Read ACMA's "Local Content Levels Investigation Report"

LSLIR_cover:Layout 1 12/09/07 12:31 PM Page B

Australia’s regulator for broadcasting, the internet, radiocommunications and telecommunications www.acma.gov.au

Local Content Levels Investigation Report

Local Content Levels Investigation Report

June 2007

© Commonwealth of Australia 2007 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Manager, Communications and Publishing, Australian Communications and Media Authority, PO Box 13112 Law Courts, Melbourne Vic 8010. ISBN 0 642 78354 3 Published by the Australian Communications and Media Authority Canberra Central Office Melbourne Central Office Sydney Central Office Purple Building, Benjamin Offices Level 44, Melbourne Central Tower Level 15, Tower 1 Darling Park Chan Street, Belconnen 360 Elizabeth Street, Melbourne 201 Sussex Street, Sydney PO Box 78, PO Box 13112 Law Courts PO Box Q500 Belconnen ACT 2616 Melbourne Vic 8010 Queen Victoria Building NSW 1230 Tel: 02 6219 5555 Tel: 03 9963 6800 Tel: 02 9334 7700, 1800 226 667 Fax: 02 6219 5200 Fax: 03 9963 6899 Fax: 02 9334 7799 TTY: 03 9963 6948

ii Australian Communications and Media Authority CHAIR

Senator the Hon. Helen Coonan Minister for Communications, Information Technology and the Arts Parliament House Canberra ACT 2600

Dear Minister

In accordance with the Broadcasting Services (Local Content on Regional Commercial Radio) Direction No. 1 of 2006, I am pleased to present the Australian Communications and Media Authority’s investigation report on local content levels. ACMA concluded the investigation and completed its investigation report on 29 June 2007. Please note that a report under section 43C(4A) of the Broadcasting Services Act 1992 must be tabled in each House of Parliament within 15 sitting days of the report’s completion.

Yours sincerely

Chris Chapman Chairman

27 August 2007

iv Australian Communications and Media Authority

Contents

EXECUTIVE SUMMARY...... 1

Findings ...... 3

Recommendations...... 5

1. PURPOSE AND METHODOLOGY ...... 6

Terms of reference of investigation ...... 6

Legislative provisions ...... 6 Applicable number of hours of material of local significance ...... 7 Definition of material of local significance...... 7 Review and report ...... 7

Scope of the investigation ...... 8 Legislative context ...... 8 Objects of the Broadcasting Services Act ...... 8 Trigger event requirements ...... 8 Parliament’s intent...... 8

Methodology...... 9

2. INDUSTRY CONTEXT...... 10

Overview...... 10

Regulatory environment...... 10

The industry ...... 10 Licence area attributes...... 11 Licence attributes ...... 14 Industry challenges ...... 14

3. DEFINITIONS OF MATERIAL OF LOCAL SIGNIFICANCE...... 16

Overview...... 16

Policy objectives ...... 16

ACMA’s discretion to define ‘material of local significance’...... 17

Relevance of the television licence condition to regional radio...... 18

Industry views ...... 18

Audience views ...... 20

‘Narrow’ and ‘broad’ definitions ...... 21

Australian Communications and Media Authority v

4. CURRENT LEVELS OF MATERIAL OF LOCAL SIGNIFICANCE...... 23

Overview...... 23

Program schedules...... 23

News content...... 24 Local news ...... 24 Regional news...... 25 National news...... 25 Estimated current levels of material of local significance (news content) ...... 25

Non-news content...... 26 Breakfast shows ...... 26 Talkback shows...... 28 Music shows...... 29 Hybrid programs ...... 29 Sports programs ...... 29 Estimated current levels of material of local significance (non-news content)...... 30

5. COSTS AND IMPACT ON PROFITABILITY OF INCREASED LOCAL CONTENT LEVELS (NON-NEWS)...... 31

Overview...... 31

Cost of producing local content ...... 31 Hours of local content requirement...... 33 Compliance costs ...... 34

Profitability of regional licensees...... 35

Summary of compliance costs and profitability...... 36

6. FINDINGS AND RECOMMENDATIONS—APPLICABLE HOURS FOR ALL REGIONAL COMMERCIAL RADIO LICENCES ...... 38

Exemptions from local content requirement ...... 39 Remote area services...... 39 Racing radio services ...... 40

Classes of licence ...... 41 Small licences ...... 41 Other regional commercial radio broadcasting licences ...... 44

Recommendations...... 45

7. COSTS AND IMPACT ON PROFITABILITY OF INCREASED LOCAL CONTENT LEVELS (NEWS)...... 46

Overview...... 46

Cost of producing local news content...... 46 Broad definition ...... 46 Narrow definition...... 47

Profitability of licensees...... 47

vi Australian Communications and Media Authority

8. FINDINGS —REQUIREMENT FOR 12.5 MINUTES OF LOCAL NEWS...... 48

Finding...... 48

9. FINDINGS AND RECOMMENDATIONS—OTHER RELEVANT MATTERS ...... 49

Classes of licence ...... 49

Licence condition matters ...... 49 Non compliance period ...... 49 Replacement of business days...... 50 Daytime hours...... 50

Interaction with trigger event provisions...... 50 Eligible local news bulletins ...... 51

Recommendations...... 51

GLOSSARY...... 53

APPENDIXES…………………………………………………………………………………………………………………………………55 Appendix A: Minister’s Direction………………………………………………………………………………….56 Appendix B: Covering letter to Minister’s Direction…………………………………………...... 60 Appendix C: List of regional commercial radio broadcasting licences………………………………………….62 Appendix D: Methodology details………………………………………………………………………………….68 Appendix E: Consultation summary……………………………………………………………………………….70 Appendix F: Schedule of regional visits……………………………………………………………………………83 Appendix G: Call for submissions………………………………………………………………………………….84 Appendix H: Small licences as a specific class of licence…………………………………………………………88

Australian Communications and Media Authority vii

viii Australian Communications and Media Authority Local Content Levels Investigation Report

Executive summary The Australian Communications and Media Authority (ACMA) has prepared this report in response to a direction from the Minister for Communications, Information Technology and the Arts to investigate and report on local content levels for regional commercial radio broadcasting licences by 30 June 2007. Terms used in this report are defined in the glossary. The Minister specifically directed ACMA to address current coverage of material of local significance by regional commercial radio broadcasting licensees (licensees), and the appropriateness of requiring them to broadcast 4.5 hours of material of local significance on business days. The Minister also directed ACMA to consider if the local content requirement (with the applicable number of hours currently set at 4.5 hours) should be varied for all or specified classes of licence, and whether it should include an obligation to broadcast 12.5 minutes of local news on business days. In undertaking this report, ACMA has had regard to the Broadcasting Services Amendment (Media Ownership) Act 2006 (the amending Act) passed by the Parliament in October 2006 to give effect to the government’s media reform package and relevant extrinsic material. ACMA has also had regard to the objects of the Broadcasting Services Act 1992. ACMA approached the investigation on the basis that the local content requirement was introduced to ‘ensure that the liberalisation of the media regulatory framework does not lead to further reductions in local content…on commercial radio’1. Correspondingly, ACMA determined that the requirement was intended to: • maintain, rather than materially increase, existing levels of local content on regional commercial radio; • allow licensees to meet local content requirements without changing the format of their broadcasting services (these formats have evolved over time in response to audience preferences, commercial dictates and community needs); and • be such that it did not impose an unsustainable financial impost on licences to the extent that they are no longer commercially viable, which would result in a reduction in the number of regional commercial radio broadcasting services. ACMA’s investigation and report has been informed by a number of sources of evidence: • independent research commissioned by ACMA, and undertaken by Convergent Consulting Pty Ltd, into the costs of producing local content and the likely financial impacts of the local content requirement2—Convergent Consulting analysed the impact of the requirements by reference to licence area size and operational models, not particular program formats and examined various types of licences, but was not exhaustive, for example, it did not separately address the small number of licences which broadcast predominantly racing services (Note: Convergent Consulting’s Financial Impact Report contains information claimed to be commercial-in-confidence by submitters and by Convergent Consulting. The analysis within that Financial Impact Report is based on such material. ACMA has agreed with submitters

1 Revised Explanatory Memorandum to the Broadcasting Services Amendment (Media Ownership) Bill 2006, pages 41–42 at paragraph 157. 2 Convergent Consulting Pty Ltd, Financial impact and economic analysis of the impact of the new local content requirements on regional commercial radio, 20 June 2007, prepared for ACMA (Financial Impact Report).

Australian Communications and Media Authority 1 Local Content Levels Investigation Report

that this Financial Impact Report would be disclosed only to the Minister and her Department for their consideration. Therefore the Financial Impact Report is not reproduced in this tabled report.); • statistical data maintained by ACMA on licence areas and licences; • publicly available information on regional commercial radio program schedules; and • extensive consultation through submissions from licensees, discussions with Commercial Radio Australia Ltd and visits to licensees in all states and territories. The feedback from industry has been particularly informative in demonstrating the complexity of the regional commercial radio market, the diversity of operations and management approaches and the potential impact of the local content requirement with the current applicable number of hours (4.5). In addition, the independent research has provided valuable insights through the use of case studies to examine the different business models, licence area characteristics, program formats and viability within the industry. Examination of the implications for licences of the local content requirement needs to recognise these differences. ACMA considers that the overall impact of the local content requirement will ultimately reflect the interaction of: • the applicable number of hours and any classes of licence—to be declared by the Minister; • any exemptions or other changes made to the regulatory environment—if made by Parliament; • the definition of ‘material of local significance’ in finalising the licence condition—to be made by ACMA. For the purposes of this report, ACMA has considered the components of the local content requirement as a package. Defining ‘material of local significance’ ACMA must define ‘material of local significance’ in the licence condition to be made before 1 January 2008. Further consultation with licensees on a proposed licence condition will occur in the second half of 2007. At this stage, ACMA anticipates defining ‘material of local significance’ in a way which strikes a balance between public interest considerations (for example, audience needs for local content and a diverse choice of listening content), and recognition that licensees rely on adequate returns to remain in operation. In defining ‘material of local significance’, ACMA will need to consider whether ‘local’ means the licence area or some other more broadly defined area. ACMA’s starting premise is to equate ‘local’ with the licence area. This position may evolve as ACMA consults industry on the definition and develops the licence condition. ACMA has also considered various ways in which such a definition could be made and currently anticipates a definition of ‘material of local significance’ encompassing: • programs that are hosted or produced in the licence area; • content produced outside the licence area that is specifically tailored for the licence area; and • the minimum service standards for local news and information that apply to licences where a trigger event has occurred. A narrower definition would likely require the material to relate to events, issues, persons or places in the licence area, where this imports a higher level of connection with the licence area.

2 Australian Communications and Media Authority Local Content Levels Investigation Report

Findings ACMA’s investigation found:

Direction 5(2) – Extent of current coverage There is substantial variation in the levels of material of local significance currently being broadcast by licensees. Many broadcast: • less than 4.5 hours of material of local significance on each business day (for example, the average duration of surveyed breakfast shows is 3.6 hours, and these shows are the predominant source of local content for virtually all licences); and • far less than 12.5 minutes of local news on each business day—average duration of local news is 5.9 minutes (varies from 2–9 minutes).

Direction 5(3) – Appropriateness of 4.5 hours Based on a ‘narrow’ definition of material of local significance, ACMA estimates that no FM licences and only a few AM licences would likely meet the local content requirement. Based on a ‘broad’ definition of material of local significance, ACMA estimates that a good majority of large, only some medium and small FM licences, most large and many medium and small AM licences would likely meet a requirement to broadcast 4.5 hours of material of local significance on each business day, but that significant numbers of both FM and AM licences would not. The annual cost of complying with the 4.5 hour local content requirement is $20,000–$120,000 per annum. Licensees that do not already have a presence in the licence area may incur extra capital ($5,000–$300,000) and annual operating costs ($5,000–$50,000) to establish and maintain a presence. Enforced format change and unsustainable financial impost would occur as a result of the local content requirement with the applicable number of hours set at 4.5. These are not consistent with the relevant objects and regulatory policy of the Broadcasting Services Act. Therefore, 4.5 hours is not an appropriate applicable number of hours of ‘material of local significance’ in daytime hours for licences generally. Many licences could not comply without a significant detrimental impact on their financial viability, changing their format (which could negatively impact audiences), or both.

Direction 5(4) – Whether an alternative number of hours should apply generally: The regional commercial radio industry is diverse and a blanket ‘one size fits all’ requirement will operate inequitably and fail to accommodate the wide-ranging interests and needs of regional communities. Given this diversity, ACMA does not support adoption of another applicable number of hours to apply generally to all licences.

Direction 5(5) – Whether specified classes, with different hours, should be determined ACMA supports the declaration by the Minister of specific classes of licences, with different numbers of applicable hours. ‘Small’ licences (as defined by ACMA—currently 22 in total) are considered a specific class of licence for which a significantly lower applicable number of hours is appropriate, due to the disproportionate affect the local content requirement has on their profitability. ACMA has defined ‘small’ in a way which is more limited than that proposed by industry through the consultation process. ACMA estimated that the industry-proposed definition would exclude up to two thirds of licences from the local content requirement, which seems inconsistent with the government’s policy intent.

Australian Communications and Media Authority 3 Local Content Levels Investigation Report

It is not appropriate for remote area services (five in total) and racing radio services (four in total) to have any local content requirement, given the potential impact on their viability. All other licences should be treated as another class, with any requirement exceeding three hours having a significant financial impact on many licences and placing the viability of some at risk.

Direction 5(6) – Whether 12.5 minutes of local news per day should be included Based on a ‘narrow’ definition, only a few FM licences and many AM licences would meet a requirement to broadcast 12.5 minutes of local news on each business day. Based on a ‘broad definition’, most large and many medium and small FM licences and most AM licences would likely meet a requirement to broadcast 12.5 minutes of local news on each business day, but some FM and AM licences would not. The cost of complying with a requirement to broadcast 12.5 minutes of local news each business day is estimated at $12,000–$60,000 per annum, representing as much as 15–26 per cent of the profit of some licences. Therefore, ACMA considers that a requirement to broadcast 12.5 minutes of local news on each business day is not an appropriate requirement for licences (in the absence of a trigger event) as it imposes a significant financial impost on licences and does not allow for variance in the availability of news across different licence areas.

Other findings There may be some licences with unique characteristics which did not come to ACMA’s attention during the investigation, and ACMA’s findings and recommendations may not cater for these licences appropriately. This would be reported separately to the Minister as required. To minimise industry costs and consistent with the co-regulatory framework, ACMA considers that compliance should be based on transparent self-reporting by industry on a program basis, rather than the much more onerous assessment of individual program segments. Licensees have made a number of suggestions to better reflect existing coverage of material of local significance and provide necessary operational flexibility.

4 Australian Communications and Media Authority Local Content Levels Investigation Report

Recommendations Based on the findings of its investigation, ACMA recommends that the Minister consider declaring: • specific classes of licence under section 43C(3)(c)(i) of the Broadcasting Services Act; • ‘small’ licences (defined as licences located in a licence area in which both the licence area population is under 20,000 and the population of the largest town is under 10,000) and suggests the appropriate applicable number of hours for small licences is 30 minutes; and • other regional commercial radio broadcasting licences—that is, licences other than racing radio services, remote area services and small licences—are a specific class of licence for which the appropriate applicable number of hours is suggested as three hours. ACMA also recommends that the Minister consider other times being prescribed for: • daytime hours at section 43C(8) of, for example, 5.00 am–7.00 pm, instead of the current 6.00 am–6.00 pm; and • ‘prime-time hours’ at section 61CA consistent with ‘daytime hours’ under section 43C(8). Further, ACMA recommends that the Minister consider legislative amendments to: • exempt remote area services and racing radio services from the local content requirement; • relax compliance for six weeks each year; • replace the term ‘business days’ with ‘at least five days during the week’; • amend the definition of ‘eligible local news bulletins’ to lower the total duration from 12.5 minutes and allow broadcast of repeat material; and • enable the Minister or ACMA to declare lesser local news target numbers for eligible local news bulletins.

Australian Communications and Media Authority 5 Local Content Levels Investigation Report

1. Purpose and methodology Terms of reference of investigation The terms of reference for ACMA’s investigation are contained in the Broadcasting Services (Local Content on Regional Radio) Direction No. 1 of 2006 (the Direction). The Direction is reproduced at Appendix A. In October 2006, Parliament passed the Broadcasting Services Amendment (Media Ownership) Act 2006 (the amending Act) to give effect to the government’s media reform package. Schedule 2 of the amending Act introduced new local content and local presence requirements for regional commercial radio broadcasting licences into the Broadcasting Services Act 1992 (the Broadcasting Services Act).3 On 27 October 2006 (refer Appendix B), the Minister for Communications, Information Technology and the Arts (the Minister) issued the Direction requiring ACMA to investigate and report on two aspects of the new local content and presence requirements: 1. trigger events; and 2. local content levels. ACMA provided its trigger event investigation report to the Minister on 30 March 2007. The second investigation—into local content levels for regional commercial radio—is the subject of this report and requires ACMA to investigate and report to the Minister by 30 June 2007 on the following matters: • current coverage of material of local significance (both news and non-news content) by licensees; • the appropriateness of requiring licensees to broadcast 4.5 hours of material of local significance between 6.00 am–6.00 pm on business days;4 • whether the Minister should vary the number of hours (currently 4.5) generally or for specified classes of licence; and • whether the material of local significance required to be broadcast by licensees should include an obligation to broadcast 12.5 minutes of local news on each business day4. Legislative provisions Section 43C of the Broadcasting Services Act is the provision of primary relevance to this investigation. This section requires ACMA to impose a licence condition on broadcasting licences. The licence condition will apply from 1 January 2008 and will: • require licensees to broadcast the applicable number of hours of material of local significance between 6.00 am–6.00 pm on business days5 (section 43C(1) of the Broadcasting Services Act); and • define material of local significance (section 43C(2) of the Broadcasting Services Act).6

3 The provisions in Schedule 2 of the amending Act commenced on proclamation (4 April 2007). 4 Relevant factors include: the cost of producing local content, current levels of local news and non-news content, and the profitability of licensees (clauses 5(3) and 5(6) of the direction). 5 Regulations may prescribe another beginning and end time. There are currently no relevant regulations.

6 Australian Communications and Media Authority Local Content Levels Investigation Report

The Minister may change the extent of the local content requirement by declaring a replacement number of hours for all or specific classes of licence or, through regulations, prescribe different beginning and end times for daytime hours. ACMA’s role—apart from providing this report—is limited to making the licence condition and defining ‘material of local significance’ in the licence condition to apply from 1 January 2008.

Applicable number of hours of material of local significance The local content requirement currently requires licensees to broadcast 4.5 hours of material of local significance between 6.00 am–6.00 pm on business days (section 43C(3)(a) of the Broadcasting Services Act).7 The Minister may declare that another number applies to licences generally8 or to a specified class or classes of licence.9

Definition of material of local significance ACMA must define material of local significance in the licence condition. ACMA will develop and consult on a proposed licence condition, including a definition of material of local significance, in the second half of 2007. The definition will be informed by submissions ACMA received from licensees for this investigation and through the mandatory consultation and gazettal process prescribed by section 43 of the Broadcasting Services Act.

Review and report Section 43C(4) of the Broadcasting Services Act requires the Minister to cause a review of the local content requirement to be conducted before 30 June 2007. The Revised Explanatory Memorandum explained the scope of the mandatory review: The review will specifically address the issue of whether a ‘one size fits all’ approach will affect the commercial viability of regional radio licensees in smaller markets. The review will also be required to recommend an alternative minimum level, which may then be implemented by disallowable instrument.10 The review must address whether the Minister should make: • a general declaration varying the applicable number of hours of material of significance and, if applicable, specifying the new number; and • declarations varying the applicable number of hours of material of significance for one or more classes of regional commercial radio broadcasting licences and specifying the new number(s) for the relevant class(es). Section 43C(4A) of the Broadcasting Services Act requires the Minister to make a report of the review but does not specify a time frame for completion of the report. Once the report is completed, the Minister has 15 sitting days to lay the report before both Houses of Parliament11 and make either a general declaration or one or more specific declarations.12

6 The definition must be broad enough to cover minimum service standards for local news and information that apply to licences affected by a trigger event (section 43C(2) of the Broadcasting Services Act). 7 Business days are days other than Saturdays, Sundays and public holidays (section 6(1) of the Broadcasting Services Act). 8 Section 43C(3)(b) of the Broadcasting Services Act. 9 Section 43C(3)(c) of the Broadcasting Services Act. 10 Revised Explanatory Memorandum to the Broadcasting Services Amendment (Media Ownership) Bill 2006, page 46 at paragraph 175. 11 Section 43C(4B) of the Broadcasting Services Act.

Australian Communications and Media Authority 7 Local Content Levels Investigation Report

Scope of the investigation Under the Direction, the investigation must consider the need for either a declaration changing the applicable number of hours for licences generally, or for declaration(s) changing the applicable number of hours for specific classes of licence. This investigation report provides recommendations, including options for replacement numbers of hours and classes of licence, having regard to: • the explanation in the Revised Explanatory Memorandum about the scope of the review;13 • the regulatory framework of the Broadcasting Services Act; • views expressed by industry in their submissions; and • ACMA’s own experience in regulating content in the broadcasting sector.

Legislative context Objects of the Broadcasting Services Act In undertaking this investigation, ACMA had regard to relevant objects of the Broadcasting Services Act, including: • promot[ing] the availability to audiences throughout Australia of a diverse range of radio and television services offering entertainment, education and information (section 3(1)(a)); • provid[ing] a regulatory environment that will facilitate the development of a broadcasting industry in Australia that is efficient, competitive and responsive to audience needs (section 3(1)(b)); • encourag[ing] providers of commercial and community broadcasting services to be respons[ive] to the need for … an appropriate coverage of matters of local significance (section 3(1)(g) of the Broadcasting Services Act); and the newly inserted object of: • promot[ing] the availability throughout Australia of television and radio programs about matters of local significance (section 3(1)(ea) of the Broadcasting Services Act). These objects apply generally and are not confined to regional commercial radio broadcasting. Trigger event requirements While the licence condition will apply to all regional commercial radio broadcasting licences, additional requirements already apply to licences that are affected by a trigger event.14 Licensees affected by a trigger event must meet minimum service standards for local news and information (section 61CD of the Broadcasting Services Act). For example, affected licensees must broadcast 12.5 minutes of local news between 6.00 am and 10.00 am five days a week. Parliament’s intent Parliament passed the amending Act on 18 October 2006, introducing into the Broadcasting Services Act: • a local content requirement (that is, material of local significance) for all regional commercial radio broadcasting licences; and • local presence and additional local content (minimum service standards for local news and information) requirements for regional commercial radio broadcasting licences affected by a trigger event.

12 Sections 43C(4B) and 43C(4C) of the Broadcasting Services Act. 13 Revised Explanatory Memorandum to the Broadcasting Services Amendment (Media Ownership) Bill 2006, page 46 at paragraph 175. 14 ACMA reported separately to the Minister on the definition of trigger event on 30 March 2007.

8 Australian Communications and Media Authority Local Content Levels Investigation Report

The Revised Explanatory Memorandum to the Bill states: It is a Government priority to ensure that the liberalisation of the media regulatory framework does not lead to further reductions in local content on … commercial radio.15 The stated intent of the new local content requirement is to address ‘existing concerns about the diminution of local content’, and ‘the potential impact of the removal of the cross-media restrictions on local content levels’.16 Methodology A number of sources of evidence have informed ACMA’s investigation: • statistical data maintained by ACMA on licence areas and licences; • analysis of publicly available information on regional commercial radio program schedules. • independent research commissioned by ACMA, and undertaken by Convergent Consulting Pty Ltd, into the cost of producing local content and the likely financial impact of the new local content requirement on licences, based on Broadcasting Financial Results (BFR) data and information provided by licensees to the consultants (as Convergent Consulting’s Financial Impact Report contains material provided on a commercial-in-confidence basis and analysis based on such material, it has not been included in this report);17 • 16 submissions received on behalf of 147 regional commercial radio broadcasting licensees and a detailed submission from their peak industry body, Commercial Radio Australia Ltd (CRA); and • regional visits to licensees in all states and territories by ACMA between February and June 2007. ACMA considered the investigation task of addressing the ‘appropriateness’ of the new local content requirement was best approached by analysing both quantitative and qualitative data. The combination of quantitative data (for example, the analysis in the commissioned research) and qualitative data (for example, industry submissions) provides relevant information on the likely impact of the new requirement on licensees and a balanced understanding of the issues for industry in meeting the new requirement. Appendix D gives more detail on the various sources of data that informed this investigation and report.

15 Revised Explanatory Memorandum to the Broadcasting Services Amendment (Media Ownership) Bill 2006, pages 41–42 at paragraph 157 16 Revised Explanatory Memorandum to the Broadcasting Services Amendment (Media Ownership) Bill 2006, page 43 at paragraph 165 17 Financial Impact Report

Australian Communications and Media Authority 9 Local Content Levels Investigation Report

2. Industry context Overview The Australian regional commercial radio broadcasting landscape is diverse and complex. Significant variations exist in the attributes of different licence areas—for example, licence areas differ in their population size and density, concentration of licences, and media diversity. These variations are compounded by varying attributes of licences (for example, format and network affiliation) to create an extremely diverse commercial regional radio sector. The diversity of the regional commercial radio industry suggests a single requirement applied to all licences, regardless of their particular characteristics and circumstances will operate inequitably. A ‘one size fits’ all approach may also fail to accommodate the wide-ranging interests and needs of the regional communities they serve. Regulatory environment Licences are regulated by the Broadcasting Services Act. The conditions of broadcasting services licences are made and monitored by ACMA. The licence condition will apply to all (224 licences in 104 licence areas) licences from 1 January 2008. In addition, the Commercial Radio Australia Codes of Practice and Guidelines (developed by the industry and approved by ACMA)18 regulate aspects of the behaviour of commercial radio licensees. For example, the codes of practice, relevantly: • prescribe minimum levels of Australian music content, based on licence format; and • mandate procedures for receiving and broadcasting emergency information. The industry The local content levels requirement will apply to 224 regional commercial radio licences in 104 licence areas. These 224 licences comprise: • 214 broadcasting services band licences; • five section 40 licences; and • five remote area services.19 Regional commercial radio broadcasting licences are licences in areas other than Sydney RA1, Melbourne RA1, Brisbane RA1, Perth RA1, Adelaide RA1 or Western Suburbs Sydney RA1. Section 40 licences comprise 12 commercial broadcasting licences issued under section 40 of the Broadcasting Services Act, with five being regional commercial radio licences. The remaining seven section 40 licences that contain the General Post Office of one or more of Sydney, Melbourne, Brisbane, Perth and Adelaide are not included under section 43C of the Broadcasting Services Act which provides for the licence condition. Appendix C lists the 224 licences and 104 licence areas (shaded entries indicate licences for which ACMA received submissions).

18 Issued 23 September 2004 and due for review in September 2007. 19 There are five remote licences located in three remote licence areas. These cover vast areas of outback Australia and contain many small towns, none exceeding a population of 20,000.

