CHAPTER SIX
Ownership of electronic media has been tightly regulated since the early days of radio. The regulations limit ownership of broadcasting services in a licence area and the overall breadth of media interests that may be held by an individual. While Australia imposes formal control on ownership of free-to-air and subscription television, there are no formal controls on foreign ownership of radio. Foreign ownership of newspapers is subject only to Foreign Investment Review Board guidelines and proposals are considered on a case-by-case basis. However, in recent years, attempts to increase foreign interests in the Fairfax Group above 25 per cent have not been allowed. Cross-media ownership restrictions are similarly based on the principle of limiting concentration of influence on public opinion.
Legislators have always been concerned about the power of the electronic media to influence public opinion. The Joint Parliamentary Committee on Wireless Broadcasting (Gibson, 1942), for example, was of the view that "no medium of entertainment, whether it be stage, cinema or literature has such a powerful influence for good or evil as broadcasting". With respect to foreign owners, Robert Menzies, the then Prime Minister, saw the issue as whether "people who do not belong to this country" should be permitted to control "the most intimate form of propaganda known to modern society" (House of Representatives, 1951: 2926).
Australia is not unique in this respect. Limits on ownership of electronic media are a common feature of media regulation around the world. Most countries also restrict foreign ownership and control of electronic media industries. In many countries foreign ownership of newspapers is also limited.
While ownership controls are intended primarily to promote diversity of influence on opinion, they also have substantial impact on industry structures and operational efficiencies. In essence, therefore, the regulation is a trade-off between efficiency and the social objective of promoting diversity of influence on opinion. Similarly, while foreign-ownership limits ensure domestic control of influential media, they also reduce the pool of potential investors and may limit the scope for ownership diversity and competition. How well these restrictions serve the public interest when these factors are taken in account is considered in this chapter.
REGULATION OF OWNERSHIP AND CONTROL
The first regulatory controls on ownership were applied to radio in 1935. Legislators acted to prevent what was then seen as the "development of monopolies" by newspapers as there was "little multiple ownership of broadcasting licences by other interests" (Gibson, 1942). That initial regulation, which continued to apply for half a century, restricted individuals from owning:
- more than one metropolitan station in any State;
- more than four metropolitan stations in the Commonwealth;
- more than four stations in any one State; and
- more than eight stations in the Commonwealth.
The same regulatory arrangements had been proposed for television (Royal Commission on Television, 1954). However, when television was introduced in 1956, the government imposed a stricter limit, permitting common ownership of a maximum of only two television stations located anywhere in Australia. Both the radio and television ownership limits were reduced progressively in the 1980s and 1990s.
Restrictions on ownership and control of media by foreign interests (initially defined as non-residents of Australia) were first introduced in 1956 to safeguard national sovereignty by preventing foreigners from gaining a position of influence on domestic opinion. The concern with foreign ownership of media was precipitated by the acquisition of several radio stations by British press interests and prompted Parliament to express the opinion that foreign control of radio stations was undesirable (House of Representatives, 1951).
Another important element of ownership and control provisions is cross-media limits which prohibit ownership of television and radio interests in the same market or the ownership of a radio or television station jointly with a newspaper associated with their service area. Although newspaper ownership of broadcasting media had regularly aroused concerns, prohibition of cross-media ownership was introduced only in 1987 with respect to television and newspapers and television and radio, and in 1988 with respect to radio and newspapers. According to the then Minister for Communications, the cross-media ownership restrictions were needed "in order to curb major expansion in television by existing newspapers or radio interests which already have considerable influence over the formation of public opinion" (Duffy, 1987).
MEDIA OWNERSHIP PROVISIONS
The BSA limits the extent to which a person may control commercial radio and television licences, whether in terms of one medium or jointly, or control a broadcasting licence and an associated newspaper in the same licence area, and the extent of individual and aggregate ownership of broadcasting licences by foreigners. The specific limits set by the Act are as follows:
Commercial television licences
S.53(1) of the Act provides that a person must not control:
- more than one licence in the same licence area
- licences whose combined licence area populations exceed 75 per cent of the declared population of Australia.
