Address to National Commercial Radio Conference

Thank you Joan [Warner, CEO, Commercial Radio Australia ]

It is a great pleasure to be here today for what promises to be a very entertaining and informative conference.

I couldn’t help but notice that one of the speakers following me has entitled his address ‘How Radio Ruined My Life’.

I think my address would be better titled ‘How Radio Enriched My Life’.

My morning ritual involves at least 3 radios being on in my home, listening as I am simultaneously to various talkback and news programmes.

This addiction is of course a function of my line of work – my childhood years growing up on a farm in country New South Wales were more about radio for entertainment purposes.

Without wanting to show just how rural my roots are, we didn’t have a television until well after it was a feature of city lounge rooms.

But ‘Entertaining’ and ‘informative’ are two words which, I think, go to the heart of what keeps radio so popular in a time when everything else about communication seems to change daily.

It is no accident, as you all well know, that radio has kept its popularity.

And as an industry you have deliberately and commendably continued to evolve in the midst of a technological revolution.

Radio today is a highly innovative and creative medium that is keeping pace with change. I would like to talk today about how this Government has also moved to keep pace with change so that the regulatory framework reflects the modern era.

I must firstly offer my profound thanks to the conference organisers for not putting me on after Ned Flanders, Mr Burns and Kent Brockman… that would be a very hard act to follow.

I am told that in a number of Simpsons episodes, Harry Shearer does voice a commercial radio DJ.

Apparently, in one episode, the station threatens to replace him with a fully automated DJ machine with “three distinct varieties of inane chatter.”

Sounds just like an election campaign!

But thankfully the Australian commercial radio industry has not been so highly innovative as to adopt this technology and we still have real live radio personalities on our airwaves.

Speaking of the Simpsons, Homer once said “Son, if something is hard to do, then it is not worth doing.”

Happily, I don’t happen to subscribe to that particular piece of wisdom, and I think the Government’s media reforms are a good example of something has not been easy, but has certainly been worth doing.

Media reform

The reforms we have seen over the past year in this portfolio have contained significant developments for commercial radio.

You don’t need me to tell you that chief among these developments has been the Broadcasting Services Amendment (Media Ownership) Act 2006, which implements the Government’s longstanding commitment to reform Australia’s outdated media ownership laws.

It encourages greater competition and allows media companies to achieve economies of scale and scope, while protecting the diversity of Australia’s media.

Schedule 2 to the Act, which commenced on 4 April 2007, amends the Broadcasting Services Act 1992 (BSA) in a number of ways.

Firstly, it removes the foreign ownership restrictions for commercial and subscription television interests.

It also removes the cross-media ownership restrictions relating to commercial radio licences, commercial television licences or associated newspapers.

And it imposes disclosure obligations on commercial radio and television licensees and newspaper publishers with cross-media interests.

For twenty years, Australia had a set of media control rules that restricted the way media markets and companies operated.

This was based on the philosophy that diversity of ownership was more important in the media sector than in other industries regulated via the Trade Practices Act 1974.

The Government continues to share this philosophy, but we also believe that diversity can be protected in a less restrictive way.

This is the driving philosophy behind the Government’s amendment of the ownership rules.

The new rules permit greater competition and economies of scale and therefore let the media market operate more efficiently.

This, of course, benefits industry and consumers alike, and these benefits are shared across a large sector of the economy.

As with other micro-economic reforms undertaken by this and the previous Government, the benefits flowing from the reform of media ownership restrictions are real and readily seen.

For example, the removal of foreign ownership restrictions allows foreign media companies and investors to enter the television and daily newspaper markets, providing greater competition in sectors that have long been protected.

And greater competition is surely a good thing.

Similarly, the removal of cross-media restrictions allows Australian media companies to enter different media, challenging incumbents and seeking opportunities for greater efficiency.

Through the sale of Southern Cross Broadcasting, we are already seeing key players take advantage of this flexibility.

When completed, this sale will create cross-platform media groups throughout the country whether between Macquarie’s radio interests and Southern Cross Broadcasting television assets in the bush, or through Fairfax and Southern Cross’ radio interests in Sydney and Melbourne.

At the same time, the diversity of ownership that everyone agrees is important will continue to be protected, via the 5/4 rule, the 2 out of 3 rule and licence and reach limits.

Regional local content on commercial radio

Another matter of real relevance to many of you here is what Joan and I would probably refer to as the ‘L’ word – the local content obligations for regional Australian radio stations.

The L word manifests itself to ensure regional commercial radio licensees broadcast a minimum level of local content from 1 January 2008.

But why do we need these particular safeguards for regional radio operators?

This sector of the industry is unique. The number of commercial radio stations in any community is determined by the regulator, not by the market and in the regions there is never more than four and frequently two licences made available.

One of the reasons for these limitations is so that the licensees can deliver a high quality and relevant service to the community.

As a starting point, the minimum local content requirement was set at 4.5 hours each day.

The objective of this minimum level was not to increase existing levels of local content in regional areas but to ensure they were maintained.

