Paul McIntyre: Media shake-up on way

After much jostling, posturing and cajoling by Australia's media companies, the federal Government finally and formally outlined its grand plan this week to overhaul the media sector.

The blueprint, flagged by Communications Minister Helen Coonan in an address to the National Press Club on Wednesday, will let media companies combine newspaper, radio and TV interests in any market but mergers would be prevented if they reduced the number of commercial operators to less than five in capital cities and four in regional markets.

Shares in media groups have traded at a premium this year on expectations that the Government would change the rules and trigger a flurry of takeovers and mergers. That scenario is looking more likely than ever although Senator Coonan indicated the legislative changes might be delayed until early 2006 rather than industry expectations for this year.

But there are still the finer points to deal with which will ultimately upset at least one or two media moguls such as Kerry Packer, Rupert Murdoch or Kerry Stokes.

Stokes for instance, is pushing for new rules letting free-to-air TV networks launch new digital channels, a position resisted by the Packers and Rupert Murdoch's News Ltd because of their 25 per cent stakes in pay TV operator Foxtel.

Coonan, so far, appears to be ready to stand-up to the big guns.

"The forces of change are unstoppable and while they do challenge some business models, they actually present real opportunities to embrace new ways of doing business and to provide significant benefits to consumers," she told the Press Club.

But when asked after her speech on Wednesday about her discussions with media companies, Senator Coonan resisted any stern words about differing agendas. "I haven't detected an unwillingness to continue to work with me to see if we can work through these issues."

Some argue, however, that if Coonan bins foreign and cross-ownership restrictions without seeing any new media players arrive, she will be vulnerable to accusations she is discarding the people that Coonan says the reforms are for - the public.

Under the current rules, media companies that already operate in one media sector - print, TV or radio - are unable to expand into another in the cities where they operate. Coonan's proposals would replace those restrictions with a so-called "five voices test" to ensure at least five media companies are operating in major cities. Internet ventures would be excluded from the new regime along with the public broadcasters, the ABC and SBS, and pay TV operator Foxtel.

Coonan said the restrictions on foreign ownership of media would be abolished although any deal will still have to be approved by the Foreign Investment Review Board.

She argued this week that in a converged media and communications environment it will be "almost impossible, and certainly counterproductive, to stop new players and new services from emerging" although Labor has rubbished the proposed safety net on media diversity. It says the changes would halve the number of media outlets in each city and dramatically restrict consumer choice.

"There are currently 10 major media groups in Sydney and nine in Melbourne," said opposition communications spokesman, Stephen Conroy. "The minister's plan would essentially halve the number of major media groups. It's just a recipe for further media concentration and it's not in the public interest."

Labor is in favour of opening up foreign ownership restrictions but wants to retain cross-media ownership rules.

The major challenge now for Coonan's proposals is to get them past Cabinet and see off the challenge which will come from some media companies lobbying Cabinet ministers to water down changes which would adversely affect their own interests.

Although media companies generally embraced Senator Coonan's speech, some have warned key issues will not get industry consensus. Most are now marking the first quarter of next year for the real action to kick in.

* Paul McIntyre is a Sydney journalist.