Australia: Repackaging reform in the media sector in Australia

Last Updated: 12 May 2017
Article by Angela Flannery

Most Read Contributor in Australia, August 2017

On 6 May 2017, in the lead up to the 2017-18 Australian Commonwealth Budget, the Government announced a consolidated package of reforms for the Australian media sector. Many of the reforms included in the package have either previously been announced (for example, the changes to media ownership laws) or have long been considered (for example, the review of support for Australian and children's content was first floated shortly after the 2013 Federal election).

The Government has obtained industry support for this consolidated package. The Government believes it is more likely to secure support in the Australian Senate for this consolidated reform package than if elements of the package were pursued separately. The Australian Labor Party and the Greens have already indicated concerns with some of the reforms and therefore support from the remaining minor parties and independents in the Senate will be critical for the passage of the necessary legislation.

The reforms will assist Australian free to air commercial broadcasters to reform in a rapidly changing environment, particularly as online streaming services become increasingly popular with Australian consumers and international media organisations increasingly provide those services.


The package contains the following:

  • Media ownership laws: Removal of the "75% reach" rule and the "2 out of 3" rule which apply to media mergers, as provided for in the Broadcasting Legislation Amendment (Media Reform) Bill 2016 (Bill). The Bill is currently before the Senate and could potentially be debated during the 2017 Winter sittings of Parliament. More details on these changes are in the second half of this briefing note.
  • Licence fees: The removal of licence fees for commercial television and radio broadcasters (amounting to approximately $130 million per annum in savings for those broadcasters).
  • Spectrum charges: A spectrum charge for broadcasters, based on spectrum transmitters used, will be introduced. This will result in revenues to the Government of approximately $40 million per annum. Regional broadcasters, who might face an increase in fees as a result (even after taking the licence fee removal into account), will have the benefit of a 5 year transitional support package.
  • Anti-siphoning scheme: Changes to Australia's 'anti- siphoning' regime will be introduced, allowing subscription television to bid for more live sporting events. The list of events to which the scheme applies will be marginally shortened, with events such as some international rugby league test matches, some FIFA World Cup matches and some ODI World Cup cricket events being removed. The changes will include a removal of the restriction that prevents free to air broadcasters from televising the listed events solely on their digital channels and increasing the time at which an event is automatically removed from the anti-siphoning list from 12 weeks before the event to 26 weeks.
  • Content review: An Australian and children's content review will be undertaken, looking at whether the measures in place to support the production and delivery of Australian and children's content remain fit for purpose.
  • Gambling ads: Further bans on gambling advertising are intended to take effect from March 2018. These restrictions will prohibit gambling advertising during the broadcast or streaming of live sporting events for the period starting 5 minutes before the scheduled start of play to the first to occur of 5 minutes following the conclusion of play and 8.30pm. Importantly, the restrictions will not only apply to free to air television broadcasters (that is, the commercial broadcasters and SBS) but will also apply to commercial radio, subscription TV and online platforms. Existing exemptions for racing and lotteries will continue to apply. Where possible, these changes will be implemented without legislation, through applicable codes. It is not yet clear how the online ban will be implemented.
  • Women's sports: A limited increase in financial support will be provided for subscription television to broadcast women's sports (and niche sports) that currently receive low or no broadcast exposure.

The merger reforms and content review, which are likely to have far reaching impacts, are considered further below.

Media Merger Guidelines

The aim of the changes proposed in the Bill is to allow for the possibility of mergers that are arguably required to ensure ongoing sustainability and competition in this rapidly changing sector. Restrictions will however remain, both under general competition law and media specific regulation, which will limit consolidation in this sector.

Existing Australian regulation

Mergers in the media sector in Australia are currently regulated by both the Competition and Consumer Act 2010 (Cth) (CCA) and the Broadcasting Ser vices Act 1992 (Cth) (BSA). Section 50 of the CCA prohibits acquisitions that would have the effect, or be likely to have the effect, of substantially lessening competition in any market in Australia. This rule applies generally to mergers across all industry sectors.

