Regionals float takeover trigger in media reform bid

The Australian Financial Review | Dominic White | 5 October 2015

Any buyer of a regional television network would be required to maintain the station's local news services at existing levels, under a proposal designed to win approval from regional MPs for the abolition of cross-media ownership laws.

The Save Our Voices campaign, led by regional networks Prime Media, Southern Cross Austereo, WIN Corp and Imparja, is also floating the idea that any buyer of a regional network be required to provide a minimum local news service in markets where no such requirement currently exists.

The lobby group's recommendations are designed to mollify those regional MPs who are concerned about both the diminution of local voices caused by the growth of internet viewing and the possible impact of scrapping ownership restrictions.

Communications Minister Mitch Fifield will begin meetings with television industry bosses when Parliament resumes on October 12, having signalled that long-awaited media reform is back on the agenda under the new Prime Minister Malcolm Turnbull. 

A television network's obligations to show sufficient material of local significance are determined by licence conditions.

The obligations have nothing to do with the cross-media ownership laws, which currently prevent a metropolitan television network from acquiring a regional one under the so-called "reach rule".

However, while Southern Cross operates close to its minimum local content requirements in most of its regions where such obligations exist, Prime and WIN both easily exceed their minimum requirements in most of their mandated regions. (The minimum requirement is to typically to screen around 18 minutes of local news a day, under an arcane points system.) 

Some regional MPs are concerned that if the ownership laws are abolished any acquirer of a regional network could strip back a regional network's local news output to that minimum requirement in order to slash costs.


So the regional networks are proposing that a change of control clause be written into their licences that would prevent any buyer from cutting regional news services further.

The buyer would also be required to introduce local news services at a minimum level in all regions in which the acquired network operates. Such a move could strengthen local news provision in those regions – such as regional South Australia, regional Western Australia and Mildura – where no requirement currently exists.
Regional network bosses will argue that the cost savings that could be generated by merging with, or being acquired by, a metropolitan network would far outweigh the extra regulatory imposts from their recommendations.

Seven West Media chief executive Tim Worner has described the regional broadcasters' push to media laws changed as a "scare campaign" with an ulterior motive of making their assets more attractive for takeover bidders.

"Removing the reach rule will do nothing more than achieving the very outcome they claim they are trying to prevent – extraction of costs from a merged entity at the expense of local content and local jobs," he said in July.

Save Our Voices argues that the abolition of the reach rule and the two-out of-three rule – which stops any one group owning more than two of a newspaper, commercial TV licence or radio licence in a major market – would actually save local news.

Unless the rules are scrapped, they argue, they will be forced to continue cutting costs. Facing escalating affiliation fees, falling revenues and the high cost of maintaining the 500-plus transmission towers they use to get signals to the bush, local news – which makes up 15 per cent of total costs – is the only major cost they can cut back, they say. 

Some politicians say that the regional networks' commitment to news is already diminishing, evidenced by a flurry of recent closures of local news services.

The networks says that scale, by way or mergers and acquisitions, would protect local news. 
They point to NBN, a wholly-owned subsidiary of metropolitan network Nine Entertainment Co, which has the scale to produce five local hour-long news bulletins to viewers in the northern NSW area.

About 40 per cent of the content of those bulletins is local to each of the five local areas. In contrast, Prime provides two local news bulletins, and Southern Cross Austereo only provides viewers in that licence area with news updates. 

WIN has recently shut down its local news bulletin in Mackay and says it is considering closing other news services in Queensland unless there are changes that allow them to compete more effectively. \

View the article on the Australian Financial Review.