Australia’s embattled media industry stands on the verge of the biggest ownership shake-up in a generation after the federal government announced a reform package that will open the door for a major round of mergers and acquisitions.
After more than a year of negotiations with key industry players, coupled with unrest within cabinet over planned media reforms, Communications Minister Mitch Fifield has announced the government will take to federal Parliament rule changes that will eliminate the controversial “two out of three” and “reach” rules, which have long restricted consolidation among Australia’s biggest media companies.
The Ten Network’s mogul backers will be delighted with the media reforms.
The “two out of three” rule prevents a person or company from owning all three of metropolitan newspapers, television stations and radio stations in a capital city market.
The “reach rule” prevents a person or company from controlling a commercial television network with a licence area that exceeds 75 per cent of the Australian population.
“I think it’s a very interesting time ahead for the media industry,” said Harold Mitchell, who is chairman of Free TV Australia, the industry group that represents the free-to-air networks. “History shows us that change to the law always brings new players to the media landscape. I also suspect the merchant bankers of Martin Place and Collins Street will be running the rule over the possibilities as we speak.”
Another media executive, who did not wish to be named, said ownership changes were “inevitable”, particularly for the Nine and Ten networks, but would not happen immediately as the law changes still had to pass Parliament and “there is nothing live and on the table in terms of a deal”.
Mooted merger deals between Fairfax Media and Nine Entertainment, or Network Ten and News Corp, have been rendered impossible due to those restrictions.
The media reform package, stitched together by Senator Fifield over the past six months, was described as a “clever piece of political tapdancing” by a key TV network executive.
The elimination of television licence fees has won over the free-to-air broadcasters, who will save $130 million. They will now be charged an annual spectrum fee, estimated to raise around $40 million.
Over the next four years, $30 million of taxpayer money will be paid to subscription television networks – read Rupert Murdoch’s Fox Sports – to increase coverage of women’s sports and niche sports. The anti-siphoning list, which stops pay TV broadcasters from buying the rights to sports events before free-to-air broadcasters have the opportunity to purchase the rights, will also be reduced.
“It’s no surprise that this package was announced by the Prime Minister just after he met Rupert Murdoch in the US,” said a key adviser to the deal.
Finally, new restrictions on gambling advertising during live sports events will ensure the reforms have the backing of Nick Xenophon and his party in the Senate. Those restrictions will prevent betting companies from advertising between five minutes before a live sports broadcast and until five minutes after it concludes, or 8.30pm, whichever comes first. An exemption has been given to racing industry broadcasts.
The package was welcomed by the key media companies.
Ten Network chief executive Paul Anderson has been counting on a cut to the licence fees.
“The government’s package provides very welcome, immediate financial relief for all commercial free-to-air television broadcasters,” he said. “Recent financial results and announcements from across the Australian media industry clearly demonstrate that this is a sector under extreme competitive pressure from the foreign-owned techmedia giants.”
Mr Anderson also welcomed the change to the cross-media ownership rules. “A critical element of this holistic package is the removal of two of the current cross-media ownership rules: the two out of three rule and the 75 per cent reach rule. These cross-media rules arbitrarily prevent Australian television, radio, and newspaper companies from operating across media platforms. They are stifling growth and costing jobs.”
Fairfax Media CEO Greg Hywood said: “Fairfax Media has long supported reform of the current media laws and welcomes any developments that would progress legislation through the Senate.”
Mr Mitchell said the changes were needed to help protect Australian media companies from overseas technology giants, such as Facebook and Google.
“Broadcasters must be able to effectively compete with the giant multinational media companies taking advertising dollars out of Australia,” Mr Mitchell said.
“Repealing the 75 per cent audience reach and cross media ownership rules is vital for Australian media companies to be able to compete in our modern media environment and we urge the Senate to support the legislation already in Parliament.”