6 Mar 2012

Why The Market Can't Ensure A Free Press

By Wendy Bacon

The Finkelstein report has already put some noses out of joint but it's an important analysis of the current state of the Australian media. Wendy Bacon explains the Inquiry's key findings and recommendations

Last Friday, the Independent Media Inquiry headed by ex-judge Ray Finkelstein released its report on the Australian media. If you have been following the media discussion since then, you couldn't be blamed for thinking that Finkelstein wants to create a state super cop which will seize control of the media, impose new standards on journalists, dragging every blogger and tweeter into its net. Some media have accused the Inquiry report of being "leftist", academic and beyond the comprehension of ordinary people. New Matilda thinks part of the media's job is to explain to the public what's in reports they don't have time to read so they can decide what they think. Here's our go at doing that.

The report begins by setting out some core principles. A free press is crucial and no regulation should be allowed to threaten its independence or censor it. The media and journallists have rights which they exercise on behalf of the public to whom they should be accountable.

The report also accepts that media exercises power and can do harm. When harm is done, citizens need remedies. These are the core principles on which the report is based.

In considering how to find ways to put these principles into place, the report sets out key arguments about the role of the press in democracy. Contemporary political philosophy has moved beyond simply seeing government as the only threat to media freedom. Many argue you also need to consider the power of media itself, especially the power of big media companies.

The Inquiry looks at other theories, including those which concentrate on the media's role in providing a voice for citizens and a forum for political discussion. Rather than favouring any single rationale for free speech, it concludes:

"This is the situation this Inquiry must address: how to accommodate the increasing and legitimate demand for press accountability but to do so in a way that does not increase state power or inhibit the vigorous democratic role the press should play or undermine key rationales for free speech and a free press."

Finkelstein finds that you can't rely on the market to deliver a free press. This is particularly true in Australia with its highly concentrated media. The Inquiry was discouraged by its terms of reference, which did not mention issues of ownership, from looking at broader solutions to the structure of the media. Nevertheless, it found that an examination of ways of delivering quality journalism and ethical standards can't avoid considering the concentrated nature of the media. It provides a useful update of ownership issues.

Australia has the most concentrated media in the developed world. News Ltd has 65 per cent of total circulation of metropolitan and national daily newspapers — Fairfax controls another 25 per cent. In a study of 26 countries, Australia was the only one in which a single company — News Corporation — accounts for more than half of daily circulation. In 20 of the countries surveyed the share of the top company was under 40 per cent. With a share of 86 per cent, Australia's top two companies — News Corp and Fairfax Media — hold a greater share than in any of the other countries.

The Australian newspaper market is not the sort of competitive market which imposes discipline on suppliers of products. It is a highly concentrated market in which "consumers have little choice and little power to influence what is supplied". In fact, newspapers operate in a dual market serving both readers and advertisers with only about a quarter of their income coming from circulation sales.

In seeking to best serve the commercial interests of shareholders, newspaper managers regularly balance conflicting needs of readers and advertisers. "It is unlikely", the report finds, that "the resolution of these conflicts will always favour the interests of readers." This point is an important one which highlights the flaws in the argument, regularly trotted out by those opposed to strengthening accountability, that the rights of consumers lie in their ability not to consume media products.

Finkelstein argues that before considering what steps to take to ensure accountability, you need to establish that there are problems which need fixing. After acknowledging the high quality journalism that is regularly published, he proceeds to spell out serious problems with Australian media.

There is, as he calls it, a case of "market failure". The media and reasons for its existence can never be reduced to the needs of producers and consumers which is why we have codes of ethics to protect broader public interest. He then returns to the problem of concentration which in some cities and towns means that there is a possibility that media owners and journalists will unduly influence public opinion.

The second problem is high levels of distrust of the media demonstrated through lots of surveys.

The third problem is harm actually done by the media. The ex-chair of the Australian Press Council, Professor Ken McKinnon, told the Inquiry of examples where media used its power to oppose policy on self-interested commercial grounds and unfairly pursue indviduals on the basis of inaccurate information. The Inquiry referred to other examples of ethical breaches and to the Australian Centre for Independent Journalism (ACIJ) and Crikey investigation into the influence of PR on news media and studies by Robert Manne and the ACIJ on how News Ltd was extremely "biased" in its coverage of the significant issue of climate change.

