Chapter 2 - Regulatory environment
Regulatory functions
As the regulator for broadcasting, the internet, radiocommunications and telecommunications, ACMA’s responsibilities include promoting self-regulation and competition in the communications industry, while protecting consumers and other users, fostering an environment in which electronic media respect community standards and respond to audience and user needs, managing access to the radiofrequency spectrum, and representing Australia’s communications interests internationally.
ACMA’s regulatory functions are set out in Part 2, Division 2 of the Australian Communications and Media Authority Act 2005.
Ownership and control
In October 2006, the Australian Parliament passed key legislation put forward as part of the Australian Government’s media reform package.
Media reform
ACMA plays a central regulatory role in implementing the government’s new media laws which received Royal Assent on 4 November 2006. Schedule 1 of the Broadcasting Services Amendment (Media Ownership) Act 2006 came into force on 1 February 2007. It introduced key concepts relating to media ownership, including prohibitions relating to unacceptable media diversity situations and unacceptable three-way control situations.
Schedule 2 of the Act, which contains local content protections and the repeal of cross media and foreign control rules, commenced on 4 April 2007.
Register of Controlled Media Groups
A core component of the new media ownership rules is the Register of Controlled Media Groups (RCMG). The RCMG lists the media groups in each licence area, the media operations that form part of a group and the controllers of those operations.
The publication of the RCMG by ACMA on 27 March 2007 was a major step in the implementation of the new media ownership regulatory arrangements. The RCMG provides new information to industry and the community on the existence of registrable media groups in licence areas across Australia.
Information used to create the RCMG
To enable ACMA to create the RCMG, licensees of commercial television and commercial radio services (other than non-broadcasting services bands licensees) and publishers of newspapers associated with the licence areas of these services were required to notify ACMA of the controllers of those operations and the directors of the licensees and publishers as at 1 February 2007, by 6 February 2007. Controllers were also required to notify ACMA by that date.
A letter, customised notification form and guidance notes were sent to commercial broadcasting licensees—except for non-broadcasting services band licensees—in December 2006. Similar information was also sent to publishers of associated newspapers in December 2006. In February 2007, letters were sent to controllers of licences and newspapers requesting further information that would assist ACMA in reviewing entries in the RCMG.
Cooperation by industry in providing this information was instrumental in enabling ACMA to publish the RCMG at an early stage.
Entries in the RCMG
The RCMG contains entries for registered media groups in each radio licence area. An entry in the RCMG lists the media operations that form part of a group and the controllers of those operations.
While an entry for a media group is unconfirmed, or if a removal or alteration of an entry for a group is unconfirmed, the entry for the group includes a note indicating the unconfirmed status. The RCMG also includes explanatory notes to assist users.
Updates to the RCMG
Commercial television and commercial radio licensees and publishers of newspapers associated with the licence areas of their licences are required to notify ACMA of any changes in control within five days of becoming aware of those changes. Persons who come into a position to exercise control of such licences and associated newspapers are also required to notify ACMA within five days of becoming aware of coming into that position.
ACMA will update the RCMG when it is notified of relevant changes in control. Provided that a transaction creating a new group does not result in an unacceptable media diversity situation or an unacceptable three-way control situation, ACMA will update the RCMG with an unconfirmed entry within two days of receiving notification. ACMA is then required to review and confirm or cancel the entry within 28 days. Similar requirements apply to the removal and alteration of entries.
An unacceptable media diversity situation will arise if there are fewer than five points in any metropolitan licence area or fewer than four points in any regional licence area. In general, each registrable media group constitutes one point, as does each separate media operation that is not part of a registrable media group.
An unacceptable three-way control situation exists if a person is in a position to exercise control of a commercial television licence, a commercial radio licence and an associated newspaper in the one radio licence area.
Further information on media operations
The information in the RCMG is supplemented by the Media Diversity Report developed by ACMA. In addition to the registered media groups in each radio licence area, the report includes the ungrouped media operations and a guide to the points in each radio licence area. ACMA published the report in May 2007.