Commercial radio licences
S.55(1) of the Act provides that a person must not be in a position to control more than two licences in the same licence area.
Cross-media rules
A person must not control:
- a television licence and a radio licence that have the same licence area (s 60(a));
- a television licence and a newspaper associated with the licence area of that licence (s 60(b));
- a radio licence and a newspaper associated with the licence area of that licence.
Equivalent restrictions apply to the holding of directorships of companies that control radio and television licences and newspapers.
For the purpose of the Act, a person is deemed to be in control of a company by holding, directly or indirectly or through associates, 15 per cent of the company's shares. The deemed control is held to apply in the absence of evidence to the contrary. Two or more persons may be deemed to exercise separate control of a company if each controls 15 per cent or more of the company's shares. However, a person is not deemed to be in control if another person holds more than 50 per cent of the shares in the company.
Shareholdings in licensee companies may be transferred or sold freely to another person.
Foreign Ownership Limits
A foreign person is prohibited by the Act from controlling, either directly or indirectly or through associates, a television licence (s 57(1)) or have share interests exceeding 15 per cent in a company holding a television licence. In aggregate two or more foreign persons must not have company interests in a television licence exceeding 20 per cent (s 57(3)). Also, no more than 20 per cent of the directors of a company holding a television licence may be foreign persons. A foreign person is defined as either a person who is not an Australian citizen, or a company controlled by persons who are not Australian citizens.
In subscription television, a foreign person is prohibited from having share interests in a licensee company exceeding 20 per cent. The aggregate company interests in a licence held by a foreign person must not exceed 35 per cent (s 109). There are no restrictions on the interests foreign persons may have in radio licences.
Newspaper Ownership Restrictions
Although the print media can also exert substantial influence on public opinion, it is not subject to controls on ownership concentration other than the provisions of the Trade Practices Act. This might be partly because the Commonwealth Government does not have the necessary powers. Cross-media provisions, however, were introduced partly in response to increasing concentration of press ownership reflected in the decline in the number of independent proprietors of metropolitan dailies from 10 in 1950 to two currently.
IMPACT OF OWNERSHIP RESTRICTIONS
Concentration Limits
Ownership limits appear to have considerable influence on the structure of the commercial radio and television industries. Amendments to ownership limits, particularly for television, have generally been the catalyst for major and rapid changes to industry structures. The biggest restructuring that has taken place in the media industries, for example, is linked to the 1987 amendments which combined a major liberalisation of ownership of broadcasting assets with the introduction of cross-media rules.
For television, the changes replaced the two-station ownership rule with provisions permitting a single owner to hold any number of television stations provided that the aggregate population reach of the stations did not exceed 60 per cent of the Australian population. The population reach limit was subsequently increased to 75 per cent. The changes were followed by major realignments of the ownership of media assets and led to the creation of three current capital-city television networks and other regional television groups.
For radio, the 1987 amendments increased the ownership limits to no more than 16 licences in Australia and no more than half the radio licences in any State. These limits proved to be quite liberal even for the then largest radio groups and generated little change in the concentration of radio assets.
The introduction of cross-media restrictions not only prevented the formation of large multimedia groups, but also led to the dismantling of existing groupings. Although the introduction of cross-media limits provided for the "grandfathering" of existing cross-media groups for as long as the owners did not acquire new media interests, virtually all of them disappeared soon after as the major players moved to consolidate their position in the medium of choice for their future business interests. Some of the effects of the ownership regulation changes at the end of the 1980s are illustrated in Tables 6.1 and 6.2.
