Ownership laws miss their targets

In its announcement of the proposed merger with Southern Cross Media, Seven West described the deal as ‘consistent with SWM’s stated strategic position of being in support of media consolidation in Australia’.  

There’s no arguing with that: in most regional media markets across Western Australia, three existing media groups will be reduced to two. At least, that’s how it looks before one of the few remaining media ownership rules kicks in and the merged entity is required to divest some of its interests. Among the most significant events affecting the two companies are the merger of Seven Media and West Australian Newspapers in 2011, and the merger of Southern Cross Media and Austereo in the same year. All of this followed the 2007 merger of Southern Cross Broadcasting – a regional TV network – with Macquarie Media Group, which had earlier acquired two independent radio networks. Seven West then acquired the Sunday Times from News Corp in 2016 and then its own regional television affiliate, Prime, in 2021. In 2019 it sold its radio stations in Western Australia to Southern Cross, while Southern Cross sold its TV stations to Seven earlier this year. The latest deal brings them all together. 

These cross-media acquisitions were made possible by the Howard Government’s initial easing of cross-media ownership laws in 2006 and the Turnbull Government’s removal of the remaining restrictions in 2016. But some key rules remain, among them a restriction on transactions that reduce the number of independently owned media outlets in already concentrated markets. Under a points scheme that counts the number of commercial TV and radio licences and major newspapers associated with them, an ‘unacceptable media diversity situation’ arises in a regional market if a transaction takes the number of points below 4 or if it further reduces the number of points in a market that is already below that level. And this is where the Seven-Southern Cross transaction gets interesting.  

All but two of the regional commercial radio licence areas are already sitting at 3 points, with Seven and WIN controlling the TV licences and Southern Cross Austereo holding the radio licences. After the merger, from Port Headland to Albany, media that’s subject to the ownership and control rules will be controlled by either Seven-Southern Cross or WIN. On its face, the Broadcasting Services Act is designed to prevent this kind of outcome, but it won’t stop the deal outright; instead, the Australian Communications and Media Authority (ACMA) has the power to authorise the transaction in advance, provided it’s satisfied that steps will be taken to restore the existing number of points. This usually involves divestments, meaning the merged company could, for example, sell one of its radio stations in these markets. And while this analysis excludes media sources not subject to media ownership rules – like community radio, non-daily newspapers, digital media and the national broadcasters – Seven West itself owns 12 regional newspapers, most of which are located in areas where the Southern Cross radio stations operate. That’s apart from the post-merger cross-platform holdings in Perth – The West Australian and Perth Now; Channel 7 and 7Plus; and two SCA radio stations – where no divestment will be needed.

Even with some divestments in regional markets, and even by Australian standards, this is looking like an extraordinary level of media concentration.  

Of course, there’s always competition law, and the merger documents show Seven-Southern Cross is prepared for this. The tests in the Competition and Consumer Act might address the impact on the market for advertising, but that’s something different from media diversity. A comprehensive attempt to assess a merger scenario should involve a public interest test – in media regulation, not in competition law – that weighs up the public interest in a diverse media landscape with the sustainability of local media outlets that now need to compete against international players as well as digital platforms. Newer participants have expanded the range of media sources we have access to, but what often matters most in ensuring diversity is a range of local sources of news and current affairs. In Australia there’s a very small number of companies offering daily reporting and analysis on the routine as well as the exceptional workings of government, business and the community. Consolidation of these sources does matter, and sweeping endorsements of media consolidation are no more helpful than pre-programmed protests at all media mergers.  

In the transaction before us, we’re primarily looking at a set of commercial radio stations, along with the LiSTNR app, that are important participants in the media environment but which don’t drive the local news agenda. The real problem arises from an accretion of diverse assets over a period of about 20 years and the failure to design a regulatory test to deal with the outcome. The transaction also shows a curious effect of media regulation: although the Act will kick in and the ACMA will ensure that appropriate divestments are made, other transactions would likely be free of such intervention. Consider, for example, a possible acquisition of Network Ten by News Corp, with all its existing interests across the media landscape.  

Our ownership rules ring loud and clear on something of lesser significance and stay silent on something of great public interest.  

A version of this article was published by The Conversation. 

References:

https://sevenwestmedia.com.au/assets/pdfs/250930-SWM-media-release.pdf

https://advertising.sevenwestmedia.com.au/print/the-west-australian-regional-newspapers/

https://mediated-trust-arts.sydney.edu.au/programs/global-media-concentration-and-internet-project/