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Localism, pluralism and responses to COVID-19

Encouraging local content – especially for people located outside metropolitan centres – is a policy issue often related to, but separate from, media pluralism.

With COVID-19, that may be changing.

The crisis – two decades in the making

In Australia, the challenge of promoting localism across a vast but sparsely populated continent has been the subject of successive policy reviews. In the 2000s, concerns raised in the Local Voices parliamentary inquiry and other forums led to broadcast quotas and then to regular monitoring of both regional radio and TV by the regulator, the Australian Communications and Media Authority. Research, such as that conducted in 2019 by the Centre for Media Transition, has pointed to the importance of local content and also the challenges in making it commercially viable.

In the digital platform era – as advertising revenue moves from news producers to distributors – the story of dwindling diversity has been entwined with the loss of localism. Plummeting ad revenue has resulted in the temporary closure of many regional newspapers. Recent developments include the following:

  • News Corp suspended 60 community newspapers
  • Australian Community Media announced that a large number of newspapers would suspend all print operations, with some moving online, while some daily newspapers would continue
  • Other independent regional newspapers such as The Sunraysia Daily in regional Victoria and The Barrier Daily Truth in regional News South Wales have closed, dramatically reduced their frequency or moved entirely online.

Will the print versions of these publications return when the COVID crisis is over? No one knows the answer to this, but some ideas for further policy change have been fomenting among the larger regional media ownership groups.

These suggestions needs to be considered in light of existing, much reduced, legislation. And rather than risking a temporary response to the coronavirus crisis setting future policy direction, it also might be time to rethink how policy research can help us understand current levels of localism and diversity.

Further calls

Even before the coronavirus, some in the industry had called for more extensive legislative change. In submissions to a Senate inquiry in 2016, for example, both News Corp and the Ten Network said all media ownership rules should be removed. More recently, further change to the ownership rules has been proposed by the new entrant on the media ownership scene, Antony Catalano of Australian Community Media. It was ACM that picked up a large number of regional titles in 2019 after Fairfax Media (publisher of The Sydney Morning Herald and The Age, among other titles) was acquired by the Nine Network in the most significant corporate transaction following changes to media ownership rules in 2017. Catalano called for removal of the rule that limits control of commercial television licences in most markets to one per licence area.

In announcing the suspension of News Corp regional publications in early April 2020, News Corp CEO Michael Miller identified the actions of digital platforms and the regulation faced by local companies as reasons for the dire economic situation of regional publications, even ahead of the collapse in advertising prompted by the coronavirus. He singled out the remaining media ownership laws, saying that only ‘partial reform’ had been achieved so far.

Industry assistance

Soon after Michael Miller took a stand on regulation – an argument for more of one kind and less of another – the Australian government announced a policy response to COVID-19. It included a $50 million funding package for regional media and a 12 month waiver of spectrum tax for commercial radio and television broadcasters, including regional broadcasters. It also included suspension of existing broadcast quotas and financial obligations relating to Australian and children’s programs but – despite speculation that regional television broadcasters were considering an end to some bulletins – did not suspend regional radio and TV quotas.

In a related policy decision, on 20 April 2020 the government announced it would ask the competition regulator to make a mandatory code of practice addressing commercial relations between media organisations and digital platforms, ending a voluntary code development process and thereby supporting calls from local media for stronger government intervention.

So, things are being done to help Australia’s news producers cope with COVID-19 and with the impact of digital platforms. But should further changes to the media ownership rules be pursued as well?

Genuine ‘reforms’?

It’s important to see the proposals from Michael Miller and Antony Catalano as part of a narrative that sees digitisation and much freer access to international media as the reasons for dismantling media ownership rules. This was evident even twenty years ago in reforms attempted by former Communications Minister Richard Alston; it manifested again in the removal of foreign ownership laws and part of the cross-media rules under Helen Coonan in 2006; and it was a key part of the rationale for media reform pursued in 2016 and 2017 under Mitch Fifield, albeit with a new level of urgency injected by the challenge from digital platforms.

The loss of revenue and the additional competition are real. And there is a good argument for strengthening local companies in order to respond to international competitors, even if the link between cost savings and continuity of quality has never actually been demonstrated.

There may still be private, commercial benefit in removing the remaining rules but – unlike past exercises in policy reform – there is no longer any shimmer of accompanying public interest. To understand this, let’s look at the two rules that remain.

