PERTH COMMERCIAL TELEVISION AFTER 1965

Tom O'Regan & Ulla Hiltula

This essay will look at the development of the two commercial stations in Perth since 1965. It will contextualise the current inquiry into a third commercial station, and take into account the future implications for Perth TV of the recently launched domestic satellite AUSSAT.

It is worth going back over some of the ground that Eric Fisher has already covered to establish the framework for the introduction of a second commercial station in Perth in 1965. When TVW 7 was granted Perth's first commercial licence on 13th October 1958 there was never any question that more than the one commercial licence should be initially given out in the Perth area. In question was only to what group it should be issued. It was, however, assumed that another commercial licence would eventually be issued some time in the future. TVW 7 was required not to enter into any exclusive arrangement with any other (Eastern States) commercial TV stations for the provision of programs, the sale of station time, or advertising. This undertaking, plus the granting of the licence to local interests in the West Australian Newspapers group (TVW 7) ensured that Perth TV was not formally and financially locked into one or other of the Eastern states networks. This made it unlike Brisbane and Adelaide. The large Sydney and Melbourne media groups not only had a financial involvement in those markets but they were able to ensure (through a little leverage upon receptive federal government ministers) that these stations were formally locked into receiving their-local output and the overseas programming they purchased. It is generally conceded that the furore associated with the granting of the Brisbane and Adelaide licences led to the emphasis upon local ownership in the granting of subsequent TV licences. The TVW 7 licence is usually held up as the first example of this localism policy in action. It is doubtful, however, that a concern for localism had a lot to do with TVW 7 being the successful applicant. Localism did, however, have a lot to do with the way the decision was rationalised. WA Newspapers was, after all, the dominant media group in the West with considerable local political muscle.

Only one commercial license was given out initially in Perth - principally because of its market size. Perth was smaller than Brisbane and at that stage smaller than Adelaide. But size was not the only reason. Another had to do with Perth's geographical isolation which made the kind of networking which occurred between Sydney, Melbourne, Brisbane and Adelaide (hereafter SMBA) physically out of the question. This networking, it should be borne in mind, went more than a little way to making SMBA stations viable. It was thus always much more expensive to get programs to Perth. The kind of communication links allowing for 'live' hook ups and simultaneous programming were late in coming because of the prohibitive expense involved in setting them up. Indeed it was not until July 1970 that a new micro-wave radio relay link was opened which allowed : for- the transmission, for the first time, of TV programs east-west and west-east. Although used, it was still extremely expensive to do so. Eric Fisher, as a STW 9 executive in the mid 1970s, remembers trying to enlist Bob Hawke's support, as ACTU President, about reducing the prohibitive cost of this Telecom bearer across Australia. His argument was that these high costs were isolating Perth and WA from the rest of Australia.

If the undertaking by TVW not to enter into any agreement with another Eastern states station came out of a desire to ensure TVW's, and by extension WA's autonomy vis-a-vis the Eastern stations, it also ensured that the one station Perth market was not closed off to the produce of one or the other of the SMBA channels. If TVW had entered into agreements with one of these channels then the other would have had the fifth largest TV market in Australia closed off to it - thereby putting that channel;s operations at a competitive disadvantage vis-a-vis the other.

The second commercial TV license in Perth was granted to Swan Television on the 271211964. Swan (STW 9) began broadcasting on the 12/6/1965. By 1964 Perth's population had reached 510,000 and there were a total of 100,280 homes with TV. This represented nearly 70% of the total number of homes in Perth. The second commercial station in Perth was part of the 5th stage in the introduction of TV into Australia. The other part of this stage was the introduction of a third commercial station in SMBA markets. Both represented the final stage in the development of commercial TV in those markets. This sense of finality helps explain why the issue of a third commercial licence in Perth took nearly twenty more years to come off the agenda.

