Continuum: The Australian Journal of Media & Culture
Vol. 4, No. 1, 1990
The Media of Publishing
Edited by Albert Moran

Steering between private and state power: the upheavals in Australian broadcasting and rationales for regulation

Peter G. Cook

The ongoing transformations of Australian media systems are raising a range of regulatory issues which are in jeopardy of being submerged beneath the new right economic rationalist framework. The purpose of this paper is to review some recent developments in Australian media, and to make an initial attempt to identify limits to both economic rationalism's reliance on markets and to those modes of content regulation based on bureaucratic control and supervision. Underlying the present discussion will be the idea that the conventional distinction represented in the terms software/hardware, content/conduit, message/medium, program/transmission system, should not be interpreted as implying a rigid separation. This point is raised largely in order to support a focusing of the regulation debate less upon questions of content in isolation, and more upon the creation of structures and opportunities for the production, reception and uses of content or 'software'. [1] A straightforward example of this point comes from the recent House of Representatives committee report on pay TV, which recommends Australia implement pay TV on an optical fibre cable system, rather than through direct broadcast satellite. One of the reasons offered for this recommendation is that a cable system leaves open the possibility for local and community programming. [2] There is thus an important relationship between software and the institutional and technical structure which enables software to be produced and used. This point is particularly important during the current dynamic restructuring in global communication. The regulation of content as such must be considered in the broader context of regulation of the structure of communication systems, because it is these emerging systems which will determine the new kinds of opportunities for software production and reception.

Lost in Space: Impact of the Satellite System

Australia is at the end of a tumultuous decade in broadcasting (and in telecommunications more broadly), and the tumult shows no signs of abating. Much of the turmoil can be attributed to the Australian government's decision to implement a domestic communication satellite system. The satellite system was proposed in 1976 by television magnate Kerry Packer, who had visions of a new era of national television networks, American style, rather than the more regionally-based television system which Australia then had. Big business also supported the idea as a way of obtaining cheaper and more flexible telecommunications than was offered by the national carrier, Telecom. Political leaders such as Malcolm Fraser took the idea on board and added their own rhetoric about improving communication services to rural and remote areas. In 1983, the Australian government established Aussat, a commercially-mandated corporation to operate the satellite. Significantly, Telecom was made a 25 per cent shareholder of Aussat, thus suggesting that the competition between Telecom and Aussat was not intended to be vigorous. Indeed, the bulk (around 75 per cent) of Aussat's business has come from television networking services, and in turn much of this from the national broadcasting services, ABC and SBS. Aussat has not been allowed near the public switched voice network. The recommendation of the Saunderson committee report on pay TV to also ultimately use an optical fibre system is a major blow to Aussat because it was banking on DBS services to help pay for the $600 million second generation of satellites due for launch by 1992. The trend is ominous: Aussat's high debt combined with minimal growth in earnings has produced a debt to equity ratio of 22:1. Aussat will soon require a capital infusion and/or major restructuring, and the government has commissioned a study of options along these lines [3]

The case of Aussat is an unfortunate example of what happens when communication planning is undertaken in a technological determinist mode. Instead of asking how the various individual and group needs for communication across Australia might be most economically met, a single (and very expensive) system was proposed which would supposedly meet all needs. In the upshot it has turned out to meet very few. Against this, some might argue that the domestic satellite system has been a victim of excessive government regulation, notably on behalf of Telecom, which has drastically limited how it might be used. And indeed this is true, but it only reinforces the point that it is not the hardware as such that matters, but the way in which it is institutionalised which is ultimately "determining". In other words, unless the implementation of technology is understood as a political process of negotiation (with the possibility of deeply conflicting goals between different groups) then the final result is likely to be confusing and disappointing for all concerned.

Let me now turn more specifically to television broadcasting, upon which the decision to deploy a domestic satellite has had a considerable impact. One financial journalist summed up the current situation quite well: "Overall, Australian broadcasting is in a complete mess, partly because of ill-advised and inconsistent government policies and partly because of the vanity of entrepreneurs and their bankers." [4] How this situation arose is an intricate story, but one important factor is that the perceived networking potential of the satellite destabilised the existing television regime in Australia. The upheavals began with agitations from various quarters to use the satellite to expand the range of rural television services, which have until now been serviced by the ABC and some local commercial station. A political struggle ensued among the major urban stations, the rural stations, new entrepreneurs wanting to develop networks, and various factions within the Labor government. In the end, the government decided to scrap existing ownership rules which limited ownership to two stations and which permitted extensive cross-ownership between newspapers and broadcasting. The new rules placed restrictions on cross ownership and abolished the two-station rule, replacing it with a limit of 60 per cent of national audience reach for each owner. The changes were an attempt to encompass a disparate range of objectives: to reap the cost savings purportedly associated with satellite networks, to provide the economic basis for more rural services, to break the nexus of cross ownership which had existed since the beginning of television in Australia, and by no means least, to settle some old scores between the Labor party and the Fairfax and Herald and Weekly Times cross-media empires, who were perceived to be Labor's enemies. [5] The government had also earlier announced a new policy to increase the range of rural commercial television services: local rural markets would be aggregated to larger regional units which would enable competition between three regional stations, which would be established over a number of years. It was plain that this was setting the stage for rural networking on behalf of the big three urban majors.