  • The rules in ss 53 and 54 of the Broadcasting Services Act 1992 (the BSA) establish that (except in a few smaller markets) there is a limit on any person controlling more than one commercial television licence or more than two commercial radio licences in any one licence area (and there are accompanying rules in ss 55 and 56 for company directors). The rules relate to control rather than just ownership and the Act allows for tracing control through a string of companies and for looking behind surface-level arrangements.
  • There are prohibitions in ss 61AG and 61AH of the BSA on transactions that result in ‘an unacceptable media diversity situation’. There is a complicated mechanism for awarding points to each media group or independent media operation in a local area, as recorded in a register. The scheme is colloquially known as the ‘5/4 rule’ because it effectively stops transactions that cause the number of points in a metropolitan area to fall below 5 or the number of points in a regional area to fall below 4, or to further erode the number of points in an area that is already below these levels.

These rules remain after the removal, in 2017, of the last version of Australia’s cross-media rules. It prevented common control of commercial radio, commercial television and associated newspapers in the one licence area. The 2017 amendments also removed a rule preventing control of commercial television licences with a combined licence area population of more than 75 per cent of the Australian population. The second of these had been characterised in policy terms as a means of ensuring there would be regional commercial networks aside from those based in capital cities.

A measured approach

Looking at the remaining rules, it may well be that the points system governing ‘unacceptable media diversity situations’ can be improved. It gives a single media operation the same value, without reference to its contribution to media diversity. For example, a commercial radio station broadcasting mostly entertainment programs or programs syndicated from metropolitan stations is awarded one point; the same value is given to a local newspaper that employs its own journalists who cover local government, local courts and other local events.

In contrast, as [Derek Wilding] argued in the 2016 media reform process, the licence area caps are crucial to the structural separation of news-producing media organisations in Australia. The one licence cap on commercial television effectively ensures there are at least three commercial media operators in most areas of Australia. Of course, most areas have more commercial media services and these commercial sources are supplemented by the public service national broadcasters as well as community broadcasters.

Already, cross-media ownership of radio, television and print is permitted. In a number of key regional markets across Australia, allowing the three regional television networks to merge could have a serious negative impact on media diversity, even if that means companies such as Australian Community Media are strengthened.

Instead, we need to re-assess the value and operation of the points scheme under the ‘5/4 rule’. But before we can propose meaningful reform, these markets need to be mapped. Benchmarks need to be established based on current levels of local news production.

The measurement of media pluralism in Australia will become a central part of the policy research we conduct in the final phase of the Media Pluralism Project.

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The Role of a Pluralistic Media in Australia’s Democracy

Media and Australian Democracy

AS in any democracy, a diverse and pluralistic media has been seen by governments around the world as a vital means to the end of having a healthy democracy. The fewer the voices expressing their viewpoints, the less healthy a society becomes, and the watchdog role of the media to hold politicians and large and powerful business interest to account, is diminished. Obviously, in an election focused period, this is even more important. People require a diverse and pluralistic range of opinions in order to make informed decisions, not only on a daily basis as citizens and consumers, but also for key democratic moments such as voting.

There is a long running historical trend in media internationally, not just Australia, to media becoming more concentrated. Media ownership became more concentrated throughout the 20th century, and that trend continues in the 21st century. It is a predictable consequence of deregulated media markets which have been on the rise for several decades. At the same time that Australia removed its cross-media ownership rule in 2017, the Federal Communications Commission in the US eliminated its rules on radio/television and newspaper/broadcast cross-ownership. The 2017 order and notice are subject to an appeal filed in 2019 by the Prometheus Radio Project petitioners in the United States Court of Appeals for the Third Circuit (Prometheus Radio v. FCC, 2019).

Australia’s media is among the most concentrated in the world according to a study undertaken by researchers in New Zealand in 2016, and only two countries — China and Egypt — have a media system where one owner holds more than 50% of the daily newspaper market – and those owners are the government!

Recent Developments

The removal of the cross-media rules in 2017 facilitated the take-over of Fairfax Media by Nine Entertainment in a 3 billion dollar deal which subsumed the separate identities of the famous independent news mastheads, The SMH, The Age, the AFR.

We can expect further concentration: We might see a tie up between the Seven TV network, and News Corp, for example.

The concentration in legacy media is duplicated offline. The most popular online news sites are mainly run by the legacy brands, News Corp Australia and now, Nine Entertainment.

It was announced in early May that Nine Entertainment have sold their regional media arm, Australian Community Media (ACM), to a Private Equity group lead by Anthony Catalano, the former head of the Fairfax Media lifestyle division, that included the Domain real estate brand.

ACM includes around 170 titles such as The Newcastle Herald, the Illawarra Mercury, The Canberra Times, The Examiner.

On the face of this deal, it’s a new owner, so we might expect some welcome diversification in the newspaper sector. However, ACM is part of the highly commercialised news media sector in Australia. In the last few years this regional arm of Fairfax Media has been cut right back in terms of journalistic resources, in an attempt to assist in their survival. It’s reasonable to assume even more of this kind of cost-cutting at a time when local journalism is in a very precarious situation from the challenges of a reconfigured global media, including from social media platforms like Facebook and Twitter. Experimentation with alternative revenue models, such as subscription is expected.

