Australian Broadcasting Authority v Star Broadcasting Network Pty Ltd [2004] FCAFC 168

FEDERAL COURT OF AUSTRALIA

Australian Broadcasting Authority v Star Broadcasting Network Pty Ltd

[2004] FCAFC 168 RADIO COMMUNICATIONS – BROADCASTING SERVICES – whether Administrative Appeals Tribunal erred in law by setting aside additional licence condition imposed by Australian Broadcasting Authority – condition sought to prevent promotion of Ipswich Radio Station as a Brisbane station – whether no evidence or other material capable of supporting the Tribunal's findings – whether Tribunal failed to take into account relevant considerations Broadcasting Services Act 1992 (Cth), ss 3(b), (g), 4(2), 5, 6(1), 26(1), 42(2), 43, 44, 154, Clause 8(2) of Schedule 2

Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577

AUSTRALIAN BROADCASTING AUTHORITY v STAR BROADCASTING NETWORK PTY LTD

N66 of 2004

BLACK CJ, CARR & TAMBERLIN JJ

30 JUNE 2004

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N66 OF 2004

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: AUSTRALIAN BROADCASTING AUTHORITY

APPELLANT

AND: STAR BROADCASTING NETWORK PTY LTD

(ACN 083 443 501)

RESPONDENT

JUDGES: BLACK CJ, CARR & TAMBERLIN JJ

DATE OF ORDER: 30 JUNE 2004

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The applicant pay the respondent's costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N66 OF 2004

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: AUSTRALIAN BROADCASTING AUTHORITY

APPLICANT

AND: STAR BROADCASTING NETWORK PTY LTD

(ACN 083 443 501)

RESPONDENT

JUDGES: BLACK CJ, CARR & TAMBERLIN JJ

DATE: 30 JUNE 2004

PLACE: SYDNEY

REASONS FOR JUDGMENT THE COURT: INTRODUCTION 1 This is an "appeal" from a decision of the Administrative Appeals Tribunal (constituted by its President, Downes J, who holds a commission as a judge of this Court), made on 23 December 2003, to set aside a decision of the applicant Australian Broadcasting Authority ("the Authority"). We use quotation marks because, as the Tribunal's title suggests, its decision was an administrative one and this Court's jurisdiction on appeal from a decision of the Tribunal is limited to questions of law. The decision which the Tribunal set aside was one whereby the Authority, relying upon s 43 of the Broadcasting Services Act 1992 (Cth) ("the Act"), imposed three special conditions on the commercial radio licence held by the respondent.

FACTUAL AND PROCEDURAL BACKGROUND 2 The following description of the facts is taken largely from the reasons for decision of the Tribunal. 3 The respondent's commercial radio broadcasting licence was originally issued under the predecessor of the Act, but continued in force under its provisions. The respondent purchased the licence, on 30 October 1998, from the original holder. 4 We set out the relevant statutory provisions later in these reasons. At this stage it is sufficient to refer to s 26(1) of the Act. That subsection directs the Authority to prepare written licence area plans which determine the number and characteristics, including technical specifications, of broadcasting services that are to be available in specified areas of Australia. The Authority is required to use broadcasting services bands in the preparation of what are termed "the licence area plans". Broadcasting services bands are those parts of the radio frequency spectrum which are designated as being primarily for broadcasting services. 5 The Authority developed licence area plans for the Ipswich area at the same time as it developed licence area plans for the Brisbane, Gold Coast, Gimpie, Lismore, Murwillumbah and Nambour areas. 6 The Brisbane, Ipswich and Toowoomba/Warwick licence areas overlap. Part of the western-most reach of the Brisbane licence area is within the eastern-most reach of the Ipswich licence area. Part of the western-most reach of the Ipswich licence area is in the eastern-most reach of the Toowoomba/Warwick licence area. When the first of the two proposed new commercial radio licences for the Brisbane licence area was put up for auction, the information package made available to applicants for that licence stated that the Brisbane and Ipswich licence areas overlapped. It noted that the population of the overlapped area was 118,915 or 7.96 per cent of the total population of the Brisbane licence area. The total population of the Brisbane licence area is almost ten times that of the Ipswich licence area. 7 The respondent's station has been known by various call signs such as 4QFM and 4MIX. It is now promoted as "River 94.9". When the Authority was developing the local area plan for the Ipswich area, the respondent and its predecessor (at that time the licence had not been transferred) requested it to amalgamate the Ipswich and Brisbane licence areas. They asked to be allowed to relocate the station's transmitter from an area called the Knobby, in the centre of the Ipswich area, to Mt Coot-tha which is closer to Brisbane and is the site of the transmitters for the Brisbane licence area. The application for amalgamation was refused, as was the application to move the transmitter. However, the Authority accepted that the respondent was unable adequately to service the existing licensing area. It allocated to the respondent a different frequency (94.9MHz) and authorised the respondent to broadcast at a maximum of 50 kW, with a specified directional radiation pattern. 8 The part of the Brisbane licence area which overlaps with the Ipswich licence area represents a substantial intrusion into the latter, with the City of Ipswich in the centre of that intrusion. That is, the City of Ipswich is within the Brisbane licence area as well as the Ipswich licence area. 9 It is technically possible to attempt to confine radio signals to a particular licence area by controlling the power of the signal in different directions. But to achieve coverage at the border of a licence area requires an effective signal which, inevitably, will be receivable outside the licence area. The Tribunal found that the directional radiation pattern determined by the Authority for the Ipswich licence area undoubtedly sought to maximise reception within the area and to minimise reception outside the area. The authorised actual power ranges from 2 kW to 50 kW. By far the best coverage, so the Tribunal found, from the respondent's Ipswich radio station is in the Ipswich licence area. Lower quality signal can be received in parts of Brisbane, Toowoomba, Logan City and surrounding areas. Reception may not be satisfactory for comfortable listening in all these areas. Reception in moving vehicles may be erratic. The Tribunal also found that it was clear that the signal is concentrated in the Ipswich licence area and is at its highest quality there.

