to the issues that I wish to address: the two-out-of-three rule and the 75 per cent reach rule. The Broadcasting Services Act 1992 includes five rules that limit the control of commercial broadcasting services, television and radio, and newspapers associated with the licence areas. The bill proposes, amongst other things, to repeal the following two rules: first, the 75 per cent audience reach rule. This rule provides that a person either in own right or as a director of one or more companies must not be in a position to exercise control of commercial television broadcasting licences whose total licence area population exceeds 75 per cent of the Australian population. This rule was first introduced as the 60 per cent reach rule in 1987 and was increased to the 75 per cent threshold in 1993.

The regulation impact statement published in the explanatory memorandum for the bill in late 2016 explains that the framework was based on the concept of control, not ownership per se. If a person has company interest exceeding 15 per cent, they are regarded as being in a position to exercise control of the company. However, holding company interest is not the only way to be in a position to exercise control. Another example of control is the ability to control the selection or provision of a significant proportion of the licensee's programming.

It is interesting to note that organic population growth does not result in the 75 per cent threshold being contravened. However, the current audience reach of the metropolitan networks and the application of the 75 per cent audience reach rule means that no metropolitan network can take over a regional network or acquire more licences without divesting one or more commercial television licences, which is very inflexible given the changing and dynamic nature of the current media landscape.

Second is the two-out-of-three cross-media control rule, which deals with television, radio and newspapers. This rule provides that mergers cannot involve more than two of three regulated media platforms: commercial television, commercial radio and associated newspapers in any commercial radio licence area. The two-out-of-three rule was introduced in 2006.

The three other rules which would remain if the bill were enacted include the five-out-of-four rule, which applies to television, radio and newspapers. This rule, which is also known as the minimum voices rule, is a requirement that at least five independent media operations or media groups must be present in the mainland state capital cities and at least four must be present in regional commercial radio licence areas. It is important to remember that that will remain even if this bill is enacted.

The one-to-a-market rule, which applies to television, is:

A person, either in their own right or as a director of one or more companies, must not be able to exercise control of more than one commercial television broadcasting licence in a licence area.

Again, if this bill is enacted, that will remain in place. The two-to-a-market rule, which applies to radio, is:

A person, either in their own right or as a director of one or more companies, must not be able to exercise control of more than two commercial radio broadcasting licences in the same licence area.

Again, no change to that rule is planned.

Under the BSA framework, a newspaper is associated with a television broadcasting licence, if more than 50 per cent of its circulation is within the relevant licence area; and with a commercial radio licence, if more than 50 per cent of its circulation is within the relevant licence area and the newspaper circulation covers at least two per cent of the licence area's population. National newspapers, such as The Australian and The Australian Financial Review, are not included in the definition of associated newspapers.

As mentioned, the arguments in support of the proposed measures stem from the technological changes and related developments that the media sector has faced. The arguments put by submitters to the inquiry that we conducted late last year include that, in recent years, it has become increasingly apparent that the 75 per cent rule does little to support media diversity as regional viewers essentially receive the same commercial television programming as metropolitan viewers due to affiliation or content supply agreements. In relation to the proposed abolition of the two-out-of-three cross-media control, as the rule focuses on traditional media platforms, it does not take into consideration the changed media landscape, where consumers access news content from alternative sources, such as online.

The technological change that has altered how media content can be consumed is strongly evidenced by the growing popularity of online content. Online video-on-demand services provided by international and domestic businesses distribute products throughout Australia without being subject to the ownership and control regulation rules in the Broadcasting Services Act. For example, the 75 per cent audience-reach rule prevents metropolitan television networks from broadcasting directly to 25 per cent of the population. However, this does not apply to online content. Clearly, it is a situation that is restrictive for those to whom the regulations apply.

Southern Cross Austereo noted at the inquiry that all three metropolitan television networks stream television programming—that is, online—with no regard for the exclusive broadcast licence areas and regardless of any cannibalisation this may cause to viewing or revenue in regional licence areas. The arrival of Netflix has crystallised the growing realisation that the existing media regulatory framework does not account for the internet. Indeed, Netflix's arrival represents for the first time a major media intervention in Australia that has not gone through a series of important regulatory gates.

In addition to online entertainment, the widespread popularity of online news services is another key development over recent years. As already noted, Australian newspaper businesses and other traditional Australian media companies operate websites used by many Australians to access their news. Contrary to Senator Back's assertion earlier on, I do not get Hobart's The Mercury in paper form anymore. I get the digital edition, as I imagine many other people do. He was actually putting me in the older generation. I find the digital edition fantastic for somebody who travels a lot because, as long as I have access to the internet, I can access the newspaper. That has advantages, but it demonstrates the changing landscape within which the additional media outlets now operate.

