The Australian Communications and Media Authority has accepted enforceable undertakings from Macquarie Radio Network Limited (MRN) to sell radio stations 2CH in Sydney and 4LM in Mt Isa.
The undertakings arise from the merger of MRN and Fairfax Media Limited’s (Fairfax) radio interests, which took place on 31 March 2015. The undertakings were offered in support of MRN and Fairfax’s applications to the ACMA to approve temporary breaches of the control rules in the Broadcasting Services Act 1992 (BSA).
As a result of the merger, MRN and Fairfax now control three commercial radio broadcasting licences in Sydney: 2GB and 2CH (both formerly controlled by MRN) and 2UE (formerly controlled by Fairfax). This is in breach of the ‘two-to-a- market’ limit under the BSA, whereby a person must not be in a position to exercise control of more than two commercial radio licences in a licence area.
In Queensland’s Mt Isa, following the merger, both MRN and Fairfax control the commercial radio broadcasting licence 4LM (formerly controlled by MRN) and Fairfax controls the associated newspaper, The North West Star. This means that the number of independent media ‘voices’ in Mt Isa has dropped from four to three in breach of the rule in the BSA requiring that the number of independent ’voices’ in regional licence areas should not fall below four.
The ACMA has approved:
- temporary breaches of the ‘two-to-a-market’ limit for commercial radio licences in the Sydney licence area and associated directorship limits - for a period of one year to 31 March 2016
- a transaction that will result in an unacceptable media diversity situation (UMDS) in the Mt Isa licence area - for a period of six months to 30 September 2015.
MRN has undertaken to divest 2CH and 4LM within the approval periods granted by the ACMA in order to remedy these breaches.
The undertakings have been published on the ACMA’s website. Details of temporary breaches approved by ACMA are provided in the Register of Notices and Approvals under Part 5 of the Act.
For more information, please see the Backgrounder below or contact: Emma Rossi, Media Manager, (02) 9334 7719 and 0434 652 063 or firstname.lastname@example.org.
Media release 15/2015 - 2 April
The transaction on 31 March 2015 involved the acquisition by MRN of commercial radio licences controlled by Fairfax and the issuing of 54.5 per cent of the shares in MRN to Fairfax.
Implications under the control rules
‘Two-to-a-market’ limit - Sydney
Sections 54 and 56 of the BSA provide that a person, either in their own right or as a director of one or more companies, must not be able to exercise control of more than two commercial radio broadcasting licences in the same licence area. This is known as the ‘two-to-a-market’ limit.
Following the merger, MRN now controls 2GB, 2CH and 2UE in Sydney in breach of this limit. All controllers of the merged entity, which includes John Singleton and Fairfax, are also in breach of this limit, as are the directors of these companies.
‘Unacceptable media diversity situation’ or ‘5/4’ rule – Mt Isa
Section 61AB of the BSA provides that at least five independent media ‘voices’ must be present in metropolitan commercial radio licence areas, and at least four in regional commercial radio licence areas. This is referred to as the ‘5/4’ or ‘minimum voices’ rule.
A ‘voice’ is a commercial television broadcasting licence, a commercial radio broadcasting licence or an associated newspaper, or a group of two or more media operations.
As a regional commercial licence area, the Mt Isa RA1 licence area previously had the minimum of four voices: Southern Cross Austereo (HOT FM and Southern Cross Television); Imparja (Imparja Television); MRN (4LM); and Fairfax (North West Star).
Following the merger, both MRN and Fairfax control commercial radio broadcasting licence 4LM and the associated newspaper, The North West Star. These media operations are therefore counted as one group/voice which means that the number of media diversity points in Mt Isa has dropped from four to three, in breach of the rule requiring that the number of media diversity points in regional licence areas should not fall below four. This has resulted in an UMDS.
Prior approval process
The ACMA has the discretion to approve temporary breaches of media ownership and control rules brought about by media transactions. Such approval must be sought from the ACMA in advance (that is, before the transaction takes place) and applicants must demonstrate that a proposed course of action to ‘cure’ the breach (such as divesting certain licences or assets) will be implemented in a suitable timeframe.
Under section 67, the ACMA can approve a temporary breach of the statuary control rules, which includes the ‘two-to-a-market’ limit, for a period of six months, one year or two years.
Under section 61AJ, the ACMA can provide prior approval for transactions that will result in unacceptable media diversity situations (i.e. a breach of the ‘5/4’ rule) for a period of between one month and two years.
The ACMA generally does not give approval for a period that is longer than is reasonably necessary to remedy the breach.
A person who has been given approval can apply for a maximum of one extension, which must not exceed the period initially approved, or one year, whatever is the lesser. Such applications can only be made to the ACMA within 3three months of the end of the initially agreed period for the temporary breach. The ACMA is not required to grant an extension but may do so if, in its opinion, an extension is appropriate in all the circumstances.
On 30 January 2015, the ACMA approved applications by MRN and Fairfax for prior approval of:
- temporary breaches of the ‘two to a market’ limit for commercial radio licences in the Sydney RA1 licence area and associated directorship limits (sections 54 & 56 of the BSA)
- a transaction that will result in a UMDS in the Mt Isa RA1 licence area (section 61AG & 61AH of the BSA).
The temporary breaches arise from the transaction noted above.
The applications were received on 12 and 20 January 2015.
Period of approval
The ACMA approved:
- the temporary breach of the ‘two to a market’ limit for a period of one year from the date the transaction is completed
- a UMDS existing in the Mt Isa RA1 licence area for a period of six months from the date the transaction is completed.
The approval periods were in line with timeframes requested by the applicants.
Remaining in breach after the period approved by the ACMA under section 61AJ expires is an offence that attracts 20,000 penalty units ($3,400,000). It also attracts civil penalties for each day.
Remaining in breach after the period approved by the ACMA under section 67 expires is an offence that attracts 20,000 penalty units (commercial television) or 2,000 penalty units ($340,000) (commercial radio).
The ACMA can accept enforceable undertakings from applicants and can accept the undertaking on the condition that actions will be undertaken to remedy the breach by a specified date.
The ACMA has accepted enforceable undertakings from MRN and Fairfax to remedy the breaches arising from the transaction.
The ACMA can only publish details of the prior approvals once the transaction has taken place. Prior to this, the ACMA was required to treat the information provided as confidential.
If the ACMA considers a person has breached an enforceable undertaking, it may apply to the Federal Court for, among other things, an order to direct the person to comply with the undertaking.
 Requests for extension in relation to prior approvals given under s61AJ, must also be given not less than one month before the end of the initially agreed period for the temporary breach.