The new legislation on Media Ownership will result in a concentration of media ownership both in the old media and in the new media. However, there is an approach that requires no new legislation, can be implemented by regulation, does not fall foul of the ACCC, keeps within the spirit of free Trade agreements, will satisfy the National Party and at the same time has a good chance of making for Diversity of Media and Media Ownership.

The reason why large national and multinational organisations can take over local media providers is that they hold a competitive advantage because the marginal cost of content for yet another media outlet is close to zero. That is, once content is produced there is little cost in reusing it. Hence if a media outlet can get content for virtually nothing it has an advantage over a media outlet that has to pay for content. Organisations, whether they are local, national or international that produce local content do not have a competitive advantage if they produce local content. The advantages come when local content is reduced.

Hence the underlying problem is the lack of local content and lack of reporters and people who write and record the local stories. If we address this problem without distorting the operation of the market then we will get local content and a possible increase in local ownership of local media outlets.

One way of overcoming the problem is to subsidise the employment of local journalists and other local content providers.

The issues are how much money should be allocated, who should get the subsidies and where the money comes from. We want a system that does not interfere with the market but encourages local content, is self regulating and costs little to implement.

If the money for content subsidies came from all or part of the GST collected on all media sales (or an addition impost to the GST) within a local area and if that money and only that money was available to subsidise local content providers then the market would still be “fair” but local content would be encouraged. Subsidies would apply equally to global or national companies but make it likely for genuinely local organisations to flourish.

The allocation of the funds could be on the basis of the which postcodes workers satisfy (that is the places where their output is used). The effect of the subsidy will be to spread content providers ‘evenly’ throughout the land.

The system would be self regulating because the subsidies would depend on the total media sales in any market. The system would not fall foul of anyanti competitive or international rules because all media is treated the same as the subsidy is not based on ownership. That is, if global companies want to employ local people then they get the subsidy.

In this day of computerised accounting the cost of establishing and running such a system can be made quite low and it could be largely self policing as the subsidy distribution is on employment and would be made public and transparent. That is, competitors would watch each other and would have avenues of appeal. The money for distribution is on total media sales and total advertising and is unrelated to the subsidy. The money collected is based on consumers of media postcodes and is based on total sales not profit so it is easy to measure and to allocate to postcodes.

Reporters for whom a subsidy is applied give all the post codes they cover and they get a proportion of the funds available for the postcodes but adjusted for the number of other postcodes they cover. This information is made public and allocations to postcodes can be challenged.

The approach makes the media market more of a true market because it gets rid of the anti competitive advantage caused by the reuse of media content. It should appeal to the drys and wets. The potential losers are the national and international groups but they can still take advantage of the subsidy if they are prepared to employ local content providers.

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