STW 9's prospectus predicted that the station would be operating in the black in its second full year of operation. These were optimistic calculations. Like the other stations that were established in the major Eastern metropolitan centres at this time, STW 9 had difficulty establishing itself as a public presence. The inevitable gaucheries and mistakes that went with a whole new group of people learning how to use TV drew unfavourable comparison with TVW 7's professional and slick operations. TVW 7 had by then been established for nearly six years. Like the new SMBA stations struggling to establish themselves STW 9 had more frequent staff changes and more problems with getting its local programs right. Indeed one of the most remarkable things about TVW 7 is the long service of and sense of a history in TV exhibited amongst some of its staff. People such as Ken Alexander and Richard Ashton are most notable in this regard.

TVW 7 quickly formed a buying cartel with STW 9 to ensure that the presence of another station did not inflate the cost of program purchase from overseas and Eastern states sources. To operate this cartel a separate company called TV Facilities was set up in which the two stations were equal partners. Because all programs were purchased through this single buying authority, Perth TV paid less for its programs than it would have if Channel 7 and 9 were competing against each other for programs. As Eric Fisher put it to me:

Because the two stations were buying through TV facilities, this meant that the East coast networks could never raise their Perth prices as much as they would have liked. Consequently they disliked the arrangement.

Programs were allocated to each station on the basis of alternate choices after a coin was tossed. Whoever called correctly took the first choice of the available programs and then choice alternated between them until all the programs had been allocated.

This agreement helped ensure the competitiveness of STW 9 by allowing it to always get 50% of the good programs coming through. But for all its fairness, the agreement helped TVW 7 retain its dominance. TVW 7 not only obtained 50% of the good new programs coming through but it continued to get those new episodes of continuing programs that had been purchased prior to STW 9's opening; and it continued to re- use its six years of accumulated programs and movies. By contrast STW 9 had no such stockpile to draw on and had only 50% of the good new programs coming through. In this way the agreement actually guaranteed the commercial viability of STW 9 but maintained it in a subservient position. TVW 7, it seems, never wanted to achieve more than a 60% share of the commercial TV audience. That figure could be seen to be a reasonably fair one in the market place. Indeed the agreement was evidence of TVW 7's encouragement of competition between itself and STW. After all, it was in a position to outbid STW 9 for programs, if it had wished to.

STW 9 seems to have had mixed feelings about the agreement but never felt able to opt out for fear of being drowned. Its only alternative to the agreement was affiliating itself with one of the Eastern state networks - preferably Packer's high rating Nine Network. But that would have meant entering uncharted waters, swapping one local giant for another bigger Eastern one. Although the question of affiliation was raised at senior levels at STW 9 from the early 1970s on, it was not until 1978 that STW finally took the plunge and affiliated itself with the Nine Network.

It chose affiliation rather than full membership unlike STW 9's sister stations Brisbane and Adelaide. Although the station retrospectively justified affiliation rather than full membership as an example of its concern for localism, affiliation conferred upon STW 9 the full advantages of belonging to the Nine Network without having to pay the penalties. It allowed STW 9 to retain full control over its programming and advertising decisions whilst still being able to take advantage of the extra non-Nine Network programs available to it because it was in a two rather than a three commercial station market.

STW 9's affiliation paid immediate dividends. It finally broke the stranglehold that TVW 7 historically had over the top place in the ratings since 1965. STW 9 was helped inestimably by the strong Nine Network programming in this period. The advent of Packer's World Series Cricket was particularly significant in this regard. Channel 7 had established themselves, by and large, as the station that covered local events and sports. With World Series Cricket Channel 9 was able to establish a public presence for themselves in sport. Similar results were obtained firstly through the presence on Nine prime time schedules of both the high rating drama serial The Sullivans and the current affairs program 60 Minutes. Secondly the shift of The Mike Walsh Show from TVW 7 to STW 9 after a legal battle helped STW's afternoon program. Audiences followed it across from TVW 7. Its acquisition provided the station with a good avenue for promoting their night time shows to the women who made up much of its audience.

