Channel Ten taken hostage as Parliament held to ransom on media reform

20 June 2017

By Emma Dawson

As IA‘s Dave Donovan has already pointed out, Channel Ten is not actually insolvent.

It has borrowed only around a third of the total available from its bankers and has another six months to pay back debt. Yet its board pulled the trigger on entering voluntary administration, angering smaller shareholders and causing confusion among analysts.

The current “crisis” at Ten is entirely aimed at pressuring the Senate to pass the Turnbull Government’s media reform legislation, which includes measures to repeal the 75 per cent “reach rule” that stops metropolitan broadcasters merging with regional players; and the “2 out of 3 rule“, which prevents any one proprietor owning more than two of the three services – TV, radio and print – in any one market.

Ten has been here before. It was rescued from administration in the early 1990s by a team including Malcolm Turnbull and returned to be a highly profitable business for more than 20 years.

The broadcast media sector has been pushing for these reforms for more than a decade. They were close to getting the 75 per cent rule – which the internet has rendered obsolete – repealed in March 2013. It failed because it was part of the ill-fated media reform package that Stephen Conroy tried to ram through the Parliament in the dying days of the Gillard Government and which crashed and burned spectacularly due to a relentless misinformation campaign led by News Corp.

I was an advisor to Conroy for almost five years until January 2013. I dealt with the TV networks on a wide range of policy and legislation, including the switch to digital television, equalisation of services for regional and rural Australia, anti-siphoning, local content regulation — anything in the portfolio that wasn’t related to the NBN, basically.

Mostly, my interactions with the folk from media peak bodies and individual broadcasters were productive. The switch to digital TV went so smoothly hardly anyone heard about it. We passed a lot of legislation with agreement from all parties and worked cooperatively to get some good stuff done.

The media reform package, though, was fraught. It’s virtually impossible to get the free-to-air networks and their pay TV counterparts to agree on the necessary reforms to update Australia’s woefully anachronistic legislative framework. It’s been endlessly tinkered with – only the IncomeTax Assessment Act has more appendices than the Broadcasting Services Act – but even after a significant and serious independent review of the rules, agreement on the way ahead was impossible to achieve.

So the fact that current Minister for Communications Mitch Fifield has stitched together a fragile consensus in support of his current package of legislative reforms is, on the face of it, impressive and would seem to be a rare opportunity for the Parliament to pass laws that the whole industry supports.

The problem, though, is no-one involved in that consensus has the public interest at heart.

And you’ll be hard-pressed to find any discussion of this issue that prioritises the public interest argument of protecting a diversity of media in this country. Media coverage has been focussed on the damage to shareholders if Ten collapses and the Prime Minister himself is on the record saying that the 2 out of 3 rule isn’t needed because we have the ACCC. Sure, the ACCC will assess mergers and acquisitions based on a lessening of market competition but they give no regard to the impact on the public of reducing the number of voices in our public debate. Just take a look at Brisbane or Adelaide, where the only daily papers in town are News Corp publications — developments that caused the ACCC not a skerrick of concern.

It’s true that free-to-air broadcasting is under incredible pressure. There is good reason to question whether a country with Australia’s small population and resulting limited advertising revenue can continue to support three entirely advertising-funded TV networks. Yet the pressures of the internet have been evident for decades but the broadcasting barons have consistently failed to innovate or adapt their business models to take on the challenge. That’s not how big business operates in Australia; rather, they come cap-in-hand to Canberra seeking “regulatory relief” that will allow them to make money from more favourable conditions. As Donovan said last week, read Cameron Murray’s Game of Mates to understand the playbook.

The media industry is incredibly powerful, politically. While people with a deep interest in politics get their information from a variety of sources, those who are only marginally engaged – the voters who tend to swing elections – continue to get their impressions of daily politics from short grabs on the nightly TV news. It’s a brave politician indeed who risks the wrath of those who control the means of communication with the public.

So Fifield and Prime Minister Turnbull are, predictably, trying to give the moguls what they want. And what they want – particularly Lachlan Murdoch and, potentially, Bruce Gordon – is to buy Network Ten at a rock bottom price.

While Conroy’s reform package would have removed the legislative restriction on Gordon buying the network, it would not have repealed the 2 out of 3 rule that blocks Murdoch. In fact, Conroy proposed extending that legislation to become a “2 out of 4 rule” — it would have included, for the first time, pay TV. This would have prevented the owner of Foxtel from ever buying a free-to-air network in Australia.

Well before this ill-fated package hit the Parliament, the interests of News Corp and Foxtel were affecting the fate of Network Ten. When Murdoch took over as Chair and CEO, he almost immediately changed the networks’ first digital multi-channel, One, from a sports channel to general programming. One had been performing quite well by multichannel standards and had the advantage of first rights under the anti-siphoning scheme that is so loathed by Foxtel. It had to go — in the interests of Fox Sports.

There’s now credible talk of Sky News taking over Ten’s news production as well.

But small programming changes aren’t enough. It’s apparent that News Corp wants complete control of Network Ten and, in order to get it, is willing to threaten the livelihoods of Ten’s employees by entering into voluntary and unnecessary administration in a bid to pressure Parliament to pass Fifield’s package.

They are making good on a long-standing threat. No-one wants to be the politician responsible for the loss of a free-to-air network. Which Senator will put up their hand and say “I killed Offspring, The Project and Masterchef? That’s the implied threat to every member of the Senate the moment. It’s not new – it’s a line I heard repeatedly in my time in Conroy’s office – but the sector has, after finding a tenuous consensus on the Fifield package, ramped up the tactics and is now holding Ten hostage to its game of Parliamentary ransom. These people play politics hard and they are willing to risk the jobs of thousands of employees at the network and its affiliated companies to get what they want.

They know this is their last best chance for a good while. Labor won’t back repealing the 2 out of 3 rule so it has to be done before their possible comeback at the next election. Doubtless, the moguls have also been told by the prime minister that this is a one-shot deal — no prime minister wants to head into an election year with media reform still on the table. Gillard rolled the dice because she had little left to lose.

So now the media moguls are holding a gun to the head of every Senator.

The Senate must block the repeal of 2 out of 3. It’s not an ideal rule to protect media diversity by any measure but it’s all we currently have. Labor and the Greens appear to be standing firm, so this will not be a pleasant week to be a crossbench Senator — the pressure on them to give the moguls what they want will be immense.

Every Australian who cares about media diversity and doesn’t want to see Network Ten become “Fox News Lite” must contact every cross-bench senator and tell them not to cave. Our democracy can’t afford it.

This article first appeared in Independent Australian on 20 June 2017.