the legislative scheme 10 The Authority is established under s 154 of the Act. It is charged with the implementation and supervision of the regulatory regime established by the Act. In particular, by s 5 it is charged with producing "…regulatory arrangements that are stable and predictable", with "monitoring [inter alia] the broadcasting industry" and "deal[ing] effectively with breaches of the rules". Section 3 specifies objects of the Act, which include: '(a) to promote the availability to audiences throughout Australia of a diverse range of radio and television services offering entertainment, education and information; and (b) to provide a regulatory environment that will facilitate the development of a broadcasting industry in Australia that is efficient, competitive and responsive to audience needs; and … (g) to encourage providers of commercial and community broadcasting services to be responsive to the need for a fair and accurate coverage of matters of public interest and for an appropriate coverage of matters of local significance.' 11 Subsection 4(2) of the Act requires the Authority to regulate broadcasting in a manner that: 'enables public interest considerations to be addressed in a way that does not impose unnecessary financial and administrative burdens on providers of broadcasting services.' 12 By subsection 42(2) of the Act all commercial radio broadcasting licences are subject to the conditions set out in Part 4 of Schedule 2 of the Act and such further conditions as are imposed under s 43. The conditions in Schedule 2 recognise that some radio signals will cross the boundaries of licence areas and be receivable in other licence areas. Clause 8 in Part 4 of Schedule 2 relevantly provides: '(2) Each commercial broadcasting licence is also subject to the following conditions: (a) the licensee will provide a service that, when considered together with other broadcasting services available in the licence area of the licence (including another service operated by the licensee), contributes to the provision of an adequate and comprehensive range of broadcasting services in that area . . .

(b) Each commercial radio broadcasting licence is also subject to the condition that the licensee will not provide commercial radio broadcasting services under the licence outside the licence area of the licence unless:

(a) the provision of those services outside that licence area occurs accidentally; or (b) the provision of those services outside that licence area occurs as a necessary result of the provision of commercial radio broadcasting services within the licence area; or (c) both:

(i) the licensee satisfies the ABA that the provision of those services outside that licence area occurs in exceptional circumstances; and (ii) the ABA has given permission in writing; or

(d) all of the following subparagraphs apply:

(i) the first-mentioned licensee satisfies the ABA that there is a person (the eligible person) who is in a commercial radio broadcasting licence area (the second licence area) that is not the same as the first-mentioned licence area and who is not receiving adequate reception of a commercial radio broadcasting service provided by a commercial radio broadcasting licensee for the second licence area; (ii) the provision of the first-mentioned services outside the first-mentioned licence area occurs only to the extent necessary to provide adequate reception of the first-mentioned services to the eligible person; (iii) the ABA has given permission in writing.' [Emphasis added] 13 Section 43 authorises the Authority to impose additional licence conditions and to vary or revoke licence conditions other than the conditions in Schedule 2. Section 44 provides: '44 Matters to which conditions may relate (1) Conditions of commercial television broadcasting licences and commercial radio broadcasting licences must be relevant to the broadcasting services to which those licences relate.