The Inquiry concluded that the costs of harm are borne not by the media or their consumers but the community. Therefore steps are needed to reduce the harms.

What is wrong with the current regulatory system?
Contrary to what you might think from reading the media, our current system already includes both statutory and self regulation. The broadcast media have what is called a "co-regulation" model. The commercial broadcasters set their own standards and have 60 days to answer any complaint.

If the complainant is not satisfied with the response, he or she can then move on to the Australian Media and Communications Authority which will take four months to consider the complaint. The complainant is not even a party to these proceedings and is usually not even interviewed. The Inquiry found that this system does not sufficiently recognise the rights of complainants and needs an overhaul. This finding alone shows that the Inquiry does not favour all forms of statutory regulation which can be just as dysfunctional as self-regulation.

The Inquiry also considered the performance of the Australian Press Council (APC) which is funded by big media companies with nearly half coming from News Ltd and a quarter from Fairfax Media. (This section of the report sets out the history of how the owners undermined the effectiveness of the APC at crucial moments including when News Ltd took over the Herald and Weekly Times in 1987).

Former APC Chairperson McKinnon told the Inquiry that the owners don't give the Council the independence it needs and that he supported bolstering the Council's security with extra public funding. The current Chair Julian Disney also argued for some public support and argued that more power is needed to make decisions enforceable. (The point that the Council itself has been concerned about enforcement powers if complaints are upheld has been missed by most media.)

The big companies, in particular the CEO of Fairfax Greg Hywood disagreed with Disney and argued that the Press Council is adequately funded and should be restricted to running a complaints process. Hywood and others argued the Council does not need to research the media, as it did for a short period in its State of the Media report which was defunded in 2009. The companies' lack of support for the current Chairman's position undermined Disney's attempt to argue the merits of change based on the Council.

This led the Inquiry to conclude that the APC "suffers from serious structural constraints . It does not have necessary powers or funds to carry out function." It found that the APC lacks independence which leaves media accountability to the whim of companies who say they are satisfied with what even the Press Council itself argues is a deficient system.

By arguing that nothing needed to be done, the owners effectively stymied an argument for reform and more independent self-regulation which the Inquiry acknowledges might be preferable.

Is public funding a threat to independence?
The Inquiry considered whether public funding of a media regulatory body, as the owners argue, is necessarily a threat to independence. As Finkelstein points out: If public funding is a threat, then why isn't private funding a threat? He referred to "ample evidence before the Inquiry that the current direct funding of a body dominated by its funders does not allow for independence".

Accordingly he asks "whether the potential negative impact of government funding on the performance of the APC's functions would be greater or lesser than the existing system." He also pointed out that the newspapers already receive government subsidy in the form of advertising.

Having concluded that the current system is so flawed as to prevent piecemeal reform and that public funding is not a threat, Finkelstein moves to his key recommendation which is for a single council across all media called the News Media Council. The move to a cross media form of regulation recognises impracticality of dealing with print and broadcast separately when online media publish text, video and sound.

News Media Council
The APC currently appoints its own members which the Inquiry found is not sufficiently independent. Instead Finkelstein suggests that an "independent' body including several academics, the Solicitor General and Commonweath Ombudsman appoint an independent publicly funded News Media Council which would consist of a Chairperson and 20 part-time members, half men and half women. One half would have no connection with the media. The media and the MEAA would be consulted in the selection of others.

The council would set standards "in consultations with industry" which would probably be similar to those already in place in journalists' codes of ethics.

The aim would be to provide a speedier complaints service than currently exists. This service would not prevent media from making their own corrections, giving rights of reply and so on in the normal course of their business. If media, such as ABC, SBS and Sydney Morning Herald have an internal process, complaints would initially be referred to those organisations. The emphasis would be on resolving complaints. If a hearing was required, documents could be required but confidentiality of journalists' sources would be respected. If a finding was made against the media, an order could be made for an apology, a correction or a right of reply. This order would be enforceable, eventually through a court. There would be no fines or compensation.

