New Australian rules let merger of major media houses

BY A CORRESPONDENT

March 29, 2007: Decks have been cleared for a series mergers of media companies in Australia. This follows the Federal Government announcing extensive reforms to ease ownership rules. The amended rules will take effect on April 4, 2007.

The new laws, passed by the Australian Parliament in October 2006, are expected to stimulate consolidation of the country’s media industry.

According to reports quoting Australia’s Minister for Communications Helen Coonan, the amended rules would reform the country’s restrictive media ownership regulations while protecting the public interest and ensuring a diverse and vibrant media sector.

The Government’s media reforms, Helen Coonan added, would promote greater competition and allow media companies to achieve economies of scale and scope, while maintaining the diversity of Australia’s media landscape.

It had been felt that the existing foreign ownership and control restrictions relating to free-to-air and subscription television, and cross-media ownership restrictions on commercial radio and television licences and associated newspapers have for too long limited competition in the media sector. The existing rules also restricted access to foreign capital and expertise, hindering opportunities for growth, according to Helen Coonan.

Media companies have been preparing themselves for the new laws, but the Government had delayed the date the laws would come into force, while the regulator, the Australian Communications and Media Authority, drew up a register of media interests.

Newspaper groups John Fairfax and West Australian Newspapers, and broadcaster Southern Cross are expected to be the most likely targets for takeover. Your browser may not support display of this image.

The Packer family’s Publishing and Broadcasting and Kerry Stokes’ Seven Network had formed joint ventures with private equity firms in 2006.

A majority stake in Ten Network Holdings is up for sale. News Corp has already taken 7.5% stake in its rival Fairfax. James Packer sold 50% of key media assets in a $4.5-billion deal, which could fund future gaming and media acquisitions.

However, Minister for Communications Helen Coonan said she did not expect the new media laws to spark a wave of takeovers since the moves by the big players were more about the owners protecting their media assets than bid to grab more.

The amended laws allow foreign investors to buy local media companies and lift limits on how many media outlets a single proprietor can own in one market.

Besides, for the first time in two decades, newspaper publishers will be allowed to own a radio or television station in the same city, and vice-versa. But there is a condition: there will have to be at least five operators in mainland capitals and four in rural centres.

The amendments to the laws will not permit any single company to own more than two formats – newspapers, television or radio – in any one market.

Minister Helen Coonan said the regulator would report to her by the end of June 2007 on the new requirement for all regional radio licencees to broadcast at least 4.5 hours of local content, to see if the level was appropriate.