Cross-Media and Foreign Ownership Laws in Australia - Essay Example

Australia Ripples the Waters as It Relaxes Cross-Media and Foreign Ownership Laws I. Introduction After Lord Morley left journalism tojoin government service in the early stages of the development of media in UK, there is an oft-quoted remark made to him by Kennedy Jones, co-founder of the venerable Daily Mail. "You left journalism a profession. We made it a branch of commerce," Jones told Morley. The equally famous rejoinder was: "The more, the pity."1 One view in effect exults that media has evolved into a business proposition, where profit takes precedence over its traditionally loftier priorities. The other opinion looks with sadness at such commercialization of journalism, implying that this is inimical to public interest. That pithy exchange from the past captures the essence of the present-day debate in Australia triggered by the government announcement of plans to deregulate media after 20 years of controls on foreign ownership and cross-media transactions. The Morley-Jones clash of views between the public service and business orientation of media deferred to old UK conditions, but the same hairsplitting still rings true today and continues to reverberate throughout the world as economic opportunities diminish and competition for scarce resources tighten up. Since almost all sectors of national economies have been served up for foreign interests in the universal drive to generate much-needed foreign investment, governments in many parts of the world, both developed and underdeveloped, are fixing their attention on the media industry as the last remaining enticement for foreign investors. As Australian Sen. Ron Walker puts it: "Media has become the last major industry begging for reform to bring it to the 21st century."2 By inference, the senator is batting for a new scheme that would keep Australian media in step with the times by allowing foreign investment into the arena. Australia is veering towards that exact direction, with the reforms on foreign media ownership and cross-media transactions programmed to take effect in 20073. The main purpose is to maximize the business benefits from the operations of media. For a change, foreign media players will be given the welcome mat and local media groups already in place will be allowed to merge for simultaneous ownership of television, radio and newspaper licenses and other newly arrived media platforms. This merger is called cross-media ownership in industry parlance. In the interim, the government conducts a nationwide multi-sector consultation in a desire to accommodate every viewpoint in the reform framework and thus hammer out a final policy that is acceptable to all. The more strident objections, as expected, come from the vanguards of press freedom and the citizens' rights to the widest sources of news and information brought to them without the biases of big business. Big businesses the media firms will indeed become if the set of current restrictions are pulled out. Thus, the debate now raging in Australia's media landscape centers on the basic question: Are the economic benefits promised by the entry of foreign media and liberalization of cross-media rules enough to justify placing at risk the spirit of competition and independence of media This essay weighs the pros and cons of the issue, ranging the Australian media reform plan against that of other countries exhibiting the same inclinations, if only to see which models it can use to improve a framework that would appeal to the cross-section of Australian society. II. Foreign Ownership of Media Under the Australian media reform plan, regulations on media ownership will be relaxed as they involve both Australian citizens and foreigners. All existing restrictions on foreign ownership and control of media will be abolished as well as relevant barriers contained in both the 1992 Broadcasting Services Act (BSA) and the Foreign Investment Policy under the 1975 Foreign Acquisitions and Takeovers Act (FATA)4. Limits on simultaneous ownership of TV, radio and newspapers media, or cross-media control, will be lifted and media mergers will be allowed. The move forms part of the government efforts to 'break down the tyranny of distance and help deliver essential health and educational service through telemedicine and e-learning services," says Minister Helen Coonan. This is a lead feature of the $878-million Broadband Connect Program, which in turn comprises the second phase of the $1.1-billion Connect Australia package designed to revitalize communities in rural and regional Australia5. The heaviest flak is drawn by the prospect of foreign ownership in a field usually associated with sovereignty, patrimony, freedom and independence. As the Campaign for Australian Media Diversity (CAMD) indicated in its objection to the plan, foreign media ownership represents outside intervention in the internal affairs of a sovereign state. The least of the possible damage it can do is compromise the independence of editorial policies in media, the NGO says6. Media traditionally provides an important check-and-balance function in a democracy, watching over government and society to expose wrongdoings and inequities. It is also a potent tool for propaganda and for molding public opinion and, given the proper motivation, can galvanize the citizenry into taking up arms against the government, launching civil disturbances, causing general panic, or mustering public aversion against something. This explains why in fledgling democracies, political dissidents usually start a power grab by first taking over media facilities. With media thus muzzled, it rules out the possibility that media might develop public sympathy against the rebels. Once