Re Rich Rivers Pty Ltd and Independent FM Radio Pty Ltd v Australian Broadcasting Tribunal and Goulburn Valley Broadcasters Pty Limited [1989] FCA 132

Re Rich Rivers Pty Ltd and Independent FM Radio Pty Ltd v Australian Broadcasting Tribunal and Goulburn Valley Broadcasters Pty Limited [1989] FCA 132 - FCA 1989 case summary — Zoe

[35]

"1.8 The Tribunal conducted two conferences

during this inquiry. The first was a

procedural conference held in November

1987 dealing with administrative matters

and the inquiry directions.

1.9 The second conference was held in

Shepparton between 19-22 April 1988 after

the documentary phase of the inquiry (see

directions 11-19 in Appendix C) had been

completed. For the first two days of

this conference, the Tribunal heard from

the applicants' directors and chief

executives on the key features of their

applications, as described in the

documentation already submitted. The

Tribunal then put questions to each

applicant on matters arising from all

documentation to date, including:

- the history of the application and

the applicant, including an

explanation of the corporate and

management structure of the

applicant

- the background and areas of

responsibility of directors and

senior executives

- significant features of the

application, including programming

policies and proposals and financial

projections.

1.10 The Tribunal then heard from Rich Rivers

Radio Pty Ltd and put questions to it on

its submission.

1.11 Having heard from each party, the

Tribunal held a brief meeting with the

representatives or agents of each party

to hear whether any of them considered it

necessary or desirable to hold an oral

hearing in accordance with regulation 14.

Two of the parties informed the Tribunal

that it was not desirable or necessary to

have an oral hearing nor to proceed to

cross-examination. The other three

parties agreed that at this stage, it was

not necessary to proceed to an oral

hearing; however, if the Tribunal were to

form a preliminary view, after reviewing

all the evidence, that a licence of this

kind should not be granted, having regard

to 2QN's commercial viability, then the

conference should be reconvened to allow

cross-examination of Rich Rivers. The

Tribunal ruled in accordance with that

submission.

1.12 Final submissions were presented on the

last day of the conference, with the

order of the parties being reversed."

[39]

"8.8 IFM, GVB and SBS all conducted a

considerable amount of research which

identified the same needs of the audience

in the service area, and their

programming proposals are designed to

meet those needs. The primary and

secondary target audiences of these three

applicants are similar, as are the music

proposals and general formats which

include comprehensive news and community

information services. All three

applicants have proposed high levels of

Australian music ranging between 30% and 40%.

...

8.11 IFM's proposals were developed by Mr

Wheatley, Mr Simpson and Ms Hourigan and

show a dependence on the metropolitan FM

model. IFM proposes to employ Ms

Hourigan as its program manager if

granted the licence. She is experienced

in the programming of metropolitan music

stations, and at the conference displayed

a knowledge of the established Australian

music industry. However, the Tribunal

was disappointed by her apparent lack of

knowledge of the independent music

industry, despite IFM's proposals to

incorporate independent labels into its

Sunday night programming. Ms Hourigan

was also not able to articulate what

criteria new talent had to meet to get

airplay and none of the Board had any

detailed knowledge of the music talent in

the area. No concrete proposal was

provided on how new talent could be heard

regularly throughout the daytime

playlist. The Tribunal is concerned that

IFM proposes to relegate new Australian

releases to the 'grave-yard' hours of 9pm

to midnight on a Sunday.

8.11 IFM's proposals were developed by Mr

8.12 GVB's music programming is more

adventurous than either IFM's or SBS's.

The Tribunal was impressed by Mr

Debelle's knowledge of the Australian

music industry, especially of his

understanding of the problems of local

bands, the way the independent recording

industry operates, and his contacts. It

also believes that the 'Give us a Break'

segment identified by Mr Cameron in which

it is proposed that new Australian

releases and independent recordings will

be played 3 to 6 times throughout the day

as part of the normal playlist, provides

more encouragement to Australian creative

resources than only providing a ghetto

for this music and burying it in a Friday

or Sunday evening program. GVB has also

realistically appraised the extent of

local talent, and developed achievable

proposals with regard to the Australian

creative resources side of the

undertaking. Through Bruce Adderley's

studios, GVB will be able to help any

good local bands record their music in a

professional manner. Colin Cameron also

has a track record in encouraging local

talent.