Again and again in the report, Finkelstein stresses the importance of independence. The only role of the government should be a funding one as the proposal is not about "increasing the power of government or about imposing some form of censorship. It's about making the news media more accountable to those covered in the news and to the public generally". Funding needs would be assessed by the council on a three year basis, and verified by the Commonwealth Auditor General in order to guarantee independence which is lacking if the funding arrangements for the Press Council.

The new body would not just deal with complaints but would research and report on the state of the media, including trends in the provision of quality and investigative journalism. There is no other body which currently has these tasks. The News Media Council could take up issues it believed important even if there was no complaint. It would have a role in educating the media and the public.

Who would be covered by the News Media Council?
The council would cover only organisations that "gather, analyse and disseminate news" — but who this includes, it acknowledges is "not easy to define". It suggests that those publications which have more than 3000 readers or 15,000 hits a year should be included. (There has been much criticism of this suggestion as the estimates seem low and the potential cost to small independent operators such as New Matilda and others could be high).

Should there be an enforceable right of the reply?
This is where the balance between freedom and accountability gets tricky. The Inquiry considered whether enforcing a "rights of reply" in circumstances where harm has been found to be done is a threat to free speech or could have a "chilling effect" on the media.

An enforced "right of reply" does diminish free speech but a "right of reply" without enforceability is not a right at all. It concludes that the threat to free speech of forcing a right of reply needs to be balanced against the harm done by not granting a right of reply. One answer to those who argue that a right of reply interferes with independence is to publish more on an issue rather than denying others a right of reply.

The Inquiry rejects the idea that communities should have a "right of access" to the media because even if it was theoretically possible, it would be impractical and impose an unreasonable financial cost on the media.

Is there a need for public subsidy of the media to ensure availability of quality and investigative journalism?
Some submissions argued that public subsidies are needed to support quality and investigative journalism, as occurs in some Norway and some other countries. The media owners argue this is not necessary in Australia. The Inquiry did not find that subsidies should be immediately implemented but did acknowledge that the media situation is changing rapidly.

The News Media Council would chart trends to see if there is a serious decline in production and delivery of quality journalism and in two years, it recommends a thorough analysis of industry by the Productivity Commission. If the Productivity Commission finds gaps, the ABC could be given more funding which would be tied to particular ventures.

The Inquiry finds public subsidy for journalism, beyond funding of public broadcasters, does not necessarily threaten its independence and lays out some possibilities. There is some support for a public subsidy for university-based investigative journalism which is being promoted by some journalism academics — including those at the ACIJ where I am based. The possibilities of introducing tax deductions for investigative journalism is also accepted.

A final significant finding is that Finkelstein recommends urgent action to address increasingly poor news media services in regional communities through public funding.

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Posted Tuesday, March 6, 2012 - 14:35

Good piece, Wendy. Thanks.

As well as what 'News Media' would be covered by the porposed NMC, the rport briefly mentions what kind of 'complaints' would also be covered (point 11.70, page 296):

There should be a filtering process carried out by a senior officer of the News Media Council. The process is to determine whether or not a complaint is frivolous or vexatious. If it is, it need not be pursued. It may be appropriate to allow for an appeal to the chair by a complainant whose complaint is not to be pursued.

This user is a New Matilda supporter. johanlidberg
Posted Tuesday, March 6, 2012 - 15:22

Great piece, Wendy. It'll be very interesting to see the Convergence review's final report at the end of March. The UK Leveson report will also play a role in the revamp of the Australian media ethics system that is, hopefully, inevitable. The Leveson inquiry probably has months to run still, though.

Posted Tuesday, March 6, 2012 - 15:25

I like the suggestion for public funding of expert investigative journalism independent of the disgraceful Mainstream media oligopoly. "The Conversation" is an example of such university-linked reportage but the science-based writers tend to be rather timid to my way of thinking (afraid of losing their research grants?).