the rebels control the media, they then use the facilities to generate public support for their own cause. In this connection, opposition to Australia's media reform plan harps on the fear that with the liberalized scheme, nothing can prevent foreign elements with sinister designs or at least hidden agenda from entering the country. Allowing these foreign interests to control media only makes this task easier, so goes the reasoning. Nevertheless the business sector receives the news with unconcealed delight. Following the announcement of the media reforms, media stocks surged in the Australian exchanges particularly those of Fairfax, Austereo and 7-Network7. Evidence is mounting that some segments of the traditional media are losing out to the new alternative media, such that their owners need to expand to other platforms in order to maintain profitability, or find a powerful foreign investor that can reinforce their position through the economy of scale. Newspapers appear to be headed as first in the casualty list of the digital age. In the US, for example, the Project for Excellence in Journalism released its annual report recently declaring that newspapers are either dying or constricting. 8. If Australian newspapers are going through the same difficulties, the planned reform promises to rescue them by removing the current newspaper-specific restrictions on foreign ownership under the FIP-FATA. The grant of ownership to foreign entities, however, will be guided by the policy that considers media as a "sensitive sector." All proposals of foreign firms to make a direct investment in media, irrespective of size, will be approved by the Treasurer9. III. Cross-Media Transactions Under current cross-media rules, a person may control licenses for a commercial TV, radio or associated newspapers in a license area all at the same time. But there are specific rules on licenses and reach providing that within a license area, a person may not control more than one TV license or two radio licenses, and he may not control TV licenses that reach more than 75 percent of the population10. Only a few years ago, the consensus gathering in Parliament was for more regulation instead of liberalization to protect diversity. This was the core purpose of the Media Ownership Bill of 2002, which sought to strengthen intervention in the commercial operation of media organizations by, among other things, requiring editorial separation of cross-held entities. The idea was that media diversity would be served best by clearer protection measures against excessive media ownership concentration among traditional media outlets, combined with a liberalized market entry and relaxed regulatory barriers for new platforms and services that would assist in delivering diversity and choice for consumers. With cross-media rules out, TV and newspaper interests are expected to combine in major cities. The implications of this consolidation may be good or bad, depending on one's perspectives. The preferred options for cross-media transactions include: amending the rules to allow cross-media transactions on conditions that a minimum number of commercial media groups remains in the affected market - four in region markets and five in mainland state capitals; retaining the limits on broadcasting licenses - a maximum of two commercial radio licenses in a radio license area, one television license in a TV license area, and no more than 75 percent of national television reach. In addition, public disclosure will be required when a media outlet reports the activities of a cross media held entity11. In announcing the plan to abolish the 20-year-old cross-media restrictions on both local and foreign investment, Minister Helen Coonan of the Ministry of Communications, Information Technology and the Arts (MCITA) sought to alleviate the fears that the move would lead to a concentration of media interests in a few hands. It seems TV station owners in Australia have been lobbying the government to ease the rules in order to enable them to offer new digital channels. However, Coonan said the new setup is not for the benefit of the media moguls but for the consumers who stand "to get new varied services." Another key beneficiary is supposed to be the economy due to the new investment expected from the lifting of restrictions12. Existing cross-media laws prevent a media firm from controlling any combination of TV license, radio license or newspaper franchise in the same license area. This prevents the growth of new media services, thus restricting the ability of media companies to improve their profit margin through the economy of scale and address the challenges posed by the outburst of new media forms. Investment and innovation as a result are tied down in the media sector, contradicting the objective of BSA to "provide a regulatory environment that will facilitate the development of a broadcasting industry that is efficient, competitive and responsive to audience needs."13 IV. Rationale for Reform The rules of the game in media will be changed as part of the effort to build up Australia's capabilities on information and communications technology. The country does not want to be left behind in the Information Revolution. Newspaper readers, television audiences and radio listeners are being attracted away from the traditional media sources, which are being challenged by new digital technologies that have given rise to new media players, content, services and delivery platforms. These developments make it necessary for Australia to consider new models of regulatory frameworks geared less on controlling market structures and more on allowing some efficiencies in scale and scope for existing media players while encouraging new entrants, new content