...

8.16 IFM intends to employ one full-time

journalist at the station and three

stringers in other parts of the service

area. It also proposes to have an

arrangement with the local papers to

supply leads. It is not proposed to

provide a local news service at weekends.

8.17 GVB intends to begin broadcasting local

news with the employment of a full-time

journalist at the station and five

stringers throughout the region; a second

full-time journalist will be employed in

year 2. No weekend bulletins are

proposed at this stage.

...

8.19 In selecting the most suitable applicant

to provide a service which most closely

accords with the public interest it is

apparent that GVB's knowledge of, and

commitment to, Australian music and

encouraging Australian creative

resources; its knowledge of the local

talent; and its programming proposals in

this area are superior to the other

applicants. Its commitment to local news

is comparable to IFM and both IFM and GVB

proposed to employ a community service

officer, IFM's would be fulltime whereas

GVB's would be up to 30 hours a week.

The SBS news service is not comparable to

the other two applicants and although the

employment of three journalists and a

weekend news service produced by the

station might indicate the provision of a

better local news service there was no

evidence to show that this would be the case.

8.20 GVB proposes to have automated assisted

programming from 2.00pm to 6am and this

is regarded by some applicants as a

factor which mitigates against an

adequate and comprehensive service.

8.21 The use of an automated assisted service

as described by GVB however provides a

method by which announcers pre-record

their announcements so that they do not

have to spend most of their time

listening to the music as they play it.

There was some opinion expressed about

how acceptable this is to the audience

but no research was provided to show that

this type of programming is not

acceptable.

8.22 The SBS service was judged to be less

suitable than the services proposed by

IFM and GVB. On balance their services

were judged to be equal."

[95]

"MR LITTLE: Ms James Bailey, if we hypothesize

on a 5 to 15 per cent loss of revenue, year 1,

that would give a range of revenue loss of

somewhere between 50,000 and 160,000; year 2,

would be 64 to 192,000. It is a great deal of

money within the forecasts that we have

prepared. However, we would believe that such

an occurrence would be temporal in nature

because the board, after having discussions

with management, would formulate a policy to

ensure that we recovered that ground.

Our financial position is such that we could

withstand the loss of revenue, certainly for

year 1, or year 2. But we do not believe it

would go on for that long. It is difficult to

suggest to you today how we would cope with

the problem without knowing what the true

facts are. But one's immediate reaction is to

suggest that if we are losing revenue it is

because we are not covering the area

adequately with a sales force. And it may

well be that we would need to strengthen our

sales force and perhaps put one or maybe two

more salesmen out to be more aggressive in the

area in selling, bearing in mind that sales

costs of two extra sales people for a year

might be $40,000.

So I think that we have sufficient reserve to

withstand, in the shorter term problems, and I

would suggest that in a shorter term, is up to

a year to put our place in order.

MS JAMES BAILEY: May I say, and when you do

compare regional radio stations, one with

another, and look at their market size and

their revenue, the one area that becomes very

apparent in terms of difference, as far as

costs are concerned, is the staffing level.

Now, had you thought about that?

MR RIORDAN: Well, yes, our board has thought

about staffing levels. And our view at the

current time is that those staffing levels are

- that the appropriate staffing levels are to

provide the adequate .... of service. If the

circumstances were such that we could not

approach this problem in any other way, in

other words as our last resort, cut in

service, and that basically a cut in staff in

our view, is very much along the path of cut

in service. We do not see, as for example,

increased automation as being the answer to

the problem except as a last resort. And we

regard that as effectively a cut in service

that the community wants.