The immediate consequence of these developments was an orgy of buying and selling of media assets as new and old corporate players positioned themselves within the new framework. The urban television majors all came under new ownership, with each of the new owners purchasing a national network of stations for about one $1 billion each, prices which some analysts believe were excessive. Those who wondered aloud at the time whether such massive debt financing would be repaid through revenues have since had their question answered with the progressive collapse of each of the owner's corporate empires. Aside from the inflated prices and associated debt loads, other contributing factors to this collapse have been high interest rates, the bidding up of imported program costs by the new owners, and the new owners' lack of experience in media compared to the old newspaper/broadcasting owners who specialised solely in media. The operating profits of the commercials have also deteriorated markedly, with Bond Media's channel 9, the top rating network, barely showing a profit in 1989.

Through a chain of economic and political decisions and consequences, therefore, the introduction of the domestic satellite produced an unstable situation which is still very dynamic. Undoubtedly these developments have induced a strong trend towards further centralisation of information and cultural production along the Sydney-Melbourne axis, and the erosion of whatever local production there has been in rural areas, through the aggregation of rural markets. [6] On the latter point, however, trouble is brewing because rural licensees are not happy with the high infrastructural investments required to aggregate markets, particularly if they are contracted to one of the lower-rating networks. [7]

Australian Content

One significant consequence of these developments is that the networks are already taking steps to cut the levels of Australian production. The level and quality of Australian content on television has grown significantly over the last two decades in response to content regulation and, importantly, to government support and incentives for local film production. During the past decade these incentives have resulted in funds being channelled predominantly into telefilms and mini-series of high standard. [8] Not only do these local productions generate the largest television audiences, but producers also prefer them to feature films because of the virtually guaranteed audience, compared to higher risks involved in a local feature release. Nevertheless the costs of Australian drama programming is inevitably higher than imported product by at least a factor of ten, which means networks are now increasingly tempted to forego the extra expense. Thus not only are we seeing a concentration of information and cultural production along the Sydney-Melbourne axis, but the amount of it is being reduced to boot. The terrain is being cultivated for an increasing Australian dependence on imported programming services.

It was during the financial crisis of the network owners in mid-1989 that the broadcast regulator, the Australian Broadcasting Tribunal (ABT), announced its new draft standard for Australian television content (TPS 14), a culmination of an exhaustive five year inquiry. The new standard, using a points-based system to encourage production in a diversity of programming types including high quality drama, and combining this with a 50 per cent transmission quota during the 6 pm to 12 pm period, met with a fierce reaction from licensees who, although they had participated placidly in the preceding inquiry process, were now keenly aware of impending problems. Considerable negotiation and redrafting followed, with the tribunal conceding that the awarding of points on the basis of whether a program had an "Australian look", was not workable. This represented a significant retreat, and probably a wise one, from an attempt to develop an on-screen measure of "Australian-ness" in content, intended to supplement off-screen indicators such as the nationality of production personnel, directors, writers, and actors. In addition, the off-screen test has been weakened somewhat by allowing foreign producers, actors, and post-production personnel, although writers and directors must be Australian to receive the maximum "Australian factor" score. One other significant concession is to allow the transmission quota to be phased in over three years. The end result is that TPS 14 is in my view a well thought out approach to regulation which should contain little for the licensees to complain about. [9]

The ABT: Regulation and Markets

Yet TPS 14 has also been the latest target for a persistent chorus of criticism of the ABT coming from neo-liberals or "free marketeers", those followers of what in Australia is curiously named economic rationalism. These new right critics are located in a number of significant institutions: the columns of The Australian newspaper, various right wing think tanks such as the Sydney Institute, and to some extent in the Department of Transport and Communication itself. [10] In some respects this sometimes vehement criticism is curious because the tribunal is widely regarded to be quite weak and ineffectual in many areas: a "toothless tiger", in the words of tribunal head Deidre O'Connor. However, the free marketeers are not only concerned with what the tribunal has been doing (although it is concerned about that too), but also about what new powers it might be granted. For there is broad agreement on the need for reform of the Broadcasting Act.

