Media Concentration in Australia Franco Papandrea and Rodney Tiffen Introduction

Franco Papandrea and Rodney Tiffen

Australia has the media profile of an economically advanced, mature and stable democracy. It has long had close to universal literacy and among the highest life expectancies in the world (Tiffen, and Gittins, 2009). To understand its contemporary media mix one must understand the legacy of former local industry development structures and of the effect of domestic policies and regulations. Australian history was shaped by the tyranny of distance (Blainey, 1968), not only internationally but domestically. At the time of federation in 1901, it took a week to sail from Perth to Sydney. Most media markets were local, reflecting local interests and advertising markets, as well as bowing to logistical necessity. It is only in more recent generations that national media markets and their economies of scale as well as international integration have developed.

Some traditional media sectors, particularly broadcasting, have been and continue to be subject to extensive regulation. Others, such as telecommunications, although highly competitive after liberalisation, are largely dominated by the former publicly-owned monopoly operator. While the growth of the Internet has been instrumental in the development of new media and the emergence of some new globally powerful operators, at the local level, its influence on concentration of traditional media has been, at best, weak. In the Australian context, for example, access to domestic news continues to be confined largely to traditional media sources which now also control some of the most popular domestic news sites on the Internet.

Broadcast television and radio from their early beginnings were developed with a dual commercial-public structure with services widely distributed throughout the country. Entry to the commercial broadcasting industry, which is funded exclusively from advertising, is strictly controlled by licensing. There are two separate and independent public broadcasting corporations, the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Service (SBS). Apart from some relatively minor income generated from its ancillary business activities, the ABC is funded entirely from the public purse. The overwhelming proportion of SBS funding also comes from the public purse. However, unlike the ABC, SBA is permitted to raise part of its operational funding from the sale of advertising. At present, most urban and regional population centres are served by three commercial television services, several commercial radio services (at least two in each area) and the television and radio services of the ABC and SBS.

The newspaper sector is entirely commercial. It is still largely city based, although as in television, the two key markets are Sydney and Melbourne, which constitute around 43 per cent of the country’s population. They are the only cities with competing, locally-produced daily newspapers. A single daily newspaper is published in other major urban centres and many regional centres. Many diverse magazine titles are published on a regular weekly or monthly basis. The print media are highly concentrated by world standards.

Multichannel subscription television was a relatively late-comer in Australia largely because of regulatory prohibitions aimed at insulating commercial free-to-air television from competition. The first licenses were issued in 1997. According to the Australian Subscription Television and Radio Association only 34 per cent of the population had subscription television in 2011 (http://astra.org.au/pages/facts-figures). Current regulatory provisions constrain access of subscription television providers to broadcasting rights for popular sporting events.

The Australian film and television production industry is the beneficiary of substantial direct and indirect financial assistance from Federal and State film support agencies. It also benefits from domestic content regulations imposed on free-to-air and subscription television operators. An average of up to 30 feature films are produced each year with approximately half of total production expenditure coming from a small number of high-budget foreign features filmed in Australia. Box office revenue is dominated by foreign feature films and distribution is predominantly controlled by international film distributors.

Usage of new media is widespread with 74 per cent of the population aged 15 or more years being regular users of the Internet (Australian Bureau of Statistics (ABS), 2010). There are several hundred, mainly small, ISPs providing services to the public. Larger ISPs are associated with the major Australian telecommunications carriers. The search engine sector is dominated by Google.

Media concentration has a long and vexed history in Australia. It goes back to the early days of the development of radio when legislators became concerned about increasing concentration of licenses in the hands of newspaper owners. As a consequence, regulatory limits were imposed in 1935 restricting multiple ownership of radio licences at the local, state and national levels (Joint Parliamentary Committee on Wireless Broadcasting, 1942). Similarly, when television was introduced in 1956, ownership limits prevented any one individual or entity from more than one licence in one area or more than two nationally. As was the case for radio, the new medium was quickly dominated by newspaper proprietors.

Notwithstanding the long-standing concern with the extension of newspaper influence to other media, specific cross-media ownership restrictions were not introduced until 1987. When introducing the cross-media restrictions the then Minister for Communications argued that they were needed to ‘curb major expansion in television by existing newspapers and radio interests which already have considerable influence over the formation of public opinion’ (Duffy, 1987).

Almost a decade after their introduction, the cross-media rules became the focus of a major political debate between the new Conservative Government intent on their removal and the opposing political forces. After several years of debate, legislation abolishing the restrictions was passed in October 2006. The amending legislation introduced the concept of media diversity limits in local media markets designed to prevent concentration of independent media voices to below five in metropolitan areas and below four in regional areas. Given the existence of restrictions on multiple ownership of radio or television licences in individual local markets, the 2006 media diversity rules were largely redundant or ineffective in preventing media concentration (Papandrea, 2006).