The Mainstream media of Australia - including the taxpayer-funded ABC - are a disgrace and their principal crimes are egregious censorship and lying by omission about Elephant in the Room matters (e.g. horrendous war-related deaths that now total 4.6 million for Iraq, (1990-2012), 5.6 million for Afghanistan (2001-2012), 2.2 million for Somalia (1992-2012), 50,000 for Libya (2011-2012) and 2.0 million for Palestine (1936-2012) (see "Censorship by The Age": https://sites.google.com/site/mainstreammediacensorship/censorship-by-th... and http://agecensors.blogspot.com/ ; "ABC Censorship": https://sites.google.com/site/abccensorship/ ; and "Boycott Murdoch Media": https://sites.google.com/site/boycottmurdochmedia/ )

Below is a good example of Australian Mainstream media censorship that urgently needs to be addressed by both indignant consumers and by media who face going out of business if they keep lying by omission.

Today (6 March 2012) The Age On-line National Times section published an article by Gillian Guthrie about the alleged description of PM Julia Gillard as a “childless, atheist, ex-communist” and entitled “Put a stop now to mother of all insults” (see: http://www.theage.com.au/opinion/society-and-culture/put-a-stop-now-to-m... ).

The Age did not publish the following comment from me, presumably because it contains facts and opinions The Age does not want its readers to know, think about or see, even if buried in a comment thread of over 400 comments.

Censored comment: “Being childless is PM Julia Gillard's own business and indeed is a good example in an overcrowded world. However what should concern all decent folk is that pro-war and slavishly pro-US Julia Gillard ("the new warlord of Oz" in the words of outstanding expatriate Australian journalist John Pilger) has helped make Labor and Australia complicit in avoidable under-5 infant deaths totalling 1.8 million in Iraq (1990-2012) and 2.6 million in Afghanistan (2001-2012). These 4.4 million avoidable infant deaths have been due to sanctions- and war-imposed deprivation and are due to gross US Alliance violation of Articles 55 and 56 of the Geneva Convention relative to the Protection of Civilian Persons in Time of War that demands that an Occupier must supply life-sustaining food and medical requisites to a subject population "to the fullest extent of the means available to it". The World Health Organization informs that annual per capita total health expenditure permitted by the Occupiers in Occupied Afghanistan is US$69 as compared to US$7,410 for the US. Childless PM Julia Gillard is still involving Australia in an immense crime against the children, mothers and indeed fathers, men and women of US Alliance-occupied Afghanistan. PM Gillard has utterly betrayed decent anti-war, pro-child, pro-mother, pro-woman Labor voters who will vote Green and put Labor last until Labor reverts to decent values.” End comment.

For the sceptical, simply go to the UNICEF website (see: http://www.unicef.org/infobycountry/index.html ) and you will quickly discover that in 2010 in Occupied Afghanistan (population 34 million) there were 191,000 under-5 infant deaths as compared to 1,000 in Occupier Australia (population 22 million).

The holocaust ignoring of Australian (and indeed Western) Mainstream media is far, far worse than repugnant holocaust denial because the latter at least admits the possibility of public discussion. Holocaust denial in relation to the Jewish Holocaust (5-6 million killed) and the Armenian Genocide (1.5 million killed) is a criminal offence in France (a position with which I nevertheless disagree because it harms scholarship and free speech crucial for democracy and rational risk management).

Unfortunately holocaust ignoring is de rigeur for Australian mainstream media, disgraceful racist media that should be boycotted by decent people and banned from our schools and universities.

Peace is the only way but Silence kills and Silence is complicity.

Posted Tuesday, March 6, 2012 - 17:37

This is a very clearly structured and informative analysis Wendy. New Matilda should be congratulated on the effort made to clarify and explain. Roll on the Convergence report, but I won't be holding my breath about the outcomes.

