Australian Media Inquiry 2011

Steven Mayne is a famous independent Australian political and economic reporter, founder of crikey.com and of the Mayne Report. Here he writes to the Australian Media Inquiry. "I was planning to open my submission with a crack at the Inquiry for not getting Rupert in to give evidence whilst he was in town, but there was no opportunity... Former Federal Court judge Ray Finkelstein was very much on the front foot leading the discussion and my session from 2-3pm this afternoon turned into an hour of combat, covering the ins and outs of the Murdoch empire, media regulation, corrections, licensing and media ethics." First published http://www.maynereport.com/articles/2011/11/08-0212-5482.html

Ten points for discussion at Media Inquiry appearance on November 8

Whilst a more comprehensive final submission by Stephen Mayne will be produced by the November 18 deadline after listening to the various hearings in Melbourne and Sydney, what follows are 10 broad discussion points for the November 8 appearance before Ray Finkelstein QC and Matthew Ricketson.

1. A concerted push on the mandatory release of information

Whilst employing hundreds of investigative journalists to try and ferret out secret information is a noble exercise, democracies can make the transparency and accountability project a whole lot easier by mandating the release of information on a timely basis.

I subscribe to the philosophy that “sunlight is the best disinfectant”.

The most interesting piece I've read after the British phone hacking scandal was by an American freelance journalist Heather Brooke, who wrote the following in The Guardian on July 10 discussing what she called ”the secretive system of information patronage”.

I was amazed, having been a reporter in the US, to discover that all the public records we used routinely to conduct basic verification and investigation were off limits in the UK. Records such as criminal convictions, arrest logs, full court documents and land ownership documents were either illegal or very difficult and expensive to obtain. Even the detailed financial accounts of public bodies were unavailable.

When I tried to investigate parliamentary expenses, all the records I'd normally access in the US were secret. A five-year legal battle to access official information was ultimately ineffective, as parliament tried to retrospectively change the law so the Freedom of Information Act didn't apply. At that point, someone on the inside sold the full database to the Daily Telegraph.

This puts journalists wanting to do serious public interest investigations legitimately at a severe disadvantage. The fact is, all information is vulnerable to release – it is simply a matter of the resources someone wants to devote to obtaining it. In Britain information is not equally accessible to all, rather its release depends on one's wealth, power or privilege. Only the richest and most powerful media organisations have a shot at access and they, in turn, only want to expend their resources on investigations they believe will guarantee a story and a big audience – thus the focus is on sex, scandal and celebrity.

Australia does pretty well in relation to mandatory information release and the British MPs expenses scandal was surely a lesson to everyone that disclosure reduces the likelihood of bad behaviour through rorting and an entitlement culture. You would never lodge a claim for the cleaning of your moat if you knew this would pop straight up on a Parliamentary website pretty quickly.

However, we do have a number of information gaps.

Why did the Australian Greens lock out the media from much of its national conference in Perth last weekend? These forums should be open to the media.

Why aren't Australian institutional investors required to disclose how they vote their shares in listed companies like their US counterparts do?

Why aren't fund managers who vote on the pay practices of public companies not releasing their own executive remuneration arrangements?

Why aren't registered Australian political parties required to publically release annual income statements and an annual balance sheet?

Why do Federal regulations exempt disclosure of political donations below $11,000 and allow donors to wait until February 1, 7 months after the financial year end, to disclose the annual list of donations?

Whilst we all debate the challenges faced by the business model of quality journalism courtesy of the internet, I very much prefer mandated internet disclosure being the best antidote, rather than having documents being FOI-able.

Journalism these days should be about easily sifting and sorting through an avalanche of regular online disclosures and providing context to these facts.

For instance, it is wonderful that every ASX announcement since 1998 from almost 3000 listed entities is online.

It would be helpful if the Inquiry made some strong recommendations for legislation that improves comprehensive and systemic disclosure regimes in Australia.

For instance, Victorian councils should be required to follow the lead of Melbourne, Geelong and Hume and release all councillor expense claims on line each quarter.