(2) Without limiting the range of conditions that may be imposed, the ABA may impose a condition on a commercial television broadcasting licensee or a commercial radio broadcasting licensee;

(a) requiring the licensee to comply with a code of practice that is applicable to the licensee; or (b) designed to ensure that a breach of condition by the licensee does not recur.' 14 The Authority formed the view that the respondent promoted its Ipswich radio station as a radio station for the Brisbane area. In those circumstances, the Authority decided to impose an additional condition on the respondent's licence in an attempt to remedy what it perceived to be the inappropriate promotion of a broadcasting station in one licence area as if it were a broadcasting station in another licence area. 15 The evidence before the Tribunal showed that the additional condition imposed by the Authority was its fifth draft of the condition. The final version was as follows: 'The licensee must ensure the service remains a broadcasting service for the Ipswich RA1 licence area by: 1. marketing and promoting the service as a radio service for an area which is confined to, and does not extend beyond, the Ipswich RA1 licence area; 2. referring to Ipswich in on-air station identifications for the service at least twice every hour; 3. not representing, by marketing or promotion or any other way, that the service is a service for an area outside the Ipswich RA1 licence area, and in particular, without limiting the foregoing, not representing that the service is a service for Brisbane generally. In this condition, station identification means matter broadcast periodically to identify the service to its audience.'

the proceedings before the tribunal 16 The respondent challenged the proposed condition on the ground that it was, partly, ultra vires s 44 and also on grounds on merit. The ultra viresargument was that new conditions 1 and 3 were not "relevant to the broadcasting services to which those licences relate" within the meaning of s 44(2). The expression "broadcasting service" relevantly means "a service that delivers television programs or radio programs to persons having equipment appropriate for receiving that service" (see s 6(1)). 17 Section 14 of the Act defines "commercial broadcasting services" in terms which include the phrase "services … that provide programs". The respondent's submission was that broadcasting services were what came off the "stick" or "mast" or transmitter, because the transmission was the delivery or provision of programs. Accordingly, so the respondent contended, conditions which related to on-air announcements such as condition 2 were intra vires, but conditions which related to marketing and promotion, such as conditions 1 and 3, were not, save to the extent that such marketing and promotion was on-air.

The tribunal's decision 18 The Tribunal held that "broadcasting service" in the Act referred to the entity which broadcasts, not the broadcast itself. The central function of a "broadcasting service" was, so the Tribunal held, to broadcast but the "broadcasting service" was more than that. 19 The Tribunal also held that conditions relating to matters associated with a licence area are conditions relevant to the broadcasting services to which the licence relates. Accordingly it ruled that the respondent's ultra vires claim must fail. The respondent had accepted that condition 2 was intra vires because it related to what was broadcast. 20 The Tribunal then turned to the merits of the application for review. It noted that its obligation was to make the correct or preferable decision: Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577. It identified that decision as whether the condition proposed by the Authority should be imposed on the respondent's licence or whether some similar condition should be imposed. The President expressly recognised, with respect correctly, that he was sitting as a substitute for the Authority to make the decision again on its merits. 21 The Tribunal found that the respondent broadcasts advertisements for businesses in the Brisbane area and makes references on-air to activities in the Brisbane area. However, so the Tribunal found, the respondent also advertises Ipswich and Toowoomba businesses and makes on-air references to activities in those areas. 22 We shall refer, later in these reasons, to the various considerations which the Tribunal took into account in its reasons for decision. It is sufficient at this stage, we think, simply to set out the Tribunal's conclusion, which was as follows: '42. When I take all these matters into account I find that it is not appropriate for conditions of the kind proposed to be imposed on the Star Broadcasting commercial radio licence pursuant to s 43 of the Act. I include all three conditions. I do not confine this finding to the precise conditions now proposed or previously proposed. I find that any such conditions are inappropriate. I note particularly that the broadcasting conditions allocated to the licence relating to the location of the transmitter and the directional signal strength impose limitations on the station's ability to broadcast outside its area and encourage it to look within its area. These natural restraints are the best. I find that any conditions of the kind sought to be imposed would involve unwarranted interference with competition, are confusing or uncertain, difficult to comply with and difficult to enforce. I find that they may even require the station to make deceptive or misleading statements against its commercial interests. Care would need to be exercised before such conditions were imposed. For these reasons and the reasons appearing in the fuller discussion above I decide that no conditions of the kind proposed should be imposed. The formal decision I will make is that the decision under review is set aside and that no similar conditions calculated to ensure that the broadcasting service of Star Broadcasting remains a broadcasting service for the Ipswich RA1 licence area should be imposed.'

the appeal 23 There were four grounds of appeal. They were, in summary, as follows: 1. The evidence and other material before the Tribunal was incapable of supporting three of its findings. 2. In making those findings, the Tribunal failed to take into account what the Authority maintained were relevant considerations. 3. In finding that the conditions would involve an unwarranted interference with competition, the Tribunal failed to have regard to three specified factors. 4. In finding that the conditions imposed would require the respondent to make statements that would not be true, the Tribunal failed to have regard to a specified relevant factor.