Some of the mechanics and politics of STW 9's affiliation with the Nine Network can be glimpsed from the new four year agreement that was signed during the Satellite Program Services Inquiry (hereafter SPS) in 1984. Under this agreement STW 9 has the right to participate in network meetings on program acquisition on an equal basis with other network members. STW 9 is not bound to participate in purchasing any program, and when the Perth rights for a program are sought, they may only be acquired after consulting the station regarding price. In addition, all Australian programs made by the network stations must be first offered to STW 9. STW is obliged to contribute $20,000 to the Network Development Fund which finances local production at the development state. Under the new agreement STW 9 is not required to broadcast ads included in network program matter and is not obliged to join in any joint selling of advertising time with the network of its members.

This agreement was not reached easily. A measure of this can be found in STW 9's initial submission to the SPS Inquiry which suggested that its freedom of choice could be affected by the Nine Network delivering programs to it via satellite. In consequence it asked the Tribunal to seriously consider monitoring and if necessary arbitrating on the substance of network agreements. After concluding the new agreement, however, STW 9 withdrew its submission and suggested that Tribunal involvement in monitoring networking would be too unwieldy.

TVW 7 were not convinced that affiliation was their best option once STW 9 affiliated. Indeed it had good reason not to affiliate with the Seven and Ten Networks. Its acquisition in 1971 of SAS 10 in Adelaide gave it ready access to both the Seven and Ten Network programs. Being non-affiliated meant that TVW 7 played no part in program acquisition and development. There is instead a set price formula governing Seven and Ten Network sales to the station. However, TVW does have first option on programs sold in Perth by the Seven Network.

Both commercial stations in Perth have only recently changed hands. Alan Bond's Bond Corporation bought a major share holding in STW 9 in December 1983 and Robert Holmes a Court and his Bell Group bought TVW 7 in 1982. Why the take-overs? Both stations generate good cash flow which is important in the servicing of the interest repayments on debts from expensive take- overs. Bond, for example, needs the good cash flow from his Perth and later Brisbane stations to pay his interest bill incurred in taking over the breweries (first Swan Breweries and later the Castlemain-Tooheys giant). Another reason must be that to control media is to garner power, visibility and even glamour to oneself (as some of TV's show-biz connotations rub off onto the station owners).

The two Perth commercial stations attract about 83% of the viewing audience. This is close to the 85% for commercial TV in SMBA markets. These audience figures demonstrate how much commercial TV has taken on the national role originally envisaged for the ABC by the dual system of broadcasting. They also help show why there is such resistance to the idea of a third commercial licence in Perth from the existing licensees. On these figures a third commercial station would principally bite into the audiences that the two commercial stations currently get barely affecting the ABC's audience at all.

Applications for a third commercial TV license in Perth were invited by the Minister for Communications Michael Duffy in April 1984. There are no clear cut reasons for the Federal Government deciding in favour of a third commercial licence. Some say it was due to an off the cuff remark by Prime Minister Hawke that was supported by WA Premier Brian Burke. However, this does not explain why they would support another station in the Perth context. A number of tentative suggestions can be hazarded for their support.

Perth is now larger than Adelaide - and Adelaide has had a third commercial station for the last twenty years. It's also the fastest growing capital city. Some local capital groups have from time to time lobbied both Federal and WA Governments about the need for a third commercial licence to give them a chance to participate in a potentially lucrative business. Alan Bond was reported to be one of those lobbyists before he acquired STW 9. For local advertisers another station would break some of the bottlenecks in station advertising that currently exist. The WA Government saw new jobs being created by the infrastructure and investment capital needed for a third commercial station.