This simple legislative change would make accountability of councillors much easier to pursue. Also, see suggestion number 9 for a specific proposal on improving local government journalism.

2. Dealing with the News Ltd ownership situation

It is almost 25 years since News Corporation launched its takeover bid for the Herald & Weekly Times, leaving Australia with the most concentrated newspaper ownership market of any established democracy in the world.

No matter how you slice and dice the numbers, News Corporation is the dominant newspaper publisher and this is very unhealthy for Australia's democracy.

Whilst there are many issues with Rupert Murdoch's leadership of News Corp since January 1953, if his entire Australian publishing and associated digital empire was sold to another party, it would be just as troubling.

Would we be concerned if a Russian oligarch, the Chinese Government, Clive Palmer, Exxon Mobil or British America Tobacco assumed control of such an important and powerful contributor to Australia's democracy? Of course we would.

Whilst compelling News Corp to sell some newspapers would be legally challenging, I urge the Inquiry to formally express its concern about this level of ownership concentration and encourage News Corp to, in the first instance, voluntarily pursue some modest divestments.

Failing that, such market dominance can usually only be addressed when a market participant is seeking to further extend or entrench its existing holdings.

To this end, Foxtel's proposed $1.9 billion acquisition of Austar to create an Australian pay-TV monopoly with management control vested with News Corporation does create such an opportunity.

I believe the ACCC and FIRB should only approve this takeover if News Ltd undertakes to reduce its newspaper interests to below 50% of the market.

Both FIRB and the ACCC have delayed approvals until early in 2012 and I urge the Inquiry to request that these agencies wait to hear the recommendations of the Inquiry before approving the acquisition or negotiating any concessions.

Defining a specific market share would not be easy, but an appropriate divestment would potentially involve one of the following:

· Dispose of all operations in South Australia or Queensland, excluding The Australian.

· Agree to sell a range of suburban publications in the major capital cities plus daily papers in smaller cities such as Hobart, Newcastle, Cairns, Townsville, The Gold Coast and Geelong.

· Sell the daily tabloid operation in Melbourne or Sydney.

Even after undertaking such a sale to the likes of Seven West Media, Fairfax Media or APN News & Media, News Corp would still have the largest newspaper market share in any western democracy, but the dominance would be marginally reduced.

3. A light-handed licensing regime for editors and proprietors

Licensing or accreditation is common place across many industries, from taxi drivers, to doctors, car salesman, liquor outlets, brothels, lawyers, nurses, teaching, gaming employees, snake catching and many other professions.

I am a former accredited tennis coach and also was subjected to police checks before serving on a kindergarten committee of management.

It should not be anathema to the media industry to introduce a light-handed licensing regime for newspapers, magazines and major websites, similar to what occurs with radio and television.

Experience tells us that government intimidation, takeovers and shutdowns of media need to be avoided at all costs for the media to be generally free and fearless.

However, you need to be able to deal with editors and proprietors who go rogue, for whatever reason.

Australian media regulation is not equipped to deal with a News of the World style situation, were one to arise.

Therefore, assuming an independent statutory body were established to succeed the Australian Press Council, I would support this body effectively licensing the editors and owners of major newspapers.

If Alan Bond had still owned The West Australian when he was jailed for Australia's biggest fraud, the licensing regime would have forced either Bond Corporation to sell the newspaper or Alan Bond to relinquish ownership and management control of Bond Corporation.

It is not unreasonable to apply a “fit and proper” test to newspaper owners.

If Fairfax Media was suddenly discovered to be involved in large scale illegal drug importation, it would lose its licence to own and operate newspapers in Australia.

Such a regime raises questions about the so-called licensing of individual journalists or commentators. I'd be opposed to this but do believe each mast head should have a single responsible person, probably the editor in chief or editor, who should be required to meet basic probity tests, such as not being a bankrupt or having criminal convictions.

4. Expanding the journalistic capacity and diversity of public broadcasters

Crikey publisher Eric Beecher described The ABC's launch of its opinion and commentary site, The Drum, in the following terms during an October 2010 interview with The Australian:

"Operating in the commercial space, we expect vigorous competition from other commercial publishers. But to see the ABC tanks roll up on our lawn was bewildering."