So, again it is right down the scale in terms

of our options or our priorities; but in the

last resort the situation is that despite

every other option that may have been looked

at and comes to nothing, and we have to

address finally the question a cut in service,

or a cut in staff, we would then have to

research carefully just what areas the

community were saying to us that they

particularly wanted, what areas we were

perhaps meeting their needs, and make the

judgment on where the cuts would occur on the

basis of that research and the careful

analysis of it.

MS JAMES BAILEY: Because in fact what Mr

Little is explaining is that what you would be

doing initially is the reverse, you would be

increasing your sales staff.

MR LITTLE: We could well do it if it was a

condition that arose as a result of our review

of our operations. It was an illustration

perhaps that revenue loss seems to me to be

dictated by sales force. And if we are not

covering the area adequately to provide the

revenue that we have projected that may be an

option open to us. In other words I suppose

what I really am saying is that we would

necessary as our first option to reduce our

costs."

[96]

"MR HANDBURY: What would we do? Sorry, in the

short term - I hope I have put it into two

boxes - in the short term we would absorb it,

if we addressed that it was of a minor nature.

If it was a serious - - -

MS JAMES BAILEY: Could we just get

definitions? Minor nature - what sort of

figure are you talking about?

MR HANDBURY: Well, if we saw that we would

have a shortfall in the order of 100,000 per

annum. If it was to be more than that, as

with any business, you then have to look at

the operation of that business - I am not sure

of the degree of severity you are suggesting,

but you have said up to 15 per cent, well 15

per cent, if that is the top end, then the

managing director would be responding to the

board on the reasons for it and we would be

making executive decisions collectively.

Perhaps - I am not sure of an instance that

would generate a shortfall precisely of 5, 10

and 15 per cent, but - - -

MS JAMES BAILEY: Well, perhaps I could ask Mr

Cameron.

MR HANDBURY: Yes.

MR CAMERON: Well, I have never been

associated with a station that has had a

shortfall. The shortfall has always been

prior to me acquiring the stations.

MS JAMES BAILEY: So you have no experience in

this area, Mr Cameron.

MR CAMERON: I have been very fortunate in

that.

MS JAMES BAILEY: However, let us hypothesise:

for the first time in your life.

MR CAMERON: Well, when the going gets tough

the tough get going, and it is a matter of

tightening the belt a bit, really looking at

what the major problems are, whether it is

confined locally to the Goulburn Valley region

or whether it is Australia-wide. I cannot

really see us having that shortfall of a

magnitude of 15 per cent. We certainly will

not be putting on additional staff to try and

correct the system and I believe it is in all

confidence that what funds we do have in

reserve would cover that situation.

MS JAMES BAILEY: Well, Mr Handbury has

indicated it is 100,000 you have got - not in

reserve actually, but if it is greater than

that, I mean, the chairman of the board is

asking for your advice in terms of what are

you going to do.

MR CAMERON: Well, we certainly would be out

there trying to correct the situation. It is

just a matter of like when the station would

be starting up, commencing. You are out there

to get off the ground, but I just

unfortunately - or whatever, fortunate - have

never been in that situation and I cannot

really see it. We have had downturns but

certainly have bounced back.

MS JAMES BAILEY: All right. Mr Fairley.

MR FAIRLEY: We certainly have the capacity to

go back to the shareholders, Ms James Bailey,

if it was just really critical, if it was an

Australia-wide thing that we just were not

able to deal with in terms of the staffing

that we had and cranking the sales, cranking

more revenue out of the market; and certainly

that is an option. But I mean, in terms of

our projections, they are really very

responsible in terms of where we see this

market."

At a glance

Court

Decision date

Before

Source

Judgment (145 paragraphs)

Re Rich Rivers Pty Ltd and Independent FM Radio Pty Ltd v Australian Broadcasting Tribunal and Goulburn Valley Broadcasters Pty Limited [1989] FCA 132 (21 April 1989)

Parties

Legislation Cited (16)

Cases Cited (11)