24 We now turn to consider each of the grounds, and the arguments advanced.

ground 1 25 The essence of this ground is that there was no evidence or material capable of supporting what the Authority maintained was the Tribunal's finding that there was unused technical capacity for it to reduce, by adjusting the technical specifications for the licence (transmitter location and directional signal strength), the overspill of signals outside the Ipswich licence area while maintaining acceptable levels of reception within that licence area. The Authority identified these three findings as being that: (a) the legislative policy of confining radio stations to licence areas "… can be implemented by requiring transmitters to be installed in the licence area and by controlling directional strength of transmissions"; (b) the applicant's power to fix transmitter location and directional signal strength is "… the best means to achieve the legislative policy … because it actually achieves the object of limiting spillage …"; and (c) the "natural restraints" involved in fixing the transmitter location and directional signal strength "… are the best …". 26 In our view the assumption upon which this ground is based is incorrect. We think that a fair reading of the Tribunal's reasons shows that it was not making any findings about unused capacity. It was expressing the conclusion that the existing level of specifications was a more appropriate means of achieving the legislative policy than the imposition of the conditions proposed. We think that this is demonstrated by the sentences in the passage in the Tribunal's reasons, reproduced above, which read: 'I note particularly that the broadcasting conditions allocated to the licence relating to the location of the transmitter and the directional signal strength impose limitations on the station's ability to broadcast outside its area and encourage it to look within its area. These natural restraints are the best.' 27 Accordingly, in our view, there is no substance in this ground.

ground 2 28 In this ground the Authority asserts that in making the findings which we have set out at paragraph 21 above, the Tribunal failed to take into account relevant considerations [said to be prescribed by s 3(g) and s 26(1) of the Act, and associated provisions] of ensuring "appropriate coverage of matters of local significance", and that the broadcasting services to be provided by the licence holder "are to be available in [the licence area]". 29 Once again, this ground is based, in our view, on a misconception of what the Tribunal decided. It is the same misconception upon which ground 1 is based i.e. that the Tribunal decided that the Authority could make some changes to the technical specifications. This emerges from the use of the word "adjustment" in paragraph 22 of the Authority's written submissions. 30 Accordingly, for the same reasons given above in relation to ground 1, we reject ground 2.

