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«COMMERCIAL RADIO INQUIRY Report of the Australian Broadcasting Authority Hearing into Radio 2UE Sydney Pty Limited February 2000 Sydney ISBN 0 642 ...»

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If the Authority is satisfied that there is convincing evidence that a particular code is not operating to provide appropriate community safeguards, section 125 of the Act gives the Authority the power to determine a standard in relation to the matter. A standard determined in this way becomes a condition of licence for all licensees within the relevant section of the broadcasting industry.


The Federation of Australian Radio Broadcasters Limited (FARB) is the industry group that represents commercial radio stations in Australia. FARB, in consultation with the ABT, developed draft codes of practice during 1992 which were endorsed unanimously by FARB member stations in October of that year. The draft codes were submitted to the Authority for registration in March 1993, registered by the Authority on 17 May 1993, and came into force on that date.

The six codes covered the following areas:

♦ programs unsuitable for broadcast;

♦ news and current affairs programs;

♦ advertising;

♦ Australian music;

♦ complaints handling; and interviews/talkback programs.18 ♦ These codes dealt with the areas covered by the superseded Radio Program Standards and Radio Advertising Conditions, apart from the complaints handling code which did not relate directly to any previous ABT standard.19 Unlike the former Radio Program Standard, however, the code for news and current affairs does not include a definition of current affairs programs, as FARB believed such a definition was unnecessary.20 FARB indicated at that time, however, that it would be open to the idea of including such a definition in the context of guidelines.21 The superseded Radio Program

Standard 8.3 defined a current affairs program thus:

In this standard, ‘current affairs program’ means a program focussing on social, economic or political issues of immediate relevance to the community, including interviews and commentaries dealing in depth with news items.

Regarding this definition, the ABT’s December 1991 ‘Inquiry into Accuracy, Fairness and Impartiality in Current Affairs Programs on Television and Radio; Decisions and reasons;

IP/89/48’ stated that:

The standard, as it is now presented, includes a definition of the meaning of ‘current affairs programs’. Apart from mainstream current affairs programs, this may include, but is not limited to, programs such as news and current affairs specials, talkback radio [emphasis added], documentaries and magazine-style programs. However, the standard will only apply to these programs when they focus on social, economic or political issues of immediate relevance to the community.

In 1998 FARB began the process of revising its codes for the first time. After the commencement of the Authority’s investigation into 2UE and other talkback stations, the Authority advised FARB it would be difficult for the Authority to satisfy itself that revised codes dealing with news, current affairs and talkback programs (Code of Practice 2) and advertising (Code of Practice 3) provided adequate community safeguards.

After discussions between the Authority and FARB it was agreed that, rather than delay the registration of all the revised codes, FARB would submit to the Authority for registration only those codes not affected by the Authority’s investigation. The Authority registered these revised codes on 21 October 1999. As a result, the original Codes of Practice 2 and 3 remain in force. The Authority will not consider revisions to these codes until the Authority’s investigations into 2UE and other talkback stations are completed.

This code only relates to the prevention of the unauthorised broadcast of statements by identifiable persons.

As indicated on page 11 of this report, a table comparing the Radio Program Standards and Radio Advertising Conditions applicable under the Broadcasting Act 1942 with the relevant current Codes of Practice dealing with these areas can be found at Schedule 16.

Letter from FARB to the Communications Law Centre, 4 March 1993.

Letter from FARB to the Communications Law Centre, 4 March 1993.


Section 65A of the TPA states, in part:

–  –  –

‘prescribed information provider’ means a person who carries on a business of

providing information and, without limiting the generality of the foregoing, includes:

–  –  –

Accordingly, section 52 of the TPA applies to a holder of a licence granted under the Act in situations where that licensee is broadcasting advertising or promotional material. In such situations the licensee cannot rely on the exemption at section 65A of the TPA.

A contravention of section 52 of the TPA may result in the Court granting an injunction (section 80 of the TPA) or ordering the person involved in the contravention to disclose information specified by the Court (section 80A of the TPA). A person who suffers loss or damage as a result of a contravention of section 52 of the TPA may recover that loss or damage by action against the person involved in the contravention (section 82 of the TPA).

While noting the remedies that are available under the TPA for false and misleading conduct, the Panel is of the view that, with the exception of the remedy outlined at section 80A of the TPA, these remedies appear to have limited practical application to the subject matter of this hearing. The Panel is of the view that remedies under the Braodcasting Services Act are more applicable in this situation.


The Panel notes that in the United States, specific regulations exist covering the disclosure of payments made for the purpose of influencing material in a broadcast program.22 The US approach indicates that, as far as payment (or other valuable consideration) for the inclusion of broadcast material is concerned, disclosure is fundamental.

The Communications Law Centre in its written submission to the inquiry also referred to the

US experience:

Working under the long-standing principle that the listening public is ‘entitled to know by whom they are being persuaded’ the Communications Act of 1934 expressly prohibits the undisclosed payment or acceptance of money or other valuable consideration in exchange for the inclusion of material in a broadcast program; otherwise known as ‘payola’. Whether the valuable consideration is cash, cars, free travel given to a disk jockey, talk-show host or program director with the understanding of influencing the material broadcast, the payment has got to be disclosed to the station. Similarly the station, if it broadcasts the material, must disclose the ‘sponsorship’ to its listeners. Persons who engage in ‘payola’ are subject to criminal penalties of one year in jail and $10,000 per offence. Stations are subject to sanctions from the FCC if they fail to exercise reasonable diligence in ensuring that their employees or others with whom they deal do not engage in payola and that any sponsored broadcast is identified as such. Sections 317 and 507 of the Communications Act of 1934 work in tandem to impose prohibitions and penalties on licensees and employees and hidden sponsors for nondisclosure of payments.

