of those licensees who subsequently have defaulted in respect of offers of conversion AM/FM Conversion to FM, the government will receive signifi­ cantly less than $105 million. In summary, the current position is as follows; Paul Ntarx examines the story so far Sydney: No tenders have been lodged. Changed economic conditions are hkely to n the May 1989 edition of the Commu­ that the decision involved an error of law in result in bids well below the $31.5 million nication Law Bulletin, I assessed the that the Minister’s notice did not, as it was paid by the licensee of 3KZ, Melbourne. No obliged to do under section 89DAB(2) (b) of progress of the procedures for convert­ additional converted commercial FM serv­ the Act, set out an outline, in the case of ing commercial radio services in ices can be expected before early 1991- Wesgo, of the new technical conditions pro­ jtralia’s capital cities from the AM to the Brisbane: One converted FM service is posed for the frequencies to be allocated I frequency bands. Some twelve months operating, resulting in the payment to the pursuant to the Notice. Those proceedings ;r it is useful to make a further assess- Commonwealth of $17.1 million. _ . (which are listed for further directions on 14 nt of those procedures. Melbourne: One converted FM service is September 1990) resulted in the closing date The following is a simple chronology of operating. Another is expected to commence for tenders in Sydney being extended to 29 _■ events so far: in late June. Fees payable to the Common­ ,ril 1989: The then Minister for Trans- December 1989. _ _ wealth will total approximately $43 million. :t and Communications, the Hon. Ralph November 1989: The Minister an­ Adelaide: One converted FM service is op­ nounced that the licensee of SDN was the ilis published a notice in the Common- erating. The licensee of 5DN is apparently successful tenderer for the second FM fre­ alth of Australia Gazette (No. S139, 18 still to meet the preconditions for conver­ quency in Adelaide with a bid of $6 million ■ril 1989) pursuant to section 89DAB of sion. Fees paid to date to the government (Media Release 102/89,8 November 1989). ; Broadcasting Act 1942 (“the Act”) invit- December 1989: The closing date for ten­ amount to $5.5 million. t licensees who held AM commercial ra- Perth: No AM services have converted to ders in Sydney was extended to 28 February i licences in mainland State capital cities FM. Further tenders are awaited. lodge applications with the Tender Board 1990. Discussions continued between suc­ o date the government has received cessful tenderers in Melbourne, Brisbane, ■ conversion of their licences to FM. Ten- $54.1 million of the $105 million ex­ rs were called for two new FM services in Adelaide and Perth concerning the meeting pected by Mr. Willis. In the event of ch of Sydney, Melbourne, Adelaide and of the necessary preconditions for conver­ conversion of both 3TT and SDN rth. Tenders were called for one FM ser- sion.3LULI. later this year, that amount will increase to January 1990:3KZ Melbourne converted :e in Brisbane because of the availability at T$71.6 million, of which approximately 43.3% to FM and adopted the call sign 3KKZ. 5KA, at time of FM frequencies for conversion, has been paid by Industrial Printing and Adelaide converted to FM and adopted the ■riders for the conversion of licences were Publicity Company limited, the licensee of close on 19 July 1989. By 18 April 1989 of call sign 5KKA February 1990: The closing date for ten­ 3KKZ, Melbourne, e 27 AM commercial licensees Australia- The $36.3 million lost by the government ders in Sydney was extended to 30 May de eligible to apply for conversion of their from AM licensees who have defaulted is a 1990. The Minister amended his section ences, 24 had expressed interest in ten- consequence of the provisions of the Act 289DAB Notice of 18 April 1989 by publish­ relating to FM conversion. Mindful of the ring. ing a draft Statement of Technical Condi­ ugust 1989: The Minister published a provisions of the constitution (section 55), tions applicable only to those licensees in jtice in the Gazette on 2 August 1989 pur- the Parliamentary draftsman has ensured Sydney who satisfy the conditions stipulated ant to section 89DAJ of the Act notifying that Division 1A of Par t IIIB of the Act (Con­ in section 4(16)(b) of the Act (i.e. 2WS). e result of the July tender. That notice version of AM Commercial Radio Licences 4BK, Brisbane converted to FM and adopted ated that six commercial AM radio licens- To FM As Part Of The National Radio Plan) •s had been successful in their bids, namely the call sign 4BBB. is silent as to the payment by a licensee of March 1990: The licensees of each of 3 AK. XZ Melbourne ($31,568,999); 3AK, the amount of its tender bid. Section 6C(1) (Melbourne), 6PM (Perth) and 6GL (Perth) felbourne ($22,700,000); 4BK, Bns- of the Radio licence Fees Act 1964 (“the defaulted within the meaning of S.89DAM of ine ($17,139,012.96); 5KA, Adelaide licence Fees Act") provides that the fee pay­ the Act In Melbourne the licensee of 3TT, ;5,525,003); 6PM, Perth ($16,382,000); and able in respect of conversion from AM to being the next highest bidder on the tender GL, Perth ($12,001,010.80). Only one ten- FM pursuant to an application made under list ($11.5 million), became eligible for con­ ;r in Adelaide met the reserve determined section 89DAE of the Act is payable “upon version. 