Cirrus@Austlit

AGGREGATION

The first formal proposal for the amalgamation of adjoining licensed service areas of regional commercial television services was contained in an appendix to the report of the Australian Broadcasting Tribunal (ABT) into satellite broadcasting services in 1984, which was authored by two of the ABT’s public inquiry staff, Mark McDonnell and John Quigg.

The proposal contained a financial and economic analysis establishing the probability that three commercial television services could compete successfully in the main east coast regional television markets if the licensed service area was enlarged by being aggregated with the adjoining service areas. The analysis relied on a case study methodology, based on regional services in Queensland (excluding Mt Isa), demonstrating that if treated as a single market, three competing services could, in the language of the Broadcasting and Television Act 1942, be ‘commercially viable’. By implication, similar outcomes could be achieved in other relatively populous non-metropolitan areas—particularly regional New South Wales and Victoria.

At the time, there was only one regional commercial television service in each licensed service area. Government policy had grappled with the problem of how to extend the number of commercial television services in regional areas, and legislation had been enacted for a ‘supplementary licence’ to be awarded to the existing licensee. After further reviews, this legislation was amended in 1987 to include a scheme for regional commercial television aggregation.

The policy basis for adopting regional commercial television aggregation was the opportunity it created for three commercial television services in the four main regional markets of Queensland, northern and southern New South Wales, and Victoria; this was in contrast to only two services under supplementary licences. Competition policy was also influential: greater benefits were expected for viewers from competitive services under the aggregation model, while the supplementary licence scheme would entrench the existing regional commercial television monopolies then in place. However, a form of the supplementary licence scheme did continue in some smaller markets, such as Broken Hill, Griffith/the Murrumbidgee Irrigation Area and regional South Australia, where two commercial television services are provided by the same operator. Another more recent variant arose where a third service was operated by two licensees in a joint venture—such as in Mildura/ Sunraysia, Darwin and Tasmania, and remote markets such as Mt Isa, the Northern Territory and Western Australia. These areas were considered too small in population terms to support three services on a competitive commercial basis.

Regional commercial television aggregation was styled ‘equalisation’, as it provided for the same number of commercial television services in the largest regional markets that were available in the capital cities. The most important practical consequence of the scheme was for each regional commercial television service in an aggregated market to affiliate with one of the three metropolitan commercial television networks—Seven, Nine and Ten. Effectively, the affiliations meant that each regional service was re-branded to align with a city network, and previous ‘cherry picking’ (or sourcing programs selectively from each of the three metropolitan networks) was replaced with program schedules that largely mirrored the schedules in the state capital cities.

In nearly all cases, the affiliated regional stations continued as separate commercial entities, since the ownership and control provisions of the Broadcasting and Television Act 1942 (and the current Broadcasting Services Act 1992) limit commercial television licensees to a maximum of 75 per cent of the population. This prevents metropolitan networks from acquiring their regional affiliates if they would breach the 75 per cent threshold by doing so (since 75 per cent is broadly equivalent to the combined population of the five largest capital cities). The result is an industry structure where the main commercial television networks remain city based, with limited direct ownership of regional stations—for example, the Nine Network currently owns stations in Sydney, Melbourne, Brisbane, Adelaide, Perth, Darwin and Newcastle, while the Seven Network also has stations in the five mainland capital cities and in regional Queensland. In early 2014, the Australian government canvassed industry views on whether the 75 per cent ownership restrictions should be relaxed or abolished. Critics of aggregation and equalisation have claimed that there has been a loss of local content as affiliated regional stations have increased their reliance on capital city programs. Some regional commercial television operators also complained that aggregation reduced their profitability. Given the costs of local content, these two issues are directly linked, as confirmed by the ABT’s successor, the Australian Broadcasting Authority, in its 2004 inquiry.

REFs: ABA, Adequacy of Local News and Information Programs on Commercial Television Broadcasting Services in Regional and Rural Australia (2004); ABT, Satellite Program Services (1984).

MARK McDONNELL