Investigation Report No. 3132

File no. / ACMA2013/1497
Licensee / North East Broadcasters Pty Ltd
Station / 3NNN Edge FM
Type of service / Regional Commercial Radio Broadcasting Service
Issue / Trigger event reporting
Date of event / 27 March 2013
Relevant legislation / Subsection 61CF(1) and paragraph 8(2)(c) of Schedule 2 Broadcasting Services Act 1992
Section 8 of the Broadcasting Services (Regional Commercial Radio – Local Presence) Licence Condition 2012
Date finalised / 10 January 2014
Decision / Breach of the licence condition at paragraph 8(2)(c) of Schedule 2 to the Broadcasting Services Act 1992(the Act), by failing to comply with the requirement at subsection 61CF(1) of the Act to submit a draftlocal content plan and statement for 3NNN (SL10391), to the ACMA,within 90 days of a trigger event.
Breach of the licence condition at section 8 of theBroadcasting Services (Regional Commercial Radio – Local Presence) Licence Condition 2012 by not providing a report on the existing level of local presence for SL 10391

Background

On 3 September 2013, North East Broadcasters Pty Ltd and Rich Rivers Radio Pty Ltd jointly submitted a B2/B3Notification of changes in control form (B2/B3 form)to the ACMA.[1]The B2/B3 form advised that the change in control occurred on 27 March 2013. Sections63 and 64 of the Act provide the rules for when licensees must provide the ACMA with notification of a change in control.

TheB2/B3 form related to four separate licences.

Licensee / Call sign / Licence Number / Licence Area
North East Broadcasters Pty Ltd / 3NNN / SL 10391 / Wangaratta RA1
North East Broadcasters Pty Ltd / 3NE / SL 10398 / Wangaratta RA1
Rich Rivers Radio Pty Ltd / 2QN / SL 10407 / Deniliquin RA1
Rich Rivers Radio Pty Ltd / 2MOR / SL 10408 / Deniliquin RA1

The ACMA commenced separate investigations for each licence[2] under section 170 of the Act.[3] This investigation report refers to the investigation intoSL10391, held by North East Broadcasters Pty Ltd.

Assessment

When making the assessment set out in this report, the ACMAconsidered the following material:

  • written and oral submissions made by the licensee
  • information contained in the ACMA B2/B3 formsubmitted to the ACMA on 3September2013
  • information fromthe register of controlled media groups that is maintained by the ACMA in accordance with section 61AU of the Act.

The Investigation examined two key issues:

  1. whether the change in control referred to in the B2/B3 form was a trigger event for the purposes of section 61CB of the Act; and, if so
  2. whether the licensee complied with reporting requirements particular to regional commercial radio licensees that follow the occurrence of a trigger event.

Issue 1: Whether the change in control was a trigger event

Relevant legislation

Excerpt from Division 5C of Part 5 of the Broadcasting Services Act 1992

61CB Trigger event

...

Change in control of licence

(1A)For the purposes of this Division, if either of the following events (a control event) happens after the commencement of this subsection:

(a)a person starts to be in a position to exercise control of a regional commercial radio broadcasting licence;

(b)a person ceases to be in a position to exercise control of a regional commercial radio broadcasting licence;

the control event is a trigger event for the licence.

(1B) Subsection(1A) does not apply to a control event if:

(a)the control event is attributable to a transfer of shares from one person (the first person) to another person (the second person); and

(b)there is no consideration for the transfer; and

(c)the second person is a near relative of the first person.

Note: For near relative, see subsection6(1).

(1C) Subsection(1A) does not apply to a control event if the control event is attributable to circumstances beyond the control of each person who was, immediately before the control event occurred, in a position to exercise control of the regional commercial radio broadcasting licence concerned.

(1D) The regulations may provide for exemptions from subsection(1A).

...

