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2004-2005-2006
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
BROADCASTING SERVICES AMENDMENT
(MEDIA OWNERSHIP) BILL 2006
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments and New Clauses to be Moved on Behalf of the Government
(Sheet Number QS387)
(Circulated by authority of Senator the Hon. Helen Coonan,
Minister for Communications, Information Technology and the Arts)
GOVERNMENT AMENDMENTS TO THE
BROADCASTING SERVICES AMENDMENT
(MEDIA OWNERSHIP) BILL 2006
OUTLINE
The Broadcasting Services Amendment (Media Ownership) Bill 2006 (the Bill)
amends the Broadcasting Services Act 1992 (the BSA) to reform the foreign and
cross-media ownership regime in Australia.
The current foreign ownership and control restrictions relating to free to air (FTA)
commercial television broadcasting, and cross-media ownership restrictions in the
BSA limit competition in the media sector and restrict access to capital, expertise and
opportunities for growth. The proposed changes will encourage greater competition
and allow media companies to achieve economies of scale and scope, while protecting
the diversity of Australia's media.
Cross-media ownership
The Bill will permit cross-media mergers in radio licence areas where sufficient
diversity of media groups remains following the merger. At least five separate media
groups will be required to remain after any merger activity in mainland State capitals,
and four groups in licence areas elsewhere, including regional areas. Any media
merger, including one that is not a cross-media merger, will not be permitted if it
would reduce the number of media groups in a licence area below the minimum level.
Unacceptable 3-way control
The amendments and new clauses proposed to be moved by the Government have the
effect of prohibiting control of more than 2 out of the 3 regulated media platforms in a
licence area. If a person did obtain control over more than 2 of the platforms, this
would be an offence and a breach of a civil penalty provision. These amendments
reinforce the Government's commitment to protect the diversity of Australia's media.
FINANCIAL IMPACT
The amendments are not expected to have any significant impact on Commonwealth
expenditure or revenue.
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NOTES ON AMENDMENTS
Amendment (1)
Amendment (1) inserts a new definition of "unacceptable 3-way control situation" in
proposed section 61AA of new Division 5A to be inserted by the Bill. This
amendment provides that "unacceptable 3-way control situation" has the meaning
given by new section 61AEA.
Amendment (2)
Amendment (2) inserts new section 61AEA of the BSA, which establishes a new
concept of an "unacceptable 3-way control situation." An unacceptable 3-way control
situation exists in relation to a licence area of a commercial radio licence (first radio
licence area) where a person is in a position to exercise control of:
(a) a commercial television broadcasting licence (where more than 50% of the
licence area population of the first radio licence area is attributable to the
licence area of the commercial television broadcasting licence); and
(b) a commercial radio broadcasting licence (where the commercial radio
broadcasting licence area is, or is the same as, the first radio licence area; and
(c) a newspaper that is associated with the first radio licence area.
The proposed definition of "unacceptable 3-way control situation" uses the relevant
commercial radio broadcasting licence area because such licence areas will more
closely reflect the influence of relevant radio services or newspapers in a community
than a television licence area (which may be very large and highly geographically
diverse).
An "unacceptable 3-way control situation" will exist where a person, who is in a
commercial radio licence area (first radio licence area), is in a position to exercise
control of a commercial radio broadcasting licence in the first radio licence area, a
newspaper that is associated with the first radio licence area and a commercial
television broadcasting licence, the licence area of which has more than half of the
population of the first radio licence area.
The effect of this amendment is that a person cannot own more than two regulated
media platforms.
Amendment (3)
Amendment (3) inserts new Subdivision BA into New Division 5A of Part 5 of the
BSA. New Subdivision BA prohibits transactions that result in an unacceptable 3-
way control situation coming into existence.
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Prohibition on transactions resulting in an unacceptable media diversity
situation
New section 61AMA provides that a person commits an offence if the person is party
to one or more transactions, or was in a position to control the transactions, that occur
after the commencement day, and the transactions cause an unacceptable 3-way
control situation to come into existence in the licence area of a commercial radio
broadcasting licence.
The maximum penalty for an offence under new section 61AMA is 20,000 penalty
units for a natural person, or 100,000 penalty units for a body corporate (section 4B of
the Crimes Act 1914).