The Act consists of an accumulation of successive ad hoc amendments with the barest minimum of stated legislative goals which might assist in interpretation. The legislative rules on ownership changes are particularly difficult to implement. Thus there is general agreement that the Act must be rationalised in some way, but the question is how. The free marketeers are concerned that the rationalisation of the Act might actually increase the tribunal's powers to cover a range of new "broadcasting-related" services such as pay TV or videotext, rather than decrease or abolish the Tribunal's powers as they would like.

The right's attack on the Tribunal has been directed largely towards its alleged paternalism. This criticism is by now becoming familiar (and effective) in many Western industrial countries. In Australia it has been driven home forcefully by the tribunal's long inquiry into whether Alan Bond was a "fit and proper" person to hold a licence under the requirements of the Act. This drawn-out process, punctuated at several points by legal proceedings initiated by Bond, finally resulted in a tribunal ruling that Bond was not fit and proper, a ruling which was subsequently overruled and has now been taken back to the courts by the tribunal. Much of the public criticism of the Tribunal's alleged capriciousness over Bond has been misplaced: the Tribunal's actions were largely legally-driven. If anything, the Tribunal's predicament over Bond points to the need for legislative reform. Nevertheless, without wanting to pursue here the merits of the tribunal's ruling, it clearly reinforced the image of the tribunal as a moralistic parent scolding one of its licensee children. Other of the Tribunal's activities in the area of content regulation have also lent themselves to the charge of paternalism. Aside from the Australian content issue the tribunal has also conducted inquiries concerning children's television and violence on television. Children's program standards have been set and recently revised, rekindling debate on their value. [11] The tribunal's recent inquiry into violence on television, including television news, gained media prominence when it was reported that one regulatory option would be for licensees to employ a psychologist to vet violent news. Predictably this brought guffaws from many, but it was unfairly reported in that it was not made clear that this was only an option for discussion.

I dwell on the free marketeer critique of paternalism because it is (a) an effective rhetorical figure to ridicule the moralising busybodies wasting taxpayers' money, and (b) because the area of content is an extremely difficult area to design just and effective regulation, when even the most sophisticated research on, for example television violence, produces ambiguous results. Having said this, it is also true that despite the current climate of opinion disfavouring some aspects of state regulation (and sometimes for good reasons), the public mind will likely continue to be disposed towards periodic "moral panics" on matters of media content, which will keep content regulation a lively issue for some time to come. Indeed such a panic was an explicit trigger for the tribunal's violence inquiry, when various bizarre mass killings occurred in Australia in l987. [12]

The social regulation of content is not necessarily unfeasible or unjustified. Yet the critique of paternalism is at least partly effective, and there is a danger that its success will be identified with the failure of all arguments for regulation per se. In other words, the debate about regulation should also cover other terrain, and in particular questions of communication industry structure, barriers to entry, and assistance for non-market forms of media. The ABT has little to do with this domain, it being the responsibility of the Minister for Transport and Communication, as well as other bodies such as Austel and the Trade Practices Commission. It is a significant omission that whereas the ABT's content regulation proceeds by an open, public inquiry process, there are few such forums for raising public issues in communication planning (the House of Representatives Committee on Transport, Communications and Infrastructure is a notable exception here). Yet it is in this area of planning and regulation of the infrastructure that the key decisions get made; content regulation in this context is a bit like trying to catch the horse after it has bolted.

The debate about regulation needs to be moved fairly and squarely to the question of the adequacy of the marketplace in providing equitable and accessible opportunities for social communication and information. This means refocussing upon communication structure rather than content as such. It must be remembered that there is nothing natural or immutable about the oligopolistic position of the television networks. In fact, one of the main functions of the ABT, and all similar bodies elsewhere in the world, has been to protect the oligopolistic position of the licensees. This is something which is too infrequently acknowledged by those who otherwise are highly critical of the functions of the tribunal. And with the granting of a monopolistic position, the licensees are meant (in principle if not in practice) to be held accountable for the exercise of that power in the public interest. This has been the standard rationale since state intervention in broadcasting began. If, for whatever reasons, such public accountability is no longer deemed valid or necessary, then the same goes, pari passu, for the protection of monopoly power.

In any case such is the logical extension of current arguments. And the true free marketeer will not dismiss such logic with facile claims that sufficient accountability for licensees is already found in the viewer's free choice to watch some fare and not others: the argument from ratings. The true free marketeer recognises that for such an argument to work properly requires a much larger range of choice to be offered to the viewer, and preferably offered through some system of direct payment. This is the terrain of pay TV and other new kinds of services such as videotext, and it is on this terrain that the regulation debate is now crucial.