Table 6.1: Characteristics of the Commercial Television Industry,
as at 30 June 1986 and 30 June 1991 a
| 1986 | 1990 | |
| Number of stations b | 50 | 43 |
| Number of owners c | 29 | 16 |
| Television revenue earned by: d 4 largest owners 8 largest owners | (per cent) 61 80 | (per cent) 77 90 |
| Television revenue earned by those with interests in: b television only television and radio all media e | (per cent) 12 31 57 | (per cent) 59 40 1 |
Notes:
a Ownership as at 30 June 1986 and 30 June 1991, financial data for years 1985-86 and 1989-90 respectively.
b Excludes the remote commercial television services.
c Owner is defined as the major shareholder in the licensee company or the major shareholder's controlling company.
d As a proportion of total television revenue (including remote commercial television services).
e Includes those companies with a combination of television-radio-newspaper and television newspaper interests.
Source: BTCE (1991a).
Table 6.2: Characteristics of the Commercial Radio Industry,
as at 30 June 1986 and 30 June 1991 a
| 1986 | 1990 | |
| Number of stations b | 139 | 149 |
| Number of owners c | 64 | 76 |
| Radio revenue earned by: d 4 largest owners 8 largest owners | (per cent) 36 56 | (per cent) 45 59 |
| Radio revenue earned by those with interests in: b radio only radio and television all media e | (per cent) 64 6 30 | (per cent) 89 10 1 |
Notes:
a Ownership as at 30 June 1986 and 30 June 1991, financial data for years 1985-86 and 1989-90 respectively.
b Excludes the remote commercial radio services.
c Owner is defined as the major shareholder in the licensee company or the major shareholder's controlling company.
d As a proportion of total radio revenue (including remote commercial radio services).
e Includes those companies with a combination of radio-television-newspaper and radio-newspaper interests.
Source: BTCE (1991a).
The BSA in 1992 increased the allowed population reach of commercial television stations under common ownership to 75 per cent. It also removed most of the controls on the ownership of commercial radio stations. Since 1992 there have been no limits on the aggregate number of radio stations that may be held by an individual, with the exception that no more than two stations may be held in any one licence area. Cross-media ownership limits were not changed by the BSA.
These changes allowed the formation of the Seven Network from the stations previously owned by Qintex (which had been placed in receivership in November 1989) and other assets, giving it a population reach of more than 70 per cent. The new arrangements for radio led to major changes in the structure of the radio industry. Facilitated by the supplementary station licensing arrangements, common ownership of two stations in the same area has now become the norm in regional areas. It has also become a feature of radio station ownership in capital cities. Similarly, the removal of aggregate ownership limits has allowed the formation of relatively large groups of stations under common ownership. Austereo, with 11 metropolitan stations and three regional stations and Australian Radio Network with eight metropolitan and three regional are currently the largest radio groups (in terms of audience reach) in Australia. Details of the current ownership structures for the commercial television and radio industries are provided in Tables 6.3 and 6.4.
Table 6.3: Structure of the Commercial Television Industry,
February 1998
| Ownership Group | Number of Stations | Audience Reach (per cent of population) |
| Seven Network | 5 metropolitan 1 regional | 71.38 |
| The Ten Group Ltd | 5 metropolitan | 64.60 |
| Nine Network | 3 metropolitan 1 regional | 51.22 |
| Prime Network | 8 regional | 25.02 |
| TWT Holdings Ltd | 1 metropolitan 4 regional | 22.72 |
| Telecasters Australia Ltd | 5 regional | 18.05 |
| Southern Cross Broadcasting Australia Ltd | 4 regional | 15.36 |
| NBN Ltd | 1 regional | 9.43 |
| Sunraysia Television Ltd | 1 metropolitan | 7.05 |
| Broadcast Investments Pty Ltd | 1 metropolitan | 6.86 |
| Others (3 groups) | 5 regional | Less than 1.00 per group |
| Total (14 groups) | 15 metropolitan 30 regional | n.a. |
Source: Communications Update (1998).
