Paul McIntyre: Shake-up could set off media free-for-all

Rupert Murdoch and James Packer are cranky but in a surprise move the Howard Government yesterday signed off on a huge overhaul of Australian media regulation.

The changes, which got the nod from Cabinet on Thursday, will allow full ownership of local media groups by foreign companies and relax the rules for local takeovers and mergers. The changes put the John Fairfax newspaper group headed by David Kirk and TV broadcaster Ten Network at the top of the takeover target list next year when the new legislation will be introduced.

However, News Corp's Australian arm immediately attacked the changes on Thursday in line with the advice Rupert Murdoch gave Prime Minister Howard two weeks ago over a private lunch in which he said the proposed media reform package should be scrapped. Murdoch, who has for years been interested in buying a TV network in Australia or bidding for a fourth commercial TV licence, is unhappy because the current TV owners remain too protected for his liking under the new rules.

"It's a series of large steps in the wrong direction [that] will consign Australia to a digital dark age," News Ltd's attack dog and corporate affairs chief Greg Baxter said on Thursday. "The removal of cross and foreign restrictions will simply distort the market even further, reduce diversity and shore up protection for commercial TV."

This week's overhaul threatens the value of Murdoch and Packer's individual 25 per cent stakes in pay TV operator Foxtel because the TV networks will be allowed to broadcast more free channels from next year using their digital spectrum allocations. Until now, they have been forced to simply broadcast their analogue schedules in digital with a few interactive bells and whistles. The Australian public, however, has been underwhelmed by the prospect of buying digital set-top boxes to receive the free-to-air signal in a new format. But from 2009 under the new rules, the three commercial free-to-air networks will triple their offer from three to nine channels. And there could be up to another 30 channels in the free digital spectrum as long as they don't look like conventional TV programming.

While there were some concerns from some TV networks about such an expansion increasing programming costs without delivering new advertising revenues, News Ltd remained one of the few critics. Most media bosses, including David Kirk, backed the changes. In New Zealand this week, he said the changes would strengthen the media sector and "the diversity of media services".

Another public reservation about the new rules came from the head of radio network owner DMG, whose chief executive Paul Thompson cast a cloud over new media diversity rules.

From next year, current regulation which prevents companies owning print, radio and TV entities in one market will be replaced by a diversity test which says there must be no fewer than five independent "voices" in any metropolitan market and four in regional areas. The current rules, in the parlance of former Prime Minister Paul Keating, meant that media moguls could only be the "princes of print or the queens of screen".

But DMG's Thompson is worried about media diversity under the new regime.

"Five voices in each capital city is clearly not enough," he said. "In Sydney, for example, two of the voices could be solus radio stations like 2KY and 2SM and the other three could be mega-media groups." 2KY and 2SM are radio stations with tiny audiences.

Thompson said the Government should have gone for a "significant" voices test rather than a "voice of any size of relevance".

But Senator Helen Coonan, the Communications Minister widely credited with getting the media reform package up when many were convinced it was dead, was unmoved by suggestions of waning media diversity and upsetting a few powerful media owners.

"This is not designed for any particular media mogul, let me make that perfectly clear," she said. "I think you can see from the detail that it does not address the kind of issues that might have entirely suited the agenda of certain media proprietors. I make no apologies about this. I'm in it for the consumers and I want to get new services for consumers and I think that is entirely what a package of this magnitude should be delivering."

Still, there remain some roadworks for Coonan's media reform truck to navigate and that's primarily from the Senate, where two National Party allies in particular will have to be convinced about the impact on regional Australia.

Paul Neville, chairman of the backbench communications committee, remains worried despite assurances by Coonan that all was fine in the Nationals camp. Neville has flagged his intention to push for legislation blocking a single owner controlling a TV network, radio station and newspaper in one market.

The other independently minded Nationals senator, Barnaby Joyce, holds a similar line. "The details have to be examined but I would certainly not rule out asking for significant amendments," he said this week. And the media circus rolls on.

* Paul McIntyre is a Sydney-based journalist