3TT expects to convert to FM in 7 the Minister under S.89DAG of the Act the conversion”. Section 4 (1) of the Act de­ late June 1990. In Perth, no other licensees id tenders were reopened. The Minister fines “convert to FM” in relation to an AM met the reserve determined by the Minister reviously had extended the closing date for commercial radio licence as meaning to under section 89DAG of the Act, necessitat­ •nders for the two FM frequencies in Syd- “vary the technical conditions of the licence sy 11 October 1989 to accommodate an ing a further tender process. warrant in respect of the licence under sub­ May 1990: The closing date for tenders in xtension of television transmissions on section 89D(6) so as to authorise very high Sydney was extended to 19 October 1990. frequency transmission." Hence, if a lic­ hannel 4, Wollongong. In July 1989 when announcing the six -eptember 1989: Wesgo Commumca- ensee who is offered conversion defaults commercial AM radio sendees which had ons Pty- Limited (“Wesgo”) commenced (within the meaning of section 89DAM(1) of been successful in their bids to be offered a roceedings against the Minister and offic­ the Act), the defaulting licensee is not re­ frequency on the FM band, the then Minis­ es of his Department in the Federal Court quired to pay the conversion fee specified in ter announced that the total amount bid by q Australia. That application sought orders the licensees of those services was $105 the Licence Fees Act A defaulting licensee jf review and prohibition in respect of, merely forfeits any deposit paid by it in rela­ million. Mr. Willis stated that the amount of mongst other things, the Minister's deci­ tion to the conversion application (section the bids “reinforces the Government’s view sion pursuant to section 89DAB of the Act to 89DAO(5) of the Act). The amount of the that the FM radio spectrum is indeed a Publish the notice on 18 April 1989 inviting deposit specified in the notice published by enders for conversion to FM. It was claimed valuable public resource”. As a consequence 20 attributable to superior technical quality of cations. The amounts of some of their bids he Minister on 18 April 1989 inviting appli- FM transmission. Having managed aradio for conversion may well be adjusted down­ .ations for conversion was only $10,000.00. station through the transition from AM to wards, havingregard to commercial realities. It is interesting to note that, notwith­ FM frequencies, I can categorically state It is apparent that the process of AM/ standing the provisions of section 26C(1) of that the difference in quality of sound is FM conversion as part of the National Met­ he Licence Fees Act, the Minister’s section significant During our four-week change ropolitan Radio Plan has not progressed as i9DAB notice of 18 April 1989 stated, that over trials, we were able to listen to the same quickly or efficiently as the architects of that he “tender bid amount is payable within 14 programs on AM or FM simply by flicking a plan envisaged. According to a statement in lays of the date on which the Minister signs switch. The difference was like chalk and August 1988 by the then Minister for he licence warrant changing the technical Transport and Communications, Senator cheese. , :onditions of the licence to FM operation”. have maintained, with other AM licen­ Gareth Evans Q.C., AM/FM conversion as In his notice published on 14 February 1990, sees, that FM radio represented a tech­ part of Stage 1 of the Plan should have been ly which the Minister informed interested nological advance similar to the appear­ completed by 1989 (except in Brisbane lersons that the original Invitation to Ten- ance of colour technology in the televi­ where the availability of FM frequencies tier with respect to Sydney tenders was sion industry and, accordingly, existing AM would see the second FM conversion in amended, it was stated that the provisions in Ilicensees should have been permitted to the section 89AB Notice concerning pay­ 1992) ■ v . .. convert to FM as a matter of right, as a Advocates of reforms to the current li­ ment of the tender bid amount were matter of equity, and for the public benefit censing provisions contained in the Act, who amended to read “The tender bid amount is propose the introduction of a tender system payable on conversion of the licence war­ for the granting of new commercial radio The conversion scheme rant to FM, in accordance with the Radio licences (rather than the selection of the The government instead took a different Licence Fees Act 1964”. most suitable applicant by the Australian s regards those licensees who have view and in August 1988, Gareth Evans, the Broadcasting Tribunal) frequently cite the defaulted after being offered con­ then Minister for Transport and Communi­ efficiency of such a reformed licensing sys­ cations, unveiled the governments plan for version by the Minister, it is open tem as being one of its main attributes. To to them to submit a further tender the development of metropolitan radio serv­ the extent that the experience to date with ices. The plan was stated to have addressed bid in due course in circumstances where no AM/FM conversion is any indication, such Aother licensee is eligible for conversion (e.g. various issues including: in Perth where no other applicants met the a claim must be