10 Australian Communications and Media Authority Local Content Levels Investigation Report

Licence area attributes Licence areas differ markedly based on variables including population size, population density, largest city or town size, licence area size, concentration of licences, media diversity, and proximity to metropolitan licence areas. Population size Populations of licence areas range from 5,917 (Queenstown RA1) to more than 495,000 (Newcastle RA1).20 Figures 1.0 and 1.1 give a breakdown of licence areas and licences by population size and illustrate that: • 35 of the 104 licence areas (34 per cent) have a licence area population of less than 40,000. These areas comprise 66 licences (29 per cent) of the total of 224 licences; • 66 of the 104 licence areas (63 per cent) comprising 131 licences (58 per cent of total licences) have a population of less than 75,000; • only two of the 104 licence areas (two per cent), Charleville RA1 and Queenstown RA1, comprising four licences (two per cent), have populations below 10,000; and • 33 of the 104 licence areas (32 per cent) comprising 83 licences (37 per cent) have populations over 100,000. Figures 1.0 and 1.1: Licence areas (no. 104) and licences (no. 224) by population size21

80 %Licence areas 160 68 No. Licence areas 141 %Licences 70 63 63 140 No. Licences 131 58 60 120 50 100 71 40 34 80 66 66 29

30 Number 60 35 20 13 13 40 28 14 Cumulative percentage 20 10 2 2 2 4 0 0 < 10,000 < 20,000 < 40,000 < 75,000 <100,000 < 10,000 < 20,000 < 40,000 < 75,000 <100,000 Population of licence area Population of licence area Population density Licence areas vary from sparsely populated outback areas (the three remote licence areas)22 to state and territory capital cities (Darwin, Canberra and Hobart)23 and large towns such as Newcastle. Population densities of licence areas range from 25 square kilometres (km2) per person in the Remote Western Zone licence area to 0.01 square km2 for Canberra, 0.09 km 2 for Darwin and 0.03 km 2 for Newcastle. Largest city or town size The population of the largest centre in licence areas ranges from 2,094 (Bridgetown RA1) to 309,799 (Canberra) and 376,533 (the Gold Coast).

20 Population figures sourced from the Australian Bureau of Statistics’ 2001 Census of Population and Housing. 21The values for < 80,000 are identical to the < 75,000 values and for this reason are not shown in Figures 1.0 and 1.1. 22 The three remote licence areas (Central Zone, North East Zone, and Western Zone) incorporate vast regions of outback Australia: 2 ƒ Central Zone is 2,570,118km (parts of outback Northern Territory, South Australia and Western New South Wales) with a population of 159,656, and one licence (8SAT); 2 ƒ Western Zone is 2,148,658 km (remote Western Australia), has a population of 85,327, and two licences (6FMS and 6SAT); and 2 ƒ North East Zone is 1,389,713 km (remote Queensland and New South Wales), has a population of 200,659, and has two licences (4BRZ and 4BRL). 23 Canberra is 3,504 km2 and has a population of 356,384; Darwin is 10,882 km2 and has a population of 120,746; Hobart is 7,347 km2 and has a population of 218,079.

Australian Communications and Media Authority 11 Local Content Levels Investigation Report

Figures 2.0 and 2.1 give a cumulative breakdown of licence areas and licences based on the size of the largest city or town in the licence area. It reveals: • 75 licence areas (72 per cent of licence areas) comprising 145 licences (65 per cent of licences) have a largest city or town population of less than 40,000; • 49 licence areas (47 per cent of licence areas) comprising 92 licences (41 per cent of all licences) have a largest city or town population of less than 20,000; • 19 licence areas (18 per cent of licence areas) comprising 37 licences (17 per cent of licences) have a largest city or town population under 10,000; and • ten licence areas (10 per cent of licence areas) comprising 20 licences (nine per cent of licences) have a largest city or town population of less than 5,000. Figures 2.0 and 2.1: Licence areas (no. 104) and licences (no. 224) by largest city or town 100 200 %Licence areas No. Licence areas 18 4 90 88 180 %Lice nce s 82 No. Licences 160 80 72 14 5 68 68 13 4 13 4 70 65 140 62 60 60 12 0 60 54 120 50 47 100 92 91 41 80 71 71 75 40 33 66 64 29 30 60 49 37 20 18 17 40 34 Cumulative percentageCumulative 10 9 20 19 10 20 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 000 000 0 0 ,0 ,00 ,0 ,00 ,0 ,00 ,0 , , , , , , , 5 0 0 0 5 5 0 5 0 5 < 2 3 4 75,000 < 1 2 2 4 7 <1 0,000 <1 5 < <2 5 < <3 5 < < <10,000 < < < <30 <35,000 < < Population largest city or town Population largest city or town Licence area size Licence areas range in size from 1,089 km2 (Wollongong RA1) to a massive 277,818 km2 (Longreach RA1).24 Concentration of commercial radio broadcasting licences Figures 3.0 and 3.1 illustrate that: • 69 licence areas (66 per cent of the 104 licence areas) have two licences; • 15 licence areas (14 per cent) have three licences; • 13 licence areas (13 per cent) have one licence.; and • 7 licence areas (seven per cent) have four licences. Figures 3.0 and 3.1: Concentration of licences (no. 224) in licence areas (no.104)

70 66 160 No. Licence areas %Licence areas 13 8 62 140 60 %Lice nce s No. Lice nce s 120 50 100 40 80 69 30 60 20 45 20 14 13 13 40 28 7 10 6 20 13 13 15 7 0 0 1 licence in area 2 licences in 3 licences in 4 licences in 1 licence in area 2 licences in 3 licences in 4 licences in area area area area area area

24 Excludes the three remote licence areas. Although Longreach is a vast licence area, its population is only 13,860. The largest remote licence area is the Remote Commercial Radio Service Central Zone with 2,570,118 km2 and a population of 159,656.

12 Australian Communications and Media Authority Local Content Levels Investigation Report

Ownership of licences Of all regional commercial radio stations operating in a licence area, 85 per cent are ‘paired operations’—the same licensee owns two stations in the licence area. These usually operate as an AM/FM pair (62 per cent of all stations) but may be an FM/FM (21 per cent) or AM/AM (three per cent) pair. Only nine per cent of all regional commercial radio stations operate as a single entity in a licence area, either in direct competition with other single entity operators, or against ‘paired operators’. The remaining six per cent of all stations operate singularly within sub-regions of a licence area (for example, Campbelltown and Katoomba) or across multiple licence areas (for example, remote Queensland). Media diversity Figures 4.0 and 4.1 illustrate that licence areas vary in media diversity based on the ‘points’25 in a licence area: • 35 licence areas have four points; • 21 licence areas have three points; • 21 licence areas have six points; • one licence area (Remote Commercial Radio Service North East zone RA1) has only one point; and • one licence area (Nambour RA1) has seven points. Figures 4.0 and 4.1: Number of points in licence areas (no. 104)26

40 80 No. Licence areas %Licence areas 35 69 35 70 32 No. Licences %Licence areas 60 60 30 27

25 50 21 41 20 40 36 20 19 35 16 15 30 15 21 21 20 16 10 8 5 4 10 5 5 4 4 2 3 5 2 1 1 1 1 1 1 0 0 0 points 1 point 2 points 3 points 4 points 5 points 6 points 7 points 0 points 1 point 2 points 3 points 4 points 5 points 6 points 7 points Adjacent metropolitan licence areas27 Several regional licence areas compete, through fortuitous reception, with adjacent metropolitan licence areas which do not attract the local content requirement. Although it is difficult to identify which regional radio licence areas are affected by fortuitous reception from metropolitan broadcasters, ACMA understands that fortuitous reception affects Ipswich, Katoomba, Kapunda and Mandurah (adjacent to Brisbane, Sydney, Adelaide and Perth respectively). Profitability Profitability also varies widely across the industry. ACMA’s analysis indicates that average annual profit margin varies from 10 per cent in larger regional AM markets to 33 per cent in

25 The number of points in a licence area is relevant to determining, for example, whether an unacceptable media diversity situation is present: see Division 5A (specifically, section 61AC of the Broadcasting Services Act). 26 Five licence areas have zero points because they are section 40 licence areas that are not assigned points (at 21 June 2007). 27 In this context, adjacent refers to the geographic proximity of a regional commercial radio licence area to a metropolitan commercial radio licence area and the fortuitous reception that may result from this. It is separate from licence area population overlaps under section 30(5) of the Broadcasting Services Act.

Australian Communications and Media Authority 13 Local Content Levels Investigation Report medium regional FM markets.28 As a core aspect of its investigation, profitability is considered further in Chapter 5 of this report.

Licence attributes Licences also vary considerably based on a variety of factors. Network affiliation Licence operators range from family-owned entities, both small (for example, Pinecam Pty Ltd in Charleville RA1) and large (for example, Grant Broadcasters) to large networks29 owned, ultimately, by publicly listed companies (for example, Macquarie Regional Radioworks and Redwave Media, owned by Macquarie and West Australian Newspaper Holdings Limited respectively). Macquarie Regional Radioworks is the largest network with 85 licences.30 Currently, 35 entities own licences and of these: • seven are networks that between them own 170 of the 224 licences (76 per cent of licences) affected by the local content requirement; and • 28 entities own the remaining 54 of the 224 licences (24 per cent of licences) affected by the local content requirement. Program formats There are 93 licences (42 per cent) are AM and 131 (58 per cent) are FM. FM licences tend to broadcast a predominantly music format and generally attract a younger demographic. AM or ‘heritage’ licences are more likely to broadcast a hybrid format (both music and talk) or talk shows. Some licences serve a special interest, for example, radio racing services such as 3BT in Ballarat and 3SR in Shepparton. In total, there are four licences that broadcast predominantly racing content.

Industry challenges ACMA notes the following examples of challenges facing the radio industry sourced through submissions and ACMA’s knowledge of the radio industry. Regional commercial radio broadcasters face challenges in the current environment including: • proliferation of alternative forms of media,31 many offering interactivity to a much greater extent than is available to listeners of analog radio; • increasingly sophisticated audiences who actively exercise viewing and listening choices (for example, pod casting and MP3 on demand listening); • risk of audiences switching to other media if their broadcasting demands are not met on local regional radio (for example, music through a subscription TV music channel); • an impending move to a digital platform, involving considerable investment in new technology; and • population shifts in regional Australia and general economic conditions. Radio is moving to a digital future. The industry’s ongoing investment in digital technology will greatly benefit radio audiences through, for example, a wider choice of channels and programs,

28 Financial Impact Report 29 In the context of this report, a network means five or more licences owned by the same entity across two or more licence areas (there is a control cap of two licences in any one licence area). 30 Macquarie Regional Radioworks is also a controller of two licences in the Newcastle RA1 licence area. 31 For example, computers (access to a selection of radio licences online, online gaming, short message service, and email) video games and mobile phones

14 Australian Communications and Media Authority Local Content Levels Investigation Report superior sound quality and access to scrolling text information (giving, for example, news headlines, weather reports and program listings). The competitive landscape for commercial regional radio also presents challenges for regional commercial radio from: • the national broadcasters—the ABC broadcasts across five national networks: ABC Classic (classical music), Radio National (talk), NewsRadio, Local Radio (on around 60 licences throughout Australia) and Triple J (youth music) (the government is investing $12 million in ABC NewsRadio to add another 70 frequencies to its network covering towns with populations over 10,000: when the two-year project is completed 95 per cent of the population will have access to coverage, compared with the current level of 78 per cent);32 • more than 190 community radio broadcasting licences in regional licence areas; • more than 240 high power narrowcast33 licences; and • more than 1,800 low power narrowcast licences and temporary community broadcasting licences.

32 Mediaweek, 7 May 2007. 33 Narrowcast services are broadcast services limited by target special interest group, location, duration of operation, program type, or some other factor.

Australian Communications and Media Authority 15 Local Content Levels Investigation Report

3. Definitions of material of local significance Overview From 1 January 2008 a licence condition will require licensees to broadcast an applicable number of hours of material of local significance, as defined in the licence condition. Section 43C(2) of the Broadcasting Services Act ‘permit[s] ACMA to exercise judgment in the scope of material that may be broadcast by a regional commercial radio broadcasting licensee in order to satisfy the requirement of the licence condition, and mirrors the operation of new subsection 43A34.’ There are a number of possible definitions of ‘material of local significance’. For example, possible definitions for the licence area (or some other defined area) include material that: • relates to people, places, events or issues in the area; • is locally hosted or produced and broadcast in the area; • is produced outside the area but specifically tailored for the area; • is produced outside the licence area but relates to the area; or • is of interest to people in the area. The definition of material of local significance interacts with the relevant applicable number of hours for licensees generally, or for any specific classes of licence to which the licence condition will apply. ACMA is currently inclined to develop a reasonably broad definition of material of local significance. However, the remaining considerations which affect the final form of obligation on licensees are matters for the Minister. Consultation by ACMA on the draft licence condition will occur in the second half of 2007, against the background of the government’s decisions. Policy objectives ACMA conducted its investigation and considered the issues of appropriate number of hours and classes of licences within the framework of the following policy objectives: • ensuring that liberalisation of the media regulatory framework does not lead to further reductions in local content on regional commercial radio;35 • ensuring that the local content obligations reflect ‘the size and capacity of the market’;36 • the relevant objects of the Broadcasting Services Act, namely: • to promote the availability … of a diverse range of radio … services offering entertainment, education and information (section 3(1)(a) of the Broadcasting Services Act); • to provide a regulatory environment that will facilitate the development of a broadcasting industry … that is … responsive to audience needs (section 3(1)(b) of the Broadcasting Services Act);

34 Revised Explanatory Memorandum to the House of Representatives, Broadcasting Services Amendment (Media Ownership) Bill 2006, page 89 at item 3 35 Revised Explanatory Memorandum to the House of Representatives, Broadcasting Services Amendment (Media Ownership) Bill 2006, pages 41-42 at paragraph 157 36 Paul Neville, Member for Hinkler, ‘Second reading speech: Broadcasting Services Amendment (Media Ownership) 2006’, House of Representatives, Debates, 17 October 2006 www.aph.gov.au/hansard/reps/dailys/dr171006.pdf

16 Australian Communications and Media Authority Local Content Levels Investigation Report

• to promote the availability to audiences … of … radio programs about matters of local significance (section 3(10(ea)); and • to encourage providers of commercial … broadcasting services to be responsive to the need for … an appropriate coverage of matters of local significance (section 3(1)(g) of the Broadcasting Services Act); • the regulatory policy in section 4(2) of the Broadcasting Services Act of: (a) enabl[ing] public interest considerations to be addressed in a way that does not impose unnecessary financial and administrative burdens on providers of broadcasting services …; and (b) readily accommodat[ing] technological change; and (c) encourag[ing]: (i) the development of broadcasting technologies … and their application; and (ii) the provision of services made practicable by those technologies to the Australian community; and • the reasons for the introduction of the new local content requirement—the potential for consolidation of ownership in the wake of the relaxation of the cross-media ownership restrictions, the decrease in independently-owned radio licences, increases in syndicated programming and concomitant concerns over the decrease in local programming.37 The Revised Explanatory Memorandum identified ‘a general reduction in the level of local programming on … radio in many regional markets’ and explained that one of the reasons behind this reduction is: ‘the centralisation of news broadcast production [where] a number of … radio networks now broadcast, or at least coordinate the production of, news programs and other content from a single location or several hubs.’38 ACMA’s discretion to define ‘material of local significance’ ACMA has a wide discretion in defining ‘material of local significance’. However, ACMA recognises that the extent of the local content requirement is influenced by three interconnected variables: Definition Licence 1. the definition of ‘material of local significance’; classes 2. the number of hours of the requirement; and 3. whether or not a different number of hours applies to specific classes of licence. Hours The first variable (definition of ‘material of local significance’) is for ACMA to decide. The remaining variables are matters for the Minister to consider. A broader definition will make it easier for licensees to comply with the local content requirement but may conflict with the policy objects behind the introduction of the requirement. On the other hand, a narrow definition will result in a requirement that many licences—for example, those that have a predominantly music format—cannot currently meet and would impose significant financial cost to meet in the future. The Minister may: • declare a different applicable number of hours for licences generally or for specific classes of licences; and • consider prescribing different beginning and end times for ‘daytime hours’. Currently, the legislation does not allow for the exemption of any licences from the obligation. The legislation also applies the condition for 52 weeks a year and to business days only. ACMA

37 Revised Explanatory Memorandum to the House of Representatives, Broadcasting Services Amendment (Media Ownership) Act 2006, page 39 at paragraph 147 38 Revised Explanatory Memorandum to the House of Representatives, Broadcasting Services Amendment (Media Ownership) Act 2006, page 39 at paragraph 147

Australian Communications and Media Authority 17 Local Content Levels Investigation Report recognises that recommendations on these aspects of the legislation would require legislative amendment and are therefore also matters for the Minister. Relevance of the TV licence condition to regional radio In considering the appropriate level of material of local significance for all, or specific classes of licence, ACMA considered its own relevant experience in this area, having developed and imposed the additional TV licence condition. Section 43A of the Broadcasting Services Act requires ACMA to impose a licence condition requiring commercial television broadcasters in regional aggregated markets to broadcast a minimum level of material of local significance. The condition already exists39 in parts of New South Wales, Victoria and Queensland and from 1 January 2008 will also apply to Tasmania. The major features of the additional TV licence condition are: • a distinction between licence areas and local areas (each licence area comprises four to seven local areas so that the licence condition applies to a total of 51 local areas); • a definition of material of local significance as material that relates directly to the local area or the licensee’s licence area; • a points-based system for complying with the material of local significance quota with double points for broadcasting news that relates directly to a local area; and • an expectation that material collected and prepared in the local area is likely to be material of local significance. ACMA does not consider it appropriate to apply the television definition of material of local significance and key features of the additional TV licence condition to regional commercial radio as: • the aggregated television licence areas are much larger than the radio licence areas and are subdivided into local areas; • industry structure, profitability and operations are significantly different; • (as a result) the relatively tight definition applied to television would be significantly more onerous for radio licensees; • the additional TV licence condition operates on a points system while the regional radio condition is based on a statutory number of hours; • section 43C provides a mechanism for setting different hours for specific classes of licence; and • television programming is usually scripted and pre-produced with little music. However, ACMA notes that it is relevant to consider where material of local significance is prepared in the local area when making its local content licence condition for licensees. Industry views ACMA received 16 submissions on behalf of 147 licences. Submissions were representative of 66 per cent of licences. In addition, ACMA received a detailed submission from CRA. Many of the submissions specifically endorsed CRA’s views and proposals. A wide cross-section of licensees, covering remote area services, racing radio services, family- owned or independently operated and licences belonging to a network, made submissions. Appendix E contains a detailed analysis of submissions received.

39 Broadcasting Services (Additional Television Licence Condition) Notice 7 April 2003 (the additional TV condition) effective 1 February 2004

18 Australian Communications and Media Authority Local Content Levels Investigation Report

There was a high degree of consensus among licensees on what constitutes material of local significance. Eighty-three per cent of licensees who made submissions to ACMA agreed with CRA that ‘material of local significance’ includes: (i) programs of any kind that are produced locally and broadcast locally (locally hosted programs); (ii) programs produced outside the locality but ‘tailored’ for the locality (locally tailored programs); and (iii) material containing no local references but which is of particular interest or importance to persons within the locality (locally relevant material).40 Figure 5.0 illustrates that: • licensees representing 88 per cent (129 out of 147) of licences stated that locally hosted programs should be considered material of local significance (where locally hosted means programs of any kind that are produced and broadcast locally); • licensees representing the same 88 per cent (129 out of 147) of licences stated that locally tailored constitutes material of local significance (where locally tailored means content that is produced outside the licence area but tailored for the licence area); • licensees representing seventy-four per cent (109 out of 147) of licences considered locally relevant material to be material of local significance (where locally relevant material is material that is: neither locally hosted nor tailored, does not necessarily contain express or implied local references, but is of particular importance or interest to persons within the local area.)41—the submissions did not suggest an appropriate basis for assessing the requisite degree of ‘importance’ or ‘interest’; • the remaining submissions were silent on the issue, rather than offering a different interpretation. Figure 5.0: Industry interpretation of material of local significance

140 120 129 129 100 109 80 60 38 40 18 18

Number of licences of Number 20 0 Locally hosted programs Locally tailored programs Material of local interest

Material of local significance Not considered

A number of licensees stated that the definition of material of local significance should be broad enough to encompass programs offering audience participation, music, pre-recorded voice- tracked programs and advertising. Table 1.0 summarises the range of material that licensees consider qualifies as ‘material of local significance’. It also illustrates the issues on which licensees are agreed and those issues where there was a range of views.

40 Submission from CRA. 41 In its submission, CRA gave this example of locally relevant material: For instance, a report about national or international events produced outside the licence areas could be included within the definition if these events could be seen to have the “potential to effect economic, social or physical conditions within the relevant locality”, sufficient to make them of general interest to local people (even though they might be of general interest to persons outside the locality) – eg global warming or drought funding.

Australian Communications and Media Authority 19 Local Content Levels Investigation Report

Table 1.0: Summary table of licensees’ interpretation of material of local significance42 Should be Proposal Example No. of CRA considered licensees support represented Locally Programs of any kind that are produced Breakfast shows 129 Yes produced locally and broadcast locally Locally Content produced outside the locality Sports, weather, seasonal 129 Yes tailored but ‘tailored’ for the locality information, traffic, rural information, community service announcements Locally Material containing no local references Topics of general interest 109 Yes relevant but which is of particular interest or to local people (even material importance to persons within the though they might also be locality of general interest to

OF LOCAL SIGNIFICANCE persons outside the CONSENSUS ON MATERIAL locality) Programs Programs that permit audience John Laws show 16 offering participation through a talkback option audience should be considered material of local participation significance even if the program is a nationally syndicated talkback program Music Music tailored for a specific Network/syndicated music 21 demographic produced outside the local programs aimed at a area should be considered material of specific demographic local significance Commercials Commercials and other promotional Locally or otherwise 86 Yes and material should be considered material produced commercials promotional of local significance material Pre-recorded Pre-recorded programs that are voice- Networked/syndicated 15 OTHER SUGGESTED MATERIAL MATERIAL OTHER SUGGESTED -tracked tracked by a local announcer within the music programs with a programs licence area should be considered local announcer material of local significance Audience views The Minister’s Direction focuses on impacts of the local content requirement on industry and does not specifically require ACMA to investigate audience views on material of local significance. However, in addressing the definition of material of local significance, the perspective of the audience of regional commercial radio is a consideration, as audience response has a direct commercial effect on broadcasters. Regional commercial radio broadcasters are mindful of audience preferences and periodically undertake market research to identify their preferences and how to meet them. As an example, ACE Radio Broadcasters Pty Ltd (ACE) stated that: We outlay every three years, hundreds of thousands of dollars to survey our audience to ensure we are appealing to the largest audience we can gather which includes our music, news and a complete analysis every 15 minutes from 6.00 am to midnight of what we are doing on air by targeted age groups. ACMA’s analysis of radio program schedules found that music is the dominant format43 across regional radio licences.44 However, many licensees are concerned that music will not be considered material of local significance, resulting in the transformation of music format radio stations into talkback format stations. In addressing the definition for material of local significance, Australian Radio Network (ARN) stated that:

42 Submissions to ACMA on material of local significance 43 Eighty-one per cent (134 of 165) of licences with websites had a music format. 44 This is consistent with the Australian Broadcasting Authority’s findings in the 2003 survey.

20 Australian Communications and Media Authority Local Content Levels Investigation Report

A definition of material of local significance which excludes music-based programming would have disastrous consequences for commercial radio. In addition to increased costs, this definition would require format changes that would be of no interest to most listeners. ACE concurred with ARN and stated that excluding music from the definition would prove particularly unrealistic for FM stations: Music is generally the backbone of FM stations and to attempt to implement a minimum level of material of local significance, and possibly exclude music aimed at its target audience puts these stations in a forced position to play a potentially non-competitive format against for example JJJ. Licensees typically own two licences in a licence area, one aimed at the under 35 demographic (generally an FM station) and the other aimed at the over 35 demographic (generally an AM station). Stations that target the under 35 market predominantly play music (in accordance with audience expectations) and would have difficulty meeting the material of local significance requirement unless it includes music that appeals to their audience, or locally hosted or voice- tracked programs. CRA’s proposal for the inclusion of ‘locally relevant material’ reflects the industry’s support for consideration of audience demands: Our interpretation of the phrase ‘material of local significance’ [includes] material containing no local references but which is of particular interest or importance to persons in the locality.45 ACMA considers that audiences may well indeed perceive mandatory high levels of material of local significance as decreasing their listening choices and a catalyst for switching to other media. This could act against the policy intent of Parliament by adversely affecting the viability of some licences and actually reducing audience exposure to local content on regional radio. ‘Narrow’ and ‘broad’ definitions It is clear from the above discussion that it is possible to define ‘material of local significance’ in a variety of ways. A narrow definition could limit material of local significance to material, apart from advertising, that relates to any of the following: • economic or industry issues in the licence (or other defined) area; • government or other political issues in the licence (or other defined) area; • social issues in the licence (or other defined) area; • education issues in the licence (or other defined) area; • health issues in the licence (or other defined) area; • employment issues in the licence (or other defined) area; • events in the licence (or other defined) area; • recreational or sporting activities in the licence (or other defined) area • people or organisations, or the views of people or organisations, associated with the licence (or other defined) area; • weather conditions in the licence (or other defined) area; • cultural interests or issues in the licence (or other defined) area; • the natural or built environment in the licence (or other defined) area; • community, welfare, religious, educational or other community service bodies operating in the licence (or other defined) area; • emergency warnings broadcast at the request of an emergency service agency in the licence (or other defined) area.

45 CRA submission

Australian Communications and Media Authority 21 Local Content Levels Investigation Report

A broad definition could include46: • programs that are hosted or produced in the licence area; • content produced outside the licence area that is specifically tailored for the licence area; and • the minimum service standards for local news and information that apply to trigger event- affected licences under section 61CD (which must be covered by any definition)47. Industry has put to ACMA that: • a narrow definition would have a significant detrimental impact on FM music licence formats (see discussion in Chapter 5); • a narrow definition would have a significant detrimental financial impact on ‘small’ licences (see discussion in Chapter 5); • a broad definition will provide protection from reductions in local content without imposing an unsustainable financial impost on licensees or forcing format changes; and • industry would support a broad definition. ACMA’s current view on ‘material of local significance’ is that it should include: • entire programs that are hosted or produced in the licence (or other defined) area; • programs produced outside the licence area that are specifically tailored for the licence area; and • the minimum service standards for local news and information that apply to trigger event- affected licences.48 ACMA anticipates defining material of local significance in this broader way as ACMA considers it will provide protection from further reduction in local content on regional commercial radio (without imposing an unsustainable financial impost on licensees and causing a reduction in the number of regional commercial radio broadcasting services). Further, a broader definition continues to provide programming flexibility and ensures that listeners of regional commercial radio continue to enjoy a diversity of content. A number of industry submissions49, including CRA’s submission, stated that the definition of ‘material of local significance’ should extend to any material that is of interest to some listeners in the licence area. ACMA considers that this very broadest statement of ‘material of local significance’ is contrary to its understanding of the intention of the legislation. It would allow, for example, highly-syndicated programs of general appeal to qualify as material of local significance, despite having no content relating to local events, issues, persons or places, nor any tailoring for the specific licence area. ACMA notes that it is also possible to define ‘local news’ narrowly or more broadly. For instance, a narrow local news definition could be bulletins on news in the licence area (without allowing any repeats), with a broad local news definition allowing repeated bulletins and coverage of news in a larger defined area (a region, for example).