A person can only commit an offence in relation to a transaction that takes place after
the "commencement day". The commencement day is the day on which Schedule 2
to the Broadcasting Services Amendment (Media Ownership) Act 2006 (the Act)
commences (new section 61AA of the BSA). Schedule 2 will commence either on
Proclamation, or on 1 January 2008 if the Act is not proclaimed earlier (clause 2 of
the Bill).
Further, a person will not have committed an offence if the Australian
Communications and Media Authority (the ACMA) gave prior approval for the
transactions under new section 61AMC.
New section 61AMB provides that the same conduct also constitutes a contravention
of a civil penalty provision. Under the proposed Communications Legislation
Amendment (Enforcement Powers) Bill 2006 (CLAB), the ACMA may apply to the
Federal Court for a civil penalty order for a contravention of a civil penalty provision
(new subsection 205F(1), Item 48 of CLAB).
The maximum pecuniary penalty that may be payable for a civil penalty
contravention is the same as the maximum penalty for the equivalent criminal offence
(new subsection 205F(4), Item 48 of CLAB).
Prior approval of transactions
New subsection 61AMC(1) provides that a person may, before the transaction takes
place, make an application to the ACMA for prior approval of a transaction that
would result in an unacceptable 3-way control situation. This new provision is
similar to existing section 67 of the BSA, which enables the ACMA to grant prior
approval for transactions that would breach the current cross-media rules or the
statutory control rules. This new provision will operate alongside section 67 as
consequentially amended (Items 13 and 14 of Schedule 2 of the Bill).
The application is to be made in accordance with a form approved in writing by the
ACMA (new subsection 61AMC(2)).
If the ACMA is satisfied that:
· the transaction would place the person in breach of new section 61AMA or
61AMB; and
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· either the applicant or a third party will take action within 12 months to ensure
that the unacceptable 3-way control situation does not eventuate;
the ACMA may approve the transaction (new subsection 61AMC(4)).
The ACMA may seek further information from the applicant before making a
decision (new subsection 61AMC(3)). In deciding whether to approve the
transaction, the ACMA must consider all relevant matters, including any relevant
undertakings given by a third party under new section 61AS (new
subsection 61AMC(7)).
If the ACMA approves a transaction on the basis that the applicant itself will take
certain action, the ACMA must specify a time period during which the action to
prevent or alleviate the unacceptable 3-way control situation must be taken. The
period specified must be at least one month, and it can be no longer than 12 months
(new subsection 61AMC(5)).
The ACMA may specify in the notice the action that the applicant is to take (new
subsection 61AMC(6)). For example, the ACMA may approve the transaction
subject to the person divesting their interests in a specific media operation.
If the ACMA approves a transaction on the basis that a third party will take certain
action, the ACMA must notify the applicant accordingly.
If the ACMA refuses to approve a transaction, the ACMA must give written notice of
the refusal to the applicant (new subsection 61AMC(8)).
New subsection 61AMC(9) provides that the ACMA must deal with application for
prior approval in order of receipt. The ACMA must use its best endeavours to deal
with an application it receives for prior approval within 45 days of receipt (new
subsection 61AMC(10)).
Extension of time for compliance with prior approval notice
If the ACMA approves the transaction, the applicant may seek an extension of time
for compliance (new subsection 61AMD(1)). The ACMA may seek further
information from the applicant before making a decision in relation to a request for an
extension (new subsection 61AMD(3)).
The ACMA has the discretion to grant an extension in appropriate circumstances
(new subsection 61AMD(2)). For example, the ACMA may consider it very likely
that the applicant will divest an interest in a media operation within three months,
thereby resolving the unacceptable 3-way control situation. In such a case, the
ACMA might consider it appropriate to grant an extension for three months.
In deciding whether to grant an extension, the ACMA must have regard to:
· the endeavours the applicant has made to comply with the notice; and
· any difficulties the applicant has experienced in attempting to comply with the
notice (new subsection 61AMD(5)).
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However, the ACMA must not have regard to any financial disadvantage that may be
suffered by the applicant. For example, the fact that the price of shares has recently
dropped is not a relevant consideration.
Any extension granted by the ACMA can be for no longer than either the original
period specified in the notice, or six months, whichever is the shorter period (new
subsection 61AMD(4)).
If the ACMA does not make a decision within 45 days of receiving the applicant, or
of receiving additional information if this was requested, the ACMA is deemed to
have decided to extend the period for compliance by the period specified in the notice,
or six months, whichever is the shorter period (new subsection 61AMD(6)).