questioned. • the strongly pursued claim of many existing AM licences to convert to FM reserve specified by the Minister). One pre­ Paul Marx is a partner in the Sydney firm of sumes that most, if not all, of such defaulting on commercial, and in some cases, licensees will submit fresh conversion appli­ solicitors, Boyd House & Partners technical grounds • the need to guarantee a secure and technically effectivefuturefor the Radio Les Heil argues that the government’s metropolitan radio for the Print Handicapped service • the need to find a delivery mechanism conversion scheme needs overhauling _ for Parliamentary broadcasts which does not hopelessly disrupt ABC Perth is the single metropolitan capital where ince the introduction of commer­ FM audience is expected to fall marginally programming, but is not prohibitively cial FM radio services in Austra­ expensive to establish from 28.4 percent to 28.3 percent lia about 10 years ago the new • the need to not only minimise This increase in FM popularity (and FM services have attracted in­ government financial outlays to secure profitability) is not primarily due to an in­ creasingly larger audiences and their adver­ crease in the total radio audience attracted these various objectives, but to ensure Stising revenues have increased largely at by the new services. The radio sector’s audi­ an appropriate financial return to the the expense of many long-established AM community from a scarce public ence while large has not increased dramati­ services. . cally. Revenue too is generally static, with resource. In Melbourne the 1987-1988 ratings fig­ recent and estimated future growth, at best, Because of the shortage of FM frequen­ ures show that FOX-FM, Melbourne’s then equalling inflation. The growth in FM’s audi­ cies in capital cities, a shortage greatly exac­ most popular station, and MMM, FOX’s ence and revenue has been achieved princi­ erbated by governments of both persuasions nearest competitor, captured 40 percent of in first allocating part of the FM band to pally at the expense of the existing commer­ all advertising revenue. television and then squandering many of the In the same period Australia’s 29 Metro­ cial AM licencees. hese recent figures bear ample testi­ remaining frequencies on services of mini­ politan AM stations could only manage a mony to trends which have been in­ mal public appeal, it became necessary to total profit of $200,000, while the seven com­ creasingly evident over the last 10 amend the relevant legislation to provide a mercial FM stations recorded a $27 million years. Not surprisingly, as listeners mechanism to allocate the reduced number profit.______deserted established AM stations in droves,of FM frequencies. FM’s popularity______TAM operators pressed the government for An amendment to the Licence Fees Act the right to convert to FM frequencies - 1964 created an obligation on the part of the Its not hard to understand how these there being ample capacity in the FM band relevant licensees to pay a fee upon conver­ profits have been achieved by the FM sta­ (had it been properly managed) to accom­ sion from AM to FM. That fee is determined tions when one has regard to their audience modate most, if not all, existing AM opera- according to the formula B-V (where B is share. Since 1987 the FM audience in Syd­ the amount of the bid made by the success­ ney has risen from 23.1 percent to an esti­ Existing FM licensees attributed their ful licensee and V is the value of the mated 27.7 percent of the available radio success to better programming and man­ licensee’s existing transmission facilities). audience for 1990-91, Melbourne’s FM au­ agement of their new services. The AM li­ The bidding system was provided for by dience will increase from 26.5 percent to censees argued that a significant increase in the amendments to sections 89ADA to 41,4; Brisbane from 28,5 percent to 39.7; and the popularity of commercial FM radio was 89ADP of the Broadcasting Act 1942. Put Adelaide from 29 percent to 45.5 percent. 21 is beginning to realise its error and express time of high interest rates and at a time iefly, the system involves existing AM lic­ doubt about its auctioning system. There is when the economy is contracting. The re­ hees lodging a sealed bid with the Depart­ also some suggestion of a more liberal spec­ ed of Transport and Communication’s sults of this system of allocation has been to substantially undermine stability in the in­ trum allocation: that is, with less space re­ mder Board following a call for bids made quired between stations leading to increased the Minister in the Commonwealth Ga- dustry. Bond Radio has had to forgo its right to convert to the FM band in Perth (where it room on both the AM and FM frequences . tte. The amount of the bid must be a single to accommodate an increase of20-40 percent offered $16.3 million) and in Melbourne ;ure and must exceed both the value of in the number of stations on each band.. (where it offered $22.7 million). Austereo cnsee’s AM transmission facilities to be It is interesting to note that the remaining has also relinquished its right to convert to inded over to the government (for Parlia- AM stations contend future conversions FM in Perth (for which it had bid $12 mil­ entary broadcasts or Radio for the Print should be on the basis of a reasonable, fixed andicapped) and a reserve figure deter- lion). fee