As already noted, Australian newspaper businesses and other traditional Australian media companies operate websites for the many Australians who access their news online—as do I and others now. However, international businesses also provide online news services with recent entrances in the Australian market, including local editions of The Daily Mail, The Guardian, Huffington Post and Buzzfeed. Online newspapers are not covered by the BSA ownership and control framework. It is clear that the rise of online services has had a significant effect on Australia's media sector. In particular, it highlights how the increase in online advertising services is affecting the advertising revenue on which media companies have traditionally relied.

As was noted at the hearing last year, Mr Greg Hywood, the chief executive officer of Fairfax Media, stated:

The traditional media companies, including publications like us, originally had two main sources of revenue. One was classified advertising and one was display advertising. As we know, over-the-top players have come into the market—such as REA, SEEK and Carsales—and taken that classified component which, for Fairfax, was probably 60 per cent to 70 per cent of our revenue. About another 25 per cent to 30 per cent was display advertising. Most that is now going to Google and Facebook.

Mr Hywood added that although the overall marketing spend in Australia is increasing, that increase does not outweigh the falling market share of advertising that traditional media companies are experiencing. On the consequences of this for Fairfax, he said:

… we are attempting to invest in Australian media and we are attempting to provide jobs for journalists, which provides the transparency that is so valuable to this community, on a smaller and smaller amount of money.

Mr Hywood informed the committee that US research shows that '85 per cent of new display advertising coming in to the US market is now going to Google and Facebook'.

If the proposed changes are enacted, consolidation within the commercial television sector will be possible, subject to the Competition and Consumer Act 2010 and other relevant laws. It is argued—in my view, compellingly—that this would allow greater scale in operations, allowing commercial broadcasters to compete in an environment where audiences can readily access premium content online. Evidence to the inquiry backed the conclusion that 'without some form of consolidation you are going to see less and less local information and less and less diversity in the voice from regional Australia'. This is because the current economic circumstances regional media companies face will mean that over time their finances will not allow continued investment in local content.

The Australian Competition and Consumer Commission has also observed the 75 per cent audience reach rule and the two-out-of-three rule appear to be outdated as the result of technological change. As the May 2016 report on the earlier version of the bill discussed, the ACCC's views on this were informed by the review it completed in 2015 of a transaction involving the Ten Network and Foxtel. As an aside, of course, recently the Ten Network has gone into receivership—no doubt a reflection of the challenging media business landscape it faces with outdated restricted ownership rules. The ACCC's chairman, Mr Rod Sims, noted that streaming activities by the free-to-air networks made it difficult for their activities to be contained by the 75 per cent reach rule. Free-to-air networks are not as constrained by that rule as the traditional media outlets are. Mr Sims also noted that 'had there not been a 75 per cent reach rule, it is possible that other buyers could have met a more competitive outcome than the one we ended up with', maybe having some impact on the viability of the Ten Network. We will never know.

Notwithstanding the evidence regarding the financial challenges some media companies are facing and the view that certain aspects of the media ownership framework are obsolete due to technological change, the continued influence of Australia's traditional media companies is evident. Mr Tim Worner, the chief executive officer of Seven West Media, noted:

Over 70 per cent of Australians exclusively rely on free-to-air television for their news, their sport and their entertainment content.

Interestingly, Professor Michael Fraser, the former director of the now-closed Communications Law Centre of the University of Technology Sydney, stated:

While it is the case that many people, especially younger people, now obtain their content—including news and current affairs—online, much of that is parasitic on the mainstream media and is recycling content which others have invested in the production and distribution of.

Professor Fraser added that although there are online sources 'we are still in this transitional phase where people rely on the mainstream media', which is why it is so important to get the regulations that relate to mainstream media right so that they can continue to compete in this environment.

Although there is an expectation that the availability and popularity of online content will continue to grow, Professor Fraser argued that 'we will still need to ensure that there are mainstream providers of news and information which are regulated'—I would say appropriately—'so that the public has confidence in the professionalism and journalistic standards of fairness and accuracy in mainstream media.' To illustrate this point, Professor Fraser commented:

If you go online to any site, you do not know whether it is a dissident in Beirut or somebody in Glasgow pretending to be a dissident in Beirut—you take your chances. But we need to have confidence in a regulated mainstream. That is why I connect these two issues intimately.

The bottom line is that the question of diversity of sources must be linked with the standards that apply to the professional level of their production, especially fairness and accuracy.

The issues that need to be addressed relating to the application of the 75 per cent audience rule—I note I have 18 seconds left, so I am not going to get into that one too much—were clearly articulated as well during the inquiry by regional broadcasters. Although local news is produced, overall, no more than three per cent of that content is local and so it is very important that we make the changes that we are looking at today to ensure that we can— (Time expired)

Friday, 23 June 2017