11 October 1999

ABA finds no breaches of Act in news services agreements

The Australian Broadcasting Authority has found that Prime Television Limited is not in a position to exercise control of the commercial radio stations 1CBR and 2ROC Canberra and 2KKO and 2XXX Newcastle through the provision of news services to those stations.

The ABA has been investigating agreements between Prime and Canberra FM Radio Pty Limited and Newcastle Radio Pty Limited, the licensees of the Canberra and Newcastle stations, since April 1998. The agreements related to the provision of news services by Prime to the four radio stations.

"The ABA considers that the control of news services on commercial radio is an issue of fundamental importance to maintaining diversity of views as intended by the ownership and control rules in the Broadcasting Services Act," said Professor David Flint, ABA Chairman.

Under the Act, a commercial television broadcasting licensee is not permitted to control a commercial radio licence in the same licence area. One of the tests for control in the Act is ‘control of the selection or provision of a significant proportion of the programs broadcast by the licensee.’

The ABA reached a preliminary view that Prime was in a position to exercise control of Canberra FM Radio Pty Limited and Newcastle Radio Pty Limited through the provision of news services. In accordance with section 180 of the Act, the ABA distributed copies of its draft investigation report to Prime and the radio stations for their comment.

Representatives of Prime and the other parties to the original agreements contacted the ABA, indicating that they did not agree with the ABA’s preliminary conclusions. The representatives advised the ABA that (in any event) the terms in the original agreements that had given rise to the ABA’s concerns were readily capable of amendment. As a result, the ABA and Prime entered into discussions as to how Prime and the other parties could amend the original agreements to remove those terms of concern to the ABA.

The ABA is satisfied that amendments to the agreements have remedied any breaches of the Act that may have occurred.

The report of the investigation can be viewed on this site, as RTF 394k/17pp or download as PDF 60k/17pp or printed copies are available, price $10, by calling (02) 9334 7700.

BACKGROUND

In early March 1998, the ABA was advised that Prime Television Limited (Prime), Canberra FM Radio Pty Limited and Newcastle Radio Pty Limited had entered into certain contractual arrangements for the provision of news services in Canberra and Newcastle.

Prime Television (Northern) Pty Limited is the licensee of a commercial television broadcasting licence with the call sign NEN in the Northern NSW licence area. Prime Television (Southern) Pty Limited is the licensee of a commercial television broadcasting licence with the call sign CBN in the Southern NSW licence area. Radio Newcastle is the licensee of broadcasting licences with the call signs 2KKO and 2XXX in Newcastle. Canberra FM is the licensee of broadcasting licences with the call signs 1CBR and 2ROC in Canberra.

The agreement in Newcastle was entered into by Prime Television (Northern) Pty Limited, a company controlled by Prime and Radio Newcastle Pty Limited (Radio Newcastle) a company controlled by Austereo Pty Limited.

The agreement in Canberra was entered into by Prime Television (Southern) Pty Limited, a company controlled by Prime, and Canberra FM Radio Pty Limited (Canberra FM), a company jointly controlled by Austereo Pty Limited and Australian Radio Network Pty Limited.

As part of its role in monitoring compliance with the Broadcasting Services Act 1992 (the Act), the ABA made preliminary inquiries of Prime, Austereo Pty Limited and Australian Radio Network Ltd relating to these arrangements (to determine whether these agreements could put Prime in breach of the Act). As a result of its preliminary inquiries, on 9 April 1998 the ABA commenced an investigation into the control implications of the agreements between Prime and the commercial radio broadcasters Radio Newcastle and Canberra FM. The investigation focussed on whether such agreements placed Prime in breach of any provision of Part 5 of the Act (in particular, paragraphs 60(a) and 61(1)(a) of the Act).

Paragraph 60(a) of the Act provides that a person must not be in a position to exercise control of a commercial television broadcasting licence and a commercial radio broadcasting licence that have the same licence area.

Paragraph 61(1)(a) of the Act provides that a person must not be a director of a company that is in a position to exercise control of a commercial television broadcasting licence and a company that is in a position to exercise control of a commercial radio broadcasting licence that have the same licence area.

The Newcastle licence area is entirely within the Northern NSW licence area and that the Canberra licence area is entirely within the Southern NSW licence area. Paragraph 51(b) of the Act provides that if a licence area is entirely within another licence area those two licence areas are deemed to be one.

In April 1998, Prime, Austereo Pty Limited and Australian Radio Network Pty Limited provided the ABA with copies of the ‘Agreement for Provision of News Services’ in Newcastle and Canberra (the original agreements).

Under these agreements, Prime would provide news services to Canberra FM and Radio Newcastle (that is, the broadcast of news bulletins and updates throughout the day). The original agreements also provided that Prime would make space in its newsroom for the equipment necessary to enable the broadcasts. In return, Canberra FM and Radio Newcastle would provide promotion spots for Prime on their radio services, and acknowledge Prime as the source of the news. Prime submitted that this was the only consideration for the provision of news programs.

After a preliminary review of the original agreements, the ABA were concerned that certain provisions contained in the original agreements placed Prime and its directors in breach of paragraphs 60(a) and 61(1)(a) respectively, of the Act.

Of particular concern to the ABA were those provisions of the agreements which the ABA believed gave Prime:

• complete editorial control over the content and style of the entire news services to be provided by it to Radio Newcastle and Canberra FM;

• the ability to withhold consent to a variation in the news services supplied by Prime; and

• the right to be the exclusive provider of news services to Radio Newcastle and Canberra FM, thereby preventing them from selecting news from other providers while the agreements are in force.

While not agreeing with the ABA’s preliminary findings (particularly in relation to Prime having complete editorial control over the content and style of the entire news services provided), Prime and the other parties to the agreements agreed to amend the relevant clauses of the original agreements. Those amendments specifically addressed the three issues of primary concern to the ABA - editorial control, the ability to withhold consent to a variation, and the inability (during the term of the agreements) to obtain news services from another source.

The ABA took the view that the amended agreements provided a more balanced approach to the process of selection as well as the provision of programming broadcast by Canberra FM and Radio Newcastle.

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