ground 3 31 The Authority, in this ground, complains that the Tribunal's finding, that the conditions which the Authority sought to impose would involve an unwarranted interference with competition, was flawed because the Tribunal failed to have regard to three matters. Those three matters were: (a) the specific and limited role allotted by the Act to competition and competitive conduct; (b) the market or markets within which, according to the Act, such competition and competitive conduct is to occur; and (c) the manner in which the Act reconciles the competition principle with the policy of confining licensees' activities to licence areas. 32 In our opinion, although this ground is expressed in terms of failing to take into account relevant considerations, it is really a complaint that the Tribunal took into account an irrelevant consideration. 33 The asserted irrelevant consideration was the effect on competition in the area outside the respondent's licence area. 34 In our view, the Authority has not demonstrated that such a factor is an irrelevant consideration. One of the objects of the Act, specified in s 3(b) is: 'To provide a regulatory environment that will facilitate the development of a broadcasting industry in Australia that is efficient, competitive and responsive to audience needs;' 35 The essence of the Authority's point in relation to this ground is that, for the purposes of the Act, there can only be competition within a particular licence area. In its written submissions the Authority identified various provisions in the Act which, so it said, justified its contention that competition was to be confined to operations within the designated licence area and not across different licence areas. For example, the Authority submitted that the primary function of clause 8(3) of Schedule 2 to the Act was to prohibit the holder of a commercial radio broadcasting licence from providing services under the licence outside the licence area of that licence. 36 In our view the Tribunal did not err when it took into account the effect of the proposed conditions on competition. 37 First, the reference in the object clause set out above is not to competition in a market, it is to the development of a broadcasting industry that is efficient, competitive and responsive to audience needs. 38 The provisions to which the Authority took us do suggest an emphasis on competition within a particular licence area. But Clause 8(2)(b) of Schedule 2 can legitimately be construed as permitting the signal overspill involved in this matter. 39 Even if attention is to be focussed on the concept of a market, we do not think that the Authority has made out its case that the Tribunal took into account an irrelevant consideration. 40 It is a commonplace of competition law that the boundaries of a market are not defined by bright lines. There is often overlap at the edge of the markets. 41 The evidence before the Tribunal showed that that was very much the case in the present matter. The Act recognises that signals will spill over licence area boundaries. The evidence also shows, not surprisingly, that listeners move between one licence area and another and that there are very substantial numbers of listeners in the area of overspill. 42 In those circumstances we do not think that that factor, i.e. competition in the area of overspill of the signals, was an irrelevant factor. It was a commercial fact of life i.e. that the rival stations competed in their respective areas of signal overspill. They were competing for listeners and, through attracting those listeners, for advertising revenue. 43 Furthermore, we think there are at least two further reasons why that factor was not an irrelevant factor. 44 The first is that the Tribunal can be seen to have been attempting to accommodate two sets of legislative policies expressed by the Parliament. One legislative policy, in the Act, authorised the grant of licences conferring almost total local monopolies. The other legislation, the Trade Practices Act 1976 (Cth), evidences, in Part 4 of that Act, a policy of promoting competition in any relevant market. 45 The second reason is that to the extent that competition in the signal overspill area manifests itself in better or more appealing programme content, that benefit of course is not limited, and cannot be limited, only to the area of signal overspill. Everyone in the respective licence areas receives the same signal, and hence any enhancement in the quality of the content. That very competition reflects or promotes "responsiveness to audience needs", another object of the Act. 46 Accordingly, we would reject this ground.

ground 4 47 In this ground the Authority challenges the Tribunal's finding that the conditions which it sought to impose would require the respondent to make statements that would be "not true" or "deceptive or misleading". The error of law which the Authority seeks to identify is stated as being that the Tribunal failed to have regard to the essential feature of the Act, that the services which a commercial radio broadcasting licence holder is authorised to provide are services to the designated licence area of the licence. 48 The Authority, in its written submissions, contended that this finding revealed a misunderstanding by the Tribunal of the structure and operation of the Act and of the terms on which the respondent is authorised to provide a commercial broadcasting service. 49 The licence held by the respondent was, so it was put, to provide a commercial broadcasting service in the particular area designated in the licence, being an area which did not include Brisbane. 50 The essence of the Authority's argument is that the prohibition contained in clause 8(3) was only (relevant to the present matter) removed in the limited circumstances of transmissions which were accidental or an inevitable concomitant of providing services within the licence area. That limited relaxation, so the Authority argued, did not deny the essential proposition that the services which the respondent was authorised to provide were services to or for the designated licence area of the licence. 51 In our opinion, to determine whether this ground is valid, it is sufficient to have regard to the first of the three conditions which the Authority sought to impose upon the respondent. That condition would require the respondent to market and promote its radio service as being for an area which is confined to, and does not extend beyond the Ipswich RA1 licence area. It may well be that the respondent is legally authorised to provide its radio service primarily in that licence area. But in order properly to provide that service, the Act recognises that the signal will be received by listeners outside that area. Clause 8(2) of Schedule 2 makes it clear that such further transmission does not constitute a breach of the licence conditions. 52 By focussing on the word "for" in the proposed condition the Authority has identified what we consider to be too narrow and subtle a legal distinction when compared to the factual practicalities of what is involved. The fact of the matter is that the respondent's radio signals are received outside its licence area. 53 In our view, if the respondent were obliged to tell its listeners and its customers that its radio service was for an area which was confined to and did not extend beyond the Ipswich RA1 licence area, it would be obliged to mislead or deceive those persons. That is because, as a matter of fact, (and as the respondent submitted), such statements would be "palpably false". We see no merit in ground 4.

The notice of contention 54 In view of our conclusions in relation to the appeal, it is not necessary for us to consider the respondent's contention that the Act did not authorise the imposition of the conditions proposed by the Authority. 55 We would dismiss the appeal with costs.

I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of Chief Justice Black, Justice Carr and Justice Tamberlin.

Associate: Dated: 30 June 2004 Counsel for the Applicant: P Hanks QC with T Jowett

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the Respondent: J Griffiths SC with JK Kirk

Solicitor for the Respondent: Blake Dawson Waldron

Date of Hearing: 17 May 2004

Date of Judgment: 30 June 2004