Successive federal governments were pressured by the Eastern states networks to have Perth more fully incorporated into their respective networks. A third station would ensure that costs associated with purchasing overseas and initiating national programs would be borne for all rather than a proportion of their programs. Not unreasonably SMBA stations have argued that they have, by virtue of their three way competition, effectively subsidised the TV fare not only of Perth but also of the rest of Australia. They have to bring more into the country and initiate more in the way of local content than any other station. In so doing they provide a common pool of programs from which Perth and regional stations can 'cherry pick'. Similarly the Australian film and TV production industry mounted pressure on the federal government. Independent producers like Crawford Productions and Grundys are only too aware that some of their programs do not presently come to Perth and that a third commercial station would ensure that they would. They see the absence of a third commercial station in Perth as denying them an additional market and buyer for their product.

From the late 1970s on the idea that viewers in regional Australia were being disadvantaged by only receiving one commercial station, and so needed their viewing equalised, was taken on board by the then Liberal/National coalition Government as a long term policy goal. It was very easy once the idea of extending more commercial services to the country was raised to extend the concept of equalisation to include Perth. Under the present two station arrangement it could be argued that Perth viewers were being disadvantaged in comparison to those in SMBA markets.

The launching of the domestic satellite AUSSAT will significantly reduce the cost of delivery of programs to Perth from the Eastern states and vice versa. The cost of delivering live programming, news feeds etc. from any part of the continent to another via satellite is the same wherever you are as satellite distribution costs are not related to distance. Indeed the imminent prospect of a cheaper program delivery system to replace the expensive and unsatisfactory terrestrial system removed much of the argument that Perth's special place geographically precluded a third commercial licence.

Finally, a third commercial station could be expected to increase the overall amount spent on TV advertising. Indeed an extra station in SMBA markets saw an immediate 20% increase in advertising expenditure. Such an increase would partially compensate for the reduced market share of existing stations caused by an additional competitor. A further increase in overall TV advertising could be expected from the influx of tourists for the America's Cup in 1986/7. On these two grounds it was argued that a third commercial station would not only be viable but would not impact too severely on the existing licencees.

It should come as no surprise that the prospect of the third commercial station in Perth has been actively resisted by the existing licensees. The stations are, after all, only protecting their valuable properties. What is surprising is the fact that both licensees do not argue over whether there should be another TV station but instead focus upon what kind of TV station it should be. STW 9's managing director David Aspinall, for example, suggested in late 1984 that 'public access to another station, like a second ABC, would be more appropriate.' (Sunday Times. 7/10/1~84, p.3). This theme of a public TV station has been taken one step further by Holmes a Court. Not only does he go so far as to suggest that it is a matter of whether the public wants more of the same or something else, but he has offered to help bankroll a public TV station out of TVW 7 coffers.

The existence of the Public TV Group has over the past five or more years been used as evidence by executives of both TV stations to argue against the granting of a third commercial licence. It is unusual to see commercial TV executives championing the cause of public TV and expressing the sentiments of that group. Whilst these are admirable sentiments it should be pointed out that even donations in the order of $1 million per annum from the existing licensees are nowhere near the amount required to run such a station. Indeed a donation of this magnitude is slight in comparison to the amount that a third commercial station would siphon off from TVW 7 and STW 9 in advertising revenues. The Perth TV advertising market is now in the vicinity of $75 million. Splitting that three ways ($25 million) comes out at a lot more than the kind of subsidies being suggested. So there is no guarantee that the generous support to public TV offered by the stations would be continued when the prospect of a third commercial station was removed from the agenda once a public TV station started its operations or when such a station started broadcasting material criticising or upsetting the two commercial stations. It seems likely too that Government - be it state or federal - would have to foot the rest of the bill for public TV. Some have suggested that the Burke Labor Government has not been too enthusiastic about the public TV plan because of the increasing drain upon limited government funds it would mean.

Public hearings for the third commercial station began in late 1984 and were expected to have been completed by June 1985. They have dragged on. Hearings have even been set down for March 1986. Part of the delay has been due to the points of order raised by and the court challenges mounted by the existing licensees to the validity of the Tribunal hearings. These challenges have been made possible by the uncertain legal status of the Tribunal as a quasi-judicial body. It has also been due to the added complication that the Tribunal had to decide on whether the licence is to be allocated on the VHF or UHF band.