The sponsorship rules require that any material broadcast in exchange for money, services or valuable consideration be accompanied by sponsorship identification or disclosure. The announcement must clearly advise the audience that the time was purchased and who purchased it. An announcement is not required where services or property were furnished free or for a nominal charge unless the item was furnished in exchange for prominent display of the product’s name or trademark beyond that reasonably related to the use in the broadcast. The courts have held that the rules apply to all broadcast matter… For example, the penalties for violating section 508 of the US Communications Act of 1934 (relating to payments to radio station personnel or to influence the production or preparation of radio programs) include a fine of not more than $10,000 or imprisonment for not more than one year, or both.

In the area of political broadcasts and broadcast matter involving the discussion of a controversial issue of public importance, the FCC has adopted tighter requirements for

sponsorship disclosure. As the Commission stated:

The obligation upon the licensee to disclose, and the right of the listening and viewing public to know by whom they are being persuaded, is greater in the area of political and controversial issue programs than it is the case of commercial programs… Thus for political broadcasts or broadcast matter involving a controversial issue of public importance the FCC requires more frequent and more thorough identification of the sponsor, and greater specificity of the furnishing material. Stations must exercise reasonable diligence in determining the true identity of those sponsoring the program, or on whose behalf the political programming was broadcast.23 A full Transcript, of the submission made by the CLC on 19 November 1999 at the ABA hearing can be located on the ABA’s website at www.aba.gov.au/whats_new/pdf/19nov.pdf.

3 Code of Practice 2 – News And Current Affairs Programs

Code 2 of the Commercial Radio Codes of Practice is as follows:

–  –  –


The hearing was concerned with whether there had been a breach of clause 2.2(d) of the

Codes. In the broadcasts examined in the hearing, the Panel is of the view that:

♦ the existence of each commercial agreement investigated in this inquiry between either Mr Jones or Mr Laws and a third party is an ‘available fact’ as the term is used in Clause 2.2(d) of the Codes.

♦ if available facts such as these are withheld in circumstances where their disclosure might affect the listeners assessment of the material broadcast, the presentation of the relevant program material is misleading The existence of a commercial agreement becomes relevant where the subject matter of the broadcast concerns, or is favourable to, the person with whom the presenter has a commercial agreement.

In determining what is a relevant available fact, Mr Jones submitted that:

It is not obvious that the existence or content of a commercial arrangement between a presenter and a person mentioned on the presenter’s radio program is a ‘relevant available fact’ within the meaning of clause 2.2(d) whenever the presenter mentions that person on air. It will be necessary to look at individual broadcasts to decide whether such a fact is relevant.24 This submission raises the issue of the relevance to the reasonable listener of the connection between the matter broadcast and the particular commercial agreement. The Panel accepts that there has to be some connection between the them before the existence of the agreement becomes relevant but considers that the threshold at which the connection becomes relevant is quite low.

The Panel notes 2UE’s submission that due to the lack of material ‘immediately preceding and succeeding the broadcast … It is impossible to safely conclude that the broadcast may have misled listeners without considering contextual detail’. The Panel is of the view that the disclosure of relevant available facts must be sufficiently linked to the broadcast to ensure the disclosure forms part of the broadcast. The disclosure and the broadcast must be linked to avoid the broadcast being misleading. If such disclosure had been sufficiently made, it would have been as part of the broadcasts.

Neither 2UE nor any of the parties to the agreements between Mr Jones or Mr Laws and their sponsors tendered any material indicating that adequate disclosure of the existence of the agreements was made immediately before, during or after the broadcast of the material.

If such material existed, it is reasonable to expect that it would have been tendered.

In any event, the Panel have listened to audio recordings of various broadcasts of entire shows of Mr Laws and Mr Jones. These have been listened by each member of the Panel.25 This has enabled the Panel to obtain a sense of the context within which ‘live reads’, prerecorded advertisements, interviews and editorial comment existed. Some of the breaches found by the Panel were broadcast during this period of time.


Mr Jones made the following submissions in relation to many of the broadcasts alleged to

have breached clause 2.2(d):

Submissions, Mr Jones, para. 28.

Exhibit 71: All Jones and Laws shows for Tuesday 1 June 1999 to Friday 4 June 1999.

There is no dispute as to the accuracy of the facts stated in the broadcast or as to the genuineness of the opinion expressed.26 The Panel is of the view that the accuracy of the facts stated in any of the broadcasts is not relevant to whether there has been a breach of clause 2.2(d) in this context. The Panel is also of the view that the genuineness of any opinion expressed in any of the broadcasts is not relevant to whether there has been a breach of clause 2.2(d). The accuracy of facts stated, or the genuineness of any opinion expressed, in a broadcast is not relevant to whether material has been presented in a misleading manner because a relevant available fact has been withheld.

2UE, Messrs Jones and Laws and some advertisers also submitted that many of the broadcasts alleged to have breached clause 2.2(d) were matters of legitimate news, and were reported in other media as such at the time.27 These submissions asserted that as items of legitimate news, the existence of a commercial agreement between a presenter and another person is not a relevant available fact. The Panel does not accept these submissions. The Panel is of the view that the existence of the commercial agreement was a relevant available fact if the broadcast was favourable to the sponsor and is of the view that whether the item was also reported in other media is irrelevant.

2UE and Mr Jones also made submissions in relation to interviews conducted with

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