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Conroy making history with public interest test

If the Gillard government stares down the nation’s media bosses and introduces a public interest test for media ownership that’s tough, effective and free from political interference, it will be the first government in the world to do so.

So far, public debate on the proposed test — a key recommendation of the Convergence Review — has been heavy on righteous rhetoric but light on facts. Look no further than today’s letter from seven media bosses slamming the proposal as a “political interest test” that “has the capacity to be misused by politicians of all persuasions to block the acquisition of media companies by people they do not agree with or simply do not like”.

In the US, the independent Federal Communications Commission has, since its creation in 1934, assessed whether major media and telecommunications mergers would benefit or harm the “public interest, convenience, and necessity”. It’s a standard that sounds impressive but has done little to halt media concentration. As former FCC commissioner Michael Copps said last year, ”The FCC has endorsed just about every merger and transaction that has come before it; we seldom meet one we don’t like.”

The FCC hasn’t blocked a major media transaction since 2002, though it does often impose conditions. Last year the body attracted heavy criticism for its decision to allow cable giant Comcast to merge with NBC-Universal.

Across the Atlantic, since Britain introduced a public interest test  in 2003 (as a last-minute sop to rebel MPs concerned about relaxed media ownership laws) it hasn’t been a Soviet-style menace to press freedom. Nor, for that matter, has it proved a boon for media diversity.

Those who’ve studied it closely describe the British test as a cumbersome and largely ineffectual model that Conroy & Co would be unwise to replicate.

In theory it has many good attributes but in practice, it has been highly susceptible to political interference,” said Timothy Dwyer, a media studies lecturer at the University of Sydney, who has studied the UK experience closely.

The British test has no hard and fast percentage rules on what is and isn’t against the public interest. Instead, the regulators — OfCom and the Competition Commission — can be asked to take an objective look at how much share of “public voice” the merged company would have. In the case of newspaper mergers, issues such as the accurate presentation of news, free expression of opinion, and the plurality of views in each marketplace are canvassed. Similar tests are applied to broadcasting transactions.

There’s nothing wrong with such criteria, experts such as Dwyer say. The problem is that, unlike in the US, it’s government ministers — not the independent regulators — who have the first and final say on the question of public interest. If they don’t want the issue to be examined, it doesn’t happen. And if one, or both, of the regulators decides that a proposed merger or acquisition would be against the public interest, then the government can still waive it through. Even if the government does block a transaction, media companies can also apply for it to be overturned by a judicial review.

This helps explain why the British test has been used only twice since it was introduced nine years ago. In 2010, adverse findings forced pay TV giant BSkyB to reduce its share in rival station ITV from 17.9% to less than 7.5%.

Then again, in 2010, business secretary Vince Cable asked the regulators to assess whether News Corporation’s bid to lift its stake in BSkyB from 40 to 100% passed the public interest test. OfCom decided that it wasn’t. Nevertheless, as the Leveson inquiry has shown, culture secretary Jeremy Hunt was likely to waive the takeover through following energetic lobbying by well-paid News Corp lobbyists.

This shows that, despite protestations from media bosses, political interference can work for their interests — rather than against them.

I don’t think that a Secretary of State can be sufficiently independent from media power pressure to take a decision on the public interest,” said Alison Harcourt, a communications regulation expert at the University of Exeter.

Harcourt says the British system should be overhauled so that government ministers have a say in the outcome — but not the final say. She says a body including regulators, politicians and lay people would be the best way to go.

All signs so far suggest that Conroy has no plans to legislate for a carbon copy of the British public interest test. First, the model proposed by the Convergence Review is broader than the British version because it would cover all changes in media ownership — e.g. a Gina Rinehart takeover of Fairfax — not just media mergers. The review also proposed that the public interest test should be administered by an independent body — not the government — and that it’s decision should be final. The idea of the Australian Competition and Consumer Commission administering the test is one idea that’s been floated in the media.

Dwyer said the government is using the wrong stick: ”The best possible approach is to have very clear cross-media ownership laws so that we don’t need public interest tests in the first place. The best thing would be to extend cross-media ownership laws to online and subscription television.”

Federal cabinet is reportedly set to back a public interest test within the next six weeks.

Correction: This story has been updated to include reference to the US Federal Communications Commission.

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  • 1
    Posted Wednesday, 4 July 2012 at 2:59 pm | Permalink

    Point of order: the Competition Commission is based in London and has nothing to do with the EU.