and services to contribute to diversity in a competitive environment14. Under the planned reforms, there will be at least eight new channels for an average Australian viewer, with other programs directly delivered to mobile phones. The newly proposed media regime also guarantees a greater range of sports events on pay-TV than on free-to-air channels, with owners of sports events rights compelled to screen them or give them up to Foxtel and others15. This would happen once the cross-media rules are relaxed and Australia converts from the analog to the digital system, which is programmed for 2012, at which time all TV stations will be free to broadcast on as many channels as possible in their spectrum allocation. Under the present configuration, this means eight for each existing station which, taking into account all current players, would result to 40 free channels. In addition, consumers will be given access to some 30 new micro-channels on pay-TV and mobile phones offering a wide range of niche programming on news and information16. Under the BSA, TV and radio licenses in Queensland, southern and northern New South Wales and Victoria are granted only on conditions of "minimum levels of content on matters of local significance." This means 'anything-goes' on the materials the licensees broadcast as long as local events of importance and interest are given due attention. Legislation is poised for the continued imposition of license conditions in key regional commercial television markets to provide minimum levels of content on matters of local significance. For this purpose, ACMA will continue to ensure genuine competition between regional radio licensees through a requirement that, following the sale of a commercial radio license, it considers the allocation of a new commercial radio broadcasting license in the area, if the program format changes from one of broad appeal to one of limited appeal. ACMA and the government continue to monitor the provision of local content in other TV license areas and on regional commercial radio services and the license will be extended on based on the level of content. The protection of diversity in the control of commercial broadcasting and newspapers remain an important regulatory objective of the BSA. Despite the proliferation of new media to create added sources of information and opinion, commercial broadcasters and newspapers remain widely patronized and an influential media services17. In the view of Thibodaux III, R.18, deregulation of media, particularly radio stations, poses a clear and present threat to public interest. This happens when a media outfit seizes control of the airwaves and consequently quashes any information which it finds detrimental to its own selfish interests, or gives precedence to the owner's political beliefs over the public well-being. A case in point was the disparaging remarks on Bush's scorching earth policy towards Iraq made by Natalie Maines, lead singer of the popular rock group Dixie Chicks, in 2003. After the incident, the patently pro-Bush Cumulus Media made its revenge against the rock group by refusing to play its records in all but one of the 262 radio stations owned in various American states by the company19. Consequently, one viewpoint was effectively eliminated from the airwaves. In the US, absence of regulations has made media to become so powerful that it is believed capable of influencing the results of national, state and local elections. At present only three media groups own half of all radio stations in the US; Clear Channel Communications reaches one-third of the US population, two cable firms serve 40 per cent of cable-connected households and three conglomerates own all cable news networks20. In short, only 10 companies control 90 percent of the information and entertainment in United States. This lack of diversity in voices is expected to exacerbate when the effects of the new media ownership rules passed by the FCC in 2003 begin to be felt. Foreign media outfits are currently welcomed in the States but they are prohibited from holding a broadcast license, while any investment by foreigners is limited to 20 percent for direct investment and 35 percent for indirect. This is subject to the discretion of FCC as dictated by the national interest. DeClerk, S. believed that the policy change set by FCC would yield a scenario where "the big guys will get bigger and the little guys will have to decide whether they want to exist anymore." Already the battle lines have been drawn between the broadcast firms on one hand and the consumer groups on the other. The broadcasters stated that this was another triumph for the First Amendment to enhancing public access to media. The consumer groups felt that it was the downfall of public interest in the areas of diversity of views and local news and commentary21. This view holds that as media outfits grow bigger they would be less inclined to serve news for local consumption. V. Framework of Reform In the guidelines being prepared to frame the reforms in media ownership and control, the key considerations upheld by the Australian government are the public and regional interests. For this reason, the options considered in the proposed reform framework include the setting of conditions on the liberalization of cross-media transactions. Thus, such transactions will be allowed only if they do not distort the ideal arrangement in which four commercial media groups serve the regional markets and five operate for the mainland state capitals. This would ensure that consumers in one market will have uninterrupted access to two sources of information and entertainment from each of such media as national TV, community TV and radio stations, subscription TV, the Internet