Malcom Turnbull’s ascension to Prime Minister makes long-awaited media reforms more likely, even without a consensus among the major players, according to one analyst.
Credit Suisse believes a a reduction in the commercial broadcasters’ licence fees and the abolition of the rule preventing any media proprietor from reaching more than 75 per cent of the population have bipartisan support and won’t require complex negotiations with the Senate.
Removing the reach restriction would trigger a wave of mergers between the metropolitan networks and regional affiliates, with Nine Entertainment best positioned to merge with either Southern Cross or WIN Corp.
Alternatively the broker sees a Southern Cross/Ten Network merger as a possibility, which could prompt Seven West Media to buy Prime TV.
“Malcolm Turnbull has been an advocate for media reform and we expect he will be willing to push ahead with reform even without media proprietor consensus,” Credit Suisse said in a briefing to investors.
“Fundamentally the reach rule is out of date and no longer relevant in the modern media landscape. With Malcolm Turnbull as Prime Minister we believe it is now only a question of 'when' and not 'if' the reach rule is removed.
“We believe the main decision is therefore one of political priorities and how soon the government wants to move. In our view there is still potential for a package to be put forward prior to an election.”
The broker thinks bipartisan support for scrapping the '2 out of 3' rule covering metro TV, newspapers and radio is possible but would mostly impact radio stations and thus would not significantly change the landscape.
“We believe that a reduction in the TV licence fee was looking increasingly likely even without any change in the political environment. The change of Prime Minister gives us further confidence in this and may bring forward the timing,” it says.
Every 1 per cent reduction in the licence fee would add $30 million to the sector’s earnings before interest, tax, depreciation and amortisation, it estimates.