"The Drum seriously and dangerously compromises the ABC's editorial integrity."

I'm a contributor to both Crikey and The Drum and disagree strongly with these sentiments.

There a few paying outlets for online commentators and some extra competition for Crikey has added to Australia's media diversity.

However, pay rates for online contributions remain relatively modest compared with print.

I am currently paid $150 for a Crikey story, $200 for a contribution for The Drum and $250 for occasional pieces that appear on Fairfax's businessday.com.au.

The word rate for these contributions over the past year has averaged about 17c, which is well below the $1 per word rate paid by The Monthly, which is at the top of the market.

In terms of expanding diversity, the same goes for the university sector collaborating to launch The Conversation website for academic contributions earlier this year.

The Drum has been a very successful venture. It publishes about 60 pieces per week and attracts between 2.5 million and 3 million page impressions each month.

It has used more than 1000 individual authors since Unleashed (now Drum opinion) was launched 3 years ago and it receives more than 1000 comments each day.

For a modest public investment, this has added to Australia's media diversity and should be commended by the Inquiry as a worthwhile expansion of the ABC's Australian journalistic operations.

The same goes for ABC News 24 which has provided some worthwhile competition to Sky News, plus the morning commercial television news programs.

That said, it is disappointing that important watchdog programs such as Media Watch are not more effectively resourced.

Media Watch won't even be able to comprehensively cover this Inquiry because its final program for the year was last night, November 7.

5. A new model for the Australian Press Council

After being banned or abused by some News Ltd journalists and editors after publishing the www.jeffed.com website during the 1999 Victorian state election and later launching Crikey.com in February 2000, in 2006 I tried seeking some relief from The Australian Press Council.

The issue was a column by Piers Akerman published in The Daily Telegraph on December 1, 2005, which included the following:

It can be argued that almost anyone can call themselves a journalist these days, as evidenced by the nonsense published by people claiming to be journalists on websites such as Eric Beecher's and Stephen Mayne's Crikey.

After the newspaper refused to publish a correction or right of reply, I lodged a complaint with The Australian Press Council.

A mediation was held on Thursday, May 18, 2006 and then a determination was released on June 23, 2006.

Interestingly, the letter from Daily Telegraph associate editor Roger Coombes which rejected the proposed right of reply, claimed that Crikey regularly refused to run rights of reply.

I responded by claiming I couldn't recall a single News Ltd right of reply which Crikey had not run and cited 20 specific examples from over the years.

In the end, the following appeared on page 19 of The Daily Telegraph on June 26, 2006 under the headline “Telegraph article is vindicated”.

The Australian Press Council has dismissed a complaint against The Daily Telegraph from Stephen Mayne concerning a December 2005 Piers Akerman column in which he was mentioned.

The article discussed the Federal Government's proposed sedition laws aimed at preventing the ‘urging' of violence and argued that journalists would not be caught by them. Mr Akerman continued: “While some media figures have been arguing for a shield law specifically to exempt the media from the anti-terrorism laws, it can be argued that almost anyone can call themselves a journalist these days, as evidenced by the nonsense published by people claiming to be journalists on websites such as Eric Beecher and Stephen Mayne's Crikey.”

In a brief letter to the editor emailed four days later Mr Mayne wrote: “Piers Akerman blithely opines that ‘almost anyone can call themselves a journalist these days' and then describes me as someone ‘claiming to be a journalist'”.

In two following sentences Mr Mayne outlined his journalistic credentials. The newspaper replied that Mr Mayne's complaint was “entirely without substance” and that a careful reading of the article showed that Mr Akerman did not label Mr Mayne as someone “claiming to be a journalist”.

The Council agrees with this interpretation. It does not see any implication in the column that impugns Mr Mayne's journalistic credentials. Nonetheless, the Council believes that, had the newspaper printed a letter from the complainant (the Council frequently recommends that complainants write letters to the editor to achieve balance), this matter could have been resolved at the outset.