If the ACMA refuses to approve an application, the ACMA must give written notice
of the refusal to the applicant (new subsection 61AMD(7)).
Breach of prior approval notice - offence
If a person breaches a notice issued under new section 61AMC, the person is guilty of
an offence (new subsection 61AME(1)). A person commits a separate offence for
each day during which a contravention of the notice continues (new subsection
61AME(2)).
The maximum penalty for an offence under new subsection 61AME(1) is 20,000
penalty units for a natural person, or 100,000 penalty units for a body corporate
(section 4B of the Crimes Act 1914).
Breach of prior approval notice - civil penalty
New section 61AMF provides that the same conduct also constitutes a contravention
of a civil penalty provision (new subsections 61AMF(1) and (2)). Under the proposed
CLAB Bill, the ACMA may apply to the Federal Court for a civil penalty order for a
contravention of a civil penalty provision (new subsection 205F(1), Item 48 of
CLAB). A person commits a separate civil penalty contravention for each day during
which a contravention of the notice continues (new subsection 61AMF(3)).
The maximum pecuniary penalty that may be payable for a civil penalty
contravention is the same as the maximum penalty for the equivalent criminal offence
(new subsection 205F(4), Item 48 of CLAB).
Amendment (4)
This amendment is a technical amendment consequential to Amendment (5).
Amendment (5)
Amendment (5) inserts new section 61ANA of the BSA, which allows the ACMA to
issue remedial directions where it is satisfied that an unacceptable 3-way control
situation exists.
Remedial directions
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If, on or after the commencement day, the ACMA is satisfied that an unacceptable
3-way control situation exists, the ACMA may give a person a remedial direction for
the purpose of ensuring that the situation ceases to exist (new subsection 61ANA(1)).
Such a notice must specify a particular timeframe within which the action must be
taken (new subsection 61ANA(4)).
The types of directions that the ACMA might give include:
· a direction requiring a person to dispose of shares or interests in shares; and
· a direction restraining a person from exercising any rights attached to shares (new
subsections 61ANA(2) and (3)).
The ACMA may only give a remedial direction to a person after the "commencement
day". The commencement day is the day on which Schedule 2 to the Act commences
(new section 61AA of the BSA). Schedule 2 will commence either on Proclamation,
or on 1 January 2008 if the Act is not proclaimed earlier (clause 2 of the Bill).
If the ACMA issues a remedial direction, the notice must specify a period during
which the required action must be taken (new subsection 61ANA(4)). The period
specified must be no longer than 12 months (new subsection 61ANA(5)). However,
if the person acted in good faith, took reasonable precautions and exercised due
diligence to avoid an unacceptable 3-way control situation developing, the person will
be entitled to a 12 month period (new subsection 61ANA(6)).
In contrast, if the ACMA considers that a person acted flagrantly in breach of
section 61AMA or 61AMB, the ACMA must specify a period of only one month
(new subsection 61ANA(7)). This requirement is notwithstanding the fact that a
requirement to take action within one month may be financially disadvantageous for
the person concerned (e.g. if the share market is at a low point) (new
subsection 61ANA(8)).
Amendment (6)
This amendment is consequential to Amendment (5). A person who is subject to a
remedial direction under new section 61ANA may also apply to the ACMA for an
extension of time for compliance, but not if the person was subject to a one month
period for compliance (proposed subsections 61AP(1) and (2)).
Amendment (7)
This amendment is a technical amendment consequential to Amendment (8).
Amendment (8)
Amendment (8) inserts new subsection 61AP(3A) of the BSA, which allows the
ACMA the discretion to grant an extension in the case of a remedial direction issued
under new section 61ANA.
New subsection 61AP(3A) provides that the ACMA has discretion to grant an
extension if:
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· the ACMA considers it likely that an unacceptable 3-way control situation will
cease to exist in the licence area within 3 months of the end of the period
specified in the remedial direction; and
· the person acted in good faith; and
· the extension is appropriate in all the circumstances.
The ACMA may seek further information from the applicant before making a
decision (proposed subsection 61AP(4)).
The ACMA cannot grant an extension for a period of more than 3 months, and only
one extension may be granted (proposed subsection 61AP(5)).