Philip Dowling
Posted Tuesday, March 6, 2012 - 22:27

I find this whole analysis superficial and ideologically-biased. There is an assumption that media ownership directly translates into a certain party-line followed by sycophantic journalists.
The Fairfax media organisation is a publicly listed company. It has had a series of managing directors, and editors-in-chief for its various publications. There are a number of journalists who have been on its payroll for decades. Are Adele Horin, Mike Carlton, and Michelle Grattan mere ciphers, whose articles have swayed as the opinions of their superiors?
It concerns me that journalists' role has received less consideration than media ownership. Too many journalists seem to be obsessed with being players rather than reporters. As a result, they often seem to be mere political camp followers, with the morals and intelligence of a group of Justin Bieber fans.
I find it puzzling that so many newspaper articles are often barely modified press releases from a variety of sources ... generally written by ex-journalists.
It further concerns me that all too often I can read the by-line of a journalist and can predict with great accuracy what slant will be taken.
It puzzles me that journalists can be environment reporters one week and techology reporters the next and education reporters the month after.
If academics are best suited for the proposed panel because of their expertise, then surely they should be assigned the more important role of jurors and the general public may then be available for the proposed panel.
I note that a retired judge considers another legal person must be involved in any adjudication. I can appreciate his concern to find employment for the ever increasing stream of law graduates that plague our society, unlike more productive ones which value engineers more.

Frank from Frankston
Posted Tuesday, March 6, 2012 - 23:20

Wendy, congratulations on a comprehensive article. Some alternative reactions:
"the Independent Media Inquiry headed by ex-judge Ray Finkelstein" - where's the evidence for the assertion that this unprecedented totalitarian inquiry was independent? Are you referring to the Government's naming of the inquiry, having selected its head and helper, where's the evidence that it has been independent of government or other “group think” influences?
"A free press is crucial and no regulation should be allowed to threaten its independence or censor it." Yep, but, as clearly shown by Leftist ABC activist Journo, “Fearlessly Dependent” Jonathon, of MediaWatch last night, whole slabs of front pages will be written under the direction of the inevitable Fabian, Communist, ABC-ALP-Melon Green Leftist board, that would accompany the passing of Legislation based on this "independent" inquiry. Thought up and set up by lovers of one party states…
Regarding your writings on the APC; whilst I respect the input of Mr Disney and others, the reality is, only a diversity of views can balance any bias of reporting. Is this the real issue? The impact of having monolithic media organisations, created over time, usually via the offices of shameless political parties hungry for power. ("Media Mates - carving up of Australia's Media", Paul Chadwick, 1989, ISBN: 0732900905). Is this the real problem? How about limiting press ownership to 1 paper in one town, where at least one opposition paper is available?
And how about banning networked news in toto? We haven't adjusted to the dominance of cross border print and electronic news networks. I for one, am entirely sick of Sydney centric, Rugger Pushing Networks.
They can't do sport, can't do politics, and have no idea what's going on in most of Australia - beyond the harbour.
And let's not forget Australia's biggest single employer of journos and thus Group Think, the Billion Dollar per annum, taxpayer funded, with no opt in clause, ABC... Ought it be broken up and sold piece by piece, banning coverage across state lines?
Should the best regulation be a compulsory breakup of all our media monoliths so that no single power grouping, or group think tribe, has any overt agenda setting influence on Australia's body politic?
There is no doubt, the natural, instinctive monopolists such as Comrades Gillard and Conroy, he of the nationalised broadband “company”, and the Chinese like, “Great Firewall of Conroy” proposal, just cannot help themselves. Shocked at being so hated (why does anyone object to being hated? - look at me!) , these characters turned up the volume to supplicant comrades and this leftist excuse for a grab of centralised, “Politburo” power goes on.
Witness Conroy’s treatment of Australian Shareholders of Telstra. Simply shocking.
As F.D. Jonathon declared – in a decidedly muted fashion – the proposed cure would be worse than the disease.
Freedom of speech is just that. All the analysis and moves like this, by the most unpopular government and prime minister I’ve seen in 80 years, that attack it, should be resisted at all costs, and ways and means of encouraging and extending our freedom of speech, ought to be found asap.
Sell the ABC – surely the western world’s largest work for the dole scheme? - privatise it, leave all blogs alone, Sell SBS, Privatise so called Community Radio stations, Break up the massive media networks, make the proprietors choose “Which one and in what state?”. Let the competition flourish...
And any large, state wide, media outfit sold ought to be sold to Australian shareholders only.
I get decidedly nervous about Academic and Senior Journalists supporting a state controlled media, which indeed is what is proposed here. I can imagine students under their power, many having origins in one party states, who already may harbour the idea that in fact a Government Controlled Media is the norm, getting reinforcement of these views via these taxpayer funded lecturers, and then being imposed on us via the said same media monoliths.
Is there a single Right of Center, Taxpayer Funded Journalist / Lecturer at any of the journalism schools? Can anyone name one? A single one?
Maybe that's the ultimate source of the problem.
If you agree with your Activist Journo "Lecturer" - You get a high mark and a job. Else you lose. That's a Fabian Utopia I'm describing there.