Table 6.4: Structure of the Commercial Radio Industry,
February 1998
| Ownership Group | Number of Stations | Audience Reach (per cent of population) |
| Austereo Ltd | 11 metropolitan 3 regional | 62.72 |
| Australian Radio Network | 8 metropolitan 3 regional | 61.34 |
| Lamb Family | 2 metropolitan | 27.02 |
| RG Capital Australia | 1 metropolitan 9 regional | 25.47 |
| Southern Cross Broadcasting Australia Ltd | 4 metropolitan 4 regional | 24.87 |
| 2KY Broadcasters | 1 metropolitan 2 regional | 21.73 |
| Radio Superhighways Pty Ltd | 2 metropolitan 2 regional | 19.05 |
| Fusion Media | 1 metropolitan | 18.08 |
| Radio 3UZ Pty Ltd | 1 metropolitan | 18.08 |
| DMG Radio Investments Pty Ltd | 1 metropolitan 53 regional | 16.01 |
| Queensland TAB | 1 metropolitan | 7.97 |
| Broadcast Operations | 26 regional | 5.06 |
| Grant Broadcasters Pty Ltd | 11 regional | 4.86 |
| Others | 6 metropolitan 29 regional | Less than 3.00 per group |
| Total (14 groups) | 39 metropolitan 142 regional | n.a. |
Source: Communications Update (1998).
Localism
The promotion of local ownership (localism) and programming has played an important role in broadcasting policy for many years. In the early days of television, for example, it was at the centre of a major difference of opinion between the Australian Broadcasting Control Board (ABCB) and the government. When considering the allocation of commercial television stations in Brisbane and Adelaide in 1958, the ABCB favoured a plan for the allocation of the licences to local interests in preference to other major applicants. The plan was rejected by the government. The ABCB (1958:26) saw local ownership as an important element of policy. It explained its position as follows:
The purpose of the legislation is clearly, on the one hand to prevent any trend towards concentration of ownership of stations, and, on the other hand, and as a consequence, to encourage the local ownership of stations. Indeed, it seems to be universally agreed that, having regard to the nature and function of television stations, in the broadest sense, they should be, to the extent to which it is practicable, owned by the people in the areas which they are designed to serve.
The principle of localism has proved difficult to implement particularly when it has been in conflict with other competing priorities. In commercial television it appears to have been set aside when the "equalisation" policy of providing three commercial services to regional areas was developed in the 1980s. The equalisation policy together with the liberalisation of ownership controls provided strong incentives for stations in different parts of the country to combine into networks for the distribution of programming. The effect is that most of the programming on regional stations, with the possible exception of local news bulletins, now originates in Sydney. (6)
Localism continues to be an important consideration for radio. Although networking and syndication of programmes are possible, local programming is predominant on most commercial radio stations. Localism was boosted by the policy of allocating "supplementary" licences permitting owners of existing services in small regional centres to operate a second service in the same area. Localism is also a major consideration for the licensing of non-profit community radio services. Typically, community radio licences are for low-power transmitters that allow signal coverage over small geographical areas.
Foreign Ownership Limits
Foreign ownership of radio and television stations has never been widespread. To a large extent, this may reflect prohibition of foreign ownership and control of the media. It may also indicate that the permitted levels of foreign ownership do not represent attractive investment propositions to foreigners. This is likely to be the case for commercial radio generally. Although foreign ownership restrictions of commercial radio were removed completely in 1992, foreign ownership of stations remains uncommon. In television, foreign ownership is restricted to the interests of CanWest Global Communications (CanWest) in the TEN Group owners of the TEN Network television licences.
The TEN Group was initially a consortium put together in December 1992 by CanWest (a Canadian company) to acquire television stations in Sydney, Melbourne and Brisbane from Northern Star which had been placed in receivership. Subsequently, it also acquired stations in Adelaide and Perth. To comply with foreign ownership limits, CanWest took a shareholding of 15 per cent in the TEN Group company and provided additional loan finance to the group in the form of "subordinated and convertible debentures" equal in value to the subscribed equity in the company. Although this amounted to a financial interest of 57.5 per cent, a number of ABA inquiries had found the arrangements not to be in breach of the foreign ownership regulation.
