Commercial Radio Australia Conference
7 October 2016
Well, thank you very much, Joan. As I came up on stage, Joan said, ‘oh good, I’m glad you’re here, I wasn’t sure if you were actually here'. So it’s a relief for us all.
Ladies and gentlemen, good morning, it’s fabulous to be here with you in person this year. Can I particularly acknowledge Adam and Joan and the other members of the board. We had a good chance yesterday to catch up and go through a range of issues. And I really appreciated that opportunity. Can I also acknowledge just how inclusive this conference is, that there are even people from my own broadcasters here today, ABC and SBS, wherever you are, wave, say hello. So great to see you here as well.
A couple of conferences back I shared with you that I did, once upon a time, have in prospect a glittering career in radio which was cruelly cut down.
When I was a university student in the mid-1980s, I took myself along to 2UE in North Sydney for a bit of work experience. And the Lamb family still owned the station then so I had a chat to John Condie and I had a chat to Rod Spargo who was the station general manager.
And I was really excited at the prospect of working in radio, and Rod Spargo said to me, ‘son if every fibre of your being doesn’t want to rip the microphone out of the hand of the guy who’s currently on air then radio’s not for you.’ John Condie then said to me, ‘Mitch you seem like a thoughtful young man, why don’t you go and do something useful with your life, forget radio.’
Now, I thought I had done something useful with my life, I thought I’d made the right call, but I realised over the last week that I’d been very wrong. Now some of you may have seen or heard about an election campaign diary written by Mark Di Stefano from Buzzfeed. And he made an observation about me in that, he said that I had the head of a Wallace and Gromit character. Now, I know you’re a bit nervous, you’re not sure whether to laugh or not. But anyway feel free.
This of course was Mark’s way of saying that I have a head for radio; that I missed my calling and I have indeed denied the Australia radio audience the opportunity to "switch to Mitch". But anyway, there you have it.
But, friends, we’re gathered here today to reflect on the industry, on its challenges and on its fantastic opportunities. But before we discuss some of those challenges, particularly in the regulatory space, I just want to focus for a moment on how the industry is positioned.
First, I want to make it absolutely clear that the Government has the strong view that commercial radio in Australia has a strong, long and vibrant future in front of it. Radio is a very special medium. It connects in a way unlike any other. It’s immediate, it’s often interactive, it’s spontaneous and it’s ever present. And as a Victorian it’s hard to imagine Melbourne’s airwaves without the likes of Mitchell and McGuire.
And I’ve got to say, as a politician, it always pays to make time to be on radio, to talk to the presenters and journalists, because you never know, one of them may end up being a Senator. A shout out to Derryn.
Like all media, radio is operating in a challenging environment. We talk a lot about disruption. I think perhaps, t'was ever thus. But that is the environment in which all of you are deployed. And that is not going to change.
Radio has been pretty resilient in the face of challenges. While TV’s share of the national advertising pie has dropped form 33% to 28% over the past decade, the newspaper stake as fallen from 38% to 13%, while radio's share has declined only modestly, from 9% to 8%. 2015-16 marked the fourth consecutive year of revenue growth and that’s not something that can be said for other established sectors in media.
As they say, revenue follows ratings, and metro radio audiences were up by 1.8% in 2015 and 6.2% over the past two years.
Commercial radio is clearly holding its ground, and these figures are a testament to the work of everyone in this room. But, as the fundamentals are changing so rapidly, holding ground and growing will continue to demand more of broadcasters. It will require the businesses to be ever more innovative and responsive to changes in audience demand and listening patterns. Part of the responsibility, of course, rests with government. We’ve got to make sure that our media laws allow broadcasters to get on with business, and I’ll talk a little more about that shortly.
One of the good things that I think has happened in the industry is that CRA has expanded its rating surveys from four key regional centres to over twenty regional centres. The aim obviously is to investigate radio’s reach outside of the capital cities, and this is important given that a third of our population live in regional areas. We’ve got over 200 commercial stations in regional Australia and these surveys are really going to help the stations better understand their audiences.