and "out of area" newspapers or those with national circulation22. A commercial media group in this context is defined as a firm having unitary control of one or more commercial TV licenses, commercial radio licenses or associated newspapers. Specific limits on media ownership will also be retained, such that one person will not be placed in a position to control more than one commercial TV license per market; the commercial TV licensee must not be given a 75 percent reach of the national audience; and one should not be allowed to control more than two commercial radio licenses for each identified market. Moreover, any TV, radio or newspaper organizations that are part of a cross-media group would be obliged to disclose the existence of this common control when they submit a mandatory report on the activities of another entity within that group23. The underlying objective is to let the public evaluate whether there is any conflict of interests in the activities of the cross-media entities. The Australian Communications and Media Authority (ACMA) will oversee the implementation of the Broadcasting Services Act in relation to media ownership transactions to ensure that they comply with license requirements on the "minimum number of media groups" policy and reach limits. On the part of the Australian Competition and Consumer Commission (ACCC), this agency would assess the impact on competition of cross-media transactions based on the guidelines set by the Trade Practices Act 1974. On determining if a media group meets the reach limits, the ACMA will be tasked to conduct diversity tests on the quality and reach of its programming. A battery of competition tests will also be done by ACCC to see if any cross-media control stifles the competition in a given market24. In a bid to protect regional interests as regards access to diverse media outlets and programs, the reform framework intends to put a system in place, which guarantees that Australians in the regions will continue to have access to locally relevant news and information programming regardless of any changes in the ownership structures of media outlets in their market. In the regional TV markets in Queensland, Victoria and northern and southern New South Wales, these license conditions are already imposed on media outlets. This arrangement will be retained and extended to the aggregate market of Tasmania. ACMA will also evaluate whether there is genuine competition between radio licensees in these regional areas, even as it amplifies its effort to monitor compliance with the BSA and trade practices restrictions on foreign and cross-media ownership, the terms of the commercial broadcasting license and the limits on audience reach. For this reason, there is a plan to cloth ACMA with more powers to protect the integrity of the regulatory framework and deal effectively with breaches of regulations, including violations of the broadcaster code of practice and the license conditions, such as the capability to issue infringement notices, injunctions and civil penalties25. VI. Global Trends in Media Deregulation Media ownership around the world is seen as a reflection of a nation's political conditions, such that authoritarian regimes logically control media, while democratic countries by rights allow pluralism of ownership26. But this is not the case in many democratic countries where restrictions are placed on media, especially on the matter of ownership. The global trend is towards deregulation, which hews more to the tenets of democracy as more and more countries came to realize that the controls smack of authoritarianism. For instance, foreign ownership and cross-media mergers are now more liberal in UK, Canada, Germany, New Zealand and Japan. In UK, cross-media ownership is allowed in all but the smallest market, so long as at least three media proprietors and the BBC are left independent in the license areas. However, the media firms with sizable holdings in the national newspaper market cannot own independent television licenses, which comprise the primary commercial free-to-air broadcasting network. There were previous restrictions on ownership of broadcast stations for non-Europeans but these were lifted recently, although a ban remains on media mergers which, in the opinion of the government through the Minister of Communications, represent a threat to the plurality of ownership, diversity of content or freedom of expression principles27. There are no existing restrictions on media ownership for both foreign and local entities in New Zealand, Sweden and Finland. Japan previously prohibited a single firm from owning more than one TV stations but this law had been lifted. Italy and Germany are an interesting study since both countries have sternly avoided the concentration of media ownership in a few hands but this rule is followed more in the breach than in the observance.28. In the US, cross-media ownership of a TV license, radio franchise and newspaper is not allowed for a single person, especially in markets with three TV stations or less. This is the last remnant of the "one outlet per customer" principle on media ownership adopted by the Federal Communications Commission (FCC) in the 1960s and 1970s29. All previous regulations have been relaxed, including those involving cross ownership of newspapers and TV stations. Australia is treading just about the same path to media deregulation, which is considered a liberal but safer setup to provide a middle ground for the groups that see business opportunities in media liberalization and those jealous of press freedom and media independence. Limits will be retained in the smaller market as in UK, and the amount and scope of foreign ownership to be allowed only up to a point, in the same