46 For the widest definition, ‘local’ means a bigger defined area—for example, a group of licences or a region—than the licence area. 47 Section 43C(2) of the Broadcasting Services Act 48 Section 43C(2) of the Broadcasting Services Act states: If a regional commercial radio broadcasting licensee is required to comply with section 61CD [that is, the minimum service standards for local news and information] the definition of material of local significance must be broad enough to cover material that the licensee must broadcast in order to comply with that section. 49 Refer to consultation summary in Appendix E.

22 Australian Communications and Media Authority Local Content Levels Investigation Report

4. Current levels of material of local significance Overview There is significant variation on the levels of material of local significance currently being broadcast by licensees. ACMA’s analysis of website programs listings (for 165 stations) and submitted program schedules for licences reveals: • licensees currently broadcast a variety of formats, for example, news content, breakfast shows, talkback shows, music shows, hybrid programs and sports programs; • 100 per cent of licences have breakfast shows, with an average duration of 3.6 hours; • 81 per cent of licences broadcast some music; • 56 per cent of licences have a predominantly music format; • 55 per cent of breakfast shows appear to be either produced locally or produced for the local area; • 37 per cent of licences broadcast talkback programs; • 80 per cent of talkback programs are syndicated, making talkback shows the most heavily and widely syndicated type of show; • 52 per cent of licences broadcast hybrid programs of which 72 per cent are networked; • 42 per cent of licences broadcast local news at least once during daytime hours50; • 41 per cent broadcast local news within their breakfast show; and • duration of local news varied between two and nine minutes, with an average of 5.9 minutes. Significantly, ACMA’s analysis reveals that, based on current levels of local content production, and narrow definitions: • only a few FM licences and many AM licences would likely meet a requirement to broadcast 12.5 minutes of local news on each business day; and • no FM licences and only a few AM licences would likely meet a requirement to broadcast 4.5 hours of material of local significance each business day.51 Under broad definitions: • most large and many medium and small FM licences, and most AM licences would likely meet 12.5 minutes of local news; and • a good majority of large, only some medium and small FM licences, and most large and many medium and small AM licences would likely meet 4.5 hours of material of local significance. Program schedules ACMA’s call for submissions from licensees also asked them to submit a typical weekly program for each of their licences. Eight licensees submitted programs covering 53 licences, which ACMA analysed. Given the small sample, ACMA supplemented its knowledge of local

50 This was ascertained from submitted program schedules for 53 licences. 51 A narrow definition requires material to relate to people, places, events or issues in the licence area.

Australian Communications and Media Authority 23 Local Content Levels Investigation Report programming from submitted programs by examining publicly available program listings published by licensees on their websites. Nearly three-quarters of licences—165 out of 224 (74 per cent)—maintain websites with program listings. ACMA analysed program listings over two-weeks from 30 April to 11 May 2007. To accord with the terms of section 43C of the Broadcasting Services Act, ACMA mainly confined its analysis to listings between 6.00 am and 6.00 pm on weekdays.52 ACMA recorded these details of programs: • name, duration, and format (breakfast, talkback, music, sport, or hybrid); and • type (for example, syndicated, locally produced or produced outside the licence area for the area). News content ACMA’s analysis of news content (against three categories: local news, regional news, and national news) was restricted to programs submitted for 53 licences as licensees’ websites did not give information on news broadcasts. Therefore, the number of licences analysed represents only 24 per cent of licences that will be affected by the licence condition. In addition, not all programs submitted listed their news broadcasts and some did not specify the hours of their program schedule. As a result, unlike the analysis of non-news content, this snapshot is a less reliable reflection of industry’s current coverage of news.

Local news Licensees were asked to report on local news broadcast between the hours of 6.00 am and 6.00 pm, Monday to Friday. One network53 offered this interpretation of local news: Local News = News (including sport and weather) produced in and for the region The majority of licensees did not provide their interpretation of ‘local news’. Therefore, ACMA could not identify from their submissions if local news incorporated weather, sport, community announcements, emergency warnings, or included repeated bulletins.54 Forty-two per cent (22 licences) of respondents who submitted program schedules (53 licences) stated that they broadcast local news at least once between the hours of 6.00 am and 6.00 pm, Monday to Friday. Of these 22, nine stated that they broadcast local news within their breakfast show55. The duration of local news varied between two and nine minutes, with an average duration of 5.9 minutes. All licensees that responded56 on local news opposed a requirement to broadcast 12.5 minutes of local news between 6.00 am and 6.00 pm, Monday to Friday, considering it appropriate for licences to broadcast local news at a level that is responsive and suitable for their market. Licensees further considered that any increase in news would have unpredictable effects on audiences (‘listenership’) and affect profitability.

52 Programs starting before and continuing beyond 6.00 am on weekdays were also considered. 53 Submission from Macquarie Regional Radioworks 54 Although some submissions, for example, Macquarie Regional Radioworks, suggested removing the repeated content restriction on ‘eligible local news bulletins’ in section 61CA of the Broadcasting Services Act. 55 This aligns with the obligation on trigger event affected-licences to broadcast local news within certain parameters, including a time band of prime-time hours (6.00 am–10.00 am, in the absence of regulations). 56 ACE, A&D Robertson, B&J Smart, Flow FM, Grant, Macquarie Regional Radioworks , Rebel, Redwave (representing 133 licences)

24 Australian Communications and Media Authority Local Content Levels Investigation Report

One network57 considered the requirement to broadcast 12.5 minutes of local news should be confined to trigger event affected licences.58

Regional news As an alternative to solely broadcasting local and national news, two networks59 broadcast regional news. Regional news is typically syndicated from a metropolitan licence or networked amongst licences within a region. It may include news of rural, national or international events that have the potential to affect economic, social or physical conditions within the relevant locality and is usually produced outside the licence area. One network60 that favoured regional news summarised it as: Local issues material—ie material containing no local references but which is of particular interest or importance to persons within the locality. This is likely to be of most relevance when news stories are categorised as being local or not.

National news Of the 53 licences, a majority (55 per cent) stated that they broadcast national news throughout the day. National news is typically syndicated61 from a metropolitan licence or networked.62 Total duration of national news throughout the day ranged between 42 minutes and 99 minutes, with an average of 61 minutes. However, licences did not specify whether this included news bulletin repeats.

Estimated current levels of material of local significance (news content) ACMA commissioned Convergent Consulting to undertake an independent analysis of current levels of local content broadcast by licences63. Convergent Consulting’s Financial Impact Report provided ACMA with estimates of current levels of local news. Table 2.0 summarises the current ability of regional AM and FM licensees in small, medium and large licence areas to meet a requirement for 12.5 minutes per day of local news compared with regional news. For the purposes of this analysis: • local news means original or unrepeated news stories on events and issues occurring within the licence area. It includes refreshing, re-writing and re-sequencing of previous bulletins and news stories throughout the day; (narrow local news definition); and • regional news means original news stories on events and issues occurring within either the licence area or the broader region within which the licence area is located—includes wholly

57 Macquarie Regional Radioworks 58 Trigger event-affected licences must broadcast ‘eligible local news bulletins’ (section 61CA of the Broadcasting Services Act): Eligible local news bulletins means local news bulletins that meet the following requirements: (a) the bulletins are broadcast on at least 5 days during the week; (b) the bulletins broadcast on each of those days have a total duration of at least 12.5 minutes; (c) the bulletins are broadcast during prime-time hours; (d) the bulletins adequately reflect matters of local significance; (e) none of the bulletins consist wholly of material that has previously been broadcast in the licence area concerned. 59 ACE and A&D Robertson 60 ACE 61 Syndicated shows comprise material created by another licence or other program providers and are either directly broadcast or re-packaged (source: Australian Broadcasting Authority, Survey of Commercial Radio Program Formats 2003–04, 20 May 2004). 62 Networked programs are produced for and broadcast by a particular network or small operator. 63 Convergent Consulting interviewed 11 licensees (representing 127 licences), analysed submissions received by ACMA, and viewed websites maintained by regional commercial broadcasters.

Australian Communications and Media Authority 25 Local Content Levels Investigation Report

repeated stories and bulletins, as well as those previous bulletins and news stories that are refreshed, rewritten and re-sequenced throughout the day (broad local news definition). ACMA’s analysis of program schedules, based on the limited information available on local news64 broadcasts found that: • 22 (42 per cent) of surveyed licences broadcast local news at least once between 6.00 am and 6.00 pm on business days; and • the average duration of daily local news broadcasts, as reported by industry, varies between two and nine minutes, with an average duration of 5.9 minutes. Further, the Financial Impact Report concluded that: • most FM licences and a few large and some medium and small AM licences would not meet a requirement to broadcast 12.5 minutes of local news on each business day, based on a narrow news definition; and • a few large and some medium and small FM licences and a few AM licences would not meet a requirement to broadcast 12.5 minutes of local news on each business day, based on a broad news definition. Table 2.0: Local news compliance estimation for AM and FM licences Definition Small licence area Medium licence area Large licence area (population <40,000) (population 40,000– (population >100,000) 100,000) Narrow Most will not meet Most will not meet Most will not meet

FM Broad Some will not meet Some will not meet A few will not meet

Narrow Some will not meet Some will not meet A few will not meet

AM Broad A few will not meet A few will not meet A few will not meet

Non-news content ACMA analysed program listings published on websites for 165 licences against these categories: breakfast shows, talkback shows (other than breakfast shows), music shows and hybrid programs.

Breakfast shows All radio licences stated on their websites that they broadcast breakfast shows.65 Timing of breakfast shows Breakfast show start times ranged from 5:00 am to 6:30 am. As illustrated in figure 6.0, 37 per cent (61 licences) of licences start their breakfast show between 5:00 am and 5:30 am, and 40 per cent (66 licences) start their breakfast show between 6:00 am and 6:30 am. The daytime hours requirement (from 6.00 am to 6.00 pm) means that 37 per cent (61 licences) of licences will not be able to count 30–60 minutes of their breakfast show towards the ‘material of local significance’ requirement (refer to Chapter 9 for a discussion of daytime hours).

64 In this context local news refers to news identified by licences on their websites as being ‘local news’. 65 Breakfast programs combine a number of different program features, including: music, interviews, talkback, competitions, local, state and national news, and weather.

26 Australian Communications and Media Authority Local Content Levels Investigation Report

Figure 6.0: Start time for breakfast shows

23% 37%

40%

Starting 5:00am or 5:30am Starting 6:00am or 6:30am Undisclosed

Breakfast show duration Breakfast show duration ranged from 2.5 hours to five hours (including advertising). As illustrated in Figure 7.0, the most common duration of breakfast shows was 4 hours, with the average duration of breakfast shows analysed being 3.6 hours, and mode (most commonly occurring) duration of four hours. ACMA was unable to identify the duration of 28 per cent of breakfast shows as the relevant website listings did not include this information. Figure 7.0: Duration of breakfast shows

50

45 4 hrs Not disclosed 40

35 3 hrs 30 3.5 hrs 25

20

15 Number of radio stations radio of Number 10 2.5 hrs 4.5 hrs 5 5 hrs 0 Number of hours

Syndication of breakfast shows Figure 8.0 illustrates that a slight majority (55 per cent) of breakfast shows (90 licences) are not syndicated.66 It was not possible to identify from website listings if non-syndicated breakfast shows (that is, those shows provided exclusively to one licence area) were produced in the local area. It seems reasonable to assume that non-syndicated breakfast shows are produced for a specific licence area, regardless of where they are produced. The racing radio services broadcast a breakfast show although they do not share remaining characteristics of other licences. For the remainder of the day, they broadcast racing events and information. All racing radio breakfast shows are syndicated from Racing 927, Victoria.

66 Syndicated shows consist of broadcast material created by another licence or other program providers and are either directly broadcast or repackaged. (Source: ABA, Survey of Commercial Radio Program Formats 2003– 04, 2004.)

Australian Communications and Media Authority 27 Local Content Levels Investigation Report

Figure 8.0: Syndication of breakfast shows

21% 22%

55%

Syndicated Not syndicated Not disclose d

Talkback shows Of the 165 regional commercial radio licence listings examined, 36 per cent (59 licences) broadcast talkback shows.67 On any given business day between 6.00 am and 6.00 pm, 109 talkback shows are broadcast by these 59 licences. Talkback shows are heavily syndicated with 80 per cent (87 shows) of the 109 talkback shows syndicated. A handful of shows dominate the talkback market: Figure 9.0 illustrates that 42 per cent (46 licences) of talkback shows are the John Laws Morning Show68 and a further 21 per cent (23 licences) are Charles Wooley Across Australia. The Charles Wooley program is networked69 solely across Macquarie Regional Radioworks licences, whereas the John Laws program is syndicated to 16 networks and small operators. Figure 9.0: Talkback shows

John Laws Other Morning Show 37% 42%

Charles Wooley 21%

John Laws Morning Show Charles Wooley Other Some talkback shows are locally produced or syndicated to a specific region or state, in contrast to the strongly syndicated shows. For example, Rural Focus is syndicated to all seven Macquarie Regional Radioworks’ AM licences in Western Australia. It covers agricultural and rural issues related to grain, beef, wine, dairy, sheep, associated political matters and relevant market reports.

67 Generally consists of a mix of telephone calls from listeners, pre-arranged interviews (often with politicians, commentators and others involved directly in issues of current interest), editorials and commentary. No music is included in the talkback format—music combined with talkback is included in hybrid shows. Talkback usually features a well-known or celebrity host. 68 This figure relates to regional commercial radio licences that broadcast the John Laws Morning Show. It does not include metropolitan commercial radio licences. 69 Networked denotes programs that are produced for a certain network or small operator and not broadcast beyond those licences.

28 Australian Communications and Media Authority Local Content Levels Investigation Report

Similarly, Country Today is syndicated to four ACE AM licences in western Victoria. It covers national rural news, market reports and interviews. However, these tailored talkback show are in the minority.

Music shows Music70 is the dominant program format across all licences. Of the 165 regional commercial radio licences, 81 per cent (134 licences) play some music between 6.00 am and 6.00 pm on business days split between 56 per cent (93 licences) that play music in predominantly music format shows and 25 per cent (41 licences) that play music within hybrid shows. Of the 93 licences that broadcast predominantly music-only programs, 48 per cent (45 licences) are networked music shows (music programs produced by and aired across a specific network). In some instances, a local host introduces songs and plays requests. As illustrated by Figure 10.0, 56 per cent of licences (75 licences) that broadcast music are predominantly music format licences. Music format licences typically commence music programs once their breakfast shows end. Figure 10.0: Licences that broadcast music

19%

56%

44%

Music programs Music and hybrid programs Music not significant Hybrid programs Fifty-two per cent of licences (85 licences) broadcast hybrid71 programs of which 76 per cent (65 licences) are FM licences. On any given business day between 6.00 am and 6.00 pm, 93 hybrid programs are broadcast, of which 72 per cent (67 licences) are networked. As with music shows, networked hybrid programs are typically produced by and broadcast across a specific network. For example, The Benchwarmers is broadcast to 35 of Macquarie Regional Radioworks’ 85 radio licences.

Sports programs ACMA is aware that many licences broadcast a sports program of one-to-two hours in duration on the weekends which will not currently count towards the local content requirement, as it is not broadcast on a business day.

70 Timeslots featuring music as primary program content; includes announcer time, Australian Broadcasting Authority, Survey of Commercial Radio Program Formats 2003–04, 20 May 2004 71 Hybrid shows consists of programs that combine a number of different program features, including music, interviews, talkback and competitions. Hybrid programs mirror the breakfast format but are broadcast outside the breakfast time slot.

Australian Communications and Media Authority 29 Local Content Levels Investigation Report

A small number of licensees also have a sport-only format, that is, racing radio services. Further discussion on these licences is included in Chapter 6.

Estimated current levels of material of local significance (non-news content) Convergent Consulting undertook an independent analysis of current levels of local content broadcast by commercial regional radio licences. 72 The Financial Impact Report provided to ACMA by Convergent Consulting estimated current coverage of material of local significance against a ‘narrow’ and a ‘broad’ definition of material of local significance. These definitions are included in Chapter 3 of this report. Table 3 summarises the current ability of regional AM and FM licensees in small, medium and large licence areas to meet a requirement for 4.5 hours per day of material of local significance against these two definitions. The Financial Impact Report concluded that: • all FM licences and most AM licences would not meet 4.5 hours based on a narrow definition of material of local significance;73 and • a few large and many medium and small FM licences and a few large and some medium and small AM licences would not meet 4.5 hours based on a broad definition of material of local significance.74 In addition, ACMA’s analysis of website program listings for 165 licences relevantly found that: • all licensees broadcast a breakfast show; • the majority of breakfast programs are locally produced or specifically tailored for the local area; • the average duration of a breakfast program is 3.6 hours; and • 37 per cent (61 out of 165) of licences commence their breakfast show at 5.00 am or 5.30 am. Table 3.0: Local non-news compliance estimation for AM and FM licences75 Definition Small licence area Medium licence area Large licence area (population <40,000) (population 40,000- (population >100,000) 100,000) Narrow None will meet None will meet None will meet

FM Broad Many will not meet Many will not meet A few will not meet Narrow Most will not meet Most will not meet Most will not meet

AM Broad Some will not meet Some will not meet A few will not meet

72 Convergent Consulting interviewed 11 licensees (representing 127 licences), analysed submissions received by ACMA and viewed websites maintained by regional commercial broadcasters. 73 A narrow definition requires material to relate to people, places, events or issues in the licence area. 74 A broad definition means material that is hosted or produced in the licence area or tailored for the licence area. 75 Financial Impact Report

30 Australian Communications and Media Authority Local Content Levels Investigation Report

5. Costs and impact on profitability of increased local content levels (non- news) Overview Most licences (with the exception of small licences76) would meet a three-hour requirement for local content without additional production, based on a broad definition of material of local significance. However, the above analysis indicates that a 4.5-hour local content requirement would require many licensees to increase their current levels of local content. This varies from small to significant increases on current levels, depending on the licence and the type of programming licensees select to meet the requirement. Costs range from $20,000 per annum (for ‘voice-tracked’ content)77 to $180,000 per annum (for a new hybrid and talkback program in the licence area employing three extra people78). Importantly, these figures assume that the licensee already has a presence in the licence area and can recruit and retain staff. If not, the licensee will incur: • capital costs in introducing a presence of $5,000 to $300,000; and • ongoing operational costs of $5,000 to $50,000 per annum. Small licences and highly networked licensees will experience the greatest impact if the applicable number of hours in the local content requirement remains at 4.5 hours per day. Average profit margins for licensees range from 10 per cent (medium AM licensees) to 33 per cent (medium FM licensees)79. While it is difficult to estimate the exact impact of increased local content production on individual station profitability, ACMA’s research suggests that increases of these magnitudes have the potential to seriously affect the profitability (and in some cases viability) of licences. Much of the discussion in this chapter is drawn from the Financial Impact Report prepared for ACMA by Convergent Consulting, and has not been included in this report on the basis of commercial-in-confidence material contained within it. Cost of producing local content The cost of producing local content is significant, is not the same for all licences and varies depending on the method of local content production adopted. Further, the majority of licences will incur additional local content production costs once the applicable number of hours contained in the local content requirement exceeds three hours per day. Various factors combine to make it difficult to quantify the general cost of producing local content. These factors include the two options for the definition of material of local significance

76 Refer to glossary for definitions of small, medium and large licences. 77 Voice-tracking is where an announcer pre-records entire programs or parts of programs (for example, on-air announcements) that are incorporated into programs along with advertisements and music. 78 Financial Impact Report 79 Financial Impact Report

Australian Communications and Media Authority 31 Local Content Levels Investigation Report

(broad and narrow), licence area size, broadcasting band (AM or FM) and associated radio formats, current profitability, current programming structure, reliance on publicly available aggregated data and the limited number of licensees (31) that gave access to their individual Broadcasting Financial Results (BFR) data. Despite these complexities, the consultants were able to estimate the cost of producing local content in the Financial Impact Report. Essentially, the report shows that additional costs associated with producing local content are not the same for all licences. These costs differ according to the licence’s business operating model (that is, whether broadcast content is networked, locally produced, or an amalgam of the two), content programming, and the way in which licensees meet local content requirements. All tables in this section are taken from the Financial Impact Report. The following analysis estimates costs which licensees are likely to incur to comply with a 4.5 hours requirement, based on the programming options individual stations adopt to meet the requirement. Voice-tracked music programs The cheapest option for increasing local content is to produce voice-tracked music programs. This is estimated to require a part-time staff member (0.3 of a full-time equivalent employee) to produce the program with annual costs of up to $20,000.80 Live music-based programs Live music-based programs require an additional 0.5–1.0 full time equivalent employee, at an annual cost of $30,000–$60,000.81 Hybrid and talkback programs The most expensive way to produce extra local content is to produce hybrid or talkback programs. This is unlikely to be a practical option for isolated licences as they have difficulty in attracting and retaining staff. The Financial Impact Report explains that the annual cost of introducing a hybrid or talk back program is $60,000–$180,000 per annum82, comprising an increase in staff of one to three full time employees (two live-to-air hosts and another staff member to source content and produce the program). There are potential additional expenses to cover housing allowances in areas where rents are high. Table 4.0 summarises the estimated annual costs for the three options discussed above. Table 4.0: Summary of compliance costs and staff requirements by program format83 Format Number of staff required (full-time equivalent) Incremental cost (per annum) 84 Voice-tracked 0–0.3 $0–$20,000 Live music program 0.5–1 $30,000–$60,000 Hybrid/talk 1–3 $60,000–$180,000 Capital expenditure Importantly, the above discussion assumes licensees have a presence in the licence area. If they do not, they will also incur capital expenditure and annual operational costs of $5,00085– $300,00086 and $5,000–$50,000 respectively87.

80 Financial Impact Report 81 Financial Impact Report 82 Financial Impact Report 83 Financial Impact Report 84 Costs are the same for narrow and broad definitions, but the narrow definition may not allow for voice-tracking or live music options.

32 Australian Communications and Media Authority Local Content Levels Investigation Report

Hours of local content requirement This section estimates the costs for licensees, based on network affiliation and licence area size, of delivering different levels of hours of local content. Table 5.0 summarises estimated compliance costs for AM licences and Table 6.0 summarises estimated compliance costs for FM licences, based on a broad definition of ‘material of local significance’. Table 5.0: Estimated additional costs for AM licensees - broad definition Type of licence Hours of local content obligation 1 2.25 3 3.5 4 4.5 Cost to licensees ($000s) Non-networked licensees, large LA 0 0 0 0 0 0 Highly networked licensees88, large LA 0 0 0 120 120 120 Non-networked licensees, small & medium LA 0 0 0 0 0 0 Highly networked licensees89, small & medium LA 0 0 0 60 60 60 LA = licence area Table 5.0 shows that AM licences do not incur any additional compliance costs in producing up to three hours of local content90, but highly networked licensees incur costs above this level. The exceptions to this are licences where the population is considered too small (for example, Charleville and Scottsdale) or too isolated (for example, Karratha and Port Hedland) to justify any local content production for the licence area. These are discussed further in Chapter 6. Table 5.0 also illustrates that: • the cost for highly networked licensees in large licence areas is about $120,000 per annum once the requirement exceeds three hours; • the cost for highly networked licensees in small and medium licence areas is approximately $60,000 per annum once the requirement exceeds three hours; and • there is no difference between the cost of producing between 3.5 hours and 4.5 hours of local content91.

85This lower end cost estimate is for a non-studio based voice-tracking using a PC-based recording facility, housed within a sales office. (Financial Impact Report) 86 This upper end cost estimate is for a professional live-to-air studio including consoles, mixers, recording and editing equipment and associated software. (Financial Impact Report) 87 Financial Impact Report 88 Assumes local studio presence in LA, the only locally produced programming is a breakfast show providing 2.25 hours of local content (broad definition), and further hours met by introducing a new 3 hour locally produced hybrid show requiring two staff. 89 Assumes local studio presence in LA, the only locally produced programming is a breakfast show providing 2.25 hours of local content (broad definition), and further hours met by introducing a new 3 hour locally produced hybrid show requiring one staff. 90 ACMA’s analysis of regional commercial radio websites and industry submissions indicates that most licensees are currently producing 3–3.5 hours of material of local significance each business day (assuming material of local significance is broadly defined to include locally hosted breakfast shows). 91 Financial Impact Report

Australian Communications and Media Authority 33 Local Content Levels Investigation Report

Table 6.0: Estimated additional costs for FM licensees – broad definition Hours of local content obligation Type of licence 1 2.25 3 3.5 4 4.5 Cost to licensees ($000s) Non-networked licensees, large LA 0 0 0 0 0 0 Highly networked licensees92, large LA 0 0 0 60 60 60 Non-networked licensees, small & medium LA 0 0 0 0 0 0 Highly networked licensees93, small & medium LA 0 0 0 20 20 20 LA = licence area Table 6.0 illustrates that: • licensees currently producing a locally hosted or tailored breakfast programs do not incur any additional compliance costs in producing up to three hours of local content; • once the requirement exceeds three hours, the cost to highly networked licensees is estimated at $60,000 per annum in large licence areas and $20,000 per annum in small and medium licence areas;94 • some licensees incur significant additional costs once the applicable number of hours in the local content requirement exceeds three hours per day95; and • there is no difference between the cost of producing 3.5 hours of local content and 4.5 hours of local content. Costs for licensees are dependent on the approach licensees adopt to meet requirements. The most significant cost component is employing additional staff. This varies from 0.3 full-time equivalent staff for voice-tracked shows (at a cost of around $20,000 per annum) to 1–2 full-time equivalent staff for hybrid or talk-back shows (at a cost of $60,000–$120,000 per annum).96 Further, both AM and FM licensees that do not currently have a local presence will incur: • capital costs up to $300,000 to establish a local presence; and • annual operational costs of up to $50,000 to maintain that local presence97.

Compliance costs The Financial Impact Report does not address potential reporting and other administrative costs associated with local content compliance. In defining ‘material of local significance’, ACMA is endeavouring to minimise any additional costs associated with compliance. As a result, ACMA favours a ‘block’ programming approach where licensees would identify for their listeners (on their website, for example) those programs they claim as material of local significance. This approach provides transparency while minimising compliance costs and allows ACMA to respond to any complaints about alleged non- compliance.

92 Assumes current local studio presence in LA, the only locally produced programming is a breakfast show totalling 2.25 hours of broad definition local content, and further hours of broad definition are produced by the introduction of a new three-hour locally hosted or produced live music show which requires one staff member. 93 Assumes current local studio presence in LA, the only locally produced programming is a breakfast show providing three hours of broad definition local content, and further hours of broad definition are produced by the introduction of a new three-hour a locally hosted or produced voice-tracked music show (pre-recorded) requiring 0.3 FTE staff. 94 Financial Impact Report 95 Financial Impact Report 96 Financial Impact Report 97 Financial Impact Report

34 Australian Communications and Media Authority Local Content Levels Investigation Report

Profitability of regional licensees The current applicable number of hours for the local content requirement (4.5 hours per day) will have a significant impact on the profitability of licences, although not to the same extent for all licences. Small licences will feel the greatest impact of the requirement on their profits, to the extent that some risk becoming unviable. The impact on profitability is linked to licence characteristics, including the current program structure. While profit margins vary between licences (see table 7.0), all licences potentially face significant additional compliance costs and reductions in profits as a result of the local content requirement. Table 7.0: Estimated average financial statistics by characteristics98 Large FMLarge Medium Medium Small Small AM FM AM FM AM Average revenue per licence ($000,000) 3.2 1.1 1.0 1.0 0.4 0.5 Average expenditure per licence ($000,000) 2.3 1.0 0.7 0.9 0.3 0.4 PBIT per licence ($000,000) 0.83 0.10 0.32 0.09 0.11 0.12 Average profit margin (PBIT/revenue) 26% 10% 33% 10% 28% 24% The Financial Impact Report contains a series of case studies which model three scenarios for highly networked and smaller isolated licences and indicate that the local content requirement will represent a significant financial impost on some licensees.99 Scenario 1: AM and FM studio both producing breakfast programs In this scenario—the most common—a licensee has both AM and FM studios in a licence area (operating on a part-time basis), which produce a breakfast program of 3–4 hours duration as the only local content hosted in the licence area. The Financial Impact Report notes that licensees consider it problematic to extend a breakfast show beyond 9.00 am.100 As a result, highly networked licensees would need to produce a new program for both the AM and FM services. The model used in the report suggests this would result in an estimated reduction in profit before interest and tax (PBIT) of: • 19 per cent in the case of medium licence areas; and • 35 per cent in the case of small licence areas.101 Scenario 2: only AM studio producing breakfast program In this scenario—the next most common—the AM service in a licence area produces a local breakfast program, but there is no operational FM studio broadcasting locally hosted content. Modelling suggests that these licences would need to broadcast locally hosted content on the FM service with an estimated reduction in profit (PBIT) of: • 17 per cent for medium licences; and • 31 per cent for small licences.102 Scenario 3: No AM or FM studios in licence area (all content externally hosted) In this scenario all content is hosted outside of the licence area. Based on modelling, developing a local presence and broadcasting locally produced content would reduce profit by: • for medium licences, an average of 110 per cent (97–122 per cent); and • for small licences, an average of 83 per cent (66–99 per cent)103.