relevant to the size of the market KZFM ined by the Minister and kept secret from Conclusion______supports this approach. If the government e bidders. Bidders are also required to pay accepts this proposition it will have a strong deposit There are a number of alto-native ap­ moral obligation to refund the difference proaches the government could have between the reasonable fee for what stations, Commercial radio ravaged adopted. A mini-hearing by the Australian such as KZFM, had to pay for the right to Broadcasting Tribunal was one possibility. convert and this new licence fee. Only in this way could the government maintain eq­ o how has the plan worked? In our Even a ballot would have been preferable to uity and establish the “level playing field" caseKZFM (formerly3KZ) topped the approach adopted. which all political parties claim to believe in. the biddingfor Melbourne. We bid There is some indication that the gov­ ernment, which has hitherto ignored the $31.5 million, $8.8 million more Les JHeil, AM, is manager of the Melbourne ian the next highest bidder 3AK. 3AK has pleas of the industry to move with the times )w withdrawn its bid, thereby relinquish- and embrace the new technology sensibly, FM station KZFM g its right to conversion to 3TT which bid 11.5 million - $20 million less than KZFM! We converted to FM on 1 January 1990 .id in the first ratings survey of 1990 picked ? 3.2 percent more of the radio audience - Police and the media i a total of 14.6 percent of the radio audi- nce or 0.3 of a percentage point more than OX FM which had topped the previous 11 Relations between police and the media recently came— itings surveys. With 41.4 percent of under some scrutiny at the Blackburn inquiry. Evan Whitton [elbourne’s radio listening audience, FM :ations now draw 63 percent of all advertis- examines aspects of this relationship.. tg revenue. Similar results have been achieved else- porting tasks; the media presumably took here with Adelaide’s KZFM (formerly SKA) hester (The Smiling Funnelweb) the view that it was assisting the police in icreasing its ratings from 14.9 to 16.5 per- Porter QC, counsel assisting Jus­ their inquiries. Sooner or later, it may be snt (it paid $5.5 million), while Brisbane’s tice Jack Lee at the Blackburn thought, both sides were bound to come BK, now B105, has jumped 2.5 percentage inquiry, offered some character­ undone on a matter of possible contempt. oints (it paid $17.4 million). And it should istically trenchant views about the perform­ While not denying that such practices e noted that the conversion of 4BK to BIOS anceC of former Sun police roundsman, Steve may tend to put the liberty of the.subject at ccurred during the latter part of the first Brien, director of the NSW Police Media risk, we may perhaps suggest that contempt urvey in Brisbane for 1990: therefore tur­ Unit, in events leading up to and following ner gains for B105 can be anticipated. the arrest of Harry (The Hat) Blackburn. law is a little out of date. First, the Australian Law Reform Com­ It is significant that KZFM did not alter What excited Porter was that before mission pointed out in 1987: s format and there was relatively little van- Blackburn, a former Superintendent, was “The origins of the common law concept of tion in our competitor’s formats. Our climb arrested on multiple rape charges, Brien contempt lie in the medieval notion that the n ratings is a clear vindication of what I and took the media into a lockup for a briefing on monarch was divinely appointed and account­ jthers have maintained for some time: that the pending event and after the arrest, but able only to God and therefore any resistance or he popularity of FM stations has little to do before Blackburn appeared in Court, laid on affront to the authority of the monarch should rith programming and management and aphoto opportunity of the accused for televi­ attract not only eternal damnation but imme­ verything to do with technology. It needs to sion and press cameras. ,e understood, of course, that programming diate retaliation... "It was only a short step from this to say that ieeds to be right. Good programming will Contempt______any resistance or affront to the authority of... iave far greater appeal on FM - inferior pro­ a court established under royal authority, should gramming will not benefit from technology All involved, including the media, were thus at risk of contempt charges for possible also be considered a contempt of royal author­ done. The commercial radio industry is be- ng ravaged by the government for the right prejudice of the case. In the event, there was ity." no case; further police investigations indi­ o use improved technology when the only cated that Blackburn was innocent; the nd second, as Adrian Deamer has Uternative, in the face of the growing mar­ properly noted, allegations of con­ charges were withdrawn. _ ket dominance of FM stations, was to even­ tempt by prejudice may amount to There was evidence before the inquiry tually go broke. contempt by way of influencing The government’s iniquitous bidding that the photo opportunity was not uncom­ mon. The unit presumably took the view that jurors: but there is evidence indicating that ;ystem is forcing the commercial radio sec- Athey are perfectly capable of understanding it was merely assisting the media in its re- or to assume a large financial burden at a 22