What Impact have these Mergers had on the Media Industry?

In 1903 there were 21 daily newspapers across Australia’s 8 capital cities, and 17 different owners. By the 1950s, there had been a gradual consolidation to 15 daily newspapers and 10 owners. By 2016 there were 10 metro or state-wide newspapers. News Corp Australia and Nine Entertainment own the bulk of these with some notable exceptions, including The West Australian, owned by Seven West Media.

When Nine Entertainment took control of Fairfax Media as part of that deal they left their charter of editorial independence in place. Will that survive with the renewed focus on commercialism at ACM? In effect, in the commercial media sector, two large companies now dominate the Australian media. The former Liberal party treasurer and conservative stalwart, Peter Costello is chair of Nine Entertainment. How will that board handle journalism that is damaging to the coalition Government? We expect that our current large-scale data collection of online news stories will provide some interesting insights in this regard.

Have these Mergers Affected the Media’s Role in Australia’s Democracy?

With Australia’s media being dominated by two large commercial media corporations there are no longer any larger scale independent media voices as a result of the impact of deregulation.

You might argue that with fewer people reading newspapers anyway, and especially younger cohorts being less interested in these legacy mastheads, so why does that matter?

Several points can be made which question that line of argument.

First, the brands that dominate legacy media in Australia also dominate online news media. News Corp Australia and Nine Entertainment own many of the most visited online sites.

Second, with the removal of cross media laws, which prevented co-ownership of TV, radio and newspapers, this dominance will only continue and intensify. The convergence of digital media has resulted in news media being re-used across platforms.

And third, these major brands tend to set the news agenda for the rest of the media because they control the bulk of the journalistic resources.

The ABC is of course an important part of the media ecosystem in Australia, but its funding has been slashed year after year, reducing its ability to constantly undertake the best quality investigative journalism. If it is in a position where is it less likely to be critical of the Government for fear of further budget reductions, there’s a chilling effect, and it is then less likely to play a watchdog role that holds politicians to account for their actions.

Social media platforms, in large measure, distribute and amplify existing news stories amongst like-minded networked groups. And of course, these platforms are often responsible for amplifying the worst kinds of speech, and providing a means for algorithmic news manipulation as witnessed in the Cambridge Analytica and other incidents by extremist groups.

What role does law and regulation play?

In Australia, mergers that might affect media concentration are only considered by our media regulator (the Australian Communications and Media Authority, or ACMA) if they will breach one of the three remaining media ownership rules:

  • The limit of one commercial TV licence per local area
  • The limit of two commercial radio licences per local area
  • The diversity points test which applies where there are only five or fewer independently owned media groups in a metropolitan area or four such groups in a regional area.

And while our competition regulator, the Australian Competition and Consumer Commission (ACCC) will look at all media mergers, it applies a general, cross-industry test based on ‘a substantial lessening of competition in a market’.

As the ACCC explained when it sought comment on the Nine-Fairfax merger, this test focuses on the effect that removal of a competitor within the market will have on prices, quality and choice. The ACCC said:

‘It is not the same as a diversity (range of views) or plurality (number of voices) test and is not a public interest test. However, the potential impact on diversity and plurality can be relevant to assessing whether there is a lessening of competition.’

This means that in Australia we have no effective test for assessing the broader public interest in media mergers – and because our media regulation only takes account of legacy media platforms, we have no means of even assessing the level of media pluralism in this country.

What can be done in terms of Governance and Policy Responses?

Our European field research has provided some potentially interesting policy response models for Australia to investigate. In the UK, for example, they have a public interest test process that is triggered when media mergers arise that threaten media plurality. The test is one of ‘sufficient plurality’ and, importantly, it is applied by both the media regulator (Ofcom) and the competition regulator (the Competition and Markets Authority). It involves a serious assessment of the level of media plurality at the time of a transaction.  In addition, the Media Plurality Framework developed by Ofcom could, at least in principle, be applied outside of a merger situation as a gauge of media plurality overall.

Our research is also looking at initiatives such as the Media Pluralism Monitor developed by the Centre for Media Freedom and Pluralism at the European University Institute. CMFP has been commissioned by the European Union to apply the Monitor to assess pluralism in 31 countries. Its latest report is available here. CMFP is now working on its 2020 report which will take more account of digital media.

All of this seems to suggest that we need two distinct tools for media pluralism in Australia: a ‘thermometer’ to measure media pluralism via an initial, benchmark study and then periodic reviews; and a public interest test that will be applied in merger environments. As our research progresses, we’ll start to consult locally on how some of these ideas might be applied in Australia.

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