In January 1997, through a separate Australian company, CanWest acquired an additional 37.49 per cent of the TEN Group shares, bringing its total shareholders' interest in the company to 52.49 per cent. The ABA found the new arrangements to be in breach of the foreign ownership regulation and ordered CanWest to divest itself of the excess shareholding. CanWest was also found to be in breach of the Act because it was in a position to secure the appointment of more than half of the directors of the Ten Group.
EFFICIENCY EFFECTS OF OWNERSHIP RESTRICTIONS
Media industries have been treated differently from other industries. Ownership controls impose much more onerous limits on media industry concentration than those allowed by trade practices legislation for industry in general. These are claimed to be necessary to ensure diversity of opinion and programming. But do these controls actually meet these goals? And, if they do, at what cost?
Effect on Firm Size
The ownership regulations prevent the common ownership of more than one television station or more than two radio stations in a licence area. They also prevent a company from owning assets in more than one medium (television, radio or daily newspapers) in the same area, forcing companies to specialise in one medium.
In broadcasting, economies of size may arise both from standard processes whereby companies apply fixed overhead costs to larger size units and from the special characteristics of broadcasting programmes. A company with multiple broadcasting licences is likely to achieve economies of scale in management, administration, purchasing and other central office functions as well as in marketing and the sale of advertising.
Broadcasters have a strong incentive to maximise the size of the audience for a given programme. Networking of commonly-owned or affiliated stations is one way of achieving an increased audience. The advantages of networking come mainly from the operational savings associated with the programming function of stations rather than savings in programme costs. Programme costs usually take the form of rights to broadcast and are based on the size of the potential audience in the area in which they are shown. Consequently, for most programmes, the cost of the programme rights for a given audience reach is unlikely to differ substantially whether the programme is networked or separately distributed to stations. The benefit of networking arises from the centralisation of the programme purchasing and scheduling functions. In a network, this function is performed once for all the stations in the network whereas for independent stations each would have to perform those functions separately.
Second, a network also has advantages over independent stations in producing programmes and competing for independently-produced programmes. Because a network is able to spread production costs over all its stations it is able to undertake more expensive and more appealing productions than independent stations. Similarly, because it is assured a large combined audience, a network will generally be able to outbid independent stations for the rights to popular programmes produced independently.
Third, networks also have substantial advantages in the sale of advertising. This is particularly so for television where most of the advertising is sourced through advertising agencies and comes from national advertisers. Advertisers seeking large national audiences for their products are better off dealing with a network rather than singly for a large group of stations. Indeed, advertisers tend to pay a premium for large audiences. The network also benefits from having a single specialised sales force for all its stations and from the ability to promote the stations as a group.
However, as indicated in Chapter 3, many of the financial incentives that underlie the formation of networks arise from the nature of broadcasting rather than common ownership. Independently-owned stations could secure similar benefits by collaborating to form a network. For example, because of the limit on population reach for commonly-owned television stations, each of the current national networks comprises several affiliated stations not owned by the network. However, many of the affiliated stations are part of multi-station independently-owned groups such as the seven stations in the Prime Network and the five stations owned by TWT Holdings Ltd. This suggests that substantial economies of scale may also be gained from group ownership.
My overall conclusion is that, although the current ownership limits do not necessarily preclude network-type economies from being achieved, they prevent the achievement of economies of size that could flow from the formation of single-owner national networks.
Effect on Formation of Multi-Media Groups
Limits on cross-media ownership and on the ownership of multiple media outlets in the same service area are aimed at promoting competition between media outlets and ensuring diversity of opinion. While independent ownership is more likely than common ownership to produce a diversity of opinion, this comes at a cost. Programming diversity is more likely under common ownership of outlets in one medium. Further, the regulation also prevents the formation of local media monopolies and could be potentially beneficial to advertisers.
Considering first programme diversity, the owner of multiple outlets would be likely to promote complementary rather than competitive programmes and thus satisfy the programming needs of a wider cross-section of the community. It is not possible, however, to assess whether the additional minority groups served by complementary programming value those programmes more than majority audiences value the choice provided by competitive programmes.