Initially the Tribunal received submissions from four applicants: West Coast Telecasters, Now Television, Perth Television and Western Television (Sunday Times, 7/10/1984, p.3). There are now only two of these left: West Coast Telecasters and Western Television. The high cost of maintaining expensive legal counsel has forced two of the initial applicants out of the race. Now Television withdrew early on and Perth Television (involving ACE Theatres) joined with the Western application in August 1985. Perth Television's legal costs were estimated at $750,000.

Despite the delays it seems likely that a third commercial station will be granted; mainly because the Federal Government has a firm commitment to equalising TV services across Australia. This could be accomplished through issuing supplementary TV licences in existing regional TV markets. thereby giving viewers a choice of two to three commercial channels. The Federal Government hopes to create three commercial services in the 35 regional broad- casting areas in Australia before 1990. This policy could, ironically, see . Albany with three commercial stations before Perth if the hearings drag on too far into 1986. Such an anomaly would be bizarre.

For this reason the real question that needs to be asked is why have the existing Perth licences gone to so much trouble over something that is so inevitable? There are a number of possible answers to that question. Prolonging the Tribunal inquiry does mean putting off the day that the third commercial station starts, and that mean quite a deal in terms of advertising revenue. It put, the successful applicant in a weaker financial position thereby reducing its ability to successfully compete and expanding the time frame needed to turn station losses into profits. Another reason for their opposition could be the inroads that video is making into their TV audience. All TV stations in Australia, let alone those in Perth, are not as confident about video not affecting them as they once were. Once the third commercial station starts operating all three stations will become affiliated with their respective networks. For TVW 7 in particular, this would mean choosing either the Seven or Ten Networks. Both stations would, of necessity, lose some of their independence in the process. This is significant in that for the last five or so years both Holmes a Court and later Bond have been expanding their media operations. A third commercial station coming too soon could cause hiccups in these plans. Whilst there is no third commercial licence, Perth TV is third to Sydney and Melbourne respectively as a profit centre. With an additional licence it could fall below Brisbane which has a larger population (taking the Gold Coast into account). Furthermore, dragging the inquiry out will allow the existing stations to have the additional audiences for the America's Cup all to themselves.

Both STW 9 and TVW 7 argue that because a third licence would mean lower profits, less money would be available to local production. Twenty years ago a third commercial station in Brisbane and Adelaide did mean precisely that. Clearly a third commercial station would mean that money for local productions would have to be found from a reduced advertising base. But it is now 1985. Comparable Brisbane and Adelaide stations, despite their operating in a more competitive market, manage to show as much if not more than do Perth stations. They do this despite the fact that Perth advertising rates are reported to be considerably higher than those in Brisbane and Adelaide. Duncan Graham cited the January 1985 figure for a thirty second prime time spot as being $625 in Perth compared to $460 in Brisbane and $400 in Adelaide (The National Times, 4-10/10/1985).

A11 the controversy over the third commercial station tends to overshadow the 1985 launching of the domestic satellite AUSSAT. But the satellite is going to have more far reaching and unexpected implications for Perth TV and its proprietors than other commercial stations. The satellite will undoubtedly bring Perth and WA closer to the Eastern states. In 1984 STW 9 suggested to the SPS Inquiry that some 50% of the programs delivered by air freight now could be delivered by satellite. And both STW 9 and TVW 7 conceded then that the satellite would probably increase their viewer's demand for real time coverage of news and special events.

One long term outcome of the satellite will be that audiences in Perth and elsewhere will increasingly watch the same episodes of the same program broadcast at the same time (allowing time delays) as each other. This prospect could also see the eventual integration of national advertising in the program feed from the satellite. This situation is not without its dangers. At the SPS Inquiry, both regional and Perth stations were concerned with the effect of the satellite not only on their viability but also on their autonomy. The satellite could bring with it a further centralisation of influence and control by the Sydney and Melbourne stations. The Perth and regional stations also felt that it could lead to a loss of local identity.

