In its announcement of the proposed merger with Southern Cross Media, Seven West described the deal as “consistent with Seven West’s stated strategic position of being in support of media consolidation in Australia”.

There’s no arguing with that. In most regional media markets across Western Australia, three existing media groups will be reduced to two. At least, that’s how it looks before the plan is put through the regulatory hoops.

If approved, the merger will be the latest tightening of Australia’s already highly concentrated media landscape.

We didn’t arrive at this point overnight. Over the decades, media ownership laws have been relaxed or rewritten without any attempt to craft regulation that addresses the changing media environment.

Our remaining media ownership rules don’t even acknowledge online media exists, and they don’t allow the regulator to meaningfully examine transactions that reduce diversity.

3 key years

In the past 40 years, there have been three points of fundamental change to Australia’s media ownership laws.

1. 1987 Hawke government reforms

The most significant of these was the resetting of media policy under the Hawke government. These changes made it easier for national networks to emerge, while simultaneously restricting concentration in any one market.

In 1987, a cap was imposed on national population reach for TV licences, set at 60% and rising to 75% soon after. In practice, this meant all three metropolitan networks (Nine, Seven and Ten) had to maintain program supply agreements with regional affiliates (WIN, Prime and Southern Cross).

However, in each market there was a limit imposed on the number of commercial TV or commercial radio licences that could be held. Cross-media ownership rules prevented a company from controlling more than one of three regulated platforms in the same licence area. These platforms were commercial radio, commercial TV and major newspapers.

This is what prompted then-treasurer Paul Keating to say media owners could be princes of print or queens of the screen, but not both.

Strict limits on foreign ownership also applied.

2. 2007 Howard government reforms

The first major change to these arrangements came with a wave of media reform under the Howard government, with new laws taking effect in 2007.

The foreign ownership rules were repealed and the cross-media rules relaxed so companies could control interests across two of the three regulated platforms, instead of just one.

These changes saw cross-media transactions such as Fairfax Media acquiring a group of influential talk-back radio stations, including 3AW.

3. 2016 Turnbull government reforms

The second wave of reform came in 2016, with the local industry facing increased competition from international media and digital platforms. The Turnbull government removed the remaining cross-media restrictions, as well as the 75% reach rule.

Among other outcomes, Nine Entertainment acquired Fairfax.

Nine and Fairfax media merged in 2018 under new, relaxed media ownership rules. Dean Lewins/AAP

Despite these changes, some media ownership rules remain. Among them is a restriction on transactions that reduce the number of independently-owned media outlets in already concentrated markets. This rule was introduced at the time of the Howard government reforms in 2007.

Divest your way to success

In Western Australia, Seven and WIN control the TV licences and Southern Cross Austereo holds the radio licences.

After the merger, all commercial TV and commercial radio in these licence areas will be controlled by either Seven-Southern Cross or WIN.

The Broadcasting Services Act is designed to prevent this kind of outcome, but it won’t stop the deal outright.

Instead, the Australian Communications and Media Authority (ACMA) can authorise the transaction in advance, provided it’s satisfied steps will be taken to restore the previous level of media diversity.

This usually involves divestments. The merged company could, for example, sell one of its radio stations in these markets.

And while this analysis excludes media sources not subject to the remaining ownership rules (such as community radio, non-daily newspapers, digital media and the national broadcasters), Seven West owns 12 regional newspapers. Most of these are located in the areas where Southern Cross radio stations operate.

In addition, Seven West owns both the Channel Seven licence and the West Australian newspaper in Perth, while SCA owns two of the six commercial radio licences.

Even with some divestments in regional markets, and even by Australian standards, this is looking like an extraordinary level of media concentration.

Changing the laws

Competition law comes into play in these kinds of situations, but it doesn’t adequately take account of media diversity.

What often matters most in assessing media diversity is the range of sources of news and current affairs. In Australia there’s a very small number of companies offering daily reporting and analysis on the routine workings of government, business and the community. Consolidation to keep these companies going has benefits and shortcomings.

In the Seven and Southern Cross case, we’re primarily looking at a set of commercial radio stations, along with the LiSTNR app. These are important aspects of the media landscape, but they don’t usually drive the local news agenda.

Southern Cross’ FM radio stations are important, but don’t usually lead local news coverage. Tracey Nearmy/AAP

So while the market will be more concentrated, it won’t necessarily have a big impact on local news.

The real problem here arises from a gradual accumulation of diverse assets over decades, and the level of influence this could give a single company, particularly within Western Australia.

But there’s also a regulatory problem: the absence of a test based in media regulation – not in competition law – that tells us when a transaction really matters for media diversity.

Instead, we have rules that don’t apply evenly, or even appropriately. If, say, News Corp wanted to acquire Network Ten, the regulations would have little application, even with all News Corp’s existing interests across the media landscape.

There is some hope for change, though. In the past couple of years, the federal government has developed its News Media Assistance Program policy. It’s designed to support media diversity and public interest journalism, especially at a local level.

And the media authority has started reporting against a new Media Diversity Measurement Framework. This takes a more nuanced and contemporary approach to media diversity.

These are both important initiatives, but they won’t evaluate multi-million dollar deals for how they might benefit or harm media diversity. For that, we need to update our media ownership rules with a fit-for-purpose public interest test.