The introduction of cross-media rules in 1987 was partly intended as a counterbalance to the concomitant replacement of the previous constraint of common ownership of more than two stations with a broader rule that allowed common ownership of any number of stations provided their aggregate reach did not exceed a prescribed share of the national population. Subsequent to the change, the widely diffused ownership structure of the commercial television broadcast industry was transformed to one of considerable concentration with the formation of three urban networks covering the major metropolitan centres and two regional networks. Consequently, the removal of the cross-media rules not only entrenched the relatively concentrated industry structure but also opened the doors to the extension of concentration across different media. Another potential avenue for dilution of ownership concentration in the broadcast television industry has also been blocked by government imposed moratoria and/or prohibitions on the issue of new commercial television licences that have been in place for more than two decades and are to remain in force at least until the completion of digital terrestrial broadcasting conversion of the industry due for completion by the end of 2013.

Like broadcast television, broadcast radio was also affected by the changes in cross-media ownership rules. For radio, however, the strict multiple ownership limits introduced in 1935 were removed by the promulgation of the Broadcasting Services Act 1992. Since then, the only remaining restriction is a limit of no more than two stations in common ownership in individual licence areas. There are no limits on the number of licences that can be held in common ownership in different local markets. The removal of the cross-media rules has seen the re-emergence of common ownership of radio licences and newspapers (APN News and Media), and broadcast radio and broadcast television (Southern Cross Media Group).

Other media industries are not subject to specific ownership regulation. Starting in 1991 the telecommunications sector underwent progressive reforms transforming the sector from publicly owned monopoly operations to a fully competitive market structure. The transformation began with the establishment of a second fully privatised carrier (Optus) providing wireline and wireless services in competition with the publicly-owned former monopoly carrier (Telstra). A third mobile operator was licensed and entered the market in 1993. The Telecommunications Act 1997 introduced a fully competitive market starting 1 July 1997 and Telstra was subsequently progressively fully privatised. Telstra’s former monopolist’s status and ownership of the wireline consumer access network (notwithstanding a regulatory regime guaranteeing access to other carriers) has provided it with an ongoing advantage over its new entrant competitors. Tesltra was also able to use its position as Australia’s dominant wireline carrier and largest wireless carrier to establish itself as the largest ISP.

Widespread access and use of the Internet has brought many changes with major implications for media industries. However, the hoped-for multi-fold increase in news sources and consequential mitigation of concentration in traditional media has only partially materialised, particularly with regards to new sources of domestic news. In the domestic arena, little has changed since the Productivity Commission (2000) pointed out that the majority of Australians who were getting their news from the Internet were accessing the sites of the established traditional media organisations. So far, Crikey.com is the only significant independent alternative Australian news site established on the Internet.

Australian media industries have tended towards high levels of concentration due to a variety of factors that differ from industry to industry. The relatively small (in world terms) Australian market combined with economies of size and scope in many traditional media markets has always been a limiting factor on the number of competing players. In some industries, regulatory interventions have sought to limit the impact of market forces on ownership concentration. In other industries such as telecommunications, former state monopoly provision of services has been supplanted by open competition, but ownership concentration nonetheless remains relatively high. A high rate of technological change in recent decades has been an overarching influence on the structure of established media industries as well as the catalyst for the development of new industries in competition with the old. These influences have played out differently in terms applications and effects on the concentration of ownership in the media industries.

In this section we examine the current state of ownership concentration in each of the main industries of the Australian media sector and the trends that have led to it. We begin with a discussion of the print media (daily newspapers, magazines, and books) followed by a discussion of audiovisual media (Broadcast TV, Radio, Multichannel TV, Film Distribution/Production, and Cinemas). Discussion of telecom distribution media (Wireline and Wireless) comes next, and the section concludes with an examination of online media (Internet Service providers, and Search Engines). The ownership details presented reveal the emergence in recent years of a significant, but not extensive, presence of some conglomerates in more than one industry. In part this is a reflection of the effect of regulation prohibiting cross-ownership in the traditional media industries which applied from 1987 to 2006. Cross media interests of conglomerates are discussed in a subsequent section.

3.4.Print Media

The print media in Australia are almost as old as European settlement of the continent. The major cities each had local newspapers from various dates in the nineteenth century, so that the oldest Australian newspapers are now 150 years or more old. The most venerable Australian magazine, the Bulletin, began in 1880, but went out of business in 2008, and was associated with Australian moves towards Federation. The most successful magazine the Australian Women's Weekly began in the 1970s, but it was only after the Second World War that magazine publishing became a major industry. For most of Australian history, book publishing remained in British hands, but a local industry grew quickly in the last quarter of the twentieth century.