98 Financial Impact Report 99 Financial Impact Report 100 Financial Impact Report 101 Financial Impact Report 102 Financial Impact Report

Australian Communications and Media Authority 35 Local Content Levels Investigation Report

Summary of compliance costs and profitability104 The tables in this section—taken from the Financial Impact Report—illustrate the incremental costs and profit reduction associated with the local content requirement, based on both broad and narrow definitions of ‘material of local significance’. There are separate tables for networked and non-networked licences. Scenario 1: broad definition – AM and FM studios both produce breakfast programs Highly networked licensees typically have ‘part-time’ AM/FM studios in their licence areas, producing breakfast programs with 2.25 hours of local content. To meet 4.5 hours, AM services would need to locally produce an additional three-hour talk program at a cost of $60,000 per annum, while FM services would likely broadcast a voice-tracked program at a cost of $20,000 per annum. Table 8.0 illustrates that: • medium and small licences will incur additional costs of $20,000–$60,000 per annum; and • profits are likely to reduce by an average of 35 per cent (6–64 per cent) for medium licences and an average of 35 per cent (18–52 per cent) for small licences. Table 8.0: Estimated financial impact on networked licences Networked Large Large AM Medium Medium Small FM Small AM FM FM AM Incremental cost ($000) 0 0 20 60 20 60 Incremental cost as % of PBIT 0 0 6% 64% 18% 52% As table 8.1 illustrates, non-networked licences are likely to already meet a broad definition requirement, and will not incur costs. Table 8.1: Estimated financial impact on non-networked licences Non-networked Large Large AM Medium Medium Small FM Small AM FM FM AM Incremental cost ($000) 0 0 0 0 0 0 Incremental cost as % of PBIT 0 0 0 0 0 0 Scenario 2: broad definition – no AM or FM studios in licence area The ‘worst case’ scenario for highly networked licensees in small and medium licence areas is where they do not have existing AM or FM studios. Large licence areas tend to have AM and FM studios, but will need to produce an additional three-hour talk program at a cost of $60,000 per annum. Table 9.0 illustrates that small AM and medium FM licences will experience the greatest impact, incurring additional costs of $113,000 per annum and $317,000 respectively, with a reduction in profit of 99 per cent and 97 per cent respectively. Table 9.0: Estimated financial impact on networked licences Networked Large Large AM Medium Medium Small FM Small AM FM FM AM Incremental cost ($000) 60 60 317 94 113 116 Incremental cost as % of PBIT 7% 58% 97% 122% 66% 99% Table 9.1 summarises the estimated financial impact on non-networked licences. As non- networked licensees tend to have an AM studio in the licence area, financial impact is experienced by those small licences that do not have an existing FM studio in the licence area.

103 The lower-end of the cost estimate assumes a minimal local presence is established, while the upper estimate assumes the presence of new fully-functioning AM and FM studios. (Financial Impact Report) 104 Financial Impact Report

36 Australian Communications and Media Authority Local Content Levels Investigation Report

Table 9.1: Estimated financial impact on non-networked licences Non-networked Large Large AM Medium Medium Small FM Small AM FM FM AM Incremental cost ($000) 0 0 0 0 70 60 Incremental cost as % of PBIT 0 0 0 0 62% 52% Scenario 3: narrow definition – AM and FM studios both produce breakfast programs Tables 10.0 and 10.1 assume a cost impact on all FM services of 45% of revenue, with a lesser but still significant revenue impact for AM services as content must be locally hosted or tailored for the licence area. Tables 10.0 and 10.1 illustrate that all licences – networked and non-networked alike—a expected to be rendered commercially unviable by a narrow definition of material of local significance. Table 10.0: Estimated financial impact on networked licences Networked Large Large AM Medium Medium Small FM Small AM FM FM AM Incremental cost ($000) 1,420 240 440 360 180 360 Incremental cost as % of PBIT 171% 231% 139% 383% 159% 310% Table 10.1: Estimated financial impact on networked licences Non-networked Large Large AM Medium Medium Small FM Small AM FM FM AM Incremental cost ($000) 1,420 120 440 240 180 240 Incremental cost as % of PBIT 171% 115% 139% 255% 159% 207% Scenario 4: narrow definition – no AM or FM studios in licence area Highly networked licensees with no existing AM or FM studios would incur capital expenditure (for example, studios and equipment) in addition to the costs identified in tables 11.0 and 11.1. Tables 11.0 and 11.1 illustrate that all licences without existing studios, networked and non- networked, would become commercially unviable. Table 11.0: Estimated financial impact on networked licences Networked Large Large AM Medium Medium Small FM Small AM FM FM AM Incremental cost ($000) 1,420 240 757 554 293 476 Incremental cost as % of PBIT 171% 231% 239% 590% 260% 410% Table 11.1: Estimated financial impact on non-networked licences Non-networked Large Large AM Medium Medium Small FM Small AM FM FM AM Incremental cost ($000) 1,420 120 440 240 250 240 Incremental cost as % of PBIT 171% 115% 139% 255% 221% 207%

Australian Communications and Media Authority 37 Local Content Levels Investigation Report

6. Findings and recommendations— applicable hours for all regional commercial radio licences From the analysis undertaken in its investigation, ACMA considers that requiring licensees to broadcast 4.5 hours of material of local significance on each business day is not an appropriate requirement for licences generally as: • it is a ‘one size fits all’ requirement that does not acknowledge the diversity of the regional commercial radio industry and the wide-ranging interests and needs of the regional communities it serves; • it requires a significant increase in local content production from current levels which will result in increased costs for licensees affecting profitability and, in some cases, viability; • most licences currently broadcast 3–3.5 hours of local non-news content if their breakfast shows qualify as material of local significance105 and the 4.5 hours requirement increases rather than maintains current levels of local content; • the cost of producing local content is significant and could force licences to change format, reducing ‘the availability to audiences … of a diverse range of radio … services’106; and • it would impose a financial burden on industry to the extent that some licences, particularly those in smaller licence areas, may no longer be viable. The Explanatory Memorandum to the amending Act acknowledged the difficulties inherent in applying ‘a one size fits all’ approach to licences: The imposition of local content requirements across all regional licence areas and all forms of media would not enable a regulatory distinction between the difference between larger and smaller regional media companies, and their ability to provide local content without there being a significant impact on their economic viability. A ‘one size fits all’ approach to local content must therefore be considered carefully to ensure that the impacts on different licence areas are properly assessed.107 This comment was made about the local content requirement during the Broadcasting Services Amendment (Media Ownership) Bill 2006’s second reading speech in the House of Representatives: ‘4½ hours of a 24-hour broadcasting schedule is not unreasonable’108 However, the current local content requirement sets the applicable number of hours at 4.5 hours, which must be broadcast during daytime hours (6.00 am to 6.00 pm), not the originally envisaged 24-hour period. ACMA notes that the Minister’s options for varying the applicable number of hours is limited to making either a general declaration under section 43C(3)(b) of the Broadcasting Services Act or

105 Submissions covering 125 licences and CRA’s submission proposed that the applicable number of hours correlate with the average length of breakfast programs. CRA stated that: Breakfast programs tend to be 3 hours or 3.5 hours in duration, and many of those start at 5am or 5:30am 106 Section 3(1)(a) of the Broadcasting Services Act 107 Revised Explanatory Memorandum to the Broadcasting Services Amendment (Media Ownership) Bill 2006, page 44 at paragraphs 168–169 108 Paul Neville, Member for Hinkler, ‘Second reading speech: Broadcasting Services Amendment (Media Ownership) 2006’, House of Representatives, Debates, 17 October 2006 www.aph.gov.au/hansard/reps/dailys/dr171006.pdf

38 Australian Communications and Media Authority Local Content Levels Investigation Report one or more specific declarations under section 43C(3)(c). As the Minister cannot do both and ACMA considers that a different requirement should apply to specific classes of licence, ACMA suggests the Minister make a series of declarations under section 43C(3)(c) (see below). Exemptions from local content requirement ACMA is aware that exemptions are not currently available under section 43C of the Broadcasting Services Act. However, ACMA considers that exemption may be appropriate for remote area services and racing radio services.

Remote area services ACMA’s considers that remote area services are a specific class of licence that should be exempt from the requirement to broadcast material of local significance109 as: ƒ remote area services are a readily identifiable class of five licences (in three licence areas) with unique characteristics. They: − provide commercial services to outback audiences; − cover vast areas of outback Australia—two of the remote area services include more than one state; − broadcast across large tracts of Australia—between 1,389,713–2,570,118 km2; and − contain many small towns, none with a population exceeding 20,000; • ‘local significance’ is meaningless in the context of remote area services as material that is significant in one area of a remote area services is not significant in other areas of the licence110; • remote area services include ‘vast geographic areas that are not served by other commercial radio services.’111 • licensees of remote areas services argue that they already maximise their service to local audiences across these vast areas, as demonstrated in ‘live and local’ programming; • although, on the basis of populations served, the majority of remote area services are ‘large’ in BFR terms, they: − are generally operated by small and family businesses; − their advertising revenue, and hence profitability, can be relatively low; and − the less profitable would be severely affected by increased staff and capital costs of local content production; • it would be unlikely to increase truly local content across these very big licence areas but is likely to have a significant detrimental impact on the financial viability of some of these licences, having regard to costs, profitability and their limited ability to increase their audience base; and • a reduction in remote area services would adversely affect the diversity of services for outback audiences. The affected licences—all remote area services—are detailed in Table 12.0.

109 ACMA received submissions from CRA, Rebel and Flow (the latter two operators of remote area services) proposing an exemption for remote area services. In the absence of exemptions, all three submissions suggested a minimal requirement of five or 10 minutes a day. 110 Using the example of the Remote Commercial Radio Service Central Zone, material that is of ‘significance’ to listeners in Port Keats in the Northern Territory may be meaningless to listeners in Hillston, New South Wales. 111 Submission from CRA

Australian Communications and Media Authority 39 Local Content Levels Investigation Report

Table 12.0: Remote area services Licence area Population Licence area Licensee Networks On-air Call size (km2) ID sign Remote Commercial 159,656 2 570 118 W & L Phillips Independent – Phillips Flow 8SAT Radio Service Central Pty Ltd FM Zone RA1 Remote Commercial 185,779 1 389 713 Rebel FM Stereo Independent – P Breeze 4BRZ Radio Service North East Pty Ltd FM Zone RA1 200,659 1 389 713 Rebel FM Stereo Independent – P Rebel 4RBL Pty Ltd FM Remote Commercial 85,327 2 148 658 North West Redwave Media Pty Spirit 6SAT Radio Service Western Radio Pty Ltd Zone RA1 85,327 2 148 658 North West Redwave Media Pty Red FM 6FMS Radio Pty Ltd Submissions from CRA, Rebel and Flow (the latter two both operators of remote area services) identified remote area services as a specific class of licence warranting a lesser requirement. CRA stated in its submission that: Remote area licences include vast geographic areas that are not served by other commercial radio services. Flow pointed out that its remote area service has geographic boundaries across four states. All three submissions sought an exemption for remote area services but failing an exemption, proposed a minimum requirement of five or 10 minutes a day. Submissions also pointed out that ‘local’ becomes meaningless in the context of remote area services. For example, in the Remote Commercial Western Zone, material that is ‘significant’ for listeners in Kulunburu in the far north west of Western Australia does not hold the same significance for listeners in Jurien, thousands of kilometres away on the far south western coast of Western Australia. Similarly, in Remote Commercial Radio Service Central Zone, material that is of ‘significance’ to listeners in Port Keats in the Northern Territory may be meaningless to listeners in Hillston, New South Wales.

Racing radio services ACMA also considers that that racing radio services112 are also a specific class of licence113 for which an exemption from the material of local significance requirement is appropriate114 as they: • are held as commercial licences, where no narrowcast licences were available (most other radio services which broadcast coverage of racing operate as narrowcast licences); • rely on spin-off benefits to the racing industry, rather than operate on a direct commercial basis; • do not currently broadcast local content and any requirement to do so will render them financially unviable as they retransmit from Melbourne and do not have broadcasting facilities in the relevant licence areas; • serve a particular, but sizeable,115 market of racing enthusiasts who would not otherwise receive coverage of racing events,116 and

112 The Financial Impact Report did not separately address program formats such as the small number of licences broadcasting predominantly racing services. 113 0.2 per cent of all licences 114 Submissions from CRA, Tasradio, 3UZ and Unitab all argued for an exemption for racing radio services. For example, CRA’s submission argued for an exemption for racing radio services on the basis that they are: ‘networked’ from capital cities to regional centres and provide content which does not appear to be able to be described as being ‘locally relevant material – is material that is of particular relevant to people in the relevant localities. 115 3UZ’s submission referred to a recent Newspoll survey which indicated that 12.3 per cent of the adult population listened to their service in the previous seven days.

40 Australian Communications and Media Authority Local Content Levels Investigation Report

• are part of the fabric of ‘a diverse range of radio … services offering entertainment, education and information’.117 The affected licences—all racing radio services—are detailed in Table 13.0. Table 13.0: Racing radio services Licence area Licence area Licensee Network On-air ID Call population sign Ballarat RA1 114,736 Ballarat Sports Radio Pty Ltd Camplin Group Radio 3BT (Leased under agreement to 3UZ) Sport 927 Shepparton RA1 158,800 3UZ Pty Ltd Victorian Racing Radio 3SR Organisations Sport 927 Launceston RA1 109,163 Tasradio Pty Ltd Tote Tasmania TOTE 7EX Sport Radio Maryborough (Qld) 73,641 UNiTAB Limited Unitab Limited 4FC 4FC RA1 CRA’s submission argued for an exemption for racing radio services on the basis that they are: ‘networked’ from capital cities to regional centres and provide content which does not appear to be able to be described as being ‘locally relevant material—is material that is of particular relevant to people in the relevant localities. Tasradio, 3UZ and Unitab also made submissions seeking an exemption for racing radio services. 3UZ provided in its submission letters of support from a range of racing clubs and other supporters. Radio Sports 927 (3BT and 3SR) stated in its submission that it would be preferable to broadcast on a narrowcast licence, similarly to its services throughout Victoria. However, due to a lack of availability of narrowcast licences it elected to broadcast on a commercial licence. Racing radio services satisfy a strong demand. A Newspoll survey revealed 129,000 people listened to Radio Sport 927 in a seven-day period. This equates to 12.3 per cent of the entire adult population. However, these licensees argue that meeting the local content requirement would make them financially unviable. Racing radio services argue that they provide a unique service for a particular demographic, cannot feasibly meet the local content requirement, and should have an exemption from the requirement. This falls within the Broadcasting Services Act’s objective of promoting the availability of ‘a diverse range of radio … offering entertainment’ (section 3(1)(a) of the Broadcasting Services Act). ACMA notes that identifying and deciding parameters of any class or classes are matters for the Minister. In proposing an exemption for racing radio services, ACMA is aware that programming format is an imprecise measure, and one that is subject to change. As a result, there may be legal and technical drafting issues in effectively exempting racing radio services from the local content requirement. Classes of licence

Small licences ACMA has determined, for the purposes of this investigation that small licences are licences located in licence areas in which both the licence area population is under 20,000 and the largest city or town population is under 10,000.

116 3UZ’s submission attached a number of letters of support from racing clubs, racing organisations and one from the Member for Northern Victoria Region who stated in her letter that: ‘The specialised racing service prevents music and general listening programs being interrupted to broadcast racing … I believe many country people will be denied access to live racing broadcasts if an exemption or relief is not granted.’ 117 Section 3(1)(a) of the Broadcasting Services Act

Australian Communications and Media Authority 41 Local Content Levels Investigation Report

ACMA considers that small licences are a specific class of licence for which 4.5 hours is not an appropriate requirement and for which an appropriate applicable number of hours is 30 minutes. Small licences have: • a comparatively small revenue base, attributable at least partly to the small population of their largest city or town; • difficulty in attracting and retaining staff; • smaller profits which means the cost of producing local content to meet the 4.5 hours requirement has a disproportionate effect on them and is likely to render them unviable; and • for some, a greater sensitivity to audience demands for local content. ACMA considers that recognising small licences as a specific class of licence with a lower requirement gives effect to the policy intent of requiring ‘a lower threshold of compliance for those in small markets’. 118 ACMA considered and rejected defining small licences by reference to annual revenue or profitability: a) profitability is very difficult to monitor and may depend on internal accounting practices in highly-networked licensees; b) these measures fluctuate from year to year; and c) these measures are a function of a range of factors (for example, quality of programming and business acumen of licensees), all of which are likely to change over time. ACMA suggests the appropriate applicable number of hours for small licences is 30 minutes. The Financial Impact Report found that the greatest financial impact of complying with the local content requirement will be felt by highly networked and small licences, and that the smallest licences will be unable to meet a three hour requirement. ACMA acknowledges that this finding is based on a sample, rather than all, 224 licences. Even so, ACMA considers that many small licences will need to increase their current local content levels in order to comply with the requirement of 30 minutes proposed by ACMA. ACMA is aware that those small licences that currently broadcast a local breakfast program are likely to comfortably comply with the recommended 30 minutes. Eleven out of 104 licence areas (11 per cent) have the combination of licence area populations under 20,000 and largest city or town populations under 10,000. These 11 licence areas contain 22 out of 224 (10 per cent) licences. The affected licences—all 22 small licences—are detailed in Table 14.0.

118 Paul Neville, Member for Hinkler, ‘Second reading speech: Broadcasting Services Amendment (Media Ownership) 2006’, House of Representatives, Debates, 17 October 2006. http://www.aph.gov.au/hansard/reps/dailys/dr171006.pdf

42 Australian Communications and Media Authority Local Content Levels Investigation Report

Table 14.0: Small licences Call sign Band Licence area name BFR Licensee Network 7XS AM Queenstown RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie 7AUS FM Queenstown RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie 4VL AM Charleville RA1 S Pinecam Pty Ltd B & J Smart 4CCC FM Charleville RA1 S Pinecam Pty Ltd B & J Smart 6LN AM Carnarvon RA1 S Hits Radio Hits Radio 6CAR FM Carnarvon RA1 S Hits Radio Hits Radio North Queensland Broadcasting Corporation 4GC AM Charters Towers RA1 S Macquarie Pty Ltd North Queensland Broadcasting Corporation 4CHT FM Charters Towers RA1 S Macquarie Pty Ltd A Robertson & D 4LG AM Longreach RA1 S Radio Outback Pty Ltd Robertson A Robertson & D 4LRE FM Longreach RA1 S Radio Outback Pty Ltd Robertson 6BY AM Bridgetown RA1 S Elldale Pty Ltd Macquarie 6BET FM Bridgetown RA1 S Elldale Pty Ltd Macquarie 4ZR AM Roma RA1 S Regional Broadcasters Australia Pty Limited Macquarie 4ROM FM Roma RA1 S Regional Broadcasters Australia Pty Limited Macquarie 6WB AM Katanning RA1 S Elldale Pty Ltd Macquarie 6KAN FM Katanning RA1 S Elldale Pty Ltd Macquarie 6MD AM Merredin RA1 S Mid-Districts Radio Pty Ltd Macquarie 6MER FM Merredin RA1 S Mid-Districts Radio Pty Ltd Macquarie North East Tasmanian Radio Broadcasters Pty 7SD AM Scottsdale RA1 S Macquarie Ltd North East Tasmanian Radio Broadcasters Pty 7RGS FM Scottsdale RA1 S Macquarie Ltd 6NA AM Narrogin RA1 S Radio West Broadcasters Pty Ltd Macquarie 6NAN FM Narrogin RA1 S Radio West Broadcasters Pty Ltd Macquarie In defining small as a class, ACMA considered industry views on the issue as expressed in submissions. CRA, Macquarie Regional Radioworks and Redwave suggested that ‘small’ licences constitute a specific class of licence that should be exempt from the local content requirement, or at the very least attract a much lesser requirement. CRA and Macquarie Regional Radioworks both offered possible bases on which to define small, either for exemption or a lesser requirement, outlined in Table 15.0 below. In its submission, CRA proposed a definition of ‘small’ licences as: licences in licence areas with: ƒ four voices or less ‘points’ (as at 4 April 2007, the proclamation ate for Schedule 2 of the Broadcasting Services Amendment (Media Ownership) Act 2006); or ƒ a licence area population of less than 75,000. ACMA does not accept the definitions of small proposed by CRA and Macquarie Regional Radioworks, nor does it consider it appropriate to exempt small licences (however defined) as: • exempting 74 per cent of licence areas and 68 per cent of licences is not consistent with the legislative intent as it would potentially result in audiences in 74 per cent of licence areas having no guarantee of receiving local content on commercial radio;119 • the proposed definitions include licensees that may have capacity to fund local content production as well as those that do not;

119 The figures refer to the combined effect of four voices or less and licence area population under 75,000, CRA’s proposed definition of ‘small’.

Australian Communications and Media Authority 43 Local Content Levels Investigation Report

• a wide diversity of licences are covered by the proposed definitions, for example, affected licences vary widely in population from 5,917 to 185,779 (excluding Remote Commercial Radio Service North East Zone), and largest city or town populations range from 1,725 to 72,142—46 of the affected licence areas have populations below 40,000, 24 have populations between 40,000 and 100,000 and seven have populations over 100,000; and • defining ‘small’ by licence area alone is insufficient in itself as licence area population does not necessarily reflect population concentration—population concentration directly influences advertising revenue and is a far better indicator of ability to meet the financial cost of the local content requirement. Table 15.0: Licences affected by varying definitions of ‘small’ Source of Definition of ‘small’ No. of licence % of licence No. of % of definition areas (n=104) areas licences licences (n=224) CRA 4 voices or less 66 63% 122 54%

Macquarie & Population of licence area less than 66 63% 131 58% CRA 75,000 Macquarie Population of licence area less than 66 63% 131 58% 80,000 Appendix H contains a detailed discussion of ACMA’s consideration of ‘small’.

Other regional commercial radio broadcasting licences This proposed class of ‘other regional commercial radio licences’ are licences other than small licences, remote area services and radio racing services. This is the majority of regional commercial radio licences (193 out of 224 licences). ACMA considers that other licences are a specific class of licence for which the appropriate number of hours should be 3 hours with daytime hours expanded to 5.00 am–700 pm. The reasons for this view are: • most licences currently broadcast 3–3.5 hours of local non-news content if their breakfast shows qualify as material of local significance120 and retaining the applicable number of hours at 4.5 hours increases rather than maintains current levels of local content; • the cost of producing local content can be significant and could force licences to change format, reducing ‘the availability to audiences … of a diverse range of radio … services’121; • it would impose a financial burden on industry to the extent that some licences may no longer be viable: For small single operators ... the impact of the licence conditions (even if a broad definition is taken) will make, or go close to making, the service unviable122; ƒ industry is of the view that 4.5 hours is not an appropriate requirement and has suggested a replacement number of hours ranging from five minutes123 to 3.5 hours124, with most submissions proffering three hours125, based on the typical duration of daytime programs and the duration of most breakfast shows. For example, Grant stated that: Based on the typical length of shift for a breakfast show, we believe that the minimum effective quantity should be 3 hours, not 4.5; and

120 Submissions covering 125 licences and CRA’s submission proposed that the applicable number of hours correlate with the average length of breakfast programs. CRA stated that: Breakfast programs tend to be 3 hours or 3.5 hours in duration, and many of those start at 5am or 5:30am. 121 Section 3(1)(a) of the Broadcasting Services Act 122 Financial Impact Report 123 Submissions from Pinecam and Redwave 124 For example, ACE and Flow 125 For example, CRA, Grant, Redwave, and Macquarie Regional Radioworks

44 Australian Communications and Media Authority Local Content Levels Investigation Report

• licensees argued that ‘daytime hours’ be expanded to accommodate areas with peak listening times outside 6.00 am–6.00 pm, on the basis that peak listening hours vary across licence areas and time zones, with some programs targeted for audiences listening in unusual peak times,126 for example, MRRW submitted: Daytime hours should be extended to 5am to 7pm – in many areas peak listening occurs outside 6am to 6pm, especially those with unusual peak times eg fishing and mining communities Recommendations ACMA recommends that the appropriate ‘applicable number of hours’ for specific classes of licence is:

Class of licence Recommended requirement Remote area services Exemption Racing radio services Exemption Small 30 minutes Other regional commercial radio broadcasting Three hours licences (licences other than small, remote area services and racing radio services)

To implement these proposals, ACMA recommends that the Minister consider declaring: • specific classes of licences under section 43C(3)(c)(i) of the Broadcasting Services Act; • ‘small’ licences (defined as licences located in a licence area in which both the licence area population is under 20,000 and the population of the largest town is under 10,000) as a specific class for which the appropriate applicable number of hours is 30 minutes; and • other regional commercial radio broadcasting licences—that is, licences other than small licences, remote area services and racing radio services—are a specific class of licence for which the appropriate applicable number of hours is three hours. ACMA also recommends that the Minister consider legislative amendment to exempt remote area services and racing radio services from the 4.5 hours requirement. Further, ACMA recommends that the Minister consider legislative amendment to replace ‘business days’ with ‘at least five days during the week’.

126 CRA argued for time bands of 5.00 am–8.00 pm and MRRW for 5.00 am–7.00 pm with the rider that ACMA have discretion to count local content broadcast outside the daytime hours parameters.

Australian Communications and Media Authority 45 Local Content Levels Investigation Report

7. Costs and impact on profitability of increased local content levels (news) Overview Much of the discussion and tables in this chapter are taken from the Financial Impact Report, which has not been included in this report on the basis of commercial-in-confidence material contained within it. The duration of news broadcast by licences varies between two and nine minutes per day. The average duration is 5.9 minutes. Imposing a requirement to provide 12.5 minutes of local news per business day would result in additional production (and costs) to licensees. Depending on how ‘local news’ is defined, the additional costs would range from $12,000 per annum to more than $60,000 per annum, equating to 15–26 per cent of PBIT for some licences. Cost of producing local news content The Financial Impact Report estimates the cost of producing local news based on broad and narrow definitions: 1. broad local news definition: original news stories that relate to events and issues occurring within either the licence area or a broader region—includes wholly repeated, refreshed, rewritten and re sequenced stories and bulletins; and 2. narrow local news definition: original news stories that relate to the events and issues occurring within the licence area—includes refreshed, re-written and re-sequenced stories and bulletins but no repeats. The Financial Impact Report findings support industry concerns as it estimates that: • most FM licences and a few large and some medium and small AM licences would not meet a requirement to broadcast 12.5 minutes of local news, based on a narrow definition; and • a few large and some medium and small FM licences and a few AM licences would not meet a requirement to broadcast 12.5 minutes of local news based on a broad definition.

