Today BRR Media speaks with Ian McGill; he’s a Partner in the Technology, Media and Telecommunications Group with Allens in Sydney, welcome back to BRR Media Ian.

Thanks David and good to be speaking with you again.

Likewise.  Ian the final Convergence Review Report was proceeded by an interim report earlier this year, what are the major changes from the recommendations in that interim report?

David I’d like to highlight 6 of them and I’ll just run through them fairly quickly.  First is in relation to a new independent regulator, that this regulator will be different to ACMA, it will have more independence built into its governance arrangements and new powers and responsibilities, including, in relation to administration of a new national classification scheme under a new classification of Media Content Act and that picks up on recommendations of the Australian Law Reform Commission National Classification Scheme Review, so that’s the first thing.  Second the final report considers the Finklestein Independent Media Inquiry Report and recommends an industry established self-regulatory new standards body rather than the independent statutory regulator that the Finklestein inquiry report had recommended.  So that self-regulatory body would oversee journalist standards in news and current affairs, the body wouldn’t be the Press Council but a new body with some – a little bit of Government funding, but mandatory membership by content service enterprises and entities that aren’t content service enterprises can opt in to membership.  Thirdly the report provides a bit more detail on which entities would be caught by this concept of content service provider, and that’s the classification that’s the corner stone of the new regulatory regime.  Fourth, the final report illuminates much more than the interim report and new ownership and control rules and explains how they work.  Fifth the final report clarifies that Australian content obligations would only apply to content service enterprises of a significant scale in terms of revenue.  So those obligations wouldn’t apply to web services and user generated content and social media sites.  And lastly, in terms of significant changes there’s a bit more detail provided in relation to the abolition of service licences and spectrum allocation, so all existing commercial television, commercial broadcasting licensees would obtain a 15 year spectrum licence, with their broadcast licence fees being abolished but those fees being replaced by an annual spectrum access fee based on the value of the spectrum for broadcasting use.  So they’re the major differences from the interim report.

And Ian you mentioned what seems to be the regulatory focus, the concept of a content service enterprise, there was a lot of criticism of the interim report attempting to regulate the internet, has the final report provided more detail on that concept and will the internet content providers be relieved?

Yeah look I think that they should not be relieved if they provide or have control over professional content, so this could include Telstra Big Pond, Apple TV and services such as Net Flicks or Hulu.  The definition of CSE you’re absolutely right is the core regulatory focus and that will be based on an assessment by the new regulator of two things, the threshold of Australian users and an Australian sourced revenue threshold.  Now the Convergence Review proposed at least 500,000 users and a $50 million Australian sourced revenue threshold.  Now that proposal by the Convergence Review would currently exclude Telstra, Google and Apple TV.  But the final report makes it clear that this is ultimately going to be a matter for the new Regulator, so we need to wait and see.

Well Ian just turning to the proposed changes to media ownership rules, do you see any surge in media industry M&A activity, if the recommendations were implemented?

I do think that there will be some opportunities for media consolidation where that makes business sense.  However those opportunities will depend on the shape of a local market limit that the Convergence Review proposes and the detail of a new national public interest test.  The most obvious mergers will be those that can occur with the repeal of the 75% audience reach rule, so that’s basically the television networks having the opportunity to take over their regional affiliates or in reverse.  But as I say a national public interest test will apply to those mergers, so in summary yes there will be opportunity for consolidation, but the operation and the new rules needs to be worked through.

I also noticed some recent criticism of the public interest test for media mergers, including from Malcolm Turnball, the Opposition Communications spokesman, that quoting here “the Public Interest test would in effect mean the politicisation of decisions involving change of control” do you agree with that?

Look I think at one level I don’t agree.  The Convergence Review proposes some really quite detailed and robust institutional and governance arrangements to make the new Regulator independent from the Government of the day.  However, I mean I do concede that the Public Interest Test is aimed at things such as diversity at a national level and I agree that reasonable minds can differ on whether a test like that is vague or involves value judgements that might involve politicisation of issues.  But I don’t see the Regulator being politicised it may be that the decisions involve judgements that might be criticised as being essentially political judgements.  I wanted to also say that the thing about the independent Regulator is that it is going to be subject to judicial review and the Convergence Review does propose it will be subject to Parliamentary oversight, which are both good things.

Well there’s certainly a lot on the plate and now that we have the final report, where to from here in your view?

Well what the Government has stated formally is that it will respond within 6 months to this report.  The report is worthy of consideration and it’s certainly worthy of debate, but as Steven Conroy has reported to have said the passage of – if any legislation implementing it will depend upon the attitude of an increasing number of Parliamentarians sitting on the cross benches.  So I’d say it’s a little uncertain.

Well look thank you so much for your insights today Ian, pleasure to have you again speaking with us on BRR Media.

Thanks very much David.

That was Ian McGill, a Partner in the Technology, Media and Telecommunications Group with Allens in Sydney.  Listeners if you have any further questions for Ian about this interview please send a message using the panel on your screen, or you can otherwise email through to law@brrmedia.com and we’ll forward your query.