Considering advertising, competition between media outlets (both intra- and cross-media) allows advertisers to choose the best medium for their advertisements and to benefit from the price competition likely to exist between the outlets.
The limits on cross-media ownership prevent owners from maximising administrative efficiencies and from minimising their commercial risk by being involved in competing activities (rises and falls in demand for advertising in different media do not necessarily coincide). However, they do not necessarily prevent co-operative arrangements being developed between rival media groups or outlets where this is perceived as being in their mutual interest. Examples of such co-operation include radio and newspaper groups sharing advertising personnel and parts of their premises, and radio and television stations sharing local news gathering personnel, facilities and programmes.
The prohibition of common ownership of multiple broadcasting outlets has both negative and positive effects. On the negative side, particularly in relation to television, it promotes duplication of programmes appealing to large audiences. Minority audiences would be more likely to be catered for by owners of multiple outlets in the same service area who would have a financial incentive to broadcast complementary rather than competing programmes on the commonly-owned stations. On the positive side it enhances diversity of editorial opinion.
Foreign Interests
Foreign ownership restrictions in broadcasting are intended to ensure that broadcasting remains essentially "Australian", and that foreign individuals and companies are not in a position to exert effective control over any licensee company. The restrictions affect not only foreign citizens and companies wishing to invest in Australian broadcast media, but also any foreign-owned creditors of licensee companies taking equity positions in those companies or directorships on their boards. They may also prevent locally-owned investment funds (including superannuation funds) managed by the local subsidiaries of foreign-owned financial institutions from acquiring substantial interests in licensee companies.
The effect of these restrictions on economic efficiency depends on the extent to which they alter patterns of ownership in the industry and limit the capacity of media companies to secure benefits of economies of scale and scope. By limiting the pool of potential investors in Australian media stocks they may also disadvantage existing and potential licensees and their shareholders. Specifically, they are likely to reduce the opportunities for licensees to maximise the profitability of their operations and the realisable value of their licences, and for foreign companies to diversify into Australian media assets.
The existence of networks at both the national and international level suggests that economies of scale and scope are possible in broadcasting and related activities. Foreign entities with existing media or entertainment interests are the most likely source of such economies. Among the benefits which might result from affiliation with foreign broadcast interests are access to lower-cost finance, reductions in some categories of operating costs such as satellite use and station facilities, and some management and administration outlays. However as long as programme regulations persist, so preventing Australian stations from operating merely as relay stations for foreign networks, these benefits are likely to be limited by the continuing need to operate Australian facilities and retain sales staff. Even if full integration with a foreign network were permitted, the need to take account of domestic tastes and preferences in programming would limit potential operational benefits, as would the need to sell advertising time to domestic advertisers. Ownership changes that may result in access to an improved range or lower cost of programmes could offer further potential benefits.
Another possible cost of the foreign ownership restrictions is a distortion of the debt/equity structure of broadcasting companies by favouring debt over foreign equity. However, it is not possible to measure the extent to which the restrictions distort the debt/equity structure.
Further, ensuring majority Australian ownership of broadcast media does not necessarily guarantee Australian control of its tone and content. These are more likely to be determined by the programming. The choice between programmes depends on commercial imperatives such as the programme's price and attractiveness to audiences. If foreign programmes have a substantial advantage in these respects, the nationality of the owner, or indeed the programme manager, is likely to have little influence on programme choice. A more effective means of ensuring Australian control over tone and content is through regulations that address this directly; specifically through content requirements and restrictions on the source of programmes.
While the Parliament's concerns with foreign control of radio in 1951 were understandable in the context of that era, the continued validity of those concerns a half-century later is questionable. Today it is virtually impossible to prevent foreign media from influencing domestic audiences. Radio waves simply do not recognise national borders and may be propagated across borders by a variety of means. Similarly, technological change and the development of new media are increasingly undermining the effectiveness of regulations designed to limit the influence of media owners. For example, satellite transmission and the Internet provide access to sources of information that are beyond the reach of national regulation.