Broad definition The Financial Impact Report indicates (based on current costs in sample licence areas), that to meet the local content requirement under a broad definition, the cheapest option for licensees which already broadcast some local news, is to further repeat daily bulletins. Additional costs would be likely to be close to zero. In markets not providing local news on either the AM or FM service, licensees would need to either employ at least one journalist to source and write bulletins (at a cost of around $50,000 per annum, plus allowances and on-costs in some licence areas) or out-source news production. Outsourcing a news service ranges from $36,000 per annum (for three separate 2½ minute bulletins per day) to $44,000 per annum (for a daily 2½ minute bulletin repeated three times). Outsourcing would avoid associated costs, for example, relocation, housing, and isolation allowances. The approximate cost per 2½ minute bulletin is around $12,000–$16,500 per annum

46 Australian Communications and Media Authority Local Content Levels Investigation Report and this bulletin could be used on both the AM and FM services in a paired licence area, depending on the licence area.127

Narrow definition To meet the requirement under a narrow definition, the costs will be significantly higher. Licensees that are not already employing a dedicated news journalist would need to employ a full-time journalist ($50,000 per annum) and, possibly, a researcher ($45,000 per annum) to source, write, refresh, update and re-sequence news items for broadcast. In more isolated licence areas there would be additional costs to cover salaries and other allowances. While the costs of outsourcing would approximate those of employing a journalist in-house (at around $60,000 per licence area, based on the current costs of an outsourced news service), out- sourcing is a less expensive option as it avoids other on-site overheads, for example, office facilities, phone lines, and computers. Table 16.0 summaries for broad and narrow definitions of news: • estimated additional staff requirements; and • incremental costs for outsourcing and for employing a journalist. Table 16.0: Staff and cost estimate summaries for local news Number of staff required (full-time News definition Incremental cost (per annum) equivalent) Broad definition 0.3 FTE $12,000 (outsourced) $16,500 (employee + possible allowances of up to $40,000) Narrow definition 1 FTE $60,000 (outsourced) $50,000–$62,500 (employee + possible allowances of up to $40,000) Profitability of licensees The Financial Impact Report suggests that significant additional costs will be borne by licensees as a result of any local news requirement. Although the Financial Impact Report demonstrates that these costs differ according to the size of licence area, the costs will translate into a considerable reduction in PBIT.128 Table 17.0 summarises: • additional costs to meet a local news requirement based on broad definition; and • the resulting percentage reduction in PBIT. Table 17.0: Estimated additional costs and impact on profitability: local news (broad definition) Additional costs to Additional costs as percentage of the combined AM/FM pair PBIT ‘Scenario’ meet local content Medium licence area (combined Small licence area requirements ($000) PBIT=411) (combined PBIT=229) Local news meeting broad definition 60 15% 26% requirements

127 Financial Impact Report 128 PBIT: Profitability before interest and tax

Australian Communications and Media Authority 47 Local Content Levels Investigation Report

8. Findings—requirement for 12.5 minutes of local news ACMA’s investigation indicates that it is not appropriate for the local content requirement to include a minimum of 12.5 minutes of local news per day as a ‘one-size-fits-all’ approach could impose an undue financial burden on some licences. Further, it makes no allowance for variance in the availability of news across different licence areas. ACMA considers that 12.5 minutes of local news is not an appropriate requirement for licences generally as: • a ‘one size fits all’ requirement does not acknowledge the diversity of the regional commercial radio industry and the wide-ranging interests and needs of the regional communities it serves; • ACMA’s investigation suggests that a requirement to broadcast 12.5 minutes of local news on each business day could impose an undue financial burden on some licences; • most licences would not currently meet the local news requirement if a narrow local news definition were employed;129 • the duration of local news currently broadcast throughout the day (probably including repeated material) varies between two and nine minutes, with an average duration of 5.9 minutes, well under the proposed 12.5 minute requirement; • the cost of producing local news is significant—$16,000 per annum under a broad definition to over $100,000 per annum under a narrow definition; • the costs under a broad definition will be significant and translate into a considerable reduction in profit; • the costs under a narrow definition would impose a financial burden on industry to the extent that some licences, particularly those in smaller licence areas, may no longer be viable; and • if licensees in smaller isolated licence areas were required to engage staff to produce local news, recruitment and retention would be an issue as previously identified in relation to non- news local content. The Explanatory Memorandum to the amending Act acknowledged the difficulties inherent in applying ‘a one size fits all’ approach to licences: The imposition of local content requirements across all regional licence areas and all forms of media would not enable a regulatory distinction between the difference between larger and smaller regional media companies, and their ability to provide local content without there being a significant impact on their economic viability. A ‘one size fits all’ approach to local content must therefore be considered carefully to ensure that the impacts on different licence areas are properly assessed.130 Finding ACMA finds that the appropriate minimum level of material of local significance required to be broadcast by licensees should not include a minimum of 12.5 minutes of local news per business day.

129 A narrow definition of local news is news that relates to events or issues occurring in the licence area and does not wholly comprise repeated news (refreshing, rewriting and re-sequencing of previous news stories is permitted). 130 Revised Explanatory Memorandum to Broadcasting Services Amendment (Media Ownership) Bill 2006, page 44, paragraphs 168–169

48 Australian Communications and Media Authority Local Content Levels Investigation Report

9. Findings and recommendations— other relevant matters Classes of licence As discussed above, ACMA expects that setting the level for 'material of local significance’ at 30 minutes for small licences (as defined) will result in many licences in this class increasing their local content levels in order to comply. Those small licences currently locally producing a breakfast show, will be comfortably able to comply. However, ACMA’s findings are based on an incomplete sample with underlying assumptions made in the light of some missing information, and may not apply to all 224 licences. After further consultation on ACMA’s licence condition, it might be necessary for the definitions of classes declared under section 43C(3)(c) of the Broadcasting Services Act to be adjusted or for additional classes to be declared. ACMA may advise the Minister on additional classes under its function of advising the Minister on the broadcasting industry (S10(1)(q) and (r) of the Australian Communications and Media Authority Act 2005.) ACMA notes that the Minister has the power to make further declarations under section 43C(3) of the Broadcasting Services Act. Licence condition matters The licence condition will require the broadcast of ‘material of local significance’ during daytime hours each business day. ACMA’s view is that this requires licensees to broadcast for 52 weeks of the year. As well, the licence condition must be broad enough to cover material that licensees must broadcast under section 61CD of the Broadcasting Services Act131 following a trigger event.132

Non compliance period Representatives of licensees submitted that the period of compliance for the local content requirement should be reduced by six weeks.133 Licensees and CRA argued that media services usually shut down for the six-week period between mid-December and end January each year. Journalists are traditionally entitled to six weeks recreation leave and in regional areas it is not always possible to engage staff for temporary periods. Audiences do not expect the same level of services during the six-week end-

131 The condition must define material of local significance … If a regional commercial broadcasting licence is required to comply with section 61D, the definition…must be broad enough to cover material that the licensee must broadcast under section 61CD. (section 43C(2) of the Broadcasting Services Act). If a trigger event for a regional commercial radio broadcasting licence occurs, then, after the occurrence of the trigger event, the licensee must meet: (a) minimum service standards for local news; and (aa) minimum service standards for local weather; and (b) minimum service standards for local community service announcements; and (c) minimum service standards for emergency warnings; and (d) if a declaration is in force under subsection 61CE(6) – minimum service standards for designated local content programs. (section 61CD of the Broadcasting Services Act). 132 For meaning of ‘trigger event’ see the glossary. 133 MRRW submitted that the licence condition should apply 46 weeks in the year—qualified presenters are entitled to six weeks leave per year and are not available for short-term engagements in regional areas so networked programs must be used during this period.

Australian Communications and Media Authority 49 Local Content Levels Investigation Report of-year holiday season. ACMA notes that a six-week non-compliance period would be consistent with the non compliance period under the additional TV licence condition and would support an amendment to give effect to this. ACMA recommends that the Minister consider legislative amendment to section 43C(1) of the Broadcasting Services Act to reduce compliance periods from 52 to 46 weeks.

Replacement of business days Licensee representatives also submitted that compliance periods should take in weekends as substantial local content is broadcast at this time.134 Including weekends would allow coverage of sporting events to be included in the material broadcast to comply with the local content requirement. Most local sporting events fall on the weekend and are significant local content for audiences. Increased listening over weekends generates revenue. Compliance over weekends would be consistent with compliance requirements for licensees following a trigger event (discussed below). ACMA notes this would be consistent with the additional TV licence condition, which makes provision for material of local content broadcast on weekends for compliance purposes. ACMA recommends that the Minister consider legislative amendment to section 43C(1) of the Broadcasting Services Act to replace ‘business days’ with ‘at least 5 days during the week’ so that weekend content may qualify as ‘material of local significance’.

Daytime hours As discussed above, ACMA has found that compliance with the local content requirement will be achievable for most licences if the applicable number of hours of ‘material of local significance’ is set at three hours. Licences generally broadcast breakfast shows of 3–3.5 hours duration and the cost impact will be significant at levels more than three hours of material of local significance.135 However, if the local content requirement is set at three hours during daytime hours of 6.00 am to 6.00 pm, compliance will be more difficult for the 37 per cent of licences which start their breakfast show between 5.00 am and 5.30 am. Industry has also supported an extension beyond 6.00 pm and some licensees argued for the discretion to count local content broadcast outside daytime hours to accommodate licence areas where peak listening occurs after 6.00 pm, such as mining communities. ACMA recommends that regulations prescribe expanded daytime hours of for example, 5.00 am to 7.00 pm, instead of the current 6.00 am to 6.00 pm under section 43C(8) of the Broadcasting Services Act. Interaction with trigger event provisions ACMA notes that a financial analysis of the combined regulatory impact of the local content requirement and trigger event requirements is outside the terms of reference of this investigation. However, since the definition of material of local significance in the licence condition must cover the minimum service standards, ACMA considers it appropriate to discuss aspects of the trigger event provisions.

134 MRRW argued that ACMA should have the discretion to include weekend programs so that sports programs can count towards the local content requirement. 135 See Chapter 5 of this report.

50 Australian Communications and Media Authority Local Content Levels Investigation Report

ACMA has found that most licensees do not currently broadcast 12.5 minutes of local news under either broad or narrow local news definitions. All who responded to ACMA on this matter opposed mandatory inclusion of local news in the local content requirement.136 As this investigation has demonstrated, a requirement for 12.5 minutes of local news on business days during daytime hours (6.00 am to 6.00 pm) will have a significant financial impact on licensees, affecting the financial viability of some. Licensees have argued that any local news requirement should be confined to trigger event affected licences. Some licensees argued that all licences will be affected by a trigger event over time.

Eligible local news bulletins Under the trigger event obligations, a target number of 5 ‘eligible local news bulletins’ (reflecting matters of local significance) of 12.5 minutes must be broadcast on at least 5 days during the week between prime-time hours of 6.00 am to 10.00 am.137 The Minister may declare a greater number (but not a lesser number) as the local news target number per week (of five or a greater number calculated using averages in a benchmark year).138 It is arguable that licences could face an undue regulatory burden in moving from compliance with a local news component of the local content requirement to minimum service standards after a trigger event. The impact for licensees will be even greater if inconsistent local news requirements apply to both the local content requirement and minimum service standards. This could have a further financial impact for licences affecting their viability. The burden on licensees would be reduced by: • legislative amendment replacing ‘business days’ with ‘at least 5 days during the week’ at section 43C(1) of the Broadcasting Services Act (as proposed above); and • prescribing expanded ‘prime time hours’ at section 61CA of the Broadcasting Services Act consistent with the daytime hours definition at section 43C(8) of the Broadcasting Services Act (or as otherwise prescribed). The Minister may also wish to consider amending the definition of ‘eligible local news bulletins’ at section 61CA of the Broadcasting Services Act to lower the 12.5 minutes requirement and allow the inclusion of repeat material. Further flexibility would be achieved by legislative amendment to section 61CE enabling the Minister to declare lower target numbers for eligible local news bulletins. Minimum service standards covering local weather, community service announcements and emergency warnings are not discussed here as they are not raised in the Minister’s Direction. If legislative amendments are made, it might also be appropriate to revisit required levels under section 61CE of the Broadcasting Services Act. Recommendations ACMA recommends that the Minister consider other times being prescribed for: • daytime hours at section 43C(8) of the Broadcasting Services Act of, for example, 5.00 am– 7.00 pm, instead of the current 6.00 am–6.00 pm; and • ‘prime-time hours’ at section 61CA of the Broadcasting Services Act consistent with ‘daytime hours’ under section 43C(8) of the Broadcasting Services Act.

136 See Chapter 4 of this report 137 Sections 61CA, 61CD and 61CE of the Broadcasting Services Act 138 Section 61CE of the Broadcasting Services Act

Australian Communications and Media Authority 51 Local Content Levels Investigation Report

ACMA recommends that the Minister consider legislative amendments to section 43C(1) of the Broadcasting Services Act to: • provide for relaxation of compliance for six weeks each year; and • replace the term ‘business days’ with ‘at least 5 days during the week’. Further, ACMA recommends that the Minister consider legislative amendments to sections 61CA and 61CE of the Broadcasting Services Act to: • amend the definition of ‘eligible local news bulletins’ to lower the total duration from 12.5 minutes and allow repeat material to be broadcast; and • enable the Minister to declare lesser target numbers for eligible local news bulletins at section 61CE of the Broadcasting Services Act.

52 Australian Communications and Media Authority Local Content Levels Investigation Report

Glossary

Term Meaning

ABA Australian Broadcasting Authority

ACMA Australian Communications and Media Authority

Additional TV licence condition Broadcasting Services (Additional TV licence condition) Notice 7 April 2003

AM licence A licence on the AM band, typically broadcasting talkback or news coverage

CRA Commercial Radio Australia Ltd, the peak body for the commercial radio industry

EBIT Earnings before interest and tax

FM licence A licence on the FM band, typically broadcasting music

Hybrid program A radio program comprising a mix of music, talkback and news

Large licences Broadcasting Financial Results (BFR) definition of large licences: licences in licence areas with a population over 100,000. Population in a licence area is determined by ACMA pursuant to section 30 of the Broadcasting Services Act.

Licences Regional commercial radio broadcasting licences as defined in section 43C(8) of the Broadcasting Services Act

Licensees Holders of regional commercial radio broadcasting licences as defined in section 43C(8) of the Broadcasting Services Act

Local content requirement The requirement to broadcast the applicable number of hours of material of local significance. This requirement will be imposed by a licence condition which ACMA is required to make under 43C of the Broadcasting Services Act.

Medium licences Broadcasting Financial Results (BFR) definition of medium licences: licences in licence areas with a population of 40,000 – 100,000. Population in a licence area is determined by ACMA pursuant to section 30 of the Broadcasting Services Act.

Profit or PBIT Profit before interest and tax

Racing radio service A licence where the majority of material broadcast is coverage of racing and related issues

Australian Communications and Media Authority 53 Local Content Levels Investigation Report

Remote area services Licences with one of the following licence areas:

ƒ Remote Commercial Radio Service Central Zone RA1;

ƒ Remote Commercial Radio Service North East Zone RA1; or

ƒ Remote Commercial Radio Service Western Zone RA1

Section 40 licences Commercial broadcasting licences issued under section 40 of the Broadcasting Services Act, which do not use the broadcasting services bands of the radiofrequency spectrum

Small licences Broadcasting Financial Results (BFR) definition of small licences: licences in licence areas with a population less than 40,000. Population in a licence area is determined by ACMA pursuant to section 30 of the Broadcasting Services Act.

The amending Act Broadcasting Services Amendment (Media Ownership) Act 2006

The Broadcasting Services Act Broadcasting Services Act 1992

The Bill Broadcasting Services Amendment (Media Ownership) Bill 2006

The Direction Broadcasting Services (Local Content on Regional Commercial Radio) Direction No. 1 of 2006

Licence condition The additional licence condition made by ACMA under section 43 of the Broadcasting Services Act, required by section 43C(1) of the Broadcasting Services Act

The Minister Minister for Communications, Information Technology and the Arts

Trigger event A transfer of licence, OR the formation of a new registrable media group (where a licence is in the group), OR a change of controller of a registrable media group (where a licence is in the group) [section 61CB of the Broadcasting Services Act]

54 Australian Communications and Media Authority Local Content Levels Investigation Report

Appendixes

Appendix A: Minister’s Direction 56

Appendix B: Covering letter to Minister’s Direction 60

Appendix C: List of regional commercial radio broadcasting licences 62

Appendix D: Methodology details 68

Appendix E: Consultation summary 70

Appendix F: Schedule of regional visits 83

Appendix G: Call for submissions 84

Appendix H: Small licences as a specific class of licence 88

Australian Communications and Media Authority 55 Local Content Levels Investigation Report

56 Australian Communications and Media Authority Local Content Levels Investigation Report

Appendix A: Minister’s Direction

Australian Communications and Media Authority 57 Local Content Levels Investigation Report

58 Australian Communications and Media Authority Local Content Levels Investigation Report

Australian Communications and Media Authority 59 Local Content Levels Investigation Report

Appendix B: Covering letter to Minister’s Direction

60 Australian Communications and Media Authority Local Content Levels Investigation Report

Australian Communications and Media Authority 61 Local Content Levels Investigation Report Appendix C: List of regional commercial radio broadcasting licences Note: Shaded entries indicate licences covered by submissions made on ‘material of local significance’.

Number Licence area name Licensee Network

1 BROKEN HILL RA1 Radio Outback Pty Ltd A Robertson & D Robertson 2 BROKEN HILL RA1 Radio Outback Pty Ltd A Robertson & D Robertson 3 LONGREACH RA1 Radio Outback Pty Ltd A Robertson & D Robertson 4 LONGREACH RA1 Radio Outback Pty Ltd A Robertson & D Robertson 5 ALBURY RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 6 COLAC RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 7 COLAC RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 8 HAMILTON RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 9 HAMILTON RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 10 HORSHAM RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 11 HORSHAM RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 12 SALE RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 13 SALE RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 14 SWAN HILL RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 15 SWAN HILL RA1 ACE Radio Broadcasters Pty Ltd ACE Radio Broadcasters Pty Ltd 16 WARRNAMBOOL RA1 Regional Communications Pty Ltd ACE Radio Broadcasters Pty Ltd 17 WARRNAMBOOL RA1 Regional Communications Pty Ltd ACE Radio Broadcasters Pty Ltd 18 ALICE SPRINGS RA1 Alice Springs Commercial Broadcasters Pty Alice Springs Cml Brdcstrs Ltd 19 ALICE SPRINGS RA1 Alice Springs Commercial Broadcasters Pty Alice Springs Cml Brdcstrs Ltd 20 INNISFAIL RA1 Coastal Broadcasters Pty Ltd Alice Springs Cml Brdcstrs 21 INNISFAIL RA1 Coastal Broadcasters Pty Ltd Alice Springs Cml Brdcstrs 22 NEWCASTLE RA1 Radio Newcastle Pty Ltd Austereo Group Limited 23 NEWCASTLE RA1 Radio Newcastle Pty Ltd Austereo Group Limited 24 CANBERRA RA1 Canberra FM Radio Pty Ltd Australian Radio Network 25 CANBERRA RA1 Canberra FM Radio Pty Ltd Australian Radio Network 26 KATOOMBA RA1 Blue Mountains Broadcasters Pty Ltd Australian Radio Network 27 CHARLEVILLE RA1 Pinecam Pty Ltd B Smart & J Smart 28 CHARLEVILLE RA1 Pinecam Pty Ltd B Smart & J Smart 29 EMERALD S40 Murrangi Holdings Pty Ltd B Smart & J Smart 30 ARMIDALE RA1 New England Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 31 ARMIDALE RA1 New England Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 32 COFFS HARBOUR RA1 Coffs Harbour Super AM 639 Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 33 DUBBO RA1 Western Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 34 DUBBO RA1 Western Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 35 GRAFTON RA1 2GF AM Radio Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd

62 Australian Communications and Media Authority Local Content Levels Investigation Report

Number Licence area name Licensee Network

36 GRAFTON RA1 Grafton FM Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 37 GUNNEDAH RA1 2MO Gunnedah Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 38 GUNNEDAH RA1 2MO Gunnedah Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 39 GYMPIE RA1 Gympie-Noosa Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 40 INVERELL RA1 Northern Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 41 INVERELL RA1 Northern Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 42 KEMPSEY RA1 Port Macquarie Super AM 531 Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 43 LISMORE RA1 Richmond River Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 44 LISMORE RA1 Richmond River Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 45 MOREE RA1 Moree Broadcasting and Development Co. Pty Bill Caralis/Broadcast Operations Pty Ltd Ltd 46 MOREE RA1 Moree Broadcasting and Development Co. Pty Bill Caralis/Broadcast Operations Pty Ltd Ltd 47 MUDGEE RA1 Mudgee Broadcasting Company Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 48 MUDGEE RA1 Mudgee Broadcasting Company Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 49 MURWILLUMBAH RA1 Tweed Radio & Broadcasting Co Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 50 NEWCASTLE RA1 2HD Broadcasters Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 51 NEWCASTLE RA1 Newcastle FM Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 52 ORANGE RA1 Orange Super AM 1089 Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 53 PARKES RA1 Parkes Broadcasting Company Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 54 PARKES RA1 Parkes Broadcasting Company Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 55 TAMWORTH RA1 Tamworth Radio Development Co Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 56 TAMWORTH RA1 Tamworth Radio Development Co Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 57 TAREE RA1 Manning Valley Max The Heat FM Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 58 TAREE RA1 Manning Valley Max The Heat FM Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd 59 TOOWOOMBA/ Amalgamated Marketing Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd WARWICK RA1 60 TOOWOOMBA/ Radio 4AK Pty Ltd Bill Caralis/Broadcast Operations Pty Ltd WARWICK RA1 61 BALLARAT RA1 Ballarat Sports Radio Pty Ltd Camplin Group (refer to 3UZ submission) 62 BATHURST RA1 Bathurst Broadcasters Pty Ltd Camplin Group 63 BATHURST RA1 Bathurst Broadcasters Pty Ltd Camplin Group 64 CANBERRA RA1 Radio Canberra Pty Ltd Capital Radio Network & Grant Brdcstrs 65 CANBERRA RA1 Radio Canberra Pty Ltd Capital Radio Network & Grant Brdcstrs 66 GOULBURN RA1 Radio Goulburn Pty Ltd Capital Radio Network & Grant Brdcstrs 67 GOULBURN RA1 Radio Goulburn Pty Ltd Capital Radio Network & Grant Brdcstrs 68 GOSFORD RA1 Star 104.5 Pty Ltd DMG Radio 69 GYMPIE RA1 AMI Radio Pty Ltd Gerahty AMI Radio 70 NAMBOUR RA1 Hot 91 Pty Ltd Gerahty Gamble QMI 71 BALLARAT RA1 Radio Ballarat Pty Ltd Grant Broadcasters 72 BALLARAT RA1 Radio Ballarat Pty Ltd Grant Broadcasters 73 BEGA RA1 East Coast Radio Pty Ltd Grant Broadcasters 74 BEGA RA1 East Coast Radio Pty Ltd Grant Broadcasters 75 DARWIN RA1 Northern Territory Broadcasters Pty Ltd Grant Broadcasters 76 DARWIN RA1 Northern Territory Broadcasters Pty Ltd Grant Broadcasters 77 GEELONG RA1 Geelong Broadcasters Pty Ltd Grant Broadcasters

Australian Communications and Media Authority 63 Local Content Levels Investigation Report

Number Licence area name Licensee Network

78 GEELONG RA1 Geelong Broadcasters Pty Ltd Grant Broadcasters 79 HOBART RA1 Commercial Broadcasters Pty Ltd Grant Broadcasters 80 MARYBOROUGH (VIC) Radio Central Victoria Pty Ltd Grant Broadcasters RA1 81 MILDURA RA1 Radio Central Victoria Pty Ltd Grant Broadcasters 82 MURRAY BRIDGE RA1 Radio Murray Bridge Pty Ltd Grant Broadcasters 83 MURRAY BRIDGE RA1 Radio Murray Bridge Pty Ltd Grant Broadcasters 84 MUSWELLBROOK RA1 Radio Hunter Valley Pty Ltd Grant Broadcasters 85 MUSWELLBROOK RA1 Radio Hunter Valley Pty Ltd Grant Broadcasters 86 NOWRA RA1 South Coast & Tablelands Broadcasting Pty Grant Broadcasters Ltd 87 NOWRA RA1 South Coast & Tablelands Broadcasting Pty Grant Broadcasters Ltd 88 WOLLONGONG RA1 Wollongong Broadcasters Pty Ltd Grant Broadcasters 89 GOLD COAST RA1 Hot Tomato Australia Pty Ltd Independent – Anna Maria Mann 90 MANDURAH RA1 West Coast Radio Pty Ltd Independent – Bassett-Scarfe 91 MANDURAH RA1 West Coast Radio Pty Ltd Independent – Bassett-Scarfe 92 MARGARET RIVER RA1 The Cow AM1611 Pty Ltd Independent – C Redman 93 ALBANY S40 Pirate Broadcasters Pty Ltd Independent – K&W Mead 94 COOMA RA1 Radio Snowy Mountains Pty Ltd Independent – Kevin Blyton 95 COOMA RA1 Radio Snowy Mountains Pty Ltd Independent – Kevin Blyton 96 LITHGOW RA1 Media Corporation Australia Limited Independent – L & M Norris (Receivers & Managers Appointed) 97 LITHGOW RA3 Media Corporation Australia Limited Independent – L & M Norris (Receivers & Managers Appointed) 98 REMOTE COMMERCIAL Rebel FM Stereo Pty Ltd Independent – P Jowitt RADIO SERVICE NORTH EAST ZONE RA1 99 REMOTE COMMERCIAL Rebel FM Stereo Pty Ltd Independent – P Jowitt RADIO SERVICE NORTH EAST ZONE RA1 100 REMOTE COMMERCIAL W & L Phillips Pty Ltd Independent – Phillips RADIO SERVICE CENTRAL ZONE RA1 101 ALBANY RA1 Belcap Investments Pty Ltd Macquarie Regional Radioworks Pty Ltd 102 ALBANY RA1 Belcap Investments Pty Ltd Macquarie Regional Radioworks Pty Ltd 103 ALBURY RA1 Radio Albury Wodonga Pty Ltd Macquarie Regional Radioworks Pty Ltd 104 ATHERTON RA1 Tablelands Broadcasting Pty Ltd Macquarie Regional Radioworks Pty Ltd 105 ATHERTON RA1 Tablelands Broadcasting Pty Ltd Macquarie Regional Radioworks Pty Ltd 106 BENDIGO RA1 Radio 3BO Pty Limited Macquarie Regional Radioworks Pty Ltd 107 BENDIGO RA1 Radio 3CV Pty Ltd Macquarie Regional Radioworks Pty Ltd 108 BRIDGETOWN RA1 Elldale Pty Ltd Macquarie Regional Radioworks Pty Ltd 109 BRIDGETOWN RA1 Elldale Pty Ltd Macquarie Regional Radioworks Pty Ltd 110 BUNBURY RA1 Radio West Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 111 BUNBURY RA1 Radio West Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 112 BUNDABERG RA1 Maryborough Broadcasting Company Pty Ltd Macquarie Regional Radioworks Pty Ltd 113 BURNIE RA1 Burnie Broadcasting Service Pty Ltd Macquarie Regional Radioworks Pty Ltd 114 BURNIE RA1 Burnie Broadcasting Service Pty Ltd Macquarie Regional Radioworks Pty Ltd