While on the subject of regional stations, this year the Government received and supported the industry’s proposal to convert a number of regional commercial radio services from AM to FM. Earlier this year I asked ACMA to give priority to the planning work necessary to enable this conversion and I am advised that work is progressing well, perhaps not quite as quickly as the industry would hope, but the planning is well advanced for licence areas that present relatively few problems. And a series of pilot studies are in the pipeline for some of the more complex markets.
Friends, new technologies and products also offer fresh opportunities, and digital radio is perhaps the most apparent example of this. Since its launch in 2009, 27% of Australians who live in mainland state capital cities now listen to digital radio, and that’s a cumulative weekly audience of 3.6 million people.
The Government is also facilitating the rollout of digital radio in regional Australia, something that CRA has been heavily involved with. You would know that last year, government released the digital radio report which considered the regulatory framework for digital radio as well as the arrangements required to facilitate the rollout of digital radio in regional areas, of course where it’s economically feasible to do so. A key recommendation from the report was the establishment of a digital radio planning committee for regional Australia and I commend CRA for its active participation on the committee. The committee has recently recommended to ACMA the planning principles for the rollout of the digital radio services and while its principles are a matter for ACMA to consider, I really do recognise and welcome the spirit of cooperation and compromise where necessary for their development.
Accompanying the advent of digital radio is of course the advent of new ways to listen to radio and the corresponding new consumer habits. Digital radio devices are increasing in popularity. In 2015 the number of cars fitted with digital radio tripled, with over a quarter of new vehicles sold last year fitted with digital radio.
CRA does continue to innovate in the digital space, partnering with LG Electronics to launch a new phone with a tuner embedded in the device so that consumers don’t need to use data to listen. Social media is also a huge area of growth for radio with one in five people who follow radio stations on Facebook, Twitter and Instagram actively liking and sharing their content.
If you cast your minds back 20 odd years or so ago it would have been difficult I think for any of us to predict the impact that the internet would have on the media landscape.
Rapid developments in technology are driving seismic shifts in how we all consume our media and the key focus that we have as a government is to ensure that our media laws reflect the reality of today’s world.
Now, we are pressing on with reform in this space and today I’d like to highlight two of our priority areas.
The 2016-17 budget, as Joan touched on earlier, included a measure to reduce broadcast licence fees by 25%. This decision recognises the fact that the media landscape for radio, for TV, has changed dramatically since those licence fees were first introduced in the mid-1950s.
The digital environment is increasing competition for audiences, for advertising dollars. It's placing increasing financial pressure on our commercial broadcasters whose main competitors pay no licence fees.
Recently, we introduced legislation to give effect to the 25% reduction in licence fees and with the cooperation of other parties in the Senate I expect that will pass before the end of the year. The 25% cut will provide TV and radio sectors with an estimated net financial boost of $163 million over the next four years.
I am aware, obviously, that the industry is seeking further reductions in licence fees and this is under active consideration together with other reforms including spectrum pricing.
Now, I know that some of you fear that any changes to their licence fees and spectrum pricing could mean that you end up paying the same or more to government overall. But, I want to reassure you that should we be making changes to licence fees and spectrum pricing, the objective would be that licensees in net terms are better off. So if we make changes that would be the objective.
The changes to licence fees that we announced in the budget go hand in hand with measures which are contained in our media reform bill which is also before the parliament. That package, as you know, seeks to repeal media control rules, so that’s the 75% audience reach rule and the 2 out of 3 rule. I’m hopeful that these reforms can be considered and passed into law as expeditiously as possible.
As a whole, the government reform agenda aims to make sure that our media laws can adapt, change and reflect the world that we currently live in today. Can recognise changes in technology and the changes in consumer habits. But importantly, to give traditional media companies the flexibility to compete and to adapt in a changing world.
Friends, we do have a bit of work to do. To do together. I look forward to working with you over the years ahead, to make sure that the industry continues to be prosperous, continues to be vibrant, that you are in a position to give audiences what they want. Thank you for the opportunity to be with you today and also to catch up with the board yesterday. And it gives me great pleasure to formally declare the conference open.