Posted Wednesday, March 7, 2012 - 13:53

Interesting summary, thanks Wendy.

This user is a New Matilda supporter. aussiegreg
Posted Wednesday, March 7, 2012 - 18:44

Er, Frank, isn't this just about a more effective complaints process? Isn't it just looking for a remedy for those aggrieved by the media but who find no effective redress in defamation law nor in the Press Council nor in the Broadcast Authority? Isn't the only nationalisation proposed that of the Press Council, whose underfunding and understaffing serve only the interests of its conflicted private paymasters?

Your wider spray at the Left in Media Studies etc etc may be valid but I fear it is irrelevant to Finkelstein.

Posted Thursday, March 8, 2012 - 05:39

Thank you lyngain, may I borrow, copy and paste.

This is a very clearly structured and informative analysis Wendy. New Matilda should be congratulated on the effort made to clarify and explain. Roll on the Convergence report, but I won’t be holding my breath about the outcomes.

Philip Dowling
Are you saying the Abu Graib Prison Scandal never happened and that G.W Bush never knew, never directed it, in anyway. That it was some working class trash getting carried away.
Its the same deal, man. You better go and have a look in the mirror son.

Posted Thursday, March 8, 2012 - 20:51

Jackal, Feel free to use anything I may write. I never put my name to something I'm not prepared to have made public. Sorry I took so long to respond - only just worked out how to be notified of other posts on New Mathilda.

Posted Friday, March 9, 2012 - 11:29

Now that we've acknowledged the power of the media and how the marketplace gives us a distorted and biased viewpoint, its time to create a fully independent regulator, a government statutory body that is accountable to the public.
Call it what you like, it must be 'free' to determine wrongful, inaccurate, biased or even omissions in the media without a 'conflict of interests' from advertisers, shareholders and owners.
Setting up a government funded independent body, is the only remedy for such a concentrated marketplace and will help to ensure the media is responsible to all citizens (not just advertisers and shareholders) by reporting more accurately on and reflecting a larger range of opinions on matters of importance, both global and local.

Posted Friday, March 9, 2012 - 20:47

Its the best place to start when you want a real Democracy instead of this Claytons thing, you have when you don't have a real democracy.

The stupid Yanks have been ranting about their You Beaut Democracy for decades, yet what did they give Germany after WW2, something uncorruptable and it wasn't Americas Landed Gentry Claytons one.

Democracy is beginning to smell, because we have the wrong idea about Yank Democracy, the founding fathers actualy hated Democracy, they were Landed Gentry in the finest of Landed English War Lord Traditions and we followed that lot down the gurgler and are still following, like idiots suffering Yellow Fever, Lynch Mobs. Who do we blame, Historians, thats who, we allowed Winston a murderer to right his own History and defence.

Posted Monday, March 12, 2012 - 17:41

An excellent article Wendy Bacon.

I think it is such a shame that the main issue with the media, is the issue the government are trying to avoid by running this half stunt & half truth inquiry up the flag pole. They call for an inquiry whilst they use the media to convict innocent people with it, just as the mafia did in America during the Al Capone period.

It was just an hilarious & disgusting blemish on Australia's reputation when the American court system threw the case against the guy who was accused of killing his wife whilst scuba diving & had spent time in Australian Gaol's (Jail's). There was never any evidence & he was being tried by possibility made out to be probability & without fact's.

That to me was more than a victory for both the accused & our legal system being run by a government which only pretends to be just.

Posted Saturday, March 17, 2012 - 11:07

I'm just relieved that the Australian Centre for Independent Journalism exists.