In 1984 the SPS Report estimated that Sydney and Melbourne stations produce, distribute and transmit about 57 % of Australian programming (and nearly all of its high cost national productions - like drama). The other 43% is made up of low cost local programs geared to a regional audience. This gives Sydney and Melbourne an already dominant position in the TV industry. The satellite, with its potential for simultaneous scheduling and programming, threatens to give them added influence. The big fear is of a US style of networking developing. In the US most programming, scheduling and advertising is distributed from one central source with little scope for local input from receiving stations.

The issue of the Sydney and Melbourne based media monopolies and the threat of their extending their interests to each and every part of Australia tends to give the whole idea of networking a bad name. There are advantages in networking. It spreads the cost of program purchase and productions over a number of outlets enabling high cost items like Australian programs to be produced. By amortising overall production costs through member stations the production values of an Australian program can be raised. Indeed, an absence of effective Australia wide networking contributed more than its share to the low levels and particular kinds of Australian content that have been historically possible on Australian TV. But attempts by stations, like those in Perth, to have a production input into the satellite are fraught with difficulties. They do not have the same standard and extent of facilities, nor do they have the pool of suitably trained personnel to draw upon that is available in Sydney and Melbourne. Their Australian produced content is often too parochial, for the most part, to be sold interstate.

If the above comments suggest an undue influence being potentially exerted from the East upon the West, there are developments working in the opposite direction. At the 1984 SPS Inquiry both STW 9 and TVW 7 insisted they would actively pursue a role in satellite program distribution so as to ensure there-would be a west- east not just east-west flow of programs. Both have been true to their word. Each recently acquired the lease of a high powered 30 watt transponder on one of the satellites. These are transponders with a national beam unlike those with just spot beams such as the one the Golden West Network in Bunbury has recently been licensed to operate. They are ideally suited to program distribution - particularly to regional TV. There were only three available. Kerry Packer's Nine Network in Sydney is believed to be the inside runner on the other one.

It is too early to predict the outcome of the leasing of these AUSSAT transponders. But their lease does give the WA stations the capacity to base the nerve centre of regional TV distribution on the western rather than the south eastern side of the continent. This could end twenty years of Sydney, and to a lesser extent Melbourne, control over Australia's TV distribution. There is more than a hint of speculation on the part of Bond and Holmes a Court here. They are no doubt hoping that the proposed equalisation of TV services in regional markets plays itself out in their favour.

In one of The Max Gillies Shows on ABC TV a 'now we'll cross to Perth' was imaged through a person on a distant sandhill waving. Gillies once apologised for the absence of WA 'personalities' in his skits. He said he would love to do Brian Burke but, unlike Joh Bjelke Petersen and Bob Hawke, he was not yet a national figure. The advent of AUSSAT will bring that person on the sandhill into sharper national focus. And will eventually allow satirical comedians like Max Gillies to incorporate WA figures in their skits. Whatever the other outcomes of the satellite, it does seem certain that it will increasingly integrate Perth within the Australian and international communication network. If Perth remains geographically isolated, it certainly will not be as culturally isolated.

References

Allerton, Tim (21-2219/1985) ''How AUSSAT is Reshaping the View of the Nation,'' The Weekend Australian, p.20.
Australian Broadcasting Tribunal, (July 1984) Satellite Program Services Report, vols 1 & 2, Canberra: AGPS.
Graham, Duncan (4-10/10/1985) "New Season for Perth's TV Saga,'' The National Times, p.8).
Green, Gervaise (30/10/1985) "Bond, Holmes a Court win AUSSAT Race," The West Australian, p.3.
Oswin, James (August 1984) Localism in Australian Broadcasting, Department of Communications, Canberra: AGPS.
Swan Television Ltd., (271811984) Prospectus, Perth. Available from Battye Library.