64 Australian Communications and Media Authority Local Content Levels Investigation Report

Number Licence area name Licensee Network

115 CAIRNS RA1 FNQ Broadcasters Cairns Pty Limited Macquarie Regional Radioworks Pty Ltd 116 CAIRNS RA1 Greater Cairns Radio Pty Ltd Macquarie Regional Radioworks Pty Ltd 117 CHARTERS TOWERS North Queensland Broadcasting Corporation Macquarie Regional Radioworks Pty Ltd RA1 Pty Ltd 118 CHARTERS TOWERS North Queensland Broadcasting Corporation Macquarie Regional Radioworks Pty Ltd RA1 Pty Ltd 119 COFFS HARBOUR RA1 Commercial Radio Coffs Harbour Pty Ltd Macquarie Regional Radioworks Pty Ltd 120 COFFS HARBOUR RA1 Commercial Radio Coffs Harbour Pty Ltd Macquarie Regional Radioworks Pty Ltd 121 DEVONPORT RA1 Northern Tasmania Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 122 DEVONPORT RA1 Northern Tasmania Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 123 DUBBO RA1 Dubbo FM Radio Pty Ltd Macquarie Regional Radioworks Pty Ltd 124 EMERALD RA1 Regional Broadcasters Australia Pty Limited Macquarie Regional Radioworks Pty Ltd 125 EMERALD RA1 Regional Broadcasters Australia Pty Limited Macquarie Regional Radioworks Pty Ltd 126 ESPERANCE RA1 Esperance Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 127 ESPERANCE RA1 Esperance Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 128 GOLD COAST RA1 Gold Coast FM Pty Ltd Macquarie Regional Radioworks Pty Ltd 129 GOLD COAST RA1 Sea FM Gold Coast Pty Ltd Macquarie Regional Radioworks Pty Ltd 130 GOSFORD RA1 Central Coast Radio Pty Ltd Macquarie Regional Radioworks Pty Ltd 131 GOSFORD RA1 SEA FM Central Coast Pty Ltd Macquarie Regional Radioworks Pty Ltd 132 GRIFFITH RA1 Radio 2RG Pty Limited Macquarie Regional Radioworks Pty Ltd 133 GRIFFITH RA1 Radio 2RG Pty Limited Macquarie Regional Radioworks Pty Ltd 134 HOBART RA1 Great Southern Land Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 135 HOBART RA1 Great Southern Land Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 136 KALGOORLIE RA1 Regional Broadcasters Australia Pty Limited Macquarie Regional Radioworks Pty Ltd 137 KALGOORLIE RA1 Regional Broadcasters Australia Pty Limited Macquarie Regional Radioworks Pty Ltd 138 KATANNING RA1 Elldale Pty Ltd Macquarie Regional Radioworks Pty Ltd 139 KATANNING RA1 Elldale Pty Ltd Macquarie Regional Radioworks Pty Ltd 140 KEMPSEY RA1 Mid-Coast Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 141 KEMPSEY RA1 Mid-Coast Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 142 KINGAROY RA1 Forsby Pty Ltd Macquarie Regional Radioworks Pty Ltd 143 KINGAROY RA1 Forsby Pty Ltd Macquarie Regional Radioworks Pty Ltd 144 LAUNCESTON RA1 Bass Radio Pty Ltd Macquarie Regional Radioworks Pty Ltd 145 MACKAY RA1 Barrier Reef Broadcasting Proprietary Ltd Macquarie Regional Radioworks Pty Ltd 146 MACKAY RA1 Whitsundays Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 147 MARYBOROUGH (QLD) Maryborough Broadcasting Company Pty Ltd Macquarie Regional Radioworks Pty Ltd RA1 148 MARYBOROUGH (QLD) Maryborough Broadcasting Company Pty Ltd Macquarie Regional Radioworks Pty Ltd RA1 149 MERREDIN RA1 Mid-Districts Radio Pty Ltd Macquarie Regional Radioworks Pty Ltd 150 MERREDIN RA1 Mid-Districts Radio Pty Ltd Macquarie Regional Radioworks Pty Ltd 151 MILDURA RA1 Radio 3MA Pty Ltd Macquarie Regional Radioworks Pty Ltd 152 MILDURA RA1 Radio 3MA Pty Ltd Macquarie Regional Radioworks Pty Ltd 153 MT GAMBIER RA1 South Eastern Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 154 MT GAMBIER RA1 South Eastern Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 155 MT ISA RA1 North Queensland Broadcasting Corporation Macquarie Regional Radioworks Pty Ltd Pty Ltd 156 MT ISA RA1 North Queensland Broadcasting Corporation Macquarie Regional Radioworks Pty Ltd

Australian Communications and Media Authority 65 Local Content Levels Investigation Report

Number Licence area name Licensee Network

Pty Ltd 157 NAMBOUR RA1 Sunshine Coast Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 158 NAMBOUR RA1 Sunshine Coast Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 159 NARROGIN RA1 Radio West Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 160 NARROGIN RA1 Radio West Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 161 NORTHAM RA1 Radio 6AM Pty Ltd Macquarie Regional Radioworks Pty Ltd 162 NORTHAM RA1 Radio 6AM Pty Ltd Macquarie Regional Radioworks Pty Ltd 163 ORANGE RA1 Radio 2GZ Pty Ltd Macquarie Regional Radioworks Pty Ltd 164 ORANGE RA1 Radio 2GZ Pty Ltd Macquarie Regional Radioworks Pty Ltd 165 QUEENSTOWN RA1 Great Southern Land Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 166 QUEENSTOWN RA1 Great Southern Land Broadcasters Pty Ltd Macquarie Regional Radioworks Pty Ltd 167 ROCKHAMPTON RA1 Regional Broadcasters Australia Pty Limited Macquarie Regional Radioworks Pty Ltd 168 ROCKHAMPTON RA1 Rockhampton Broadcasting Co. Pty Ltd Macquarie Regional Radioworks Pty Ltd 169 ROMA RA1 Regional Broadcasters Australia Pty Limited Macquarie Regional Radioworks Pty Ltd 170 ROMA RA1 Regional Broadcasters Australia Pty Limited Macquarie Regional Radioworks Pty Ltd 171 SCOTTSDALE RA1 North East Tasmanian Radio Broadcasters Pty Macquarie Regional Radioworks Pty Ltd Ltd 172 SCOTTSDALE RA1 North East Tasmanian Radio Broadcasters Pty Macquarie Regional Radioworks Pty Ltd Ltd 173 TOOWOOMBA/WARWI Gold Radio Service Pty Ltd Macquarie Regional Radioworks Pty Ltd CK RA1 174 TOOWOOMBA/WARWI Gold Radio Service Pty Ltd Macquarie Regional Radioworks Pty Ltd CK RA1 175 TOWNSVILLE RA1 Nessan Pty Ltd Macquarie Regional Radioworks Pty Ltd 176 TOWNSVILLE RA1 Townsville Broadcasters Pty. Limited Macquarie Regional Radioworks Pty Ltd 177 WAGGA WAGGA RA1 Riverina Broadcasters (Holdings) Pty Ltd Macquarie Regional Radioworks Pty Ltd 178 WAGGA WAGGA RA1 Riverina Broadcasters (Holdings) Pty Ltd Macquarie Regional Radioworks Pty Ltd 179 WARRAGUL RA1 Votraint No. 691 Pty Ltd Macquarie Regional Radioworks Pty Ltd 180 WARRAGUL RA1 Votraint No. 691 Pty Ltd Macquarie Regional Radioworks Pty Ltd 181 YOUNG RA1 Radio 2LF Pty Ltd Macquarie Regional Radioworks Pty Ltd 182 YOUNG RA1 Radio 2LF Pty Ltd Macquarie Regional Radioworks Pty Ltd 183 ALBURY RA1 Goulburn and Border Broadcasters Pty Ltd Macquarie Regional Radioworks/ Goulburn Valley Broadcasters Pty Ltd – JNT VNTR 184 SHEPPARTON RA1 Goulburn and Border Broadcasters Pty Ltd Macquarie Regional Radioworks/ Goulburn Valley Broadcasters Pty Ltd – JNT VNTR 185 SHEPPARTON RA1 Goulburn and Border Broadcasters Pty Ltd Macquarie Regional Radioworks/ Goulburn Valley Broadcasters Pty Ltd – JNT VNTR 186 DENILIQUIN RA1 Rich Rivers Radio Pty Ltd North East Brdcstrs – C & W Mott 187 DENILIQUIN RA1 Rich Rivers Radio Pty Ltd North East Brdcstrs – C & W Mott 188 WANGARATTA RA1 North East Broadcasters Pty Ltd North East Brdcstrs – C & W Mott 189 WANGARATTA RA1 North East Broadcasters Pty Ltd North East Brdcstrs – C & W Mott 190 BUNBURY RA1 North West Radio Pty Ltd North West Radio 191 CAIRNS RA1 Prime Radio (Cairns) Pty Limited Prime Media Group 192 CAIRNS RA1 Prime Radio (Cairns-AM) Pty Limited Prime Media Group 193 MACKAY RA1 Prime Radio (Mackay) Pty Limited Prime Media Group 194 MACKAY RA1 Prime Radio (Mackay-AM) Pty Limited Prime Media Group 195 ROCKHAMPTON RA1 Prime Radio (Gladstone) Pty Limited Prime Media Group

66 Australian Communications and Media Authority Local Content Levels Investigation Report

Number Licence area name Licensee Network

196 ROCKHAMPTON RA1 Prime Radio (Rockhampton) Pty Limited Prime Media Group 197 TOWNSVILLE RA1 Prime Radio (Barrier Reef) Pty Limited Prime Media Group 198 TOWNSVILLE RA1 Prime Radio (Townsville) Pty Limited Prime Media Group 199 KARRATHA RA1 North West Radio Pty Ltd Redwave Media Pty Ltd 200 KARRATHA RA1 North West Radio Pty Ltd Redwave Media Pty Ltd 201 PORT HEDLAND RA1 North West Radio Pty Ltd Redwave Media Pty Ltd 202 PORT HEDLAND RA1 North West Radio Pty Ltd Redwave Media Pty Ltd 203 REMOTE COMMERCIAL North West Radio Pty Ltd Redwave Media Pty Ltd RADIO SERVICE WESTERN ZONE RA1 204 REMOTE COMMERCIAL North West Radio Pty Ltd Redwave Media Pty Ltd RADIO SERVICE WESTERN ZONE RA1 205 BUNDABERG RA1 Bundaberg Broadcasters Pty Ltd Rural Press Limited 206 BUNDABERG RA1 Bundaberg Broadcasters Pty Ltd Rural Press Limited 207 IPSWICH RA1 Star Broadcasting Network Pty Ltd Rural Press Limited 208 PORT LINCOLN RA1 Lanson Investments Pty Ltd Rural Press Limited 209 PORT LINCOLN RA1 Lanson Investments Pty Ltd Rural Press Limited 210 RIVERLAND RA1 5AU Broadcasters Pty Ltd Rural Press Limited 211 RIVERLAND RA1 5AU Broadcasters Pty Ltd Rural Press Limited 212 SPENCER GULF NORTH 5AU Broadcasters Pty Ltd Rural Press Limited RA1 213 SPENCER GULF NORTH Lanson Investments Pty Ltd Rural Press Limited RA1 214 LAUNCESTON RA1 Tasradio Pty Ltd Tote Tasmania 215 MARYBOROUGH (QLD) UniTAB Limited Unitab Limited RA1 216 SHEPPARTON RA1 3UZ Pty Ltd Victorian Racing Organisations 217 GERALDTON RA1 Geraldton FM Pty Ltd West Australian Newspapers Ltd 218 GERALDTON RA1 Great Northern Broadcasters Pty Ltd West Australian Newspapers Ltd 219 CAMPBELLTOWN RA1 Campbelltown Radio Pty Ltd WIN Corp – Bruce Gordon 220 WOLLONGONG RA1 WIN Radio Pty Ltd WIN Corp – Bruce Gordon 221 GERALDTON S40 Worldaudio Communications Pty Limited Worldaudio – P Solomon A Thompson 222 KALGOORLIE S40 Worldaudio Communications Pty Limited Worldaudio – P Solomon A Thompson 223 CARNARVON RA1 Hits Radio Pty Ltd Hits Radio 224 CARNARVON RA1 Hits Radio Pty Ltd Hits Radio

Australian Communications and Media Authority 67 Local Content Levels Investigation Report

Appendix D: Methodology details Submissions On 13 April 2007 ACMA wrote to all regional commercial radio licensees inviting them to make submissions on material of local significance and to provide a program schedule for a typical week by 25 May 2007. ACMA provided a copy of this letter to Commercial Radio Australia (CRA). ACMA particularly invited licensees to make submissions on: • their interpretation of material of local significance; • the appropriate number of hours; • the possibility of different numbers of hours for specific classes of licences; and • likely additional costs of complying with the new 4.5 hours requirement, with or without 12.5 minutes of local news. A copy of the call for submissions sent to licensees is at Appendix G. Regional visits Between late February and early June 2007, ACMA visited 16 licence areas over 13 days to meet with licensees about the local content levels investigation. In total, ACMA met with 22 licensees, representing 35 licences in all states and territories.139 ACMA visited a representative cross-section of licensees ranging from independently owned licences serving a relatively small population to networked licences in large regional centres. ACMA was conscious of the need to visit licences that reflect the diversity of regional commercial radio industry in terms of: • programming (for example, music, talk, and sport); • different operational models (for example, licences that produce content within the licence area, licences that produce content at hubs, and licences that share content or facilities or both with other licences); • unique licences (for example, remote licences and section 40 licences); and • licences adjacent to metropolitan licence areas. Refer to Appendix F for a complete schedule of regional visits conducted for this investigation. Independent commissioned research In May 2007 ACMA commissioned Convergent Consulting Pty Ltd (Convergent Consulting) to estimate the cost of producing local content (including local news) and to analyse the likely impact of the new local content requirement on regional commercial radio licences. Convergent Consulting is an independent management consulting practice specialising in the broadcasting, telecommunication and on-line services. Their comprehensive experience in cost and profitability assessment within the broadcasting sector includes a 2003 report for the ABA, Assessment of the costs relating to the establishment and operation of community television services. Convergent Consulting have completed research and reports for DCITA, the independent Broadcasting Authority (South Africa), Television NZ and the ABA.

139 In addition, Authority members attended ‘meet the regulator’ forums that included commercial radio broadcasting representatives in Ballarat on 21 February 2007 and in Hobart on 6 June 2007.

68 Australian Communications and Media Authority Local Content Levels Investigation Report

Convergent Consulting applied a three-phase process to the commissioned task: • Phase 1: Establish the likely compliance of various regional commercial radio categories to local content requirements; • Phase 2: Develop the likely options/strategies for the various regional commercial radio categories to pursue local content requirements; • Phase 3: Assess the economic impact on regional commercial radio pursuing various options. Convergent Consulting relied on data from its discussions with individual licensees, ACMA’s Broadcasting Financial Results data for 2004–05, submissions from licensees and CRA to ACMA on the local content requirement, ABA’s Survey of Commercial Radio Program Formats 2003–04 (May 2004), submissions to the House of Representatives Standing Committee on Communications, Transport and the Arts Radio Industry Inquiry (September 2001); and, websites for individual services. The call for submissions asked licensees for their permission to access any Broadcasting Financial Results (BFR) data they supplied to ACMA for the 2004–05 and 2005–06 financial years on ACMA Form B17. BFR data is published as reported by licensees. Where licensees gave their permission140, Convergent Consulting was able to use individual data, on a de-identified basis. Otherwise, Convergent Consulting was restricted to using aggregated BFR data in these categories: • AM services for small regional markets (population <40,000), • FM services for small regional markets (population <40,000) • AM services for medium regional markets (population of 40,000 to 100,000) • FM services for medium regional markets (population of 40,000 to 100,000) • AM services for large regional markets (population>100,000) • FM services for large regional markets (population>100,000). As Convergent Consulting’s report to ACMA contains material provided on a commercial-in- confidence basis and analysis based on such material, it has not been included in this report. ACMA statistics ACMA maintains a database of information on regional commercial radio licences and licensees for its regulatory function. This includes information on licences, networks, and number of licences in licence areas. Program schedules Nearly three-quarters of regional commercial radio stations—165 out of 224 (74 per cent)— maintain websites with program listings. ACMA analysed program listings over two-weeks from 30 April to 11 May 2007. Findings of the analysis are discussed in Chapter 4 of the report.

140 Thirty-one licensees gave ACMA approval to access their individual BFR data.

Australian Communications and Media Authority 69 Local Content Levels Investigation Report

Appendix E: Consultation summary Material of local significance submissions ACMA received 16 submissions on behalf of 147 regional commercial radio broadcasting licences, representing 66 per cent of licences. ACMA received submissions from: 1. Radio Outback Pty Ltd (Radio Outback) 2. ACE Radio Broadcasters Pty Ltd (ACE) 3. Coastal Broadcasters Pty Ltd (Coastal Broadcasters) 4. Australian Radio Network (ARN) 5. Pinecam Pty Ltd and Murrangi Holdings Pty Ltd (Pinecam) 6. Ron Camplin on behalf of Bathurst Broadcasters Pty Limited (Camplin) 7. Daily Mail and General Trust Plc (DMG) 8. Grant Broadcasters Pty Ltd (Grant Broadcasters) 9. Hot Tomato Broadcasting Co Pty Ltd (Hot Tomato) 10. Rebel Media (Rebel) 11. Flow FM (Flow) 12. Macquarie Regional Radioworks (Macquarie) 13. Redwave Media Pty Ltd (Redwave) 14. Tasradio Pty Ltd (Tasradio) 15. Unitab Limited (Unitab) 16. 3UZ Pty Ltd (3UZ). In addition, the commercial radio industry’s peak body—Commercial Radio Australia (CRA)— made a detailed submission to ACMA. Refer to Appendix C for a complete list of licences represented by submissions. ACMA also received one submission—from Joe Santana—for an Australia-wide section 40 licence and another submission (from Pinecam) included a Queensland section 40 licence. These two licences are not included in the 147 count of licences as they are not regional commercial radio broadcasting licences. ACMA asked industry to address the following points in submissions: 1. interpretation of ‘material of local significance’; 2. appropriateness of 4.5 hours and suggested replacement hours; 3. suggested classes with different hours; 4. appropriateness of requiring 12.5 minutes of local news; 5. costs of complying with requirement; and 6. other comments. Industry submissions are analysed against theses categories below.

70 Australian Communications and Media Authority Local Content Levels Investigation Report

1. Interpretation of ‘material of local significance’

CRA’s submission CRA advocates for a broad interpretation of ‘material of local significance’ that encompasses locally hosted programs, locally tailored programs, and programs of ‘general interest to local people.’ CRA considers that ‘local’ includes the licence area but may be a broader locality, for example, a grouping of licence areas or ‘a licence area’s surrounding region’. According to CRA, material of local significance includes: (iv) programs of any kind that are produced locally and broadcast locally (locally hosted programs); (v) programs produced outside the locality but "tailored" for the locality (locally tailored programs); and (vi) material containing no local references but which is of particular interest or importance to persons within the locality (locally relevant material).

Licensee submissions Licensees concurred with CRA in preferring a broad interpretation of ‘material of local significance’. One submission141 contended that: ‘Material of local significance’ must be defined to have a broad and flexible meaning … and should not be limited to news and current affairs. Eighty-three per cent stated in their individual submissions that they agreed with CRA’s interpretation of material that is locally hosted, locally tailored or locally relevant. No submissions disagreed with the interpretation offered by CRA, although some submissions were silent on the issue. Figure 1A illustrates that of the 147 licensees who made submissions: • 129 (88 per cent) consider that locally hosted programs should qualify as ‘material of local significance’; • the same number of licensees consider that locally tailored programs should qualify as ‘material of local significance’; and • 109 (74 per cent) consider that locally relevant material should qualify as ‘material of local significance’. Figure 1A: Licensees’ interpretation of ‘material of local significance’

140 120 129 129 100 109 80 60 38 40 18 18

Number of licences 20 0 Locally hosted programs Locally tailored programs Material of local interest

Material of local significance Not considered

Licensees were of the view that: • locally hosted programs are programs of any kind that are produced and broadcast locally; • locally tailored programs are programs of any kind that are produced outside the licence area but tailored for the licence area and broadcast locally;

141 Submission from Macquarie, operator of 85 regional radio stations (and a controller of an additional two)

Australian Communications and Media Authority 71 Local Content Levels Investigation Report

• locally relevant material142 is material other than locally hosted or tailored material which is of particular importance or interest to persons within the local area, although it does not necessarily contain express or implied references to the licence area. For example: a report about national or international events produced outside the licence areas could be included within the definition if these events could be seen to have the “potential to effect economic, social or physical conditions within the relevant locality”, sufficient to make them of general interest to local people (even though they might be of general interest to persons outside the locality) – eg global warming or drought funding.143; and Material which contains no local reference, but is of particular interest to persons, or a specific demographic, is undoubtedly material of local significance.144 Tasradio submitted that all racing information is of local significance as customers place bets on racing all over Australia and 3UZ considers its broadcasts are of local significance to local residents who have an interest in racing. Some licensees argued for an even more expansive definition of ‘material of local significance’ which extends to: • Programs that offer audience participation Two submissions145, representing 16 licences proposed that programs with audience participation through a talkback option should be considered material of local significance. It was argued that nationally syndicated talkback programs offer audiences from all licence areas the option to participate and should therefore be considered material of local significance. • Music programs Five submissions146, representing 21 licences proposed that music should be considered material of local significance. Statements on this issue included: A definition of material of local significance which excludes music-based programming would have disastrous consequences for commercial radio. In addition to increased costs, this definition would require format changes that would be of no interest to most listeners.147 Music format stations will not be able to survive the literal imposition of 4.5 hours of local significance, unless their music is taken into account in contributing to their s43C obligations.148 • Commercials and other promotional material Two submissions149, representing 86 licensees suggested that commercials and other promotional material should be considered material of local significance. It was further argued by Macquarie that all commercials, not just commercials that are locally produced, should qualify as ‘material of local significance’. This goes beyond CRA’s contention that the entirety of locally hosted and locally tailored programs—including advertisements, promotions and community announcements—qualify as material of local significance: Local advertisements and community announcements provide an additional local sound or flavour to regional commercial radio services. There is no question that on-air promotion of local businesses and organisations identifies to a listener that they are in a particular local area. Excluding local advertisements would ignore this reality.

142 Macquarie referred to local issues material instead of locally relevant material but their explanation of ‘material containing no local references but which is of particular interest or importance to persons within the locality’ makes it clear they mean the same thing. 143 Submission from CRA 144 Submission from Coastal Broadcasters 145 Submissions from ACE and ARN 146 Submissions from ACE, ARN, Hot Tomato, Pinecam and Flow 147 Submission from ARN 148 Submission from Pinecam 149 Submissions from Macquarie and Flow

72 Australian Communications and Media Authority Local Content Levels Investigation Report

Redwave contend that ‘commercials, whether within a locally produced program or not’ should qualify as ‘material of local significance’. • Local sport broadcasts Redwave submitted that ‘material of local significance’ includes ‘local sport and live coverage of local games’ but noted that most of this ‘happen[s] on the weekend’. • Nationally syndicated programs Three submissions150 argued that the John Laws show is ‘material of local significance’ as: 151 • it contains ‘material of political and social commentary on issues significant to the local audience’ 152 • it includes local interview inserts and local talkback access • ‘material in this program is of particular interest to people in the local community. 4LG listeners can call a toll free number. Subjects discussed are very relevant to the 4LG listeners. John has a real affinity with rural people & city people alike. He has the amazing ability to select & discuss topics that are of interest to both city & rural dwellers.’153 ACE is an example of a more expansive approach to the definition of ‘material of local significance’. According to ACE, ‘material of local significance’ should include: (i) programs produced locally; (ii) programs produced specifically for the licence area; (iii) programs with particular relevance to the local area; (iv) programs that offer audience participation, such as nationally syndicated talkback shows; and, (v) music format shows produced with a certain demographic in mind. The submission from Flow, described ‘material of local significance’ in detailed subject matter- specific terms as: (i) radio materials that specifically identify places within the licence; (ii) radio music by performers who live in the licence; (iii) regional news, regional sport and regional weather materials that identify the region or regions within the licence; (iv) rural news bulletins that include at least one story that identifies the licence region or locations within the license or includes topics of local significance; (v) community service materials about groups or people in the licence; (vi) materials that promote events, live music or field days within the licence; (vii) radio airtime or radio site crosses to regional events or personnel on location within the licence; (viii) radio interviews conducted with people on matters specific to the regions within the licence. The widest ambit definition was posed by Camplin who considers ‘material of local significance’ should include both on- and off-air activities, such as local involvement in regional markets. ARN stated in its submission that ‘material of local significance’ must be widely defined to cover the differing social and economic circumstances of regional commercial radio licence areas. They also consider that Parliament’s intention was not to confine material of local significance to local news and similar programming. Some submissions specifically addressed the issue of the geographic scope of ‘local’ and suggested that ‘local’ means a larger area than the licence area. For example: • Grant Broadcasters referred to a ‘market or close geographic area’ (i.e. cluster of licence areas) • CRA and Macquarie suggested a grouping of licence areas or regions.

150 Submissions from ACE and Radio Outback 151 Submission from Grant Broadcasters 152 Submission from ACE 153 Submission from Radio Outback

Australian Communications and Media Authority 73 Local Content Levels Investigation Report

• One submission154, from a remote area licence, pointed out that ‘local’ is meaningless in the context of their licence area—an area that constitutes 18 per cent of Australia’s land area and comprises many ‘local regions’. 2. Appropriateness of 4.5 hours and suggested replacement hours

CRA’s submission CRA submitted that 4.5 hours is not an appropriate requirement as: (i) it is ‘an extremely onerous compliance obligation’; (ii) does not ‘correlate with the duration of the average length of a radio program that is broadcast during peak listening hours’; (iii) breakfast programs tend to be 3 hours or 3.5 hours in duration155, and many of these start at 5 am or 5.30 am. As a general requirement, CRA suggests three hours is appropriate for most licences if regulations prescribe a 5.00 am start time for daytime hours. This equates to the typical duration of a daytime program.

Licensee submissions No submissions considered 4.5 hours an appropriate requirement. Some submissions expressed opposition to any requirement, for example: I do not believe there is an appropriate number of hours that should be imposed on any commercial broadcasting station to broadcast any specific material that is not of their choosing156; and Every regional market is unique, different circumstances, market pressures dictate a different approach, in particular changing market conditions and the local economy – there should be no need to regulate “number of hours”. It will become a nightmare to administer and eventually recognised as it truly is – a waste of time and money.157 Submissions suggested a replacement number of hours ranging from five minutes158 to 3.5 hours159, with most submissions suggesting three hours160, based on the typical duration of a daytime program and the duration of most breakfast shows. Redwave pointed out in its submission that the relevant award does not permit announcers to work more than four hours in any one shift161. Some submissions suggested different requirements for AM and predominantly music format FM stations. For example, ACE stated: Music is generally the backbone of FM stations and to attempt to implement a minimum level of material of local significance, and possibly exclude music aimed at its target audience puts these stations in a forced position to play a potentially non-competitive format against for example JJJ.