It is particularly pertinent in Australia because pay TV is now returning to haunt the commercial networks. In 1982 the ABT issued a report which recommended rapid introduction of cable television, and by extension, pay TV. A change of government, commercial station lobbying, and an already crowded communication policy agenda vis-a-vis the satellite saw a moratorium on pay TV declared, which is due to expire in September 1990. Two additional government reports have recently favoured the introduction of pay TV in one form or another, and this at the worst possible time for the commercial networks. Thus the scene is set for what could and should be some very interesting debates about how "free" Australia's television markets should become.

On Level Playing Fields: Markets and Democracy

The question of the virtues and limits of markets as an "allocation mechanism" for information and communication is a vital one in the current restructuring and consequent intensification of horizontal and vertical integration of the global information monopolies. What needs to be clearly spelled out is that private monopoly power is just as much a coercive social force (albeit in different ways) as state monopoly power, against which the tradition of struggle for a free press emerged during recent centuries.' [13] The task before us then is to steer a course between the coercive regimes of both private and state monopoly power: to develop an equitable and accessible system of information and communication services which is structured through a hybrid mix of institutional forms comprising markets plus regulation plus some amount of subsidisation from government or other sources. The problem is finding the right mix, and of identifying what markets can do more and less well. For example, a market-based broadcasting system can, under conditions such as a relative abundance of channels, generate a range of "minority" programming. However, irrespective of whether such a narrowcast, market-based system is constructed through direct payment or through advertising, the fact remains that such minority programming will be designed to serve either those who can afford to pay for them or those who can afford to buy the advertised products. Thus markets, if they go unchecked, can produce significant inequities in the access of individuals and groups to information and the means of communication. [14]

There is, furthermore, another condition which must hold if a market in television services is to generate a range of minority programming. This is that each sub-market must be sufficiently large to support a viable service. In Australia this is obviously a real problem given its small population. For the true free marketeer, however, this is not really a problem because the market is not considered to be confined to the Australian landmass: it is a global market. Australian stamp collectors may not generate a sufficient market for their own Australian-produced service, but they will be able to watch a foreign stamp collectors program. Less flippantly, the same principle might be invoked to justify the importation of a foreign all-news network, perhaps with some local insertions. It is thus apparent that an increasing pluralisation of television and other information services in any given service area is quite consistent with increasing monopolisation of information and cultural production at a global level. And, it should be added, such monopolies are particularly difficult to regulate not only because of their multinational character but also because they announce themselves in the name of plurality. Such indeed is the stance of Mr Rupert Murdoch, who celebrates the new plurality allowed by electronic technologies and also predicts that the global communications scene will be dominated by five or six very large media companies. [15]

In addition to the problems of inequity and cultural dependency which can arise out of markets, the entire conceptual framework of orthodox market theory is premised on a view of humans as acting simply and solely out of rational self-interest. This model is grossly inadequate, and should be identified as such. To the extent to which human cultural and public life is not conducted solely and simply in terms of self-interest, but is instead oriented to broader ethical and aesthetic principles, then this type of market theory is flawed. There is an important sense too in which the market model of self-interested individuals is antagonistic to a vision of democratic politics which privileges the process of public discussion as the path towards collective decision-making. It is thus in their differing visions of the public sphere that some of the deep ethico-political disagreements between market theory and what I call democratic theory can be located. The market vision of the public sphere, to the extent that it has one, is of private property owners each exercising their rights to pursue their own interests. Social order is supposed to arise spontaneously through the unregulated interactions between self-interested individuals (including corporations), each acting according to their own privately formulated preferences. Collective decisions, when necessary, are made by the aggregation of private preferences (e.g. the secret ballot). The vision of democratic theory, in contrast, calls for collective decisions to be made through a process of public dialogue and debate, which opens up the potential for the transformation of the individual's preferences through discussion and reflection, culminating in informed political judgment and also expression of that judgment through some form of voting procedure. [16]

One of the key issues for this democratic vision is how to ensure equitable conditions for such debate within any given public sphere. If the phrase "level playing field" has any political meaning, it is with respect to the democratic requirement for equitable opportunities for public speech in the era of digital electronic systems. This phrase needs to be appropriated from the free marketeers to indicate that there are situations in which private property must be legitimately regulated and taxed in order to create conditions for an equitable public sphere in which individuals and groups have the right to speak as well as to listen. It is in the articulation of this democratic vision, and in particular of the capacities and roles of the citizen, which can help identify cases of "market failure" in the sphere of public communication and culture. [17]

