Joint Select Committee on Broadcasting Legislation - 18/03/2013 - Further reform of Australia's broadcasting legislation
HERD, Ms Annabelle, Chief Executive Officer, Network Ten
McLENNAN, Mr Hamish, Chief Executive Officer, Network Ten
CHAIR: The committee will now reconvene. Before we hear any further evidence, is it the wish of the committee that submissions 1 to 3 that have been tabled by earlier witnesses be received and authorised for publication? There being no objection, it is so agreed.
I now welcome representatives from Channel 10. Thank you for coming along and giving evidence. We have received a written submission. Do you wish to table that?
Mr McLennan : Table it.
CHAIR: Thank you. Do you wish to say anything else or are you happy to leave it at that and proceed to questions?
Mr McLennan : Proceed to questions, thank you.
CHAIR: Thank you. I am curious about a point you make in your introduction in your written submission where you state:
... if the reported Nine/ Southern Cross Austereo merger goes through because the reach rule is lifted, it will be exempt from the public interest test and that would be scandalous.
Why do you make that claim?
Mr McLennan : Because the outcome of the merger means that they will not be held accountable as the rest of the media will, as it relates to the public interest test.
CHAIR: Are you talking about the proposed public interest test under the legislation that is before the parliament at the moment?
Mr McLennan : Correct.
CHAIR: How would that test not apply to a transaction such as that?
Ms Herd : Our reading of the bills that are currently before the parliament is that there is an interim period before the framework is fully established and operational. Whilst during that interim period there is an ability for any deals done in that period to be looked at afterwards, once the framework is set up they do not have to acquire prior approval that the transaction would meet the public interest or not lessen diversity which is quite a different thing to having to actively prove before you can go ahead with your deal that you have either not lessened diversity or met the public interest.
CHAIR: So you are making an assumption that that merger would go ahead immediately if this rule is lifted?
Mr McLennan : It appears that way based on speculation that we have seen in the media and what we have heard in the market. It looks that way at the moment.
CHAIR: Thank you.
Senator LUDLAM: I will carry on with that line because that is actually quite a very important piece of information. If, for example, a tie-up occurs between Channel Nine and Southern Cross, which is a hit of about ten per cent on Channel 10's revenues, I understand, the public interest media advocate, if it gets up as it is drafted at the moment, would in five or six months time have to be contemplating a divestiture or a disaggregation of those two entities?
Mr McLennan : They would have to contemplate that. But as the bill has been written at the moment, it would be too difficult for that to happen. Our perspective on this matter is that if the reach rule is pulled away, this merger will happen very, very quickly. I have been involved in many mergers on both sides of the fence and I think what you will see is an automatic reduction in diversity.
Senator LUDLAM: Is it the case that Channel 10, as part of Free TV, supported the lifting of the reach rule late last year? Can you just step us through how your position has evolved, or if I am misrepresenting you then just clarify the record?
Mr McLennan : Sure. That is not quite correct. I will get Annabelle to talk to that point because she was around at the time.
Senator LUDLAM: This is your first day at the job, isn't it?
Mr McLennan : This is my first day of the job.
Senator LUDLAM: Welcome.
Ms Herd : Network Ten, as Network Ten, has never said a single word in favour of lifting the reach rule. In any meetings that we have had with the government, with cabinet, with ministers, with any politician or the bureaucracy or the Convergence Review, Channel 10 has never sought to lift the reach rule. There were 24 words in a Free TV submission to the Convergence Review out of 8,600 words which mentioned the reach rule and said that perhaps it was time to look at getting rid of it. Free TV is a consensus based organisation and in the cut and thrust of getting consensus, you often let things go through. Perhaps we should have been clearer, but Network Ten has never lobbied to lift the reach rule.
Senator LUDLAM: Never lobbied, but let us just be clear without counting the words: in that Free TV position of last year, maybe you can explain for us how that came about. As a consensus based organisation you were in support of the reach rules, so what has changed? You did not try to block it or have that language taken out.
Ms Herd : Probably the biggest thing that changed is that we have now seen the context in which we are contemplating removing the reach rule.
Senator LUDLAM: That it would impact your commercial interests.
Ms Herd : No, that we would be looking at the reach rule going through perhaps with a public interest test, but none of the other recommendations that the Convergence Review made, for example. The Convergence Review recommended lifting the reach rule and introducing a public interest test, but it also recommended removing some other major regional diversity and media ownership rules, including the one licence to a market rule for television, the two licence to a market rule for radio, changing the voices test to be much broader. We are saying that getting rid of the reach rule in the context we are discussing now, today, is not the way to do it.
Mr McLennan : Our concern is carving it out. We need to look at the whole package in its totality, not carve out the 75 per cent rule. We think that is very dangerous. We think the implications for regional Australia are great and we should not rush it through. We are very, very concerned. We need to be clear that merges are about taking costs out.
Senator LUDLAM: We have heard that and that is really the point on which most of the morning's submissions have dwelled. Can you spell out for us specifically why the lifting of the rule would lead to a loss of diversity in regional markets in particular? Why is that the case?
Mr McLennan : As I said before, the whole issue around mergers is to centralise as many functions as possible, to take costs out. And it is about finance and numbers at the end of the day.
Senator LUDLAM: Is that how Channel 10 has treated its regional affiliate to date?
Mr McLennan : No, because there is not joint ownership in that regard.
Senator LUDLAM: Is?
Ms Herd : Is not.
Mr McLennan : My point here today is to say when there was the concept of the 75 per cent rule being abolished, and then rushed through parliament, we were alarmed by that. Concurrent to that there have been market rumours about this proposed merger. This appears to be real. I do not think we can afford to have this rushed through. Again, I emphasise that we need to look at this in the totality of the whole package.
Senator LUDLAM: I support that contention, and that is why we are taking your points seriously about the public interest test, that effectively all these deals could be done over the next few months that would then need to be reviewed and potentially unpicked by the PIMA. That is your point, isn't it?
Mr McLennan : It is, and I think it is impossible to unpick.
Senator LUDLAM: Why is that? My reading of the bill was that they actually would have that power.
Mr McLennan : The practicality of that happening is very difficult.