On 6 May 2017 the Federal Government announced further reforms to Australian broadcasting under its Broadcast and Content Reform Package. This integrated legislative package includes the Broadcasting Legislation Amendment (Media Reform) Bill 2016 (Media Reform Bill) tabled in parliament in 2016, as well as additional government initiatives. The reforms aim to improve the sustainability of Australia’s free-to-air broadcasting sector, support the creation of high quality Australian content and modernise broadcasting and content regulation.

Media Reform Bill

The Media Reform Bill was tabled in parliament in 2016 and is currently being considered by the Senate. If enacted, it will amend the Broadcasting Service Act 1992 (Cth) (BSA) by abolishing both the "75 per cent" audience reach rule and the "2 out of 3" cross-media rule. A third tranche of changes to the BSA designed to ensure diversity in regional areas comprises new rules requiring commercial television licence holders to broadcast a prescribed amount of "local" content each week following a trigger event. For more info on the Media Reform Bill, please click here to read our previous alert.

Under the "75 per cent" reach rule, a person cannot, either in their own right or as a director of one or more companies, be in a position to exercise control of commercial television broadcasting licences whose combined licence area populations exceed 75 per cent of the population of Australia. The rule has the practical effect of preventing mergers between any of the predominantly metropolitan commercial television broadcasting licensees (Seven, Nine and Ten) and any of the regional commercial television broadcasting licensees (Prime, WIN and Southern Cross). The government's view is that this rule does little to support media diversity as regional viewers essentially receive the same commercial television programming as metropolitan viewers, and that its repeal will better allow commercial broadcasters to compete in an environment where audiences are accessing content online.

The "2 out of 3" rule currently prohibits a person controlling more than two out of three regulated media platforms (i.e., a commercial television broadcasting licence, a commercial radio broadcasting licence and an associated newspaper) in any one commercial radio licence area. The government's view is that this regulatory framework is no longer appropriate for the modern media environment, as it was developed in the analogue era and restrains traditional media companies from optimising the scale and scope of their operations and from accessing resources, capital and management expertise available in other media sectors.

New initiatives proposed alongside the Media Reform Bill

The remaining initiatives in the Broadcast and Content Reform Package:

  • Abolish broadcasting licence fees and datacasting charges which are based on revenue (and worth approximately $130 million) and replace them with a spectrum fee calculated by reference to the spectrum that broadcasters use (worth approximately $40 million).
  • Further restrict gambling advertising in live sporting events across all platforms. New restrictions will apply to gambling advertisements during live sports broadcasts shown on commercial television and radio, subscription television, SBS and online platforms. The new restriction will ban gambling advertisements from five minutes before the commencement of play until five minutes after the conclusion of play or 8:30pm, whichever comes sooner. Existing exemptions for racing and lottery advertising will remain in effect.
  • Amend the anti-siphoning scheme and reduce the size of the list. A number of international sporting matches will be removed from the anti-siphoning list, and free-to-air broadcasters will no longer be prevented from televising the remaining events solely on their digital channels.
  • Introduce a 2017 review of Australian and children’s content in order to identify sustainable policies for the ongoing availability of Australian and children’s content to domestic and international audiences, regardless of platform.
  • Include $30 million in funding to subscription television over four years in order to maintain and increase coverage of women’s sports, niche sports and high participation sports that are less sustainable to broadcast.

Comment

Labor and the Greens oppose the repeal of the 2 out of 3 rule, remaining of the view that scrapping the rule won't benefit consumers. This has stalled progress on the proposed BSA amendments for over 12 months. They remain steadfast in their opposition of the current proposals, unless repeal of the 2 out of 3 rule is removed or appropriately amended. Without Labor or the Greens, the government will need the support of 10 of the 12 micro-party and independent crossbenchers.

However, the reform package in its current form has received overwhelming support across the media sector from free-to-air, pay television and radio broadcasters and from publishers, particularly in light of the immediate financial relief for all commercial free-to-air television broadcasters from the abolishment of licence fees.

Bolstered by this support, the government is pressing ahead to win over the independent crossbenchers it needs to push the package over the line in its entirety. It remains to be seen what amendments and/or concessions Senate crossbenchers may seek in exchange for their support, but the rise in share prices in major media companies in the days following announcement of the package suggests that the market and investors are more confident on the prospects for passage of this legislation.

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