This was not a satisfactory process and I support Bob Brown's proposal that Australia adopt the Norwegian model with an independent Press Complaints Commission with powers to investigate non-members.

The sanctions ought to extend to prompt and prominent corrections and apologies and a system of fines for members who don't publish as directed.

However, there should not be any pre-vetting or pre-publication approval requirements. The complaints regime should only deal with issues after publication.

6. Rogue bloggers, anonymous contributions and moderating comments

The internet has completely transformed the ability for public commentary in the media.

Reader feedback used to be confined to talk back radio and letters to the editor, but online comments have exploded in recent years.

Anonymous commentary on blogs can often by toxic but the response by South Australian Attorney General Michael Atkinson in 2009 was a bridge too far. Under laws which were passed unanimously and then later repealed, Mr Atkinson proposed that blog commentators must reveal their names and addresses during election campaigns.

The internet simply doesn't lend itself to such regulation.

A better approach is that responsible mainstream publications fund moderators who apply some basic editorial standards and quality control to published comments.

It is good that the Herald Sun is belatedly doing this with Andrew Bolt's blog although the following blog post by Mr Bolt on Sunday night shows that he yearns for a return to the old “anything goes” approach when he was in charge of moderating:

A number of readers today have raised with me criticisms of the moderation of this blog over the past several weeks. Some suggest I have lost interest in the comments, or have stretched myself too thin.

I accept that there have been delays. I understand your concern. But you need to know two things.

First, for legal self-protection, I am not able to moderate my blog any longer. All comments must go through our moderating team.

Second, again for legal reasons, and because this blog has become the target of lawfare, our moderators are understandably very, very careful when going through the comments. This means delays and a touchiness about publishing anything remotely dangerous.

We have also had some technical problems I hope will be resolved. But the main problem is this: the erosion of the right to free speech is now also affecting people who are simply trying to comment on this blog. If you think this is a dangerous state of affairs in a democracy, I wouldn't disagree. I ask you for your patience. We are trying to sort this out.

The most important element of comments discussion threads online is that those people who are criticised are not prevented from defending themselves and providing an alternative view.

The most aggressive and controversial Australian political blog is Vexnews.com run by Andrew Landeryou, a right wing Labor Party figure in Melbourne closely associated with Bill Shorten.

Whilst Vexnews often runs highly defamatory and inaccurate material about me and other political figures, at least it allows an alternative perspective through the comments.

I've never had Vexnews refuse to run a comment correcting or criticising one of its reports, whereas the experience with News Ltd is the exact opposite where virtually all posts or proposed letters to the editor are ignored.

7. Saving the business model of newspapers

I am the Australian Shareholders' Association company monitor for Seek.com, REA Group and Carsales.com, the three largest online classified sites in Australia which now have a combined market capitalisation of almost $5 billion.

These enterprises do not directly fund a dollar of journalism yet their value has been created at the expense of traditional newspaper classified advertising, especially from Fairfax in Melbourne and Sydney.

At one level, it would be easy to try and fight the reality of online and social media, but I've come to the view that newspaper publishing is anachronistic and environmentally damaging.

Printing all those newspapers, sending the trucks everywhere and then dealing with the recycling effort is a huge daily exercise, especially when each reader consumes such a small proportion of the total product.

We should not bemoan the demise of such an old world distributions means, but instead focus on ensuring the electronic and online media worlds can cater for enough professional journalism and disclosure to maintain our vibrant democracy.

8. Dealing with the corporate governance challenges at News Corp

It is curious that the media, more than any other sector, attracts family investors who like to personally shape and influence outcomes.

This is because the media business deals with political influence and individual families enjoy the status that comes with this territory.

After spending 8 years working for News Corp and crossing swords with Rupert Murdoch at 12 different shareholder meetings over the years, I'm convinced that his primary motivation in life is gaining and retaining influence over western governments and policy.

Unlike any other figure in history, he has understood the way political power can be leveraged for commercial gain.

At one level, the rise and rise of the Packer and Murdoch families in Australia over the past 70 years was an example of how media power could be leveraged into private wealth.