Change of controller of registrable media group

(3)For the purposes of this Division, if:

(a)either:

(i)a person who is not a controller of a registrable media group becomes a controller of the group; or

(ii)a controller of a registrable media group ceases to be a controller of the group; and

(b)a regional commercial radio broadcasting licence is in the group;

the change of controller is a trigger event for the licence.

(4)Subsection(3) does not apply to a change of controller of a registrable media group if the change of controller is attributable to circumstances beyond the control of each person who was, immediately before the change occurred, a controller of the registrable media group.

(5) The regulations may provide for exemptions from subsection(3).

Licensee’s submission

The licensee’s submission, dated 29 November 2013, states:

Our failure to submit a local content plan and local presence statement within 90 days of the sale of Linear Pty Ltd shares to Robrad Pty Limited was a genuine misunderstanding of the regulation. The share transfer was between shareholders that were existing shareholders in North East Broadcasters Pty Ltd with no new shareholders coming into existence. Accordingly we continued to conduct business in the same manner as it had been for many years and were not alerted to notify change in control.

Finding

That the change in control that occurred on 23 March 2013 constitutes a trigger event as defined in subsections 61CB(1A) and (3) of the Act.

Reasons

Information supplied in the B2/B3 form

The B2/B3 form advised of a change of control event that occurred on 27 March 2013. The transactions occurred in the following manner:

  • Linear Pty Ltd sold its shares in North East Broadcasters Pty Ltd to Robrad Pty Ltd and as a resultLinear Pty Ltdceased to be a shareholder in North East Broadcasters Pty Ltd.
  • Claire Mott ceased to be a controller of North East Broadcasters Pty Ltdwhen Linear Pty Ltd sold its shareholding in North East Broadcasters Pty Ltd.
  • Robrad Pty Ltd increased its shareholding in North East Broadcasters Pty Ltd.
  • Robrad Pty Ltd continued to be a controller of North East Broadcasters Pty Ltd.
  • The transfer of shares was confirmed by the Licensee’s submission.

Additional information held by the ACMA

North EastBroadcasters Pty Ltd wholly owns Rich Rivers Radio Pty Ltd.[4]As a result, the changes in control also affected Rich Rivers Radio Pty Ltd.

As indicated on the B2/B3 form,North East Broadcasters Pty Ltd is the licensee forSL10391 andSL10398 and Rich Rivers Radio Pty Ltd is the licensee for SL10407 and SL10408. As a result, these four licences were affected by the control event.

The ACMA maintains a Register of Controlled Media Groups under section 61AU of the Act. This Register identifies two Registered Media Groups, relevant to the change in control:

Registered Media Group / Call sign / Licence Number / Licence Area
Wangaratta 001 / 3NNN / SL 10391 / Wangaratta RA1
3NE / SL 10398 / Wangaratta RA1
Deniliquin 001 / 2QN / SL 10407 / Deniliquin RA1
2MOR / SL 10408 / Deniliquin RA1

Consequences of the change in control

Change in control of licence

As a result of the transaction on 27 March 2013, Linear Pty Ltd and Clair Mott ceased to be in a position to control SL 10391,SL 10398, SL 10407 and SL10408.

Paragraph61CB(1A)(b) of the Act provides that a trigger event occurs for the licence if a person ceases to be in a position to exercise control of a regional commercial radio broadcasting licence. There are certain exemptions to this provision, namely;

  • Subsection 61CB(1B) of the Act provides that the event is not a trigger event if there is no consideration for the transfer of shares and the transfer is to a near relative.The B2/B3 form referred to a sale of shares between the two parties. As a result, subsection 61CB(1B) does not apply.
  • Subsection 61CB(1C) of the Act provides that itis not a trigger event if the event was due to circumstances beyond the control of each person. There is no suggestion in the B2/B3 form, or the licensee’s submission, that this was the case. As a result, subsection 61CB(1B) does not apply.
  • Subsection 61CB(1D) of the Act provides that the regulations may provide for exemptions from subsection 61CB(1A). At 27 March 2013, when the change of control event occurred, therewere no regulations thatprovided exemptions from subsection (1A).[5]As a result, subsection 61CB(1D) does not apply.