way the FCC in the US sets such investment only to 20 percent. This policy also hews to that pursued in Canada, where media firms can own a newspaper and hold a broadcasting license at the same time in the same market, but subject to "benefit tests" and, where relevant, the maintenance of editorial separation. France takes the same stance, allowing cross media ownership but only for media firms with limited circulation and reach. VII. Discussion and Conclusion The same battle lines drawn between the American consumers and broadcasters over FCC plans to further liberalize the US media divide various sectors of Australian society on its own plans to lift the limits on cross-media and foreign ownership. To the TEN-Network this would "help increase the efficiency, competitiveness, flexibility and diversity of the media sector while maintaining protection on local content and diversity of opinion." The move is long overdue, agrees Austereo Chairman Peter Harvie. But to the News Corp., the changes amount to "an even more aggressive protection racket for free-to-air TV networks." As it is, 81 percent of Australians believe media ownership is already concentrated in a few rich families, based on the 2003 Australian Social Attitudes Report30. The other sectors, which are strongly opposed to the reform, include the Community and Public Sector Union (CPSU), media buyer Sandra Cotton, CAMD, the International Federation of Journalists and the Federation of Ethnic Communities. The CPSU believes the higher levels of concentration of media ownership will result in less diversity of media content, and less jobs in media, particularly in regional media organizations, while Sandra Cotton says this poses a very serious threat to the unbiased character of media and undermines media independence, which has been the fourth estate in democracies for centuries. This will open the door for corruption and cronyism and compromise media's ability to expose venalities, which happens when the owners' interests stretch across media to other business. As for CAMD, it is concerned that the loss of regulations would weaken competition in media, which serves to widen the audience choices and perspectives on issues. In the view of the Federation of Ethnic Communities, the reform will have detrimental effects on Australian democratic traditions31. The Australian Press Council pursues the same line of argument, saying government regulation of the press is incompatible with a free society, intrudes into the concept of freedom of the press, which should be unshackled by government supervision and control. The arguments in favor of the measure are represented by the position taken by the management of Austereo, Mitchell & Partners, Reeltime and Vodafone Australia. Austereo believes that all media sectors stand to benefit from the liberalization of cross-media ownership since they could make maximum use of new digital technologies. According to this media firm, the change is necessary because of the emergence of new players, content, services and delivery platforms. On the part of Mitchell & Partners, deregulation is logical since it has become impossible to totally regulate the new media. Reeltime echoes the same sentiment, saying that in practice, it is difficult to enforce foreign ownership limits "unless expensive mechanisms and beneficial tracing methods are employed." They suggest, however, that the ACCC must be clothed with enough powers to see to it that the new rules do not lead to more concentration of ownership. The debate seems to balance out as to the number of the pros and cons and the weight of the arguments of each side. But sifting through the arguments, one could see that they meet halfway on the need to protect media against too much concentration of power and foreign influence. On these concerns, the Australian government seems to draw lessons from the media liberalization programs of other developed countries, which are allowing cross-media ownership and foreign participation up to more manageable limits and only in specific media areas where activities are calculated to pose lesser risks.The problem is that despite these safeguards, people will always look at media deregulation with suspicion and misgiving because of the sensitive nature of this industry. Bibliography: 1 Quoted by Charles Rigby (1950) in "The Staff Journalist," Pitman & Sons Ltd., at 3. 2 Murray & Kruger, "Coonan Unveils Media Blueprint," The Australian, July 14, 2006, at 1. 3 Discussion paper, "Meeting the Digital Challenge," March 15, 2006 at 6. 4 Note 3, at 2 5 Note 3, at 4 6 CAMD position paper 7 Notes 2, at 2 8 DPA news release, dateline NY, July 1, 2006. 9 Joint media release. Australian government, September 21, 2006 10 Note 9, at 8 11 Note 3, at 2 12 Lewis and Kerr, "Extra Channels in Media Shakeup," The Australian. 13 Note 9, at 3 14 Note 12, at 1 15 Sainsbury, M. (2006), "More TV for Home and Mobile," The Australian, July 14, 2006. 16 Note 12, at 5 17 Note 3, at 9 18 Thibodaux III, R. (2005), "Is it Time to Revisit the Fairness Doctrine in Reponse to FCC-proposed Media Ownership Rules" Seton University of Law. 19 Note 18, at 7 20 Note 12, at 4 21 DeClerk (2000), "Where will the Deregulation Trend End" Arkansas Law Review and Bar Association Journal Inc. 22 Note 9, at 5 23 Note 21, at 6 24 Miller, D. (2004), "Limits on Media Ownership: Should FCC Curb its Reliance on Deregulation" University of Illinois Journal of Law, Fall 2004. 25 Note 9, at 4 26 Note 9, at 11 27 Note 9, at 4 28 Sturm, J. (2000), "Time for Change on Media Ownership Regulation," Federal Communications Law Journal, March 2000. 29 Note 9, at 3 30 Main arguments of the position papers submitted by various sectors to the Australian government. 31 Note 18, at 7 Read More