1. Regulation of Media Ownership 203001308_1

2. Introduction  The Rules, Past and Current  The Changing Shape of the Media Industry  The Time Line for future Reform  Ownership Effects

3. 3 Early Rules  1935 – law restricted multiple ownership of commercial stations  1942 – Newspapers had acquired 44% of commercial stations  1951 – Non citizens can’t control commercial stations  1956 – 1986 - two TV stations per interest limit  1986/87 cross media rules first introduced. “Cant be queen of screen and prince of print.”  Grandfathering rules first introduced 1965-1984, then 1987.

4. 4 Some Key Concepts  Actual Control  In a position to exercise control  Newspaper  Company interests  Tracing of interests  Overlapping licence areas

5. The Pre-2007 Rules PrintTVPay TVRadio and other Foreign Ownership Investments are subject to prior Federal Government approval -25% limit for any single foreign shareholder (30% in aggregate). -50% limit for provincial and suburban newspapers. -prohibition on foreign control. -15% limit for single foreign shareholder. -20% aggregate limit. -20% limit on foreign directors. -no control prohibition. -20% limit for single shareholder. -35% aggregate limit. -BUT de facto foreign ownership has been achieved. Foreign limits repealed in 1992. Cross Media RulesA person (foreign or Australian) cannot control: -a TV or radio licence AND a newspaper associated with the same licence area. -a TV AND radio licence in the same licence area. There are corresponding limits on directorships of companies which control those licences. Competition RulesProhibit mergers or acquisitions which would substantially lessen competition in a market for goods or services in Australia. The ACCC pro-actively monitors M&A activity. Media Concentration Competition rules only.Licence(s) must not exceed 75% of Australia's population. Competition Rules only.Must not control more than 2 licences in the same area.

6. Industry Structure PrintTVPay TVRadio 4 major Print Groups (News, Fairfax, Rural Press, ACP) 3 Networks/ Affiliated Regional Groups 1 Major Metro 1 Major Regional Several Networks of varying size 1 Metro and 1 Regional with major foreign investment 1 Network with major foreign economic interest All have substantial foreign investments 2 of 4 Major Groups 100% foreign

7. The New Rules PrintTVPay TVRadio and other Foreign Ownership Investments are subject to prior Federal Government approval. Cross Media Rules 5 Metro Voices/ 4 Regional Voices. Competition Rules Prohibit mergers or acquisitions which would substantially lessen competition in a market for goods or services in Australia. The ACCC pro-actively monitors M&A activity. Media Concentration Competition rules only. Licence(s) must not exceed 75% of Australia's population. Competition Rules only. Must not control more than 2 licences in the same area.

8. Two Rules Media Diversity Rules Statutory Control Rules 5 Media Groupings (Sydney, Melbourne, Brisbane, Adelaide, Perth): Section 61AB(1) 1 TV Licence/area: Section 53(2) 75% TV audience reach: Section 53(1) No TV or radio/datacasting transmitter: Sections 54A and 54B 2 radio licences/area 4 Media Groupings elsewhere: Section 61AB(2) Directorship equivalents Limit on control of 2 out of 3 for commercial radio/TV/print: Section 61AEA

9. Structure Register Protective Advantages Reporting Obligations Unacceptable Media Diversity Situation Key Definitions Sections 61AC and 61AE Points Test Sections 61AU to 61AZH Section 61AB Section 61AN(4)

10. Points Test: Section 61AC Radio Licence Area  50% radio/TV overlap  No radio overlap Media OperationAny of radio/TV/Associated newspaper Media GroupingControl test applies

11. Points Test StateNewspaperTelevisionRadioTotal Sydney23813 Melbourne23712 Brisbane1348

12. Reporting Obligations  Penalties: sections 63 and 64  Media Groups Protected: section 61AN(4)  First Mover Advantage for innocent breaches: section 61AN(7) and (8)  Prior approval: sections 61AJ and 61AMC

13. Prior Approval  ACMA 30 days for further information  No decision making time limit – 45 day/best endeavours  One month Undertakings 2 years for unacceptable media diversity 12 months for unacceptable 3-way control

14. The Register  Initial entry/asap after 1/2/07: sections 65, 61AU and 61AY  New media group: section 61AZ  Conditional entries: section 61AZD  Unconfirmed entries: section 61AZE  Time of essence

15. Remedial Directions: Sections 61AN and 61ANA  Not to registered controller: section 61AN(4)  Period of up to 2 years/12 months  Extension for compliance available: section 61AP Good faith Reasonable precautions Flagrant = 1 month

16. The Time Line HDTV/ABC/SBS Multichannel 2007 Relax Media Ownership Auction of 2 digital channels Anti-Siphoning Use it or Lose it SD Multichannel Full Anti- Siphoning Review 20092010-12 Analogue Switchoff Full Multichannel Digital Radio Introduction

17. New Digital Channels Channel A Must be: Datacasting Narrowcasting Community television For domestic reception Must be digital Not available for FTA broadcasters Channel B Must not be: Commercial broadcasting or re- transmission service or subscription television for domestic digital television reception Not controlled by commercial or national broadcasting if for domestic television reception

18. Cross-Media Disclosure Common control TV RadioNewspaper Commercial television broadcast: section 61BB Business affairs disclosure – commercial radio: section 61BD Regular disclosure – commercial radio: section 61BE Disclosure by newspaper publisher: section 61BF

19. Licence Conditions  Regional TV  In aggregated markets: section 43A  To broadcast minimum levels of material of local significance  Prime, Southern Cross, WIN, NBN, Seven

20. Licence Condition: Commercial Radio  Regional Radio  Trigger event: section 61CB  Licence must maintain minimum levels (section 61CD) for local news, weather, community service announcements, emergency warnings  Licensee to submit local content plan for approval: section 61CF  Local content condition: section 43C  Local presence condition if trigger event occurs: section 43B

21. Regional Radio  Trigger Event change of control Minimum standardsNews (5) weather (5), community services (1), Emergencies Local Content PlanLocal presence condition ACMA Approval Annual Compliance Report

22. Effects: Television KKRSeven NetworkConversion 50% Convertible Notes Creation of separate PBL Media Group Nine NetworkFurther 25% 50% Convertible Notes Canwest Ten NetworkSought whole of Network sale 1992 50% Convertible Notes Acquired STW Perth and NWS Adelaide Win Television Canwest to convert CVC

23. Effects: Radio DMG 1. Macquarie Media Phase One Undertaking to divest various licences acquired Southern Cross 2. Macquarie Media/ Fairfax Macquarie Media to acquire television Undertaking to divest 12 radio licences Fairfax to acquire radio

24. Effects: Newspapers Fairfax Rural Press Southern Cross Radio 2CH/3AW merger

25. Industry Structure PrintTVPay TVRadio 3 major Print Groups, one with radio holding 3 Networks/ Affiliated Regional Groups 1 Major Metro 1 Major Regional Several Networks of varying size (2 fewer networks), one with regional TV 1 Metro and 1 Regional with major foreign investment All metro networks have major foreign economic interest All have substantial foreign investments 2 of 4 Major Groups 100% foreign