154 Submission from Rebel 155 CRA polled 186 stations and found that of these, 57 (31 per cent) have breakfast programs of three hours duration and 58 (31 per cent) have breakfast programs of 3.5 hours duration. 156 Submission from Pinecam 157 Submission from Camplin 158 Submissions from Pinecam and Redwave 159 For example, ACE and Flow 160 For example, CRA, Grant, Redwave, and Macquarie 161 Commercial Radio Announcers’ Award 1998, clause 16.4.1: The maximum number of hours on air in all daylight shifts, Monday to Friday, other than public holidays, shall not exceed four consecutive hours except in an emergency.

74 Australian Communications and Media Authority Local Content Levels Investigation Report

One submission suggested maintaining current levels of material of local significance would be appropriate on the basis that stations which have been broadcasting in a particular fashion for many years should not be expected to increase their costs.162 Macquarie submitted that the 4.5 hours is not appropriate for any regional commercial radio licence. It explained that the most popular shift of the day is breakfast. The majority (66 per cent) of Macquarie’s stations have breakfast programs of between 3–3.5 hours in length and nearly all that are more than three hours long start before 6.00 am. 3. Suggested classes with different hours

CRA’s submission CRA identifies classes in its submission that it considers require different treatment: 1. Remote area licences – ‘remote licence areas include vast geographic areas that are not served by other commercial radio services’163; 2. Racing radio stations – ‘racing radio services are “networked” from capital cities to regional centres and provide content which does not appear to be able to be described as being “locally relevant material” – i.e. material that is of particular relevance to people in the relevant localities’164; 3. Small licences165 – as they are already ‘marginal’ - defined as licences in licence area with: ƒ with four voices or less (as at 4 April 2007, the proclamation date for Schedule 2 of the Broadcasting Services Amendment (Media Ownership) Act 2006); or ƒ a population of less than 75,000. CRA consider all these classes should be exempt from the requirement but failing that, should have a very minimal requirement and suggest 10 minutes.

Licensee submissions A minority of submissions did not favour the creation of classes which attract a different requirement: • Brad Smart considered that classes would not ‘help the overall health of the industry’ and … selective exemptions are even further discrimination against the regional broadcasting industry, and, they are not the solution. • Grant Broadcasters considered it undesirable to introduce any new notions of types of licence areas or classes of licences that are otherwise totally unsupported by legislation. The only segregation of commercial regional radio broadcasters Grant Broadcasters found plausible was pre and post trigger event licences. Grant Broadcasters stated that licences, where a trigger event has not occurred, should have a lower threshold. However, higher threshold of four hours could apply to licences that become part of a cross-media entity post trigger event as they are better able to manage the increased burden. Macquarie argued for small licences as a class and considers an exemption desirable. Failing an exemption for small licences, Macquarie suggested the requirement be a minimum of 10 minutes and a maximum of one hour. Macquarie classified small as: • a licence area with a total licence area population of 75,000 or less;

162 Submission from Grant Broadcasters 163 Also suggested by Rebel and Flow, in the latter’s case on the basis that its remote area licence has geographic boundaries across four states 164 Also suggested by Tasradio, 3UZ and Unitab 165 Redwave and Macquarie also argued for differential treatment for ‘small’ licences.

Australian Communications and Media Authority 75 Local Content Levels Investigation Report

• a licence area that ACMA has determined to be a small licence area, having regard to other licence area characteristics including (in addition to population figures): • the existence of licence overlaps; • overspills from adjoining markets; and, • the size of the largest population centres in the licence area. Macquarie also referred to the categorisation of licensees in the Commercial Radio Announcer’s Award166 on the basis of population. The Award classifies stations with a licence area population of less that 80,000 (Group 4 stations) as ‘small’. Rebel, a remote area licensee, also argued for an exemption for remote area licences but failing an exemption, suggest a requirement of five minutes on weekdays if community services announcements qualify as ‘material of local significance’: We are strongly opposed to any mandated local content requirements. The legislative amendments should be repealed altogether, or an exclusion be granted for the remote broadcasters, including local news requirement following a change of control trigger event. It is essential that ACMA exclude the remote radio services from any forced local content requirement. Flow, another remote area licensee, also submitted the need for an exemption on the basis that: 8SAT is a remote commercial radio service, and given the nature of our licence boundaries, areas, and 4 states of coverage seeks exemption … 4. Appropriateness of requiring 12.5 minutes of local news

CRA’s submission CRA submitted that 12.5 minutes of local news should only apply to licences affected by a trigger event: It would be manifestly unreasonable for the local news obligation to be extended as a general obligation under the licence condition described in s43C. … This would represent yet another layer of local content regulation which was not contemplated by the Parliament … There is no justification for imposing the local news requirement as a blanket licence condition requirement across regional radio licensees.

Licensee submissions Macquarie concurred with CRA that 12.5 minutes of local news should only apply after a trigger event. ACE noted that finding 12.5 minutes of local news every day would be near impossible and also require employment of one additional journalist at all ACE station. Redwave stated that local news is something that will vary from market to market depending on size, economic background, location and availability of newsworthy items and would dramatically increase the costs base of all Redwave stations. A submission from a remote area licensee (Rebel) pointed out that achieving localism in daily news broadcasts is impractical in remote area licences because of their size. Grant Broadcasters stated that 12.5 minutes of news is not appropriate and that regional radio broadcasters should broadcast local news to the level that is responsive and appropriate to the market. Any increase in news would have unpredictable effects on listenership.

166 Commercial Radio Announcer’s Award 1998 (determined by the Australian Industrial Relations Commission in 1998 and varied in 2005).

76 Australian Communications and Media Authority Local Content Levels Investigation Report

Only one submission considered that 12.5 minutes of local news is appropriate, but only for AM stations167. 5. Costs of complying with the requirement In accordance with ACMA’s agreement with licensees, sources for the following information have been de-identified. Generally speaking, submissions did not address compliance costs in any detail. One submission stated that its stations are currently running at a loss and that any new obligation would increase this loss. This submission also outlined that: • a narrow definition of ‘material of local significance’ would necessitate employment of a journalist at a total cost of around $60,000 per annum; and • imposition of a 12.5 minutes of local news requirement would cost up to $238,000 per year, including establishment of a newsroom and office expansion. Another licensee explained that to meet the 4.5 hours would require: • additional programming at another time of day when fewer people are listening (generating less advertising revenue): • extra expenditure on announcers, on-costs and leave replacement costs; and, • additional capital expenditure on production facilities, studio construction, and air outplay systems. One licensee pointed out that the local content requirement will have a detrimental impact on profitability and may render some of its radio stations unfeasible. It estimated listener and revenue loss in the vicinity of 20–40 per cent and stated that revenue losses of this order would render most regional radio licensees unviable. One submission noted that its AM station could comply but that its FM station could not without format change: We doubt, in our case, that there will be any additional costs in complying with the new requirements to broadcast 4.5 hours of material of local significance between 6.00 am and 6.00 pm on business days on our current AM station—we already exceed these requirements. However, the cost to comply with new requirements on our FM station would probably be beyond our financial capability. The only way for the FM station to comply with the new regulations would be for it too, to become a News talk operation. The cost of providing two separate News talk formats in small regional markets would be prohibitive. Some submissions noted the cost impost of monitoring compliance with the requirement. For example, one licensee stated that a narrow interpretation of material of local significance would involve employing one person in the full time role of monitoring every program to keep count of material compiled for each licence. Another referred to ‘a litany of regulatory paperwork’ to deal with existing reporting requirements to various agencies and commented that: Monitoring and reporting on local content compliance will be a substantial interruption to the day to day operation of these businesses. They are by definition small businesses, not huge organisations with a myriad of administrative staff. The cost of compliance will be taken from the bottom line of each and every licence. To date, we estimate a cost to us of $15,000 in lost time of our executive team in man hours, travel, correspondence and discussion on this issue. One licensee in its submission explained the heavy impact of the requirement on its remote area licence which relies on sub feeds to transmit programs across a vast geographic area:

167 Submission from Camplin.

Australian Communications and Media Authority 77 Local Content Levels Investigation Report

The cost of providing a journalist/s will require us to relocate premises, as our existing studio and administration building is at capacity. In addition to the costs of relocating, a preliminary estimate has minimum additional operational costs of $118,000 pa, depending on the quality of the service, the type of service provided on each station and which of the main program feeds and sub feeds are required to carry on a news service. Forced localism on the FM main feed that covers such a large area (with the exception of irregular emergency information) will be disastrous. Forced localism on any of our four sub feeds would reach less than 10% of our licence area and may render those sub feeds unviable. Any move to enforce localism on the sub feeds would be strongly opposed and would serve as an incentive for us to discontinue those sub-feeds, along with the localism they currently provide. Market forces currently dictate the level of localism on the sub feeds (and whether they continue as sub feeds) and that’s the way it should stay. A submission from another remote area licensee also raised concerns about the considerable cost impact on remote area licences: [The station] estimates that the cost of producing 4.5 hours of local content each day would require an additional 2 staff member. This would indicate the need for a senior journalist and a junior and the wage bill would be in excess of $110,000 per year. Added to this are the associated office costs for phone calls, car cost and travel cost (flights to remote areas from home studio base) and the cost of providing this service would be in excess of $150,000. [The station] is already burdened with numerous other reporting functions. In some cases our membership to CRA collectively reduces there [sic] impact, however, remote areas cannot afford to be lumbered with additional staff and reporting cost at a time when the following are impacting our viability: drought, vast distances to reach parts of the licence; the number of sites connected within a single licence; and there [sic] associated cost; small town sizes and therefore lack of competition in local markets meaning the average rate per advertising spot is extremely low to be competitive with regional newspapers. 6. Other comments

Legislative change and regulations – ‘material of local significance’ A number of submissions suggested regulations to change daytime hours and legislative amendment to other aspects of the requirement, including inserting provision for exemptions from the requirement. Section 43C currently stipulates that material of local significance must be broadcast between 6.00 am and 6.00 pm on each business day. The proposed new daytime hours varied across submissions: • CRA suggested 5.00 am to 8.00 pm; • Macquarie offered 5.00 am to 7.00 pm; • Redwave suggested 5.00 am to midnight; • Flow favoured 6.00 am to 10.00 pm. One submission (from Hot Tomato) even suggested that daytime hours should be market specific. CRA and Macquarie addressed regulatory and legislative change in some detail in their submissions: • CRA suggested: (i) the beginning and end times should be changed to 5 am and 8 pm respectively as many breakfast programs start at 5 am or 5.30 am; (ii) the requirement should only apply for 46 weeks a year as industry practice is to use nationally syndicated programming during annual leave by on-air staff; and (iii) if ACMA receives a complaint about non-compliance with the licence condition, it should be able to count material broadcast outside daytime hours and on weekends. • Macquarie submitted that:

78 Australian Communications and Media Authority Local Content Levels Investigation Report

(i) ‘small’ licences should be exempt168; (ii) the new licence condition should apply 46 weeks in the year—qualified presenters are entitled to 6 weeks leave per year and qualified presenters are not available for short term engagements in regional areas so networked programs must be used; (iii) ACMA should have the discretion to give additional exemptions from 46 weeks compliance— resigning on-air staff are not able to be immediately replaced in regional and especially, small licence areas; (iv) ‘daytime hours’ should be extended to 5am to 7pm—in many areas peak listening occurs outside 6am to 6pm, especially those with unusual peak times eg fishing and mining communities; and (v) ACMA should have the discretion to include weekend programs so that sports programs can be counted. ACE and Coastal Broadcasters also supported including ‘material of local significance’ broadcast on weekends, with ACE making particular mention of local sport commentary that occurs on weekends. CRA included a suggested legislative amendment in its submission to address its concerns: 43C(7A) Notwithstanding the reference to ‘business day’ in subsection (1): (i) the ACMA may specify the number of weeks each year during which the obligations under the condition will apply; and (ii) if requested by a regional radio licensee, the ACMA may determine that the broadcast of a program on a weekend day is material of local significance for the purposes of the condition. CRA acknowledge that exemptions are not possible without legislative amendment and suggest this wording: 43C(4D) The ACMA must ensure that the licence condition described in subsection (1) does not apply to a regional commercial radio licence that, at the date of the commencement of this section: (a) was used to provide networked racing radio services; (b) authorised the licensee to provide a commercial radio service to a remote licence area; (c) authorised the licensee to provide a commercial radio service in a licence area that contained four or less points (as calculated under section 61AC); or which had a licence area population of 75,000 or less; 43C(4E) The Minister may direct the ACMA to exempt a licensee or class of licensee from the scope of the licence condition described in subsection (1).

Legislative change – ‘local news’ Section 61CD of the Broadcasting Services Act includes minimum service standards for local news, linked to broadcasting of ‘eligible local news bulletins.’ As the Direction asks ACMA to investigate the appropriateness of 12.5 minutes of local news for all licences, CRA made comments about the definition of ‘eligible local news bulletins’ on the basis that the definition may also apply to any local news requirement of general application. CRA argued for removal of the repeated content restriction in section 61CA169, and an expansive interpretation of ‘eligible local news bulletins’: An approach of allowing a news bulleting that comprises a mix of international, national, State and local news (including local sports, weather, surf and traffic reports) to be ‘counted’ as an eligible local news bulletin would be a workable and practical approach that reflects how commercial radio operators across Australia provide news services.

168 Macquarie took the classification of small to be: ƒ a licence area with a total licence area population of 75,000 or less; ƒ a licence area that ACMA has determined to be a small licence area, having regard to other licence area characteristics. (Refer to discussion under section 2 above). 169 CRA suggested deleting paragraph (e) of section 61CA of the Broadcasting Services Act. This paragraph provides that: None of the bulletins consists wholly of material that has previously been broadcast in the licence area concerned.

Australian Communications and Media Authority 79 Local Content Levels Investigation Report

Macquarie considered that for ‘local news’, repeat material should also be allowed, the requirement should only apply for 46 weeks in the year, and there should be no suggestion that it be broadcast in one segment.

Measuring compliance An argument emerged in submissions about allowing entire programs to qualify as ‘material of local significance’ if they are locally hosted or locally tailored to reduce the administrative and compliance burden on licensees. For example, Macquarie considered that locally hosted programs should be accepted as ‘material of local significance’ in their entirety and locally tailored programs should be treated as ‘material of local significance’ to the extent they are tailored for the area. Grant Broadcasters also submitted that program blocks should quality as ‘material of local significance’ in their entirety: As a practical matter, there are hundreds of program elements that make up the many hours of “material of local significance”. Any attempt to analyse and assess and potentially argue all of them would prove to be impractical for even this exercise and would be untenable on a year long basis. Hot Tomato also favoured a ‘block’ program approach to measuring ‘material of local significance’ to avoid the need to assess whether individual segments of programs are ‘material of local significance.’ Regional visits As part of its investigation, the Authority visited a representative sample of licensees in regional, rural and remote Australia. Refer to Appendix F for a complete schedule of the visits. Authority members accompanied by staff from ACMA conducted the visits over the course of 13 days. Regional visits commenced in Bendigo, Victoria on 20 February 2007 and concluded on 6 June 2007 with a ‘meet the regulator’ forum in Hobart. For the purpose of its investigation, the Authority visited each state and territory. The Authority visited Tasmania on a separate matter (extension of the commercial television local content condition to Tasmania). The Authority held its meetings and ‘meet the regulator’ functions in Ballarat on 21 February 2007 and in Hobart on 7 June 2007. These functions were attended by representatives of regional commercial radio broadcasters. The Authority visited 16 licence areas and 22 licensees (representing 35 licences).

Major issues raised by licensees Licensees raised a number of issues with the Authority during the regional visits, including the following: ● General opposition to the requirement Many licensees consider they already serve their local communities well without the need for government regulation, and expressed general opposition to any mandatory local content requirement. ● Music format stations Licensees typically own two licences in a licence area, one aimed at the under 35 demographic (generally an FM station) and the other aimed at the over 35 demographic (generally an AM station). Stations that target the under 35 market predominantly play music (in accordance with audience expectations) and would have difficulty meeting the material of

80 Australian Communications and Media Authority Local Content Levels Investigation Report

local significance requirement unless it includes music that appeals to their audience or locally hosted programs. ● Breakfast programs Most licensees broadcast breakfast programs and consider that breakfast programs should qualify as material of local significance. Breakfast programs are typically three hours in duration. • Locally produced material Many licensees consider that material produced in the licence area should qualify as material of local significance regardless of the subject matter. ● Local news Many licensees consider that local news can be produced outside the licence area. The requirement should also allow for repetition of local news bulletins as this caters for the audience (licensees argue that audiences tune in at different times of the day and may hear a repeated bulletin for the first time). ● Possible exemptions Licensees suggested exemptions from the material of local significance requirement for certain types of licences including licences with: • small advertising revenue; 170 171 • populations below a certain level either for the licence area , or major centre , or both; • remote licences; • section 40 licences; • reception from adjacent metropolitan licence areas; or • three or more competing licences in the same licence area. Trigger event questionnaire The Direction required ACMA to conduct two separate investigations: the definition of trigger event (concluded on 30 March 2007) and local content levels (the investigation that led to this report). For the trigger event investigation, ACMA consulted with regional commercial radio broadcasting licensees through a trigger event questionnaire. ACMA received responses covering 159 regional commercial radio broadcasting licences and one section 40 licence. ACMA also received a response from the industry’s peak body, Commercial Radio Australia. Some of the questionnaire responses were not confined to the definition of trigger event and included comments on the new local content requirement. In summary, licensees made these comments on the new local content requirement in their trigger event submissions: • confusion about what constitutes ‘material of local significance’ and whether material must be produced in the local area; • the requirement prevents regional radio broadcasters from meeting audience demand for program formats; • there is no research suggesting that audiences of regional radio stations want heavily localised programming;

170 For example, licence areas with a populations under 75,000 171 For example, licence areas where the population of the largest town or city is under 45,000

Australian Communications and Media Authority 81 Local Content Levels Investigation Report

• material of local significance should include matters that occur outside the local area but are of interest to the local area population; • material of local significance should include material that is produced outside the local area but with the local area audience in mind; • all news items including international, national and local news including local sport, local weather, and local traffic conditions should be considered matter of local significance; • reduction in audience driven broadcasting will result in decreased advertising and impact on financial viability of broadcasters; • the local content condition will lock broadcasters into operating platforms and adversely impact on their financial viability; • the local content condition favours the talk back radio format; • if music is not considered ‘material of local significance’ all music format stations will be rendered incompatible with the condition; • requiring a music-based format radio station to broadcast 4.5 hours of material of local significance will ultimately lead to a change in format and listener dissatisfaction; • music that is played with a specific local audience in mind, whether or not it is produced locally, should be considered material of local significance; • the breakfast show format should satisfy the local content condition; • it is not feasible for small revenue markets to employ a journalist to produce material of local significance; • small markets should be exempt on the basis of turnover, not profit or population; and • similar obligations do not apply to similar licences in metropolitan markets, or to other media in the same market, further placing regional radio broadcasters at a competitive disadvantage.

82 Australian Communications and Media Authority Local Content Levels Investigation Report

Appendix F: Schedule of regional visits

State/territory Date Venue Licensee Network Australian Capital 11 April 2007 Canberra Canberra FM Radio Australian Radio Network JV Territory Austereo New South Wales 19 April 2007 Bathurst Bathurst Broadcasters Pty Ltd Camplin Group 19 April 2007 Lithgow Media Corporation Australia Ltd Independent – L&M Norris 4 May 2007 Broken Hill Radio Outback A & D Robertson Northern Territory 2 May 2007 Alice Springs Alice Springs Commercial Alice Springs Commercial Broadcasters Broadcasters Queensland 13 March 2007 Charleville Pinecam Pty Ltd B & J Smart 14 March 2007 Bundaberg Bundaberg Broadcasters Pty Ltd Rural Press 14 March 2007 Bundaberg Maryborough Broadcasting Pty Ltd Macquarie Regional Radioworks 15 March 2007 Rockhampton Prime Radio Prime Media Group 15 March 2007 Rockhampton Rockhampton Broadcasting Macquarie Regional Radioworks 15 March 2007 Rockhampton Regional Broadcasters Macquarie Regional Radioworks South Australia 1 May 2007 Kapunda W & L Phillips Pty Ltd Independent – Phillips Tasmania 7 June 2007 Hobart ‘Meet the regulator’ forum Victoria 20 February 2007 Bendigo Radio 3BO Macquarie Regional (Maryborough) Radioworks 20 February 2007 Bendigo Radio 3CV Macquarie Regional (Maryborough) Radioworks 20 February 2007 Bendigo Radio Central Victoria Grant Broadcasters (Maryborough) 20 February 2007 Horsham Ace Radio Broadcasters Pty Ltd ACE Radio Broadcasters 21 February 2007 Ballarat Ballarat Sports Radio Camplin Group 21 February 2007 Ballarat Radio Ballarat Grant Broadcasters 21 February 2007 Ballarat ‘Meet the regulator’ forum Western Australia 1 March 2007 Geraldton Geraldton FM West Australian Newspapers 1 March 2007 Geraldton Great Northern Broadcasters West Australian Newspapers 2 March 2007 Leederville North West Radio Redwave Media 2 March 2007 Mandurah West Coast Radio Independent – Bassett-Scarfe

Australian Communications and Media Authority 83 Local Content Levels Investigation Report

Appendix G: Call for submissions

ACMA file reference: 2006/2307

13 April 2007

Dear Chief Executive Call for submissions on ‘material of local significance’ for regional commercial radio We previously wrote to you in December 2007 about the new requirements for regional commercial radio and enclosed a questionnaire on “trigger event”. The assistance we gained from the industry was crucial to our being able to provide the Minister recently with a sound, information-based report. Invitation to provide submission I am now writing to invite you to make submissions on ‘material of local significance’ for regional commercial radio. In accordance with an undertaking previously given, your response is requested no later than Friday 25th May 2007. However, earlier responses would be much appreciated so that we can give fuller consideration to your submission and still report to the Minister by 30 June 2007 on this aspect of the package of media legislation that was passed late last year. In addition, your immediate permission (through return of Attachment B) to allow ACMA to access any Broadcasting Financial Results (BFR) data for the 2004-2005 and 2005-2006 financial years that you supplied on ACMA Form B17 would greatly assist us in preparing our report. Background From 1 January 2008, a licence condition will require regional commercial radio broadcasters to broadcast a minimum level (4.5 hours) of ‘material of local significance’ between 6 am and 6 pm on business days (section 43C(1) of the Broadcasting Services Act 1992 (the Act)).

84 Australian Communications and Media Authority Local Content Levels Investigation Report

The Minister for Communications, Information Technology and the Arts has directed ACMA to consider whether this minimum level should be different for all or specified classes of licences (Attachment A) and report to her by 30 June 2007. Our investigation provides a mechanism for you to appraise the impact of this new requirement on regional commercial radio broadcasters and the opportunity to comment on the appropriate level of the requirement. As a result, I encourage you to take the time to make a submission on the new requirements to broadcast material of local significance. Submission In your submission, we ask you for comments particularly on the following topics: 1. Your views on these three aspects of the requirement: (a) How should ‘material of local significance’ be interpreted: – At this stage, ACMA has not proposed an interpretation of ‘material of local significance’. However, this will need to be settled by ACMA when finalising the licence condition in the second half of 2007. To inform our consideration therefore, we ask for your interpretation of ‘material of local significance’ within the context of the legislation. We encourage you to provide us with any material that supports your interpretation, such as legal advice or other material relating to community expectations. (b) The appropriate number of hours of this ‘material of local significance’ that should be required on the basis of the interpretation you have identified: – In this regard, you may wish to comment on matters such as the program format of your licences, the number and source of news segments, staff employed or other matters which go to community expectations. (c) Whether there could be different requirements for different types of licence areas or classes of licence for which required levels of such material might vary: – We are aware from our recent industry visits that some licences could be separately identified by factors such as size of licence area, size of largest town in licence area and overlaps and/or fortuitous reception into other licence areas. There may be other distinctions possible and we would find it useful to have your views on what might be useful distinctions and why. 2. The likely additional costs of complying with the new requirement to broadcast 4.5 hours of material of local significance between 6 am and 6 pm on business days. – We are interested in having your assessment of the additional resources required, the likely financial costs involved and any other implications. 3. The likely additional costs of complying with the new requirement if it includes 12.5 minutes of local news. – Again, we are interested in your assessment of resources required, financial costs, and any other implications. 4. Any other comments you have to make about these requirements within the legislation. You are encouraged to provide information also by way of examples specific to your licence(s) which highlight your circumstances. Such examples would be more easily considered if provided separately to the responses on the above topics, although they would be expected to effectively augment and demonstrate your other responses.

Australian Communications and Media Authority 85 Local Content Levels Investigation Report

Typical weekly schedule We also ask you to include a schedule for a typical week for each of your licences with your submission. It is important that you clearly indicate the programs that you consider comprise material of local significance. It would also be helpful if you could identify the nature of the program as: • live hosted in the licence area • produced specifically for that licence area (indicating whether produced within or outside the licence area) • voice tracked • other (and please specify) and note why you consider the program comprises material of local significance. We have enclosed a suggested weekly program form that you might like to use for this purpose at Attachment C. For your assistance, we have also reproduced these topics listed above on an electronic form at Attachment D which you might find convenient to use for your response.

Lodging submissions Please lodge your submission as soon as possible (but no later than 25th May 2007) by: Email [email protected] Post The Manager Compliance Monitoring & Review Australian Communications and Media Authority PO Box 1500 Queen Victoria Building NSW 1230

Financial information As mentioned above, for the purpose of reporting to the Minister on our investigation, we seek your permission to access any Broadcasting Financial Results (BFR) data for the 2004-2005 and 2005-2006 financial years you supplied on ACMA Form B17. We enclose a permission form (Attachment B) for you to complete and return to us, ahead of your submission. Your immediate agreement to allow ACMA to access your BFR data would be much appreciated. Please note that ACMA will not associate individual licences with financial information in its report to the Minister.

Use and publication of submissions ACMA will use submissions to report to the Minister on the result of our investigation. ACMA will consider all submissions to help develop and implement a new licence condition in the second half of 2007. In general, ACMA publishes all submissions it receives. ACMA prefers to receive submissions which are not claimed to be confidential. However, ACMA accepts that a submitter may sometimes wish to provide information in confidence. In these circumstances, submitters are asked to identify the material over which confidentiality is claimed and provide a written explanation for confidentiality claims.

86 Australian Communications and Media Authority Local Content Levels Investigation Report

ACMA will consider each claim for confidentiality on a case by case basis. If ACMA accepts a confidentiality claim, it will not publish the confidential information unless required to do so by law. Any submissions provided to ACMA may be released under the Freedom of Information Act 1982. ACMA may also be required to release submissions for other reasons including for the purpose of parliamentary processes or where otherwise required by law (for example a court subpoena). While ACMA seeks to consult submitters of confidential information before that information is provided to another body or agency, ACMA cannot guarantee that confidential information will not be released through these or other legal means. ACMA is aware the Minister must submit our investigation report to both Houses of Parliament under section 43C(4B) of the Act.

Further information Further information on the new requirements for regional commercial radio is available from our website at www.acma.gov.au/mediareform. If you have any queries about our investigation or making a submission, please contact Jenny Brigg on (02) 9334 7941 or at [email protected]. We look forward to receiving your submission and (in advance) your permission form.