However, I was very aware of the widespread concern in the industry that a requirement of 4.5 hours per day for all regional radio broadcasters would impose unsustainable financial burdens.

Our aim has always been to ensure the sector remains viable and vibrant, and relevant to local communities, not stifled by regulation.

That is why last October, I directed ACMA to investigate whether the 4.5 hour requirement for local content was appropriate, taking into account the level of local content currently broadcast on regional radio.

Many operators indicated that they already met or bettered this level.

You would now be aware that after consulting widely with the regional radio industry, ACMA’s investigation has found that the default requirement of 4.5 hours each day for all regional radio broadcasters would materially increase, rather than maintain, levels of local content on regional radio.

The report of ACMA’s investigation was tabled in Parliament on 13 September 2007.

The report has also found that a ‘one size fits all’ requirement does not reflect the diverse range of services available to regional radio listeners and that a lesser requirement should apply for some classes of broadcaster.

In response, I have set the required level of local content for most regional radio broadcasters at three hours each day.

I did receive very strong representations from some of my colleagues seeking to retain 4.5 hours as the local content level.

However, on balance I believe 3 hours will meet the objectives of the reforms.

Three hours is consistent with the objectives of the provisions, which, as I said, were to maintain, rather than materially increase the level of local content on regional radio.

To lift any burden on broadcasters in smaller markets and broadcasters operating with licences issued under section 40 of the Broadcasting Services Act 1992, I have set a daily requirement of 30 minutes.

My intention is to move legislative amendments to exempt remote and racing radio broadcasters entirely from compliance with the licence condition as soon as practicable next year.

In the interim, I have set their daily requirement at five minutes.

ACMA will monitor adherence to this licence condition and I expect that all radio licensees in regional areas will work within its spirit and continue to service their markets in an informative, entertaining and locally relevant manner.

As I have already indicated, many licensees are already providing local content above these levels and it is expected that these levels will be maintained. After all, you understand your audiences’ needs better than either the Government or the regulator.

To provide additional flexibility to the industry in meeting these obligations, I have put in place regulations that extend the daytime hours in which the quota must be broadcast from 5am to 8pm.

This gives you an even broader window in which to broadcast your local content – previously the timeframe had been 6am to 6pm.

I am also accepting the recommendations of ACMA to allow compliance to be spread across five days in the week (rather than business days) and a six-week non-compliance period each year.

As Minister I was keen to ensure that these local content obligations represent a safety net for your local audiences, and that compliance with it would not be too onerous.

Or perhaps I could put it this way - ‘I’m from the Government and I am here to help’.

As many of you are running successful business operations in regional Australia, you are well aware that your audiences demand certain levels of local content – not all day every day of course, but enough to inform them about goings on in their local area.

That audience expectation is enough to keep most regional licensees well above the local content base level obligations.

I know there is ongoing interest, in both industry and amongst my Parliamentary colleagues, regarding the scope and long-term impacts of the regional local content protections.

I am currently considering ACMA’s investigation into the definition of ‘trigger events’, and will look at the need for legislative amendments in this area.

I have listened and will continue to listen to industry’s concerns about these wide-reaching reforms. Your ongoing success as radio operators is critical to the cultural lifeblood of both regional and metropolitan Australia.

Digital radio

I’d like to now turn to another very important issue for the future of radio: the move to digital.

I am pleased to see that this is a topic that will be covered in some detail in today’s program.

Digital transmission and delivery is important for all forms of media and sometimes digital radio gets a bit lost in the noise about digital television in particular.

In fact radio remains the last mainstream platform to make the transition. But we are making up for lost time.

Over two and a half years ago the Government initiated an extensive examination of digital radio options for Australia.

Throughout this process the radio industry made one point quite clear: in their view, a digital platform is essential if radio is to remain relevant to Australian listeners in the decades to come.

The Government firmly believes that Australian audiences deserve nothing less than the highest quality broadcasting services.

Our actions on digital radio are testament to the strength of this commitment.

In May this year, the Government ushered through legislation that will enable digital radio services to commence in the state capitals by January 2009.

We will also provide financial support for the national and community broadcasters to participate in the initial phase of digital radio.

These initiatives allow radio to exploit the potential of new technology, and to enhance the high quality radio services already enjoyed by millions of Australians every day.

To see this potential fulfilled—and to enable services to commence in January 2009—there are a range of tasks that will need to be completed by regulatory agencies and industry.

There has been substantial progress on this front.

Planning processes are well underway, and the industry itself continues to take a lead role in international forums on digital radio, in examining interference issues here in Australia, and in discussions with equipment manufacturers, importers and retailers.

This progress augers well for the successful start of digital radio, and I encourage the industry and regulatory agencies to continue their good work.

Conclusion

The future is bright for radio.

This innovative industry’s willingness to embrace new technology, in conjunction with the media reforms we have made, will ensure that radio retains its position as a ubiquitous and much-loved Australian medium, well into the future.

Finally I want to record my appreciation to all of you and to Joan for the constructive way in which you engage with Government. It shows conclusively that by working together important gains can be made to benefit all of us.