Alert

Authors
Peta Stevenson  
Senior Associate

Dana Stewart  
Solicitor

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Luke Waterson  
Partner
T +61 2 9296 2084

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Sydney
Greg Golding  
Kristin Leece  
Katrina Rathie  
Luke Waterson  
Jason Watts  
 

Melbourne
Rowan Kennedy  
John Waters  

Hong Kong
Stuart Valentine  (萬思陶)

London
Rowan Russell  

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On 18 October 2006, the Australian Parliament passed the three key pieces of legislation that make up the Government’s media reform package. The Government stated that the new regime would allow Australia to prepare for and respond to a media environment that faces dramatic change in the availability of communication platforms. The legislation will become law once Royal Assent is given (expected shortly). The media ownership changes will take effect on a date to be proclaimed some time in 2007.

Background

Following more than six months of formal consultation, the Government’s draft legislation for media reform was introduced into the Senate on 14 September 2006. The legislation was quickly referred to a Senate Committee which received over 70 submissions and held two days of public hearings, with more than 60 people appearing before the Committee.

After further debate in the Parliament, the Government’s proposed package of reforms relating to media ownership, digital television and the ACMA’s powers were passed, although with some amendments. The main opportunities generated by these changes are outlined below.

Foreign ownership

Broadcasting-specific restrictions on foreign investment in Australia’s media sector will be removed. The media will remain a “sensitive sector” under the Foreign Investment Policy that operates under the Foreign Acquisitions and Takeovers Act 1974 (Cth), meaning that all direct media investment and all portfolio investment over 5% will be required to be notified to and approved by the Treasurer.

The first deal by an overseas investor has already been announced, with private equity group CVC Asia Pacific buying an interest in PBL’s media assets.

Cross-media opportunities

Existing prohibitions on cross-media (television, newspapers, radio) ownership have been removed, subject to:

• there remaining no fewer than five independent players in metropolitan markets and no fewer than four in regional markets; and
• a prohibition on owning more than two out of three types of business in the same market.

Amid concerns in the market that the amendment limiting the number of platforms any one company can invest in would create a rush for assets, the Seven Network has taken a strategic stake in West Australian Newspapers. This ensures the Seven Network is well-positioned when these changes take effect. Similar positioning is expected to take place in the coming months as existing players identify key targets across platforms.

The ACCC will become a key “gatekeeper” for any cross-media deals. View our review: Content critical: ACCC releases media merger guidance paper for information about the ACCC’s likely approach.

Getting involved in digital TV

As noted in our previous Alerts the reforms provide for the allocation of two new national digital channels.

• Channel A may be used for niche in-home services and cannot be controlled by either commercial or national free-to-air operators.
• Channel B may be used for wider purposes, such as mobile television, but not for commercial broadcasting services or in-home subscription television broadcasting services. In addition, existing free-to-air broadcasters cannot use Channel B for any in-home services.

All bidders for the Channel B licence must establish a third party access regime, which must be approved by the ACCC.

While these changes will take effect from 1 January 2007, it is not expected that the licence auctions will take place until later in 2007. The Government has stated that it will proclaim the media ownership rules once the process for allocation of Channels A and B has been resolved.

Other changes

There are other changes which alter the regulatory landscape. These include:

• a commitment to extending the current analogue switch-off date, commencing in 2010-2012;
• a relaxation on the restrictions relating to multi-channelling by free-to-air operators - one high definition multi-channel is permitted from 1 January 2007 and a standard definition multi-channel from 2009. Unlimited multi-channelling will be permitted from analogue switch-off;
• increased local content requirements for regional radio stations;
• Ministerial controls over the issue of new commercial television licences;
• a “use it or lose it” scheme for events on the anti-siphoning list; and
• an increase in the enforcement powers held by the ACMA.

Please contact us if you have any questions about the opportunities these reforms create for your business.

Notes

The three key pieces of legislation are:

• Broadcasting Services Amendment (Media Ownership) Act 2006
• Broadcasting Legislation Amendment (Digital Television) Act 2006
• Communications Legislation Amendment (Enforcement Powers) Act 2006