Accordingly, the sale of Linear Pty Ltd’s shares in North East Broadcasters Pty Ltd to Robrad Pty Ltd constituted a trigger event for SL 10391, SL 10398, SL 10407 and SL 10408.

Change of controller of registrable media group

As a result of the transaction on 27 March 2013, Linear Pty Ltd and Claire Mott ceased to be a controller of two registeredmedia groups. The registered media groups are labelled as‘Wangaratta 001’ (3NNN and 3NE) and ‘Deniliquin 001’ (2QN and 2MOR) in the ACMA register of controlled media groups.

Under section 61AU of the Act, the ACMA is to maintain a register of controlled media groups. A registrable media group must be entered into the register, at which time, it is referred to as a registered media group. As a result, the registered media groups Wangaratta 001 and Deniliquin 001 are registrable media groups for the purposes of subsection 61CB(3) of the Act.

Paragraph61CB(3)(ii) provides that a trigger event occurs for the licence if a controller of a registrable media group ceases to be a controller of the group.There are certain exemptions to this provision, namely;

  • Subsection 61CB(4) of the Act provides that it is not a trigger event if the event was due to circumstances beyond the control of each person. There is no suggestion in the B2/B3 form, or the licensee’s submission, that this was the case. As a result, subsection 61CB(4) does not apply.
  • Subsection 61CB(5) of the Act provides that the regulations may provide for exemptions from subsection 61CB(3). At 27 March 2013, when the change of control event occurred, there were no regulations that provided exemptions from subsection 61CB(3). As a result, subsection 61CB(5) does not apply.

Accordingly, Linear Pty Ltd and Claire Mott ceasing to be controllers of the registrable media groups Wangaratta 001 and Deniliquin 001 constituted a trigger event for SL 10391, SL 10398, SL 10407 and SL 10408.

Issue 2: Trigger event reporting

Relevant legislation

Excerpt from Division 5C of the Broadcasting Services Act 1992

61CF Licensee must submit draft local content plan to the ACMA

(1)If a trigger event for a regional commercial radio broadcasting licence occurs, the licensee must give the ACMA:

(a)a draft local content plan for the licence; and

(b)a statement setting out such information about the licensee’s broadcasting operations as the ACMA requires;

within 90 days after the day on which the trigger event occurs.

Excerpt from Schedule 2 to the Broadcasting Services Act 1992

8 Standard conditions of commercial radio broadcasting licences

...

(2)Each commercial radio broadcasting licence is also subject to the following conditions:

...

(c)if a requirement under Division5C of Part5 (which sets out local news and information requirements) applies to the licensee—the licensee will comply with that requirement.

Excerpt from Broadcasting Services (Regional Commercial Radio – Local Presence) Licence Condition 2012

5 Definitions

relevant period means the period beginning on the date a trigger event for the licence occurs and ending 24 months later.

7 Licensee must maintain existing level of local presence after trigger event

A licensee must maintain at least the existing level of local presence in the licence area in relation to the licencethroughout the relevant period.

NoteFor transitional provisions see clause 16 of Schedule 1 to the Broadcasting Services Amendment (Regional Commercial Radio) Act 2012 and clause 13 of Schedule 2 to that Act.

8 Reporting to the ACMA

Reporting after a trigger event

(1)A licensee must report on the existing level of local presence in the statement given to the ACMA pursuant to paragraph 61CF(1)(b) of the Act.

Licensee’s submission

The licensee’s submission, dated 29 November 2013, states,

Our failure to submit a local content plan and local presence statement within 90 days of the sale of Linear Pty Ltd shares to Robrad Pty Limited was a genuine misunderstanding of the regulation.

...

As we are now aware of our misunderstanding we have prepared a draft local content plan on form LCP1A and an existing level of presence on form LCP1B...

