Labor’s proposed public interest test for media ownership changes has drawn howls of protest. Matthew Knott examines how the proposal compares with the UK and US.
If federal Communications Minister Stephen Conroy succeeds in shoehorning a public interest test for media mergers and acquisitions through Parliament, Australia won’t be alone in having such a law. And no, we’re not talking about Cuba or Iran — rather those other notoriously despotic regimes, the United States and the United Kingdom.
In assessing Conroy’s proposed public interest test, it’s useful to compare it with the US and the UK equivalents. All three reflect the same underlying principle: numerical cross-media ownership laws, on their own, are insufficient to protect media diversity. But there are fundamental differences between them, as Crikey has noted previously.
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. The commission, reflecting the prevailing political orthodoxy in Washington, has taken a strongly pro-deregulation stance. Recently, the FCC chairman has been pushing for a relaxation of media ownership laws, including eliminating prohibitions on newspaper-radio and TV-radio cross ownership.
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. In 2011 the body attracted heavy criticism for its decision to allow cable giant Comcast to merge with NBC-Universal.
Unlike Conroy’s one-man band “public interest media advocate”, the FCC is directed by five commissioners appointed by the US president to five-year terms. Three of the commissioners can be members of the same political party.
Across the Atlantic, Britain introduced a public interest test for media mergers in 2003 as a last-minute sop to rebel MPs concerned about the relaxation of media ownership laws. It hasn’t been a Soviet-style menace to press freedom. Nor has it proved a boon for media diversity.
“In theory it has many good attributes, but in practice it has been highly susceptible to political interference,” Timothy Dwyer, a media studies lecturer at the University of Sydney who has studied the UK experience closely, told Crikey.
Like Conroy’s test — which states any ownership change will “not result in a substantial lessening of diversity of control of registered news media voices” — 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 government ministers — not the independent regulators — 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 regulators decide a proposed merger or acquisition would be against the public interest, the government can still waive it through. 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%.
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 showed, culture secretary Jeremy Hunt was likely to waive the takeover through following energetic lobbying by well-paid News Corp lobbyists.
Conroy’s test avoids such overt political interference. The public interest media advocate, not the Communications Minister, would have the final call on whether a change of ownership is allowed or not.
In a major divergence from UK and US practice, the PIMA has oversight not only over media deals but standards for newspaper publishers. The PIMA would be tasked with enforcing, at arms-lengths, media behaviour by overseeing self-regulatory bodies such as The Australian Press Council. If media outlets don’t meet the standards they set themselves, they would lose access to exemptions under the Privacy Act.
Last year’s Leveson Report called for the creation of a new independent press watchdog with statutory underpinning. Membership would remain voluntary, with outlets lured to sign up by incentives such as speedier and cheaper resolution of defamation cases. Compared with the one-week deadline imposed by Labor, the reaction to to Leveson has been positively languid: three months since the report’s release, MPs are still haggling over what to do.