TopCompliance with ownership and control provisions
Notices
Under sections 61AN, 61ANA and 70 of the Broadcasting Services Act 1992, if ACMA is satisfied that there is an unacceptable media diversity situation or an unacceptable three-way control situation, or that a person is in breach of the ownership and control rules, it may, by notice in writing, direct a person or, in some cases, the licensee to take action so that the situation ceases to exist or the person is no longer in breach.
ACMA did not issue any such notices during the reporting period.
Annual notifications
Until changes to Part 5 of the Broadcasting Services Act took effect on 1 February 2007, section 62 of the Act required that commercial television and commercial radio licensees provide ACMA with details of persons who were in a position to exercise control of the licence, directors of the licensee and foreign directors of the licensee at the end of each financial year.
Section 65 of the Broadcasting Services Act required that, at the end of each financial year, each person who was in a position to exercise control of a commercial television or commercial radio broadcasting licence provide ACMA with details of any company interests held in a newspaper that is associated with the licence area of the licence.
Since 1 February 2007, section 62 of the Broadcasting Services Act has required that commercial television licensees, commercial radio licensees and publishers of newspapers that are associated with the licence area of a commercial radio broadcasting or a commercial television broadcasting licence provide ACMA with details of the persons in a position to exercise control of the licence or newspaper and directors of the licensee or publisher at the end of each financial year.
Further, until 4 April 2007, subsection 112(6) of the Broadcasting Services Act required that subscription television broadcasting licensees notify ACMA, of foreign persons with company interests exceeding 20 per cent in a subscription television broadcasting licence at the end of each financial year. This provision ceased to have effect on 4 April 2007, the date that the foreign ownership restrictions under the Act were repealed.
Notification of control and directorships
In 2006, section 65 of the Broadcasting Services Act was amended to require licensees of commercial radio broadcasting and commercial television broadcasting services and publishers of newspapers associated with the licence areas of these services to notify ACMA of the persons in a position to exercise control of the licence or newspaper and the directors of the licensee or publisher as at 1 February 2007. These notifications were required to be lodged within five days after 1 February 2007.
Similarly, section 65 required notification from persons in a position to exercise control of commercial radio broadcasting licences, commercial television broadcasting licences and associated newspapers as at 1 February 2007.
Notifications of changes in control
Members of the public may find out about changes in ownership and control through ACMA’s Notifications Register and the RCMG. Reports based on these registers are available on ACMA’s website.
Until changes to Part 5 of the Broadcasting Services Act took effect on 1 February 2007, section 63 of the Act required each commercial broadcasting licensee to notify ACMA when a person came to be, or ceased to be, in a position to exercise control of the licence. The licensee was required to do this within seven days of becoming aware of the event. Similarly, section 64 of the Broadcasting Services Act required a person who had come into a position to exercise control of a commercial licence to notify ACMA within seven days of becoming aware of doing so.
Since 1 February 2007, section 63 of the Broadcasting Services Act has required each commercial broadcasting licensee and each publisher of an associated newspaper to notify ACMA when a person has come to be, or ceased to be, in a position to exercise control of the licence or newspaper. The licensee must do this within five days of becoming aware of the event. Similarly, section 64 of the Broadcasting Services Act requires a person who has come into a position to exercise control of a commercial licence or a newspaper to notify ACMA within five days of becoming aware of doing so.
ACMA received notifications of changes in control for 157 commercial radio broadcasting licences in 2006–07. In the same period, ACMA received notifications for 12 commercial television broadcasting licences and 13 associated newspapers.
Compliance with notification requirements
Although levels of compliance with the new requirements of section 65 were high, formal warnings were issued in April 2007 to 17 persons who did not submit notifications as required. These warnings resulted in the lodgement of notification by all licensees, publishers and controllers who were required to provide them.
Applications for prior approval
Under section 67 of the Broadcasting Services Act, before a transaction takes place or an agreement is entered into that would place a person in breach of the restrictions on control (Division 2) or directorships (Division 3), the person may apply to ACMA for a prior approval of the breach.