Conclusion

There is perhaps a cautionary tale in the way in which Australia's domestic satellite has shaken the foundations of Australian television broadcasting in terms of the industry's financial stability and its capacity to produce quality Australian product. A new agenda of difficult legal and regulatory issues is emerging in which policy makers will be faced with juggling a range of competing claims: new or expanding players, probably multinational in scope, wanting to introduce new services to compete with the old; old established players who are going through hard times and want to protect their interests; cultural production workers who must bear the brunt of any cutbacks; and public-interest groups attempting to articulate a new vision of the role of non-market forms of communication and information services within a predominantly market setting. Perhaps one conclusion out of all this is that while the technological determinist mode of communication planning is fundamentally misconceived, the technological systems which it allows to come into being have very real social and cultural effects.


NOTES

I would like to thank Bruce Horsfield, Julianne Stewart, and Tom O'Regan for comments on an earlier draft of this paper.


1. Michael Chanan, "The Reuters Factor," in Making Waves: The Politics of Communications, Radical Science 16 (London: Free Association Books, 1985), pp. 125-26.

2. House of Representatives Standing Committee on Transport Communications and Infrastructure ("Saunderson committee"), To Pay or Not to Pay? Pay Television and Other New Broadcasting-Related Services (Canberra, AGPS, November 1989), paragraph 4.46.

3. "Aussat Faces Financial Crisis", and "Report Queries Basis of Telecom Monopoly", A, 7/12/1989; "Government Warned on Troubled Aussat", AFR, 13/12/1989.

4. Alan Kohler, "For Television, the Crunch is Just Around the Corner," AFR, 25/10/1989.

5. For a lively account, see Paul Chadwick, Media Mates: The Carving Up of Australia's Media (Melbourne: Macmillan, 1989).

6. For an extended discussion of these issues, see Tom O'Regan, "Towards a High Communications Policy: Assessing Recent Changes within Australian Broadcasting," Continuum, v.2, n.1(1988/89), pp.135-158.

7. "Black Picture for Regional TV," The Australian, 1/12/1989.

8. See Susan Dermody and Elizabeth Jacka (eds), The Imaginary Industry: Australian Film in the Late '80s (Sydney: Australian Film, Television and Radio School, 1988), Part 1. (Special issue of the journal Media Information Australia). For a helpful discussion of the development of policies concerning Australian content, see Tom O'Regan, "Aspects of the Film and TV Interface," Australian Journal of Screen Studies, Nos. 17/18 (1986), pp.5-33.

9. Australian Broadeasting Tribunal, Television Program Standard 14. Australian Content on Commercial Television, IP/86/llA, November 1989.

10. For paradigmatic examples, see John Kunkel, "The Australian Broadeasting Tribunal: What's It Up To?," Commercial Freedom at Issue, no. 1 (Spring 1989), pp. 3-10; "Broadeasting Reform May Mean the Death of ABT," AFR, 9/10/1989; "Narrow Role for Broadcast Watchdog," The Weekend Australian, 29-30/7/1989; "Free-Choice Television," The Weekend Australian, 2-3/12/1989; "Rocky Opening to Broadcast Policies Review," AFR, 6/11/1989.

11. Australian Broadeasting Tribunal, Children's Television Standards 1989, IP/87/4, November 1989.

12. Australian Broadeasting Tribunal, Television Violence Inquiry. Background Paper, December 1988, p. 1.

13. For an elaboration of this point, see John Keane, "Citizenship and the Freedom of the Media," Political Quarterly, 60 (June-September 1989), pp. 285-296. A longer version of the same piece appears as "Liberty of the Press in the 1990s," New Formations, no. 8 (Summer 1989), pp. 35-53.

14. See Dan Schiller, "Transformations of News in the US Information Market," in Peter Golding, Graham Murdoch and Philip Schlesinger eds., Communicating Politics (New York: Holmes and Meier, 1986), pp. 19-36.

15. "Why Murdoch Has No Big Plans," Business Review Weekly, 24/11/1989, pp. 83-88; Rupert Murdoch, "The Technology of Freedom," The Weekend Australian, 11-12/11/1989.

16. Jon Elster, "The Market and the Forum," in Foundations of Social Choice Theory: Studies in Rationality and Social Change (Cambridge: Cambridge University Press, 1986), pp. 103-132.

17. See John Keane, "Citizenship and the Freedom of the Media". See also Peter G. Cook, The Informed Citizen: Technology and Responsibility in the Information Age (Ablex, forthcoming).


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