    I think you’re thinking of the European Commission, which (confusingly) does also prepare competition reviews on mergers & acquisitions with significant cross-border European impact.

    You’re right on the effectiveness of the law, though.

  • 2
    Elizabeth Thornton
    Posted Wednesday, 4 July 2012 at 3:22 pm | Permalink

    After the Murdoch inquiry, is it any wonder that thinking people hear alarm bells when Gina Rinehart decides that she would like to do something similar ?

    It is quite sickening to find that around elections all of a sudden the Manly Daily prints heavily biased propaganda towards the liberals . No wonder we have Tony Abbott as our Wakehurst M.P.

  • 3
    Mack the Knife
    Posted Wednesday, 4 July 2012 at 3:27 pm | Permalink

    Labor have nothing to lose.

    The right wing press and Their ABC have been distorting and, misrepresenting the facts to bring down the government.

    I’d like to see truth in reportage that applies to radio and television mediums too.

    That would really stuff up Jones, Bolt et al

  • 4
    CML
    Posted Wednesday, 4 July 2012 at 4:05 pm | Permalink

    I think we should have a law that says newspapers have to print the TRUTH! You know, the facts of the matter. That would make a nice change. And this should apply to radio and TV as well.
    Wasn’t Murdoch found to be “not a fit and proper person” to take over BSkyB in Britain? If so, how
    can he maintain 70% of the newspapers in Oz. Does he change his spots when he travels south of the equater? Very convenient. Can’t wait for similar laws here.

  • 5
    Matthew Knott
    Posted Wednesday, 4 July 2012 at 4:21 pm | Permalink

    Thanks John - you’re right. Have fixed that up.

  • 6
    Vincent O'Donnell
    Posted Wednesday, 4 July 2012 at 5:39 pm | Permalink

    Public value/interest tests for new media services proposed to be introduced by public broadcasters are common in the EU. Thus the framework of ideas is already established. What has not been done (yet) in the EU is to extend the reach of the public value/interest framework to private broadcasters ( and other media).

    As our privately owned media continue to supply plenty of fulcrums against which the government can lever change, the have only themselves to blame for tighter regulation.

    There’s a conference in Sydney in early September devoted to discussing public interest and public value tests in media around the world.

    Could be interesting if the letter’s signatories parade on the footpath outside with banners!

  • 7
    John Bennetts
    Posted Wednesday, 4 July 2012 at 5:39 pm | Permalink

    Matthew, there is a difference between a wave (noun or verb) and the verb (waive) which extends beyond simply a difference in spelling.

    They are not interchangeable.

  • 8
    Posted Wednesday, 4 July 2012 at 5:43 pm | Permalink

    CML: Allow me to have a daydream too. I can see it clear before me-in my dreams. With each main storyline a short list of FACTS. This would accompany each politically biased opinion piece-to the left, to the right, etc. This sort of system would irretrievably knacker Andrew Bolt. Think of it, Bolt comes out with a litany of Tony Abbott’s foresighted views on a subject And, next to it would be a list of the number of times Tony Abbott has ignored the issue, refused to deal with it, and the list of times he has said no to it. It would be pointless for Bolt to continue his lies in the face of facts. And, after all, one can’t blame the average voter for not ploughing their way through Hansard.

  • 9
    Posted Wednesday, 4 July 2012 at 5:47 pm | Permalink

    Dear Mr Moderating Machine. Thank you so much for rounding out my day. It doesn’t feel like a day until I have 1-5 ‘Moderated’ comments from Crikey.

  • 10
    AR
    Posted Wednesday, 4 July 2012 at 10:14 pm | Permalink

    CML - it would be simple enough to insist that reportage be truthful and let them run riot with trollumnists, hacks & shills.
    However we do seem now to be in the era of people being entitled to their own ‘factiods’ or ‘troothiness’, after the unlamented Dubya era of “we make own own reality”.

  • 11
    John Bennetts
    Posted Wednesday, 4 July 2012 at 10:20 pm | Permalink

    AR: Agreed!

  • 12
    AR
    Posted Wednesday, 4 July 2012 at 10:29 pm | Permalink

    JohnB - glad that you understood what I thought that I wrote, despite the omissions & typos.
    It was meant to be the era of people being entitled not just to their opinions but to their own factoids ….
    And Karl Rove (Dubya’s brain) with his infamous quote “we make our own reality”, often attributed to Darth Cheney.

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