Section 67 requires that ACMA must either approve or refuse approval for the breach within 45 days of receiving the application, or approval for two years will be taken to have been given. Following the transaction that results in the breach, for which prior approval has been given, details of any approvals under section 67 are available to the public through an ACMA notifications register. ACMA may approve the breach and specify a period during which the person must take action to arrange for the breach to cease. An extension of the period specified in a notice given under section 67 may be sought under section 68. This period cannot be more than two years.
Prior approval may be sought for transactions that would result in an unacceptable media diversity situation coming into existence or which would reduce the number of points in a licence area in which an unacceptable media diversity situation already exists (section 61AJ). Prior approval may be sought for transactions which would result in an unacceptable three-way control situation coming into existence (section 61AMC). The person would be in breach of the new unacceptable media diversity situation, and unacceptable three-way control situation provisions prohibit certain transactions without ACMA approval and include civil penalty provisions. ACMA is not required to maintain a register of approvals given under sections 61AJ and 61AMC. Extensions of time may be granted under sections 61AK and 61AMD.
During the reporting period, ACMA did not approve any applications under sections 61AJ, 61AMC or 67. ACMA granted one extension of time of an approval period specified under section 67, pursuant to section 68.
Provision of opinions on control
Under section 74 of the Broadcasting Services Act, an applicant can request that ACMA give an opinion on whether a person is in a position to control a licence, a newspaper or a company. ACMA must provide an opinion within 45 days of the receipt of the request, otherwise it is taken that ACMA’s opinion accords with the applicant’s. This time may be extended if ACMA requires further information from the applicant. Opinions on control are available on payment of a fee. ACMA did not receive any requests for such opinions during the reporting period.
Associated Newspaper Register
Under section 59 of the Broadcasting Services Act, ACMA is required to maintain a public register of newspapers that are ‘associated’ with commercial radio or commercial television broadcasting licence areas.
The Associated Newspaper Register is relevant to determining the composition of registrable media groups and assists ACMA and industry in monitoring compliance with the media diversity requirements under Division 5A of Part 5 of the Broadcasting Services Act. It is available on ACMA’s website.
Local content
Regional television
An additional licence condition on regional commercial television broadcasting licensees in Queensland, northern New South Wales, southern New South Wales and Victoria required these licensees to broadcast minimum amounts of material of local significance (local content) from 1 February 2004. The minimum amounts of ‘material of local significance’ or local content must comprise at least 720 points per six-week period and a minimum 90 points per week. Points accrue on the basis of two points per minute for local news and one point per minute for other local content material, excluding paid advertising.
The additional television licence condition was imposed on the five licensees broadcasting in these markets:
- Seven Qld, Southern Cross and WIN TV in regional Queensland;
- NBN Ltd, Prime Television and Southern Cross in northern New South Wales;
- Prime Television, Southern Cross and WIN TV in southern New South Wales; and
- Prime Television, Southern Cross and WIN TV in regional Victoria.
Based on figures provided to ACMA by the licensees subject to the condition under a self-reporting scheme, all licensees met the quota requirements for 2006.
In the second quarter of 2007, three licensees were selected for independent audit by external consultants. Compliance was assessed in three local areas not previously included in the initial evaluation exercise, over a full six-week timing period in two cases and over a one-week period in one case. As a result, all licensees currently required to comply with local content requirements have now been independently audited.
The outcome of the 2007 audits was that the three selected licensees were found to be compliant with all applicable requirements of the licence condition within the relevant local areas during the audit period.
In October 2006, the Broadcasting Services Amendment (Media Ownership) Act 2006 introduced new local content requirements for regional commercial television broadcasting licences. This was part of a package of reforms to the Broadcasting Services Act 1992, introduced into Parliament by the Minister. These reforms included amendments to foreign ownership and cross media laws, and the establishment of local content provisions affecting parties, including regional commercial television broadcasting licensees.
From 1 January 2008, ACMA must impose a licence condition requiring affected regional commercial television broadcasting licensees to broadcast a minimum amount of material of local significance. As well as licensees in regional Queensland, northern and southern New South Wales and regional Victoria who are currently subject to such requirements, licensees in Tasmania will be subject to local content requirements for the first time.
Regional radio
Obligations for regional commercial radio broadcasting licences
The media reforms also introduced new local content and local presence requirements for regional commercial radio broadcasting licences and required ACMA to impose licence conditions defining ‘existing level of local presence’ and ‘material of local significance’.