Australian law has, for a long time, imposed additional restrictions in relation to media ownership. The BSA continues to contain restrictions applying only to media mergers.

These provisions are designed to, amongst other things, protect diversity and Australian content (including local news production). In short, the BSA rules are:

  • 75% audience reach rule (which applies only to television) No person may be in a position to exercise control of commercial television broadcasting licences where the total licence area population exceeds 75% of the Australian population.
  • 2 out of 3 cross-media control rule (which applies across television, radio and newspapers) A merger is prohibited if it would involve any person having control of media platforms in each of television, radio and associated newspapers in any commercial radio licence area.
  • 5/4 rule or diversity of voices rule (which applies across television, radio and newspapers) At least 5 independent media operations or media groups are required in each metropolitan commercial radio licence area and at least 4 in each regional commercial radio licence area.
  • One to a market rule (which applies only to television) A person must not be in a position to exercise control of more than one commercial television broadcasting licence in a licence area.
  • 2 to a market rule (which applies only to radio) A person must not be able to exercise control of more than 2 commercial radio broadcasting licences in the same licence area. Additional regulation will apply where a proposed acquisition involves a foreign acquirer. The Foreign Acquisitions and Takeovers Act 1975 (Cth) applies in such circumstances. The media sector is a 'sensitive sector' under the Government's Foreign Investment Policy, meaning that all foreign investment over 5% in local media businesses must be notified to and approved by the Commonwealth Treasurer.

Draft legislation

The proposed removal of the 75% audience reach rule and the 2 out of 3 cross-media control rule recognises that changing technology has limited the ability of these rules to achieve the desired objectives and also that more flexibility is required in this sector to allow business models to sustainably evolve. Recognising the ongoing concerns of consumers in regional areas, the Bill would also impose new regulation to ensure delivery of local content in those areas.

The draft legislation has been considered twice by a Parliamentary Committee and does not have general support from the Australian Labor Party, which continues to argue against removal of the 2 out of 3 rule. Even as part of the new consolidated reform package, there is no guarantee that this Bill will become law.

Media Merger Guidelines

In anticipation that reform of the BSA would occur, in mid-2016 the Australia's competition regulator, the Australian Competition and Consumer Commission (ACCC) released draft updated Media Merger Guidelines for consultation. These Guidelines are intended to replace the existing Media Mergers Guidelines, which were issued by the ACCC in August 2006. The ACCC had hoped to finalise the updated Media Merger Guidelines in 2016, though this did not occur – presumably this delay reflects the delay in the passage of the Bill. It is important to note that the current Guidelines, as they are to be updated, apply in addition to the ACCC's general Merger Guidelines.

The draft Guidelines note that, in considering the markets that may be impacted by a merger in the media sector, the ACCC is likely to focus on the supply of content to consumers, the supply of advertising opportunities and the acquisition of content from providers. This approach has been reflected in recent decisions by the ACCC in the media sector, including in respect of the Australian Regional Media acquisition by News Corporation and Seven West Media's acquisition of The Sunday Times. It is understood that only a few submissions were received from stakeholders on the draft Guidelines and therefore these are unlikely to change significantly before they are finalised.

Australian and children's content review

The content review is to be undertaken jointly between the Department of Communications and the Arts, the Australian Communications and Media Authority and Screen Australia. It will look at screen production funding and support mechanisms, quota obligations and minimum expenditure requirements for television broadcasters. This is one of the elements of the package that has been on the Government's agenda for quite some time. The need for a review was first flagged by the Prime Minister, in his former position as Minister for Communications, in 2014. When then Minister Turnbull announced his 'Deregulation roadmap' for 2014, reform of Australian and children's television content quotas and subquotas (like media ownership rules and anti-siphoning rules) was listed as an area of focus, even though not strictly deregulatory in nature.

Further detail of the proposed review has not yet been released. For example, the timing for undertaking the review, and implementing its outcomes, is not set out in the Government's announcement.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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