Ownership of Australian media set for shake-up

CANBERRA - The Australian Government plans to abolish media-ownership rules to allow overseas-based companies to control the nation's newspapers or television networks and local companies to expand into other forms of media.

The proposed changes, outlined in a discussion paper released in Canberra yesterday, may unleash a wave of takeovers, allowing Rupert Murdoch's News Corp, Australia's biggest newspaper publisher, to buy a free-to-air television network, and making John Fairfax Holdings a takeover target.

"Anything becomes possible if you've got a big enough cheque," said Greg Fraser, a media analyst at Shaw Stockbroking in Sydney.

"It's hard to predict who might take over who and why," he said.

Shares of Fairfax, publisher of the Sydney Morning Herald and Melbourne's Age, rose 3 per cent yesterday, and shares of Ten Network, Australia's third-ranked television network, gained 5 per cent.

Fairfax is the most likely takeover target, with James Packer's Publishing & Broadcasting a potential bidder, said money manager Craig Young of Tyndall Investment Management. Publishing & Broadcasting owns Australia's biggest TV network.

"It just depends on what the big guys want to do, it depends on what Rupert wants to do and what James wants to do," said Young.

The Government will seek comment from industry and the public until April 18 before finalising the policy.

The suggested changes would allow a single company to own three forms of media - newspapers, television and radio - in each major city, up from the current limit of one.

Limits restricting overseas companies from owning more than a 25 per cent stake in a metropolitan newspaper publisher and a 15 per cent stake in a television broadcaster would be abolished.

"There is a compelling case for change and if the Government does not act then there is a genuine risk that Australia will become a dinosaur," Communications Minister Helen Coonan said in a speech in Sydney. "Traditional media services are being challenged by new digital technologies."

Prime Minister John Howard's Government, which first proposed changing ownership laws in 1996, has said it wants agreement among media companies before proceeding with the changes.

Falling advertising revenue will limit takeovers between major media companies, Don Hamson, of State Street Global Advisors in Sydney, said. "There's been a lot of talk but I don't expect much action."

The plan offered two options for the timing of the media ownership reforms - next year or between 2010 and 2012 when the analogue television system would be gradually replaced by a digital system.

- BLOOMBERG