Amendment (9) - (11)
These amendments are consequential to Amendment (5).
Amendment (9) - Section 61AP
In respect of remedial directions issued under new section 61ANA, in deciding
whether to grant an extension, the ACMA must have regard to:
· the endeavours the applicant has made to comply with the notice;
· any difficulties the applicant has experienced in attempting to comply with the
notice; and
· the seriousness of the situation giving rise to the notice (amendment to proposed
subsection 61AP(6)).
However, the ACMA must not have regard to any financial disadvantage that may be
suffered by the applicant. For example, the fact that the price of shares has recently
dropped is not a relevant consideration. If the ACMA does not make a decision
within 45 days of receiving the application, or of receiving additional information if
this was requested, the ACMA is deemed to have decided to extend the period for
three months (new subsection 61AP(7)).
Amendment (10) - Section 61AQ
If a person breaches a remedial direction issued under new section 61ANA, the person
is guilty of an offence (new subsection 61AQ(1)). A person commits a separate
offence for each day during which a contravention of the notice continues (new
subsection 61AQ(2)).
The maximum penalty for an offence under new subsection 61AQ(1) is 20,000
penalty units for a natural person, or 100,000 penalty units for a body corporate
(section 4B of the Crimes Act 1914).
Amendment (11) - Section 61AR
8
Proposed section 61AR provides that the same conduct also constitutes a
contravention of a civil penalty provision. Under the proposed Communications
Legislation Amendment (Enforcement Powers) Bill 2006 (CLAB), the ACMA may
apply to the Federal Court for a civil penalty order for a contravention of a civil
penalty provision (new subsection 205F(1), Item 48 of CLAB). A person commits a
separate civil penalty contravention for each day during which a contravention of the
notice continues (new subsection 61AR(2)).
The maximum pecuniary penalty that may be payable for a civil penalty
contravention is the same as the maximum penalty for the equivalent criminal offence
(new subsection 205F(4), Item 48 of CLAB).
Amendment (12) and (13)
These amendments are technical amendments consequential to Amendment (14).
Amendment (14)
Amendment (14) extends the ACMA's ability to accept undertakings under the power
in proposed section 61AS. This amendment allows the ACMA to accept an
undertaking offered by a person to the effect that a person will take specified action to
ensure that an unacceptable 3-way control situation does not exist in the commercial
radio broadcasting licence area (new paragraph 61AS(1)(c)).
Amendment (15)
This amendment is consequential to Amendment (16), which removes the
requirement in the BSA for the Australian Competition and Consumer Commission
(ACCC) to clear transactions involving television, radio and newspaper in regional
licence areas. This amendment inserts a pre-condition that the ACMA must be
satisfied that an unacceptable 3-way control situation does not exist before entering
the media group in the Register. This new pre-condition replaces the ACCC prior
approval pre-condition for registration, which is no longer relevant.
Amendment (16)
Amendment (16) proposes that new Subdivision F of Division 5A of Part 5 of the
BSA be opposed. Subdivision F, which deals with ACCC clearance for transactions
involving television, radio and newspaper in regional licence areas, is no longer
required due to the introduction of the new rules relating to unacceptable 3-way
control situations. This amendment removes the additional requirement for ACCC
clearance in the BSA but the requirement under section 50 of the Trade Practices Act
1974 (TPA) still applies.
Amendment (17) and (18)
These amendments are consequential to Amendment (3).
Amendment (19)
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Amendment (19) amends new section 205Q (Item 48 of the proposed
Communications Legislation Amendment (Enforcement Powers) Bill 2006 (CLAB)).
This amendment extends the ACMA's ability to apply to the Federal Court for an
injunction to restrain a person from engaging in any conduct which would result in a
contravention of proposed new section 61AMB of the BSA (Amendment (3) - the
proposed new civil prohibition on unacceptable 3-way control situations coming into
existence in a commercial radio broadcasting licence area).
If, in the Federal Court's opinion, it is desirable to do so, the Court will also be able to
require the person to do something (new paragraph (205Q(b)). The ACMA may
apply to the Federal Court for a civil penalty order for a contravention of a civil
penalty provision (new subsection 205F(1), Item 48 of CLAB).
This amendment is intended to ensure that the ACMA has a range of enforcement
measures available to it when parties may be proposing to conduct a transaction that
would result in an unacceptable 3-way control situation coming into existence.
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