Finding

That the failure by the licensee to submit a draft local content planand statement for SL10391 to the ACMA by 24 June 2013,as required by subsection 61CF(1) of the Act, constitutes a breach of the licence condition at paragraph 8(2)(c) of Schedule 2 to the Act.

That the failure by the licensee to include a local presence report in the statementfor SL10391constitutes a breach of the licence condition at subsection 8(1) of theBroadcasting Services (Regional Commercial Radio – Local Presence Licence Condition 2012(the Local Presence Licence Condition).

Reasons

The Act and the licence condition contain several reporting requirements that follow a trigger event.These requirements are set out below.

Local content plan

Paragraph61CF(1)(a) of the Actstates the licensee must give the ACMA a draft local content plan for thelicence affected by the trigger event, within 90 days of the trigger event.The trigger event that occurred on 27 March 2013 meant that the licensee was required to submit a draft local content plan to the ACMA by 24 June 2013.As admitted in the licensee’s submission, this report was not submitted to the ACMA within the required timeframe.

Paragraph 8(2)(c) of Schedule 2 to the Act makes the requirement at paragraph 61CF(1)(a) a licence condition. Accordingly, the licensee was in breach of a licence condition by not submitting the draft local content plan.

Local presence statement

Where a licence has been affected by a trigger event, paragraph 61CF(1)(b) of the Act states that a licensee must give the ACMA a statement setting out such information about the licensee’s broadcasting operations as the ACMA requires, within 90 days of the trigger event. Relevantly, under subsection 8(1) of the Local Presence Licence Condition, the ACMA requires each licensee toreport on the existing level of local presence after each trigger event inthe statement made under paragraph 61CF(1)(b). The licensee was required to submit a statement containing a report on the existing level of local presence to the ACMA by 24 June 2013.As admitted in the licensee’s submission, this local presence report was not submitted to the ACMA.

Paragraph 8(2)(c) of Schedule 2 to the Act makes the requirement at section 61CF a licence condition.

Accordingly, by not submitting the statement, the licensee was in breach of the licence conditions atparagraph 8(2)(c) of Schedule 2 to the Act and at section 8 of the Local Presence Licence Condition.

Action taken by the licensee

The licensee’ssubmission indicates it had acted according to a misapprehension and as a consequence, failed to submit the required reports for regional commercial radio licensees following a trigger event. Once the licensee became aware of the oversight, they acted immediately and submitted the local content plan and local presence statementwithin a fortnight.

During recent correspondence, the licensee has agreed to be proactive with seeking advice on any future transactions,confirmingthe potential consequences of those actions with respect to the regional radio local content requirements and the ownership and control requirements under the Act.

In addition to this, the ACMA also notes existing regional radio local content reporting requirements that apply to the licensee:

  • All regional radio licensees must submit annual compliance reports.
  • Trigger event licensees must submit an additional annual compliance report regarding the local content plan.
  • Trigger event licensees must also submit a report within 24 months of a trigger event outlining compliance with the local presence statement.

In light of the actions taken by the licensee to date and noting the existing regulatory requirements, the ACMA will not be taking further action in respect of the breaches it has found in this investigation.

ACMA Investigation Report 3132 Trigger event reporting by North East Broadcasters Pty Ltd

SL 103911

[1]Relevant details from the B2/B3 form can be found on the ACMA’s register of Recent control notifications at

[2] Investigation 3132 refers to SL 10391, Investigation 3133 refers to SL 10398, Investigation 3134 refers to SL 10407 and Investigation 3135 refers to SL 10408.

[3] Under section 170, The ACMA may conduct investigations for the purposes of the performance or exercise of any of its broadcasting, content and datacasting functions (as defined in the Australian Communications and Media Authority Act 2005) and related powers.

[4]This is confirmed by the Company Chart for North East Broadcasters Pty Ltd.

[5]The Broadcasting Services (Regional Commercial Radio) Regulation 2013 does contain some trigger event exemptions, however, this regulation did not commence until 9 August 2013.