Australia: Federal court challenge to the commercial radio disclosure standard

Last Updated: 28 June 2012
Most Read Contributor in Australia, September 2016

On 21 March 2012, the Australian Communications and Media Authority (ACMA) announced new Commercial Radio Standards (Standards). The Standards require the disclosure of commercial agreements or other arrangements including the disclosure of commercial agreements or other arrangements that have the "potential to influence" the content of the current affairs programs and that advertising be distinguishable from other program material "at the time of broadcast".

The Standards began on 1 May 2012 and include –

  • Broadcasting Services (Commercial Radio Current Affairs Disclosure) Standard 2012 (Disclosure Standard); and
  • Broadcasting Services (Commercial Radio Advertising) Standard 2012 (Advertising Standard).

These changes have been made following a review into the former standards, which the commercial radio industry considered to be outdated and unworkable.

In March 2011, the ACMA released an Options Paper for comment which proposed two possible reforms: first, to vary aspects of the current Advertising and Disclosure Standards or, second, to revoke the Standards in favour of an industry code. Despite the strong industry support for the second proposal, the ACMA developed and has now implemented the Standards.

The changes are contentious and have been opposed by the industry. Commercial Radio Australia (CRA), the peak national industry body for Australian commercial radio stations, commented that the repealed Disclosure Standard was "unnecessarily prescriptive and burdensome" and the repealed Advertising Standard was "too vague to be workable or fair". It recommended that the previous Standards be replaced by industry codes that deal in a contemporary and practical way with the issue of transparency or commercial arrangements in radio broadcasting. The industry sought flexibility and a reduction in the regulatory burden to bring it on par with the rest of the media industry.

CRA also criticised the approach taken by the ACMA in assessing contemporary community standards which it argued relied almost exclusively on its own research containing significant limitations and does not provide an appropriate basis for the formation of significant public policy. Furthermore, there is a sentiment in the industry that the Standards are increasingly out of step with other broadcast media in Australia, will have major financial impact, as well as greatly affecting the listener appeal of radio.

Harbour Radio Pty Limited and the Macquarie Radio Network Limited have sought to challenge the Disclosure Standard in the Federal Court.

Harbour Radio Pty Limited v Australian Communications and Media Authority [2012] FCA 614

Harbour Radio Pty Limited and Macquarie Radio Network Limited sought judicial review of the Disclosure Standard in the Federal Court under the Administrative Decisions (Judicial Review) Act 1977 (Cth). The applicants sought to challenge the ACMA's decision to make the Disclosure Standard on the grounds that:

  1. it was made in excess of the jurisdiction conferred on the ACMA under section 125 of the Broadcasting Services Act 1992 (Cth) (BSA);
  2. the ACMA had no jurisdiction to make such the Disclosure Standard which burdens communications on political and governmental matters and is not reasonably appropriate and adapted to serve any legitimate and relevant purpose;
  3. the decision to make the Disclosure Standard was not reasonably or rationally proportionate to the community safeguards it sought to protect; and
  4. the ACMA's decision was so unreasonable that no reasonable person could so exercise the power.

Disclosure Standard upheld

Justice Griffiths dismissed the application. Justice Griffiths considered that the ACMA's decision to implement the Disclosure Standard was not made in excess of the jurisdiction conferred by section 125 of the BSA. Further, noting, that none of the registered industry codes of practice dealt with the issue of commercial influence in news and current affairs programs in respect of where a presenter had a relevant financial interest in a licensee.

Justice Griffith also rejected the applicants' argument that the 2010 Standard was invalid because it was incompatible with the constitutionally protected implied freedom of political communication.

On the question of unreasonableness and proportionality, Justice Griffiths considered that the Disclosure Standard was not invalid for unreasonableness or disproportionality. Justice Griffiths noted that the ACMA's power to make a standard under section 125(1) of the BSA is purposive and the purpose of the power is to enable the ACMA to determine a standard which provides appropriate community safeguards. "The object or purpose of the [Disclosure] Standard is to encourage licensees to be responsive for the need for a fair and accurate coverage of matters of public interest by requiring the disclosure of commercial agreements or other arrangements that have the potential to affect the content of current affairs programs". Justice Griffiths considered that this was an accurate general description of the Disclosure Standard and was consistent with the object underlying section 125 of the BSA. In addition, the Disclosure Standard can reasonably be considered to be appropriate and adapted to providing adequate community safeguards, as specified in section 125(1)(a) of the BSA, and to require licensees to make a disclosure announcement where a presenter has a financial interest in a licensee does not lack proportionality with the legislative purpose or object.

Finally, Justice Griffiths considered that the applicant's reliance on the ADJR Act should fail, as the ACMA's decision to make the Disclosure Standard is a decision of a legislative, rather than an administrative character and is not capable of review under the ADJR Act.

In this regard it is relevant to note that section 204 of the BSA provides for an automatic right of Administrative Appeals Tribunal (AAT) review for some decisions of the ACMA. However, the imposition of a standard under section 125 is not a decision reviewable by the AAT.

What does the decision mean for commercial radio broadcasters?

The Federal Court has upheld the decision, and as a result, the Standards will continue to apply and commercial radio broadcasters will have to comply with them.

The Disclosure Standard - important changes

  • Commercial agreements, including both presenter agreements with sponsors (where the presenter has a commercial agreement with a sponsor) and license agreements (where the presenter has an interest in the licensee company, which in turn has a commercial agreement with a sponsor) must be disclosed on air.
  • Presenters must make a statement that "makes it clear to a reasonable listener that the production costs associated with the current affairs program are paid for, or contributed to, by the advertiser or sponsor". The Standards remove the current obligation for current affairs presenters to use one of six scripted phrases to identify sponsorship arrangements.
  • The registration and formal notifications process has been amended so that commercial radio licensees are able to register arrangements online through their website instead of sending formal notices to the ACMA and keeping a public register at the station premises.

The Advertising Standard - important changes

  • Advertising must be distinguishable from other program material "at the time of broadcast", rather than later in the segment or program generally (as required under the previous standard). Previously, commercial radio broadcasters used one of six scripted statements to make the arrangements known. It is believed by those in the Industry that this requirement for contemporaneous broadcast of disclosures will be difficult and costly to administer.

Definition of "consideration"

In both the Disclosure and Advertising Standards, the definition of "consideration" has been expanded and now includes other beneficial and indirect benefits intending to better capture instances of paid advertising and commercial influence.

Compliance Program

The Compliance Program Standard, which required commercial radio licensees to undertake compliance education and audits, has been revoked by the ACMA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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