Furthermore, ownership of domestic broadcasting stations by citizens of a country does not guarantee that they will be less prone to use their influence to promote private, rather than public, agendas. The best protection against potential abuse of the media's power of influence is likely to be greater diversity of media outlets competing for the attention of audiences. In such a situation, sanctioning of foreign ownership would enlarge the pool of potential investors in media stocks, thus reducing media concentration and the need for domestic ownership and control regulations.
Apart from the populist sentiment in favour of keeping Australian media in Australian hands, it is difficult to see any continuing value in maintaining strict controls on foreign ownership. The inherent absurdity of the restrictions is highlighted by Rupert Murdoch's assumption of American citizenship in 1985. Although he had been living abroad for many years, he was deemed to be a resident of Australia for the purpose of the legislation and was able to retain ownership of television stations. However, on becoming a US citizen, even though nothing else had changed, he was no longer regarded suitable to own Australian television stations, but continued to remain suitable to own extensive Australian newspaper interests with a potentially greater capacity to influence public opinion.
RUPERT MURDOCH BECOMES AN AMERICAN Rupert Murdoch, founder of the Australian-based News Corporation international media conglomerate, took up US citizenship in 1985 to facilitate purchases of US broadcasting assets by The News Corporation. At the time Murdoch had been residing in the US for many years and made only infrequent visits to Australia. Broadcasting regulations prior to 1981 prohibited control of television stations by non-residents of Australia. However, in 1979 the Australian Broadcasting Tribunal (ABT) approved Murdoch's takeover of TEN-10 (Sydney) by ruling that he was a resident of Australia for the purposes of the Act. Soon after, Murdoch's purchase of half of Ansett Transport Industries Ltd which held major interests in ATV-10 (Melbourne) was contested on the basis of his residency status, and the ABT eventually refused approval of the purchase. The News Corporation appealed to the Administrative Appeals Tribunal. One of the amendments to the Act in 1981 (colloquially referred to as the "Murdoch Amendments") replaced the residency requirement with citizenship as the determinant of foreign control and enabled the purchase to proceed legally. Ironically, the citizenship requirement that facilitated the ATV-10 takeover necessitated the sale of The News Corporation's television stations when Murdoch became a US citizen in 1985. |
CONCLUSION
Limits on the level of concentration and control of broadcasting have traditionally been considered to be in the public interest because they reduce the power held by any one individual and because the resultant wider spread of control generates a greater diversity of views. Similarly, the public interest is seen by many to be better served by restrictions on foreign ownership, on the basis that there may be a greater risk that the interests of foreigners might not be consistent with the national interest. However, the regulations addressing these concerns come at a cost.
A significant effect of the ownership and control limits has been to prevent the formation of single-owner national television networks and multi-media conglomerates and to restrict foreign involvement in Australian broadcasting. The current provisions appear to act as genuine constraints on acquisition, with some owners declared in breach and required to divest assets in recent years.
Ownership restrictions reduce the range of potential operators and limit the development of industry structures reflecting the existence of economies of scale or scope. Businesses prevented by regulation from growing to their optimal size or from producing complementary products have higher costs and lower profits than otherwise. Cross-media rules are likely to be preventing the formation of multi-media groups and the realisation of benefits of economies of scope likely to be associated with them.
Foreign ownership restrictions, in particular, do not appear to serve a useful function. They are based on outmoded concepts of national sovereignty and in an era of media globalisation they have little effect on the capacity of foreign media to influence Australian consumers. Also, by reducing the pool of potential investors in Australian media, they are likely to encourage, rather than discourage, higher ownership concentration of media assets contrary to the objective of domestic ownership and control regulation.
ENDNOTES
6. The recent decision that the sixth wide-coverage television channel available in most parts of Australia will be reserved for community television should increase opportunities for the development of local programming.
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