Yours sincerely

Lyn Maddock Deputy Chair

Australian Communications and Media Authority 87 Local Content Levels Investigation Report

Appendix H: Small licences as a specific class of licence Industry views Submissions from CRA, Macquarie Regional Radio Works and Redwave suggested that ‘small’ licences constitute a specific class of licences that should be exempt from the requirement, or attract a much lesser requirement. Submissions varied on what constitutes a ‘small’ licence. In its submission, CRA identifies a ‘small’ licence as: licences in licence area with: ƒ four voices or less (as at 4 April 2007, the proclamation date for Schedule 2 of the Broadcasting Services Amendment (Media Ownership) Act 2006); or ƒ a population of less than 75,000. CRA considers ‘small’ licences should be exempt from the requirement but failing that, should have a very minimal requirement (they suggest 10 minutes). Macquarie also favours an exemption for ‘small’ licences but in the absence of an exemption suggest a requirement of between 10 minutes and a maximum of one hour. Macquarie classified ‘small’ licences as: • a licence area with a total licence area population of 75,000 or less; • a licence area that ACMA has determined to be a small licence area, having regard to other licence area characteristics including (in addition to population figures): • the existence of licence overlaps; • overspills from adjoining markets; and, • the size of the largest population centres in the licence area. Macquarie also referred to the categorisation of licensees in the Commercial Radio Announcer’s Award172 on the basis of population. The Award classifies stations with a licence area population of less that 80,000 (Group 4 stations) as ‘small’. Table H1.0 illustrates the proportion of licence areas and licences caught by a range of definitions of ‘small’. Table H1.0: Licences affected by varying definitions of ‘small’ Source of definition Definition of ‘small’ No. of licence areas % of licence No. of licences % of (n=104) areas (n=224) licences CRA 4 voices or less 66 63% 122 54% CRA and Macquarie Population of licence area less 66 63% 131 58% than 75,000 Macquarie Population of licence area less 66 63% 131 58% than 80,000 ACMA BFR173 (without Population of licence area less 35 34% 66 29% other characteristics) than 40,000

172 Commercial Radio Announcer’s Award 1998 (determined by the Australian Industrial Relations Commission in 1998 and varied in 2005) 173 Broadcasting Financial Results denotes a licence area with a population of less then 40,000 as small. It does not represent Macquarie’s listed characteristics.

88 Australian Communications and Media Authority Local Content Levels Investigation Report

ACMA does not accept the definitions of small proposed by CRA and Macquarie, nor does it consider it appropriate to exempt small licences (however defined) as exempting 63 per cent of licence areas and 54 per cent of licences is not consistent with the legislative intent as it would potentially result in audiences in 63 per cent of licence areas not receiving local content on commercial radio. Financial impact During the passage of the Media Ownership Bill, Mr Paul Neville, Member for Hinkler said that, ‘As this review goes ahead I would be happy to support a lower threshold of compliance for those in small markets.’ This was supported by Mr Bruce Scott, Member for Maranoa, who spoke of concerns about regional radio licences being able to meet a general 4.5 hour requirement. 174 Table H2.0, taken from the Financial Impact Report, gives profits for AM/FM stations based on licence area population175: Table H2.0: Profits for AM/FM stations Larger Larger Medium Medium Smaller Smaller Regional FM Regional AM Regional FM Regional AM Regional FM Regional AM Average revenue per stations ($m) 3.2 1.1 1.0 1.0 0.4 0.5 Average expenditure per station ($m) 2.3 1.0 0.7 0.9 0.3 0.4 PBIT/station ($m) 0.83 0.10 0.32 0.09 0.11 0.12 Average profit margin (PBIT/revenue) 26% 10% 33% 10% 28% 24% It can be seen from the table that the average revenue for smaller regional FMs and AMs is $400,000 and $500,000 respectively, considerably less than larger and medium regional broadcasters. This is also the position with the PBIT/station when FM and AM services are combined—for smaller regional licences combined PBIT is $230,000 per annum compared with medium’s $410,000 and large licences’ $930,000. It has been anecdotally reported that the smaller the population concentration the smaller the revenue base as is often the case with small regional licence areas, which quite often cover large geographical areas without a major population centre of over 5,000. It has also been reported that the expenditure and therefore profit margin figures in the BFR do not necessarily present a clear picture of return on investment as they do not include expenses such as corporate overheads.176 It is possible to identify a class of small licences for an applicable number other than 4.5 based on annual revenue. However ACMA considered and rejected this approach because profitability: a) is very difficult to monitor and fluctuates; b) is a function of a range of factors (for example, quality of programming and business acumen of the licensee), all of which are likely to change over time; and c) will differ across licence areas within a network. ACMA also considered defining ‘small on the basis of licence area population. Definition 4 below, (‘small as licence area population less than 20,000’), treats licence areas with a wide variance in largest city or town population equally, for example Mudgee Licence Area population in Central NSW is 18,5475 ( largest city or town Mudgee’s population is 17,682) and Narrogin Licence Area in southern Western Australia has a population of 19,831 (largest

174 Hansard 17.10.06, at pages 18 and 65 175 Financial Impact Report 176 Email, Stephen Everett, ACE Radio Broadcasters, 8 May 2007.

Australian Communications and Media Authority 89 Local Content Levels Investigation Report population centre is Wagin 1,725). The strong correlation between population concentration and advertising revenue suggests this criterion is inadequate. A concentrated population centre is likely to attract more local advertising revenue than a population spread out over a vast distance. Advertising revenue is the primary income revenue for radio licensees, local advertising representing 70 per cent of all advertising revenue.177 Definition 1: Small as licence area under 20,000 and largest city or town population less than 10,000 Licence area population and largest city or town criteria exempts 22 licences (10 per cent) of 224 licences in 11 licence areas (11 per cent of licence areas): No. licence % of licence Class No. of licences % of licences areas areas Small as licence area population of less than 20,000 11 11 22 10

Number of Licence area name Voices licences Licence area population Largest city or town population QUEENSTOWN RA1 3 2 5,917 2,352 CHARLEVILLE RA1 3 2 9,161 3,519 CARNARVON RA1 3 2 12,100 9,152 CHARTERS TOWERS RA1 4 2 12,936 8,492 LONGREACH RA1 3 2 13,860 4,368 BRIDGETOWN RA1 3 2 14,984 2,094 ROMA RA1 3 2 15,062 6,346 KATANNING RA1 3 2 15,157 4,146 MERREDIN RA1 3 2 15,419 3,630 SCOTTSDALE RA1 3 2 16,055 1,904 NARROGIN RA1 3 2 19,831 1,725

Call sign Band Licence area name BFR Licensee Network 7XS AM QUEENSTOWN RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie 7AUS FM QUEENSTOWN RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie 4VL AM CHARLEVILLE RA1 S Pinecam Pty Ltd B & J Smart 4CCC FM CHARLEVILLE RA1 S Pinecam Pty Ltd B & J Smart 6LN AM CARNARVON RA1 S Hits Radio Hits Radio 6CAR FM CARNARVON RA1 S Hits Radio Hits Radio CHARTERS TOWERS 4GC AM S North Queensland Broadcasting Corporation Pty Ltd Macquarie RA1 CHARTERS TOWERS 4CHT FM S North Queensland Broadcasting Corporation Pty Ltd Macquarie RA1 A Robertson & D 4LG AM LONGREACH RA1 S Radio Outback Pty Ltd Robertson A Robertson & D 4LRE FM LONGREACH RA1 S Radio Outback Pty Ltd Robertson 6BY AM BRIDGETOWN RA1 S Elldale Pty Ltd Macquarie 6BET FM BRIDGETOWN RA1 S Elldale Pty Ltd Macquarie 4ZR AM ROMA RA1 S Regional Broadcasters Australia Pty Limited Macquarie 4ROM FM ROMA RA1 S Regional Broadcasters Australia Pty Limited Macquarie 6WB AM KATANNING RA1 S Elldale Pty Ltd Macquarie 6KAN FM KATANNING RA1 S Elldale Pty Ltd Macquarie 6MD AM MERREDIN RA1 S Mid-Districts Radio Pty Ltd Macquarie 6MER FM MERREDIN RA1 S Mid-Districts Radio Pty Ltd Macquarie 7SD AM SCOTTSDALE RA1 S North East Tasmanian Radio Broadcasters Pty Ltd Macquarie 7RGS FM SCOTTSDALE RA1 S North East Tasmanian Radio Broadcasters Pty Ltd Macquarie 6NA AM NARROGIN RA1 S Radio West Broadcasters Pty Ltd Macquarie

177 Regional visit consultation with James Barrett (General Manager), West Coast Radio, 2.3.07.

90 Australian Communications and Media Authority Local Content Levels Investigation Report

6NAN FM NARROGIN RA1 S Radio West Broadcasters Pty Ltd Macquarie Definition 2: Very small as largest city or town population less than 5,000 Largest city or town population of less than 5,000 would exempt 20 licences (nine per cent) of 224 licences in 10 licence areas (10 per cent of licence areas). An example of a licence that meets this definition is Riverland with a licence area population of 35,292 and a largest city or town population of only 4,470. Although Renmark would not be exempted under a licence area population definition of, for example less than 20,000, under a largest city or town population definition this licence area is the tenth smallest. No. of licence % of licence % of Class No. licences areas areas licences Small as largest city or town population of less than 5,000 10 10 20 9

Largest city or town Licence area name Voices No. of licences Licence area population population NARROGIN RA1 3 2 19,831 1,725 SCOTTSDALE RA1 3 2 16055 1,904 BRIDGETOWN RA1 3 2 14,984 2,094 QUEENSTOWN RA1 3 2 5,917 2,352 CHARLEVILLE RA1 3 2 9,161 3,519 NORTHAM RA1 3 2 27,777 3,572 MERREDIN RA1 3 2 15,419 3,630 KATANNING RA1 3 2 15,157 4,146 LONGREACH RA1 3 2 13,860 4,368 RIVERLAND RA1 2 2 35,292 4,470

Call sign Band Licence area name BFR Licensee Network 6NA AM NARROGIN RA1 S Radio West Broadcasters Pty Ltd Macquarie 6NAN FM NARROGIN RA1 S Radio West Broadcasters Pty Ltd Macquarie 7SD AM SCOTTSDALE RA1 S North East Tasmanian Radio Broadcasters Pty Ltd Macquarie 7RGS FM SCOTTSDALE RA1 S North East Tasmanian Radio Broadcasters Pty Ltd Macquarie 6BY AM BRIDGETOWN RA1 S Elldale Pty Ltd Macquarie 6BET FM BRIDGETOWN RA1 S Elldale Pty Ltd Macquarie 7XS AM QUEENSTOWN RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie 7AUS FM QUEENSTOWN RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie 4VL AM CHARLEVILLE RA1 S Pinecam Pty Ltd B & J Smart 4CCC FM CHARLEVILLE RA1 S Pinecam Pty Ltd B & J Smart 6AM AM NORTHAM RA1 S Radio 6AM Pty Ltd Macquarie 6NAM FM NORTHAM RA1 S Radio 6AM Pty Ltd Macquarie 6MD AM MERREDIN RA1 S Mid-Districts Radio Pty Ltd Macquarie 6MER FM MERREDIN RA1 S Mid-Districts Radio Pty Ltd Macquarie 6WB AM KATANNING RA1 S Elldale Pty Ltd Macquarie 6KAN FM KATANNING RA1 S Elldale Pty Ltd Macquarie A Robertson & D 4LG AM LONGREACH RA1 S Radio Outback Pty Ltd Robertson A Robertson & D 4LRE FM LONGREACH RA1 S Radio Outback Pty Ltd Robertson 5RM AM RIVERLAND RA1 S 5AU Broadcasters Pty Ltd Rural Press Limited 5RIV FM RIVERLAND RA1 S 5AU Broadcasters Pty Ltd Rural Press Limited Definition 3: Small as licence area population less than 10,000 Licence area population less than 10,000 would exempt four licences (two per cent) of 224 licences in two licence areas (two per cent of all licence areas).

Australian Communications and Media Authority 91 Local Content Levels Investigation Report

No. of licence % of licence No. of % of Class areas areas licences licences Small as licence area population of less than 10,000 2 2 4 2

Licence area name Voices No. of licences Licence area population Largest city or town population QUEENSTOWN RA1 3 2 5,917 2,352 CHARLEVILLE RA1 3 2 9,161 3,519

No. licences in Call sign Band Licence area name BFR Pop. Licensee Network licence area Great Southern Land 7XS AM QUEENSTOWN RA1 2 S 5,917 Macquarie Broadcasters Pty Ltd Great Southern Land 7AUS FM QUEENSTOWN RA1 2 S 5,917 Macquarie Broadcasters Pty Ltd 4VL AM CHARLEVILLE RA1 2 S 9,161 Pinecam Pty Ltd B Smart & J Smart 4CCC FM CHARLEVILLE RA1 2 S 9,161 Pinecam Pty Ltd B Smart & J Smart Charleville is owned by independent operators B&J Smart (Pinecam), who also own the two licences in Longreach and a section 40 licence in Emerald. The Charleville licences were mentioned, along with Roma and Longreach, as the type of small market licences requiring special attention by Mr Bruce Scott (Maranoa) in the Parliamentary debate on the Bill. Charleville is the second smallest commercial radio service area by population yet the second largest by area (141,638 km2) behind 4LG in Longreach. Both Charleville (2,352) and (3,519) Queenstown contain the smallest populations for their largest city or town, which has a direct relationship with the ability to raise advertising revenue. Brad Smart, of Pinecam has said ‘Our stations generally lose between $60,000 and $100,000 a year’. 178 Queenstown is owned by the largest radio network Macquarie Regional Radioworks. Queenstown along with Tasmania was mentioned by Tim Hughes, then CEO of Macquarie Regional Radioworks, as being one their licences that would close as a consequence of this legislation.179 Convergent Consulting reports that the average PBIT per annum for a smaller regional AM is $120,000 and for a small regional FM is $110,000.180 Definition 4: Small as licence area population less than 20,000 Licence area population of less than 20,000 would exempt 28 licences (13 per cent) of 224 licences in 14 licence areas (13 per cent of all licences). Of the 28 licences under this definition of small, 18 are owned by Macquarie, and two by Bill Caralis/Broadcast Operations, the second largest network. Charters Towers, Scottsdale, Queenstown, Katanning, Narrogin, Bridgetown, Esperance and Merredin were all mentioned in The Australian by Tim Hughes, then CEO of Macquarie Regional Radioworks, as facing closure under the new requirements.181 The difficulty with this definition, as mentioned earlier, is the disparity between population concentrations, which are indicative of the potential to raise advertising revenue. Despite the fact that licence areas may share similar licence area populations, they may vary widely in terms of licence area size and the size of the principal town(s) (and therefore population concentration). Mudgee, for example, is 3,263 km2 and has a licence area population of 18,475, whereas

178 7:30 Report, ABC, 16.11.06 179 The Australian, online, 12.10.06 180 Financial Impact Report 181 The Australian, online, 12.10.06

92 Australian Communications and Media Authority Local Content Levels Investigation Report

Narrogin is 34,231 km2 with a similar population of 19,831—very different concentrations of population and therefore ability to attract advertising revenue. % of licence Class No. licence areas No. of licences % of licences areas Small as licence area population of less than 20,000 14 13 28 13

Number of Licence area Largest city or Licence area name Voices licences population town population QUEENSTOWN RA1 3 2 5,917 2,352 CHARLEVILLE RA1 3 2 9,161 3,519 CARNARVON RA1 3 2 12,100 9,152 CHARTERS TOWERS RA1 4 2 12,936 8,492 LONGREACH RA1 3 2 13,860 4,368 BRIDGETOWN RA1 3 2 14,984 2,094 ROMA RA1 3 2 15,062 6,346 KATANNING RA1 3 2 15,157 4,146 MERREDIN RA1 3 2 15,419 3,630 KARRATHA RA1 3 2 15,974 15,974 SCOTTSDALE RA1 3 2 16,055 1,904 ESPERANCE RA1 3 2 17,428 12,820 MUDGEE RA1 4 2 18,475 17,682 NARROGIN RA1 3 2 19,831 1,725

Call sign Band Licence area name BFR Licensee Network 7XS AM QUEENSTOWN RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie 7AUS FM QUEENSTOWN RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie 4VL AM CHARLEVILLE RA1 S Pinecam Pty Ltd B & J Smart 4CCC FM CHARLEVILLE RA1 S Pinecam Pty Ltd B & J Smart 6LN AM CARNARVON RA1 S Hits Radio Hits Radio 6CAR FM CARNARVON RA1 S Hits Radio Hits Radio CHARTERS TOWERS North Queensland Broadcasting Corporation Pty 4GC AM S Macquarie RA1 Ltd CHARTERS TOWERS North Queensland Broadcasting Corporation Pty 4CHT FM S Macquarie RA1 Ltd A Robertson & D 4LG AM LONGREACH RA1 S Radio Outback Pty Ltd Robertson A Robertson & D 4LRE FM LONGREACH RA1 S Radio Outback Pty Ltd Robertson 6BY AM BRIDGETOWN RA1 S Elldale Pty Ltd Macquarie 6BET FM BRIDGETOWN RA1 S Elldale Pty Ltd Macquarie 4ZR AM ROMA RA1 S Regional Broadcasters Australia Pty Limited Macquarie 4ROM FM ROMA RA1 S Regional Broadcasters Australia Pty Limited Macquarie 6WB AM KATANNING RA1 S Elldale Pty Ltd Macquarie 6KAN FM KATANNING RA1 S Elldale Pty Ltd Macquarie 6MD AM MERREDIN RA1 S Mid-Districts Radio Pty Ltd Macquarie 6MER FM MERREDIN RA1 S Mid-Districts Radio Pty Ltd Macquarie 6KA AM KARRATHA RA1 S North West Radio Pty Ltd Redwave Media 6RED FM KARRATHA RA1 S North West Radio Pty Ltd Redwave Media North East Tasmanian Radio Broadcasters Pty 7SD AM SCOTTSDALE RA1 S Macquarie Ltd North East Tasmanian Radio Broadcasters Pty 7RGS FM SCOTTSDALE RA1 S Macquarie Ltd 6SE AM ESPERANCE RA1 S Esperance Broadcasters Pty Ltd Macquarie 6SEA FM ESPERANCE RA1 S Esperance Broadcasters Pty Ltd Macquarie 2MG AM MUDGEE RA1 S Mudgee Broadcasting Company Pty Ltd Broadcast

Australian Communications and Media Authority 93 Local Content Levels Investigation Report

Operations Broadcast 2GEE FM MUDGEE RA1 S Mudgee Broadcasting Company Pty Ltd Operations 6NA AM NARROGIN RA1 S Radio West Broadcasters Pty Ltd Macquarie 6NAN FM NARROGIN RA1 S Radio West Broadcasters Pty Ltd Macquarie Definition 5: Small as largest city or town population less than 10,000 Largest city or town population of less than 10,000 would exempt 37 licences (17 per cent) of 224 licences in 19 licence areas (18 per cent of all licences). The additional 17 licences from the higher criterion includes Roma (largest city or town population of 6,346) and Charters Towers (largest city or town population of 8,492) both mentioned in either Hansard or otherwise as requiring special consideration. No. of licence % of licence No. of Class areas areas licences % of licences Small as largest city or town population of less than 10,000 19 18 37 17

Largest city or Licence area name Voices # Licences LA pop town population NARROGIN RA1 3 2 19,831 1,725 SCOTTSDALE RA1 3 2 16,055 1,904 BRIDGETOWN RA1 3 2 14,984 2,094 QUEENSTOWN RA1 3 2 5,917 2,352 CHARLEVILLE RA1 3 2 9,161 3,519 NORTHAM RA1 3 2 27,777 3,572 MERREDIN RA1 3 2 15,419 3,630 KATANNING RA1 3 2 15,157 4,146 LONGREACH RA1 3 2 13,860 4,368 RIVERLAND RA1 2 2 35,292 4,470 REMOTE COMMERCIAL RADIO SERVICE NORTH EAST ZONE RA1 1 2 200,659 5,160 INVERELL RA1 4 2 30,441 5,722 ROMA RA1 3 2 15,062 6,346 COOMA RA1 4 2 31,433 6,949 MURWILLUMBAH RA1 6 1 207,297 7,596 CHARTERS TOWERS RA1 4 2 12,936 8,492 INNISFAIL RA1 4 2 34,441 8,534 HAMILTON RA1 4 2 43,256 9,128 CARNARVON RA1 3 2 12,100 9,152

Definition 6: Small as licence area under 20,000 or largest city or town population less than 10,000 Licence area under 20,000 or largest city or town population less than 10,000 would exempt 43 licences (19 per cent) of 224 licences in 22 licence areas (21 per cent of all licences). The discussion under definition 4 applies also to this definition. No. of licence % of licence No. of Class areas areas licences % of licences Small as licence area population less than 20,000 or largest city or town population of less than 10,000 22 21 43 19

Largest city or town Licence area name Voices # Licences LA pop population BRIDGETOWN RA1 3 2 14,984 2,094 CARNARVON RA1 3 2 12,100 9,152

94 Australian Communications and Media Authority Local Content Levels Investigation Report

CHARLEVILLE RA1 3 2 9,161 3,519 CHARTERS TOWERS RA1 4 2 12,936 8,492 COOMA RA1 4 2 31,433 6,949 ESPERANCE RA1 3 2 17,428 12,820 HAMILTON RA1 4 2 43,256 9,128 INNISFAIL RA1 4 2 34,441 8,534 INVERELL RA1 4 2 30,441 5,722 KARRATHA RA1 3 2 15,974 10,796 KATANNING RA1 3 2 15,157 4,146 LONGREACH RA1 3 2 13,860 4,368 MERREDIN RA1 3 2 15,419 3,630 MUDGEE RA1 4 2 18,475 17,682 MURWILLUMBAH RA1 6 1 207,297 7,596 NARROGIN RA1 3 2 19,831 1,725 NORTHAM RA1 3 2 27,777 3,572 QUEENSTOWN RA1 3 2 5,917 2,352 REMOTE COMMERCIAL RADIO SERVICE 1 2 200,659 5,160 NORTH EAST ZONE RA1 RIVERLAND RA1 2 2 35,292 4,470 ROMA RA1 3 2 15,062 6,346 SCOTTSDALE RA1 3 2 16,055 1,904 22 43

Call sign Band Licence area name BFR Licensee Network 6BY AM BRIDGETOWN RA1 S Elldale Pty Ltd Macquarie 6BET FM BRIDGETOWN RA1 S Elldale Pty Ltd Macquarie 6LN AM CARNARVON RA1 S Hits Radio Hits Radio 6CAR FM CARNARVON RA1 S Hits Radio Hits Radio 4VL AM CHARLEVILLE RA1 S Pinecam Pty Ltd B & J Smart 4CCC FM CHARLEVILLE RA1 S Pinecam Pty Ltd B & J Smart North Queensland Broadcasting Corporation 4GC AM CHARTERS TOWERS RA1 S Macquarie Pty Ltd North Queensland Broadcasting Corporation 4CHT FM CHARTERS TOWERS RA1 S Macquarie Pty Ltd Independent – Kevin 2XL COOMA RA1 S Radio Snowy Mountains Pty Ltd Blyton Independent – Kevin 2SKI COOMA RA1 S Radio Snowy Mountains Pty Ltd Blyton 6SE AM ESPERANCE RA1 S Esperance Broadcasters Pty Ltd Macquarie 6SEA FM ESPERANCE RA1 S Esperance Broadcasters Pty Ltd Macquarie ACE Radio Broadcasters 3HA HAMILTON RA1 M ACE Radio Broadcasters Pty Ltd Pty Ltd ACE Radio Broadcasters 3HFM HAMILTON RA1 M ACE Radio Broadcasters Pty Ltd Pty Ltd 2NZ AM INVERELL RA1 S Northern Broadcasters Pty Ltd Broadcast Operations 2GEM FM INVERELL RA1 S Northern Broadcasters Pty Ltd Broadcast Operations 6KA AM KARRATHA RA1 S North West Radio Pty Ltd Redwave Media 6RED FM KARRATHA RA1 S North West Radio Pty Ltd Redwave Media 6WB AM KATANNING RA1 S Elldale Pty Ltd Macquarie 6KAN FM KATANNING RA1 S Elldale Pty Ltd Macquarie A Robertson & D 4LG AM LONGREACH RA1 S Radio Outback Pty Ltd Robertson A Robertson & D 4LRE FM LONGREACH RA1 S Radio Outback Pty Ltd Robertson 6MD AM MERREDIN RA1 S Mid-Districts Radio Pty Ltd Macquarie 6MER FM MERREDIN RA1 S Mid-Districts Radio Pty Ltd Macquarie 2MG AM MUDGEE RA1 S Mudgee Broadcasting Company Pty Ltd Broadcast Operations

Australian Communications and Media Authority 95 Local Content Levels Investigation Report

2GEE FM MUDGEE RA1 S Mudgee Broadcasting Company Pty Ltd Broadcast Operations 2MW MURWILLUMBAH RA1 L Tweed Radio & Broadcasting Co Pty Ltd Broadcast Operations 6NA AM NARROGIN RA1 S Radio West Broadcasters Pty Ltd Macquarie 6NAN FM NARROGIN RA1 S Radio West Broadcasters Pty Ltd Macquarie 6AM AM NORTHAM RA1 S Radio 6AM Pty Ltd Macquarie 6NAM FM NORTHAM RA1 S Radio 6AM Pty Ltd Macquarie 7XS AM QUEENSTOWN RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie 7AUS FM QUEENSTOWN RA1 S Great Southern Land Broadcasters Pty Ltd Macquarie REMOTE COMMERCIAL 4BRZ FM RADIO SERVICE NORTH L Rebel FM Stereo Pty Ltd Independent – P Jowitt EAST ZONE RA1 5RM AM RIVERLAND RA1 S 5AU Broadcasters Pty Ltd Rural Press Limited 5RIV FM RIVERLAND RA1 S 5AU Broadcasters Pty Ltd Rural Press Limited 4ZR AM ROMA RA1 S Regional Broadcasters Australia Pty Limited Macquarie 4ROM FM ROMA RA1 S Regional Broadcasters Australia Pty Limited Macquarie North East Tasmanian Radio Broadcasters 7SD AM SCOTTSDALE RA1 S Macquarie Pty Ltd North East Tasmanian Radio Broadcasters 7RGS FM SCOTTSDALE RA1 S Macquarie Pty Ltd See definition 4, small as licence area population less than 20,000 for arguments regarding the use of licence area population. Findings ACMA considers an appropriate definition of ‘small’ licences to be licences located in a licence area that is less than 20,000 and where the largest town or city is under 10,000 people. ACMA considers the combination of two criteria is useful because of the correlation between the size of the largest population centre and revenue derived from advertising. This definition exempts 22 licences in 11 licence areas representing 10 per cent of all licences and 11 per cent of licence areas. No. of licence % of licence No. of % of Class areas areas licences licences Def: 1 Small as licence area population under 20,000 and largest 11 11 22 10 city or town population of less than 10,000 Def: 2 10 10 20 9 Small as licence area population of less that 5,000 Def: 3 22 42 Small as licence area population of less than 10,000

Def: 4 Small as licence area population of less than 20,000 14 13 28 13 Def: 5 Small as largest city or town population of less than 10,000 19 18 37 17 Def: 6 Small as licence area population under 20,000 or largest 22 21 43 19 city or town population of less than 10,000

96 Australian Communications and Media Authority