From 1 April 2007, licences affected by a trigger event must comply with ACMA’s local presence licence condition. Licences affected by a trigger event after 4 April 2007 must also comply with statutory minimum service standards for local news and information. Licensees must file draft local content plans with ACMA within 90 days of a trigger event and submit annual local content plan compliance reports.
A trigger event is:
- the transfer of a regional commercial radio broadcasting licence; or
- the formation of a new registrable media group where a regional commercial radio broadcasting licence is in the group; or
- a change of controller of a registrable media group where a regional commercial radio broadcasting licence is in the group.
From 1 January 2008, all regional commercial radio licensees must broadcast the applicable hours of material of local significance during daytime hours—6.00 am to 6.00 pm—on business days, in compliance with a ‘material of local significance’ licence condition to be imposed by ACMA. Under the legislation, the applicable number is 4.5 hours, but that number can be reviewed and a new number declared by the Minister.
Investigations directed by the Minister
On 27 October 2006, the Minister directed ACMA to undertake two separate investigations into:
- whether the definition of trigger event may lead to unintended consequences for regional commercial radio licensees, especially for small or family-owned licensees; and
- local content levels, including current coverage of matters of local significance, the appropriateness of 4.5 hours per business day as the applicable hours of material of local significance to be broadcast, what amount would be appropriate for all or particular classes of licences and whether it should include 12.5 minutes of news per business day.
ACMA invited regional commercial radio broadcasting licensees, including section 40 licensees, to provide information and consulted with the industry peak body, Commercial Radio Australia (CRA). ACMA reported to the Minister on the trigger event investigation on 30 March 2007.
ACMA consulted further with regional commercial radio broadcasting licensees on the investigation into local content levels including regional visits to discuss local content issues with regional commercial radio licensees in each state and territory. For the purpose of its investigation into local content levels, ACMA visited 16 licence areas and 22 licensees (representing 35 licences in the 16 licence areas). ACMA also visited Tasmania to consult on the extension of the commercial television local content condition to Tasmania. ACMA also met with representatives of regional commercial radio broadcasters at ‘meet the regulator’ functions in Ballarat on 21 February 2007 and in Hobart on 7 June 2007.
The local content levels investigation was completed and reported to the Minister on 29 June 2007.
Local presence licence conditions
From 4 April 2007 (the proclamation date), regional commercial radio broadcasting licences must maintain a local presence and comply with minimum service standards following a trigger event. A trigger event is the transfer of the licence, the formation of a new registrable media group or the change of controller of a registrable media group.
The Seven Media Group’s acquisition of a controlling stake in the West Australian Newspaper Group and Fairfax’s merger with Rural Press Limited, occurring on 4 April 2007 and 9 May 2007 respectively, resulted in 16 trigger events. Trigger event and corresponding local presence obligations for the affected licences commenced on those dates.
Draft local content plans and existing level of local presence statements are due to be filed with ACMA within 90 days of trigger events. The first annual local content plan compliance reports are due by 30 September 2007 and annual local presence compliance reports are due by 30 September 2008. These reports will be used to monitor compliance with trigger event obligations.
ACMA’s compliance strategy relies on mandatory reporting and on consumer complaints. As approved local content plans will be available from a register on ACMA’s website, performance of these plans will be transparent, enabling the public as well as ACMA to consider compliance issues. ACMA will respond to any complaints from the public under the existing Broadcasting Services Act complaints mechanisms.
Broadcasting Financial Results
To inform itself and the government on industry trends, ACMA requests that commercial television and commercial radio licensees submit details of their financial performance each year. Licensees provide information on revenue, expenses, profits, assets and liabilities for each of their broadcasting services. ACMA aggregates the information and publishes it as Broadcasting Financial Results.
These aggregated financial results are a valuable source of information for the industry, including existing and aspirant broadcasters, the government, financial advisers and market researchers.
Details on the financial performance of the 274 commercial radio and 54 commercial television licensees in metropolitan and regional Australia will be made available in the Broadcasting Financial Results 2005–06.
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