For instance, when the South Australian Government passed legislation requiring Alan Bond to sell down his 45% stake in Santos in the early 1980s, this is how Australia's most notorious corporate fraudster explained his response in his autobiography:

With a 30-day time frame on the sale, I quickly looked at my options and decided that Rupert Murdoch and Sir Peter Abeles were the logical ones to approach to buy the 30% I was being forced to sell by the government. My thought process said: ‘You might be getting rid of me, but I'm going to leave you a legacy – two other individuals who you won't be able to push around. I get the last laugh on this one.'

There was another reason for going to Rupert. He owned the major newspaper in South Australia and I thought this would stop the government doing other ridiculous things around the project. In turn the price of the shares would go up and I'd make more money on the remaining 15% I held. I said to both Rupert and Sir Peter: ‘I've got to sell these shares and I need to do a deal. This is the price and as soon as the deal is done you'll make a lot of money.'

They agreed, and in two days the deal was done. They bought the whole lot and paid me cash. As I promised them, this turned out to be an astute investment for Murdoch and Abeles as they virtually doubled their money in only a few months.

This sort of wheeling and dealing has been a feature of the Murdoch and Packer families over the years.

For many years, it led to share price out-performance, but the wheels have come off News Corp in recent times, such that 5 of the directors closest to Rupert Murdoch recently suffered a clear majority of independent shareholders voting to have them removed from the board.

However, the Murdoch family gerrymander over News Corp – which sees the family control 40% of the votes and only 13% of the stock – has prevented change from occurring. This capital structure is now looking out-dated and undemocratic.

Similarly, Rupert Murdoch's approach to scrutiny and debate at the recent News Corp AGM in Los Angeles was nothing short of dismissive.

Perhaps one regulatory intervention in Australia could be that media licence holders need to respect the democratic principle of “one vote one value” in their capital structures.

There is no doubt that Rupert Murdoch has been an extraordinary media entrepreneur, but the nepotism and board stacking at News Corp has led to poor investment decisions, insufficient governance oversight and share price under-performance.

Rupert Murdoch also suffers from the habit of hiring and promoting colourful characters who are sometimes of dubious character but always extremely loyal to his interests.

This was clearly evident in the British newspaper division and has been a feature of his global tabloid newspaper operations around the world.

A more pro-active regulatory regime in Australia would perhaps be a positive force in the ongoing attempts to reform and update the governance arrangements at News Corp.

9. Government funding of a watchdog website for local government

I agree with Bob Brown's submission about making philanthropic journalism tax deductible.

Equally, Eric Beecher's thesis about growing the non-News Ltd pie through discreet government funding of journalistic start-ups is also a worthwhile argument.

One area worthy of specific attention is a dedicated watchdog website for local government.

As an elected councillor in the City of Manningham since December 2008, I've noticed that the sector is not scrutinised nearly enough by the media.

If the Federal Government provided $5 million of annual funding for an independent website aimed at exposing poor practices and promoting good governance in local government, it would dramatically change performance in the sector.

At the moment, local government suffers from the fact that there is no formal political opposition keeping those in power accountable.

It also receives little attention from the mainstream media and those reporters assigned to cover it on local papers are often inexperienced and poorly resourced.

10. Adding a journalistic division to the Australian Charities and Not-For-Profits Commission (ACNC)

The Federal Government, with the support of the independents and Greens, has announced the formation of the Australian Charities and Not-For-Profits Commission (ACNC) to regulate the large and growing not-for-profit sector. It will commence operation in July 2012.

The media, as a whole, fails to scrutinise this large and important sector and I believe the ACNC's mandate should include a separate watchdog website with an independent charter to pursue genuine journalism about the sector.

Once again, a budget allocation of perhaps $5 million per year could resource a newsroom and media operation with up to 20 editorial staff.

The charter, independence and accountability mechanisms would need to be important, but with a mandate to expose poor practices and promote good governance, such a website would make a real difference to accountability in the sector and would also provide a lot of source material for the mainstream media.

Stephen Mayne
Melbourne
November 8, 2011