Media reforms impasse stymies Murdoch and Gordon’s Ten bid

Lachlan Murdoch and Bruce Gordon’s attempt to buy Network Ten is under a cloud after the Turnbull government’s overhaul of media ownership laws failed to pass the Senate before a deadline for bids closed.

Negotiations on the media reform package between Senator Nick Xenophon and Communications Minister Mitch Fifield ended in stalemate on Thursday over the key senator’s demands for tax breaks for smaller publishers.

The duo will continue talks before Parliament resumes on September 4 but it may come too late for Mr Murdoch and Mr Gordon, who respectively needed the two-out-of-three ownership and 75 per cent audience reach rules abolished to be able to but Network 10, which is under administration.

Bids for Ten are due on Friday, while the Australian Competition and Consumer Commission will hand down a decision or release a statement of issues on Thursday  after analysing whether their joint acquisition would substantially lessen competition.

Network Ten chief Paul Anderson said the broadcaster was “extremely disappointed” Parliament had failed to pass the media reform package despite a majority of senators now believing the “antiquated” two out of three rule should be axed. 

“It beggars belief that despite all the evidence of what is happening to Australian media companies, and Ten’s situation in particular, there is little appreciation of the urgency of these reforms,” he said.

Senator Xenophon, with support from the Greens, wants to give publishers with a turnover of less than $25 million a year a 40 per cent tax offset for the first $2.5 million they spend on journalists, similar to research and development incentives.

A publisher would have to establish its bona fides as a news organisation and have a minimum turnover of $300,000 to qualify. The offset would be capped at $3 million, with Senator Xenophon claiming a total cost to the budget of $40 million to $50 million a year.  

“There are many other countries in the world that provide assistance and (tax) breaks to journalism because in the western world we understand the importance of journalism as a bulwark of our democracy,” Senator Xenophon said.

Senator Fifield said the government shared concerns about the future for quality independent local journalism but did not believe it was appropriate for tax subsidies to benefit foreign multinational media organisations.

“Above all, government intervention in commercial media can only be contemplated when the implications for freedom of speech and freedom of the press are fully understood,” he said.

“The government considers that any policy interventions in this space deserve careful consideration and extensive public debate.”

Foreign media outlets that would potentially be beneficiaries of such an offset scheme include The New York Times, The Guardian and The Daily Mail, which have established a digital only presence in Australia.

As well as concerns over the scheme’s design, The Australian Financial Review understands the government was only prepared to spend a fraction of the cost of what Senator Xenophon is seeking. 

Senator Fifield and Senator Xenophon did manage to reach in-principle agreement on four measures.

These are an inquiry by the competition regulator into the impact of Google and Facebook on media organisations, enhanced local content in smaller regional markets, an extension for community television licensees and a review into the reach of Australian broadcasting services into the Asia Pacific region.

The failure to reach a deal with Senator Xenophon comes after One Nation offered its conditional support for media reform on Wednesday in return for increased transparency at the ABC. The minor party is still expected to vote for the reforms even if the ABC measures, which will be legislated separately, do not get enough backing from other crossbenchers.

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