Conroy faces a couple of doozies
On the media front he wasn't all that successful. He picked up on the Convergence Review's recommendation last year that media takeovers be subject to a public interest test that will focus on media diversity, and that's contentious.
Opposition communications spokesman Malcolm Turnbull branded it a restriction of press freedom and "a bad idea on every level". Other critics including former Australian Competition and Consumer Commission chairman Graeme Samuel had already pointed to the risk that a public interest test would become a political interest test.
A proposal that the existing 75 per cent limit on national television audience reach be scrapped was parked by Conroy with a parliamentary committee, however.
He says the committee will examine the implications for local and regional news coverage and says the change could still make it into his main media law reform package if the committee comes up with answers. He's also warning, however, that Parliament must agree to the media reform package before it rises at the end of next week. There is a good chance that the 75 per cent rule change will bounce around long enough to miss out, leaving Nine Entertainment's planned $4 billion takeover of regional TV group Southern Cross Media in limbo. Some chance, too, that the entire package will founder.
The 75 per cent-reach rule is becoming superfluous as internet TV expands, and the creation of a public interest test would be another hook for its removal.
But the plan to install a new Public Interest Media Advocate office that will decide if mergers of "national significance" are in the public interest and also oversee the media industry's existing complaint review procedures is untested. The Convergence Review concluded that the advocate would supplement rather than duplicate work done by the existing merger reviewer, the Australian Competition and Consumer Commission, but how that would work is unclear.
And while Conroy indicated last November that the 75 per cent rule would go after the free-to-air television networks signalled that they were comfortable, he is facing a political backlash in the bush where the prospect of network takeovers of regional TV groups is viewed with suspicion, and the free-to-air TV groups are now also openly arguing about the matter: after supporting the change last year, Seven and Ten are now lobbying against it, in the knowledge that Nine has its Southern Cross takeover in the wings.
Media regulation is always a minefield and the minefield is most dangerous in an election year. By putting the recommendation to scrap the 75 per cent-reach rule out to a committee, declaring that his main media reform package will be dropped if it is not rushed through Parliament by the end of next week and announcing that a 50 per cent reduction in commercial broadcast television licence fees will be separately locked in, Conroy may have found a way to walk through it.
Conroy's online gambling announcement came out ahead of the media announcement and was a minimalist response to a major legislative mess.
Interactive gambling has grown at a rate of 12 per cent a year since 2007, four times the growth rate of gambling overall, and the Interactive Gambling Act that was introduced in 2001 to control it is missing in action.
It stops Australian-licensed firms including Sportsbet and Betfair from offering micro-bets on sporting events and casino-like games.
Overseas online betting companies are not affected, however, and many of them offer betting products that are banned here: according to a final report on the Interactive Gambling Act by Conroy's department released on Tuesday, about 2200 online gambling providers are raking in about $1 billion a year from Australians using betting products that "may be in contravention of the act".
Conroy wants the states to join the Commonwealth in creating new consumer protection measures as a first step. The centrepiece would be a new mandatory pre-commitment regime.
As the report makes clear, however, options for blocking or restricting access to overseas firms are thin on the ground, expensive to implement and on the overseas experience, not very effective. Bringing the pirate business back into a regulated Australian environment by allowing Australian-licensed firms to offer betting and gaming options that are currently banned is the obvious and inevitable response: flagging it as a possibility in an election year is a step too far, however.
mmaiden@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
Conroy flagged a media law reform package that includes introducing a public interest test for major media takeovers, creating a new Public Interest Media Advocate to assess mergers of "national significance," and putting the proposal to scrap the existing 75 per cent national television audience reach rule to a parliamentary committee. He also separately locked in a 50 per cent reduction in commercial broadcast television licence fees. For investors, these proposals could change the regulatory landscape for free‑to‑air networks and affect planned mergers or takeover deals.
The article says the 75 per cent reach rule limits how much national audience a single broadcaster can reach. If the rule is scrapped, it could clear the way for deals such as Nine Entertainment's proposed A$4 billion takeover of regional TV group Southern Cross Media. Conroy has parked the recommendation with a parliamentary committee, so the rule change remains uncertain and the takeover could be left in limbo pending the committee's findings.
The public interest test, drawn from the Convergence Review, would subject media takeovers to an assessment focused on media diversity and public interest outcomes. Critics — including political opponents and former ACCC chair Graeme Samuel — warn it could become a political interest test. For investors, that controversy introduces regulatory and political risk around approvals for large media mergers.
The proposal would create a Public Interest Media Advocate to decide whether mergers of "national significance" are in the public interest and to oversee media industry complaint review procedures. The Convergence Review suggested the advocate would supplement, not duplicate, work by the existing merger reviewer, the Australian Competition and Consumer Commission (ACCC), but the article says exactly how the two would work together is unclear — a source of uncertainty for investors watching merger approvals.
Conroy announced a 50 per cent reduction in commercial broadcast television licence fees, which was to be locked in separately from the wider media reform package. That change could affect broadcaster profit margins and cash flows depending on how licence fees were previously accounted for.
Conroy's department report noted interactive gambling has grown about 12% a year since 2007 — roughly four times the growth rate of gambling overall — and that the Interactive Gambling Act introduced in 2001 is "missing in action." The Act currently prevents Australian‑licensed firms such as Sportsbet and Betfair from offering micro‑bets and casino‑style games, while overseas operators not bound by the Act offer many of those products.
According to the report cited in the article, around 2,200 online gambling providers are generating about A$1 billion a year from Australians using betting products that "may be in contravention of the Act." That suggests a significant offshore market opportunity that regulated Australian operators currently cannot address because of local bans on certain betting products.
Conroy is seeking state cooperation on new consumer protection measures, with a key idea being a mandatory pre‑commitment regime. The article also notes options to block or restrict access to overseas firms are limited: they are thin on the ground, expensive to implement and, based on overseas experience, not very effective. The article suggests an alternative — allowing Australian‑licensed firms to offer some currently banned products to bring business into a regulated environment — but says flagging that in an election year would be politically sensitive.
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