Draft BAI Ownership and Control Policy 2018

Introduction

The Broadcasting Authority of Ireland (“BAI) is an independent statutory organisation responsible for a number of key areas of activity with regard to television and radio services in Ireland. The work of the BAI is principally guided by the Broadcasting Act, 2009 (“2009 Act”). One of the principle objectives of the BAI, as set out in Section 25(1)(c) of the 2009 Act is ‘to provide for open and pluralistic broadcasting services’.  The BAI must also ‘promote diversity in control of the more influential commercial and community broadcasting services’. These objectives are also reflected in the BAI’s Strategy Statement (2017-2019) under the strategic theme – ‘Promoting Plurality and Diversity’. The BAI has developed its Ownership and Control Policy so as to give practical effect to the achievement of these objectives. The Policy is intended to provide clarity and certainty in respect of the ownership and control of commercial broadcasting, community and multiplex contractors.

In practical terms, the Policy is used by the BAI to assess applications for broadcasting, content provision and multiplex contracts.  It is also used to assess requests for variations to the ownership and control structures of these contractors. More broadly, the Policy is designed to facilitate the continued development of a viable and diverse broadcasting sector that is characterised by a plurality of ownership.

The Consultation

The current BAI Ownership and Control Policy was introduced in 2012 and the BAI is now seeking views from the public and stakeholders on a revised and updated Policy. This draft Policy proposes a number of changes to the regulation of the ownership and control of broadcasting services licensed by the BAI. The Policy does not apply to public service broadcasters.

The revision to the Policy involves two key activities. Firstly, the BAI undertook a targeted consultation with broadcasters and other key stakeholders. The consultation focused on the content of the current Policy and was undertaken by Dr. Roddy Flynn of the DCU School of Communications. This process was completed in the first half of 2018 and a report on the outcomes of this targeted consultation is now available here. Secondly, the BAI is now conducting a public consultation on a revised Ownership and Control Policy. The draft Policy is included in this consultation and the updated regulations detailed below have been informed by the Broadcasting Act 2009, by the BAI’s experience of implementing the current Policy and by the outcomes of the targeted consultation completed earlier in 2018.

The purpose of consulting on the draft Policy is to elicit the views of the public and interested stakeholders, including broadcasters and media owners and practitioners, on the proposed changes detailed in the draft Policy. The draft Policy provisions are detailed below. Where relevant, each section includes a brief explanation and/or rationale for the provisions (highlighted bold), the draft provisions are then set out and these are followed by a number of consultation questions.

The policy provisions have had regard to the findings of the targeted consultation and a number of updates incorporate suggestions from stakeholders who were involved in that consultation. A range of stakeholder proposals have not been adopted in the draft Policy. In some instances, these were considered to relate to implementation issues and the BAI will give these issues consideration once the Policy is finalised. In other instances, while the proposals were reasonable, they were not considered to be those that would improve on the current Policy either because they would add complexity without any benefits or because they would reduce flexibility in the application of the Policy. A number of other issues were related to broader questions of viability and sectoral sustainability and were considered more appropriate in the context of the BAI’s Broadcasting Services Strategy.

Notwithstanding this, the BAI is wholly open to submissions on all of the sections where it has invited responses to specific questions, including those areas which it has left unchanged from the current Policy. The BAI will have regard to all submissions and to the findings of the targeted stakeholder consultation when making decisions as to the contents of the final version of the Policy.

The submissions received in response to this public consultation 2018 will inform the Authority’s decisions in respect of the final Policy to be published in the first half of 2019.

How to make a submission

The BAI invites you to make a submission to this consultation. The submission can include a response to any or all of the consultation questions included here. Submissions should be made by  30^th January 2019. You can e-mail your response to consultations@bai.ie Postal responses can be submitted to:-

BAI Ownership and Control Consultation,
Broadcasting Authority of Ireland,
2 – 5 Warrington Place,
Dublin,
D02 XP29.

If you have any queries in relation to this consultation, please email consultations@bai.ie or phone (01) 6441200. 

Publication of Submissions

The BAI will publish the submissions received in this consultation on www.bai.ie after the publication of the final BAI Ownership and Control Policy and subject to consideration of information that may be deemed of a personal nature, sensitive or given in confidence, as provided for by the Freedom of Information Act 2014 and the Data Protection Acts and Regulations.

Freedom of Information

The Broadcasting Authority of Ireland (BAI) undertakes to use its best endeavours to hold confidential any information provided by you in this proposal subject to the BAI’s obligations under law, including under the Freedom of Information Act 2014.  Should you wish that any of the information supplied by you in your submission should not be disclosed because of its sensitivity, you should, when providing the information, identify the same and specify the reasons for its sensitivity.  The BAI will consult with you about this sensitive information before making a decision on any Freedom of Information request received.

Data Protection

The Broadcasting Authority of Ireland shall comply with their obligations under the Data Protection Acts 1988 and 2003 (as amended) and any other applicable data privacy laws and regulations.

This section of the Policy provides the wider context for the BAI’s regulations. The type of broadcasting contracts that are covered by the Policy are detailed and a broad overview of the contents of the Policy is provided. There are no consultation questions in respect of this section. If you have views on this section they can be provided by responding to the final consultation question.

The BAI Ownership and Control Policy (2018) (“the Policy”) has been designed to facilitate the continued development of a viable, sustainable and diverse broadcasting sector that is characterised by a plurality of ownership. The Policy is also designed to provide clarity and certainty in respect of the regulatory approach to be adopted and the rules that will apply. Overall, the Authority believes that this Policy balances the needs of a continually evolving indigenous broadcasting sector with the BAI’s requirement to ensure plurality. The BAI’s commitment to plurality is also set out in the BAI Strategy Statement 2017-2019, where a core part of its mission is identified as promoting a plurality of voices, viewpoints, outlets and sources in Irish media.

This Policy will be used by the BAI to assess the ownership and control element of licence applications and to assess relevant requests for variations to contracts as well as any compliance issues that may arise subsequently in respect of such contracts. In this regard, the Policy will apply to contracts provided further to the following sections of the Broadcasting Act 2009: Section 63 and Section 64 (Sound Broadcasting Contracts); Section 70 (the national Television Programme Service Contract); Section 71 (Content Provision Contracts), and; Section 131 (Multiplex Contracts).

The Policy is divided into a number of sections. Section 2 provides a summary of the legislative and policy background that informs the provisions of the Policy while Section 3 outlines the objectives of the Policy. Section 4 details the key definitions and terms used in the application of the Policy. Finally, Section 5 contains the detailed Policy provisions that the BAI will apply when considering matters pertaining to ownership and control.

This section of the Policy provides the legislative and policy context for the Policy and makes reference to three key documents – the Broadcasting Act 2009, the Competition and Consumer Protection Act 2014 and the BAI Statement of Strategy (2017-2019). There are no consultation questions in respect of this section. If you have views on this section they can be provided by responding to the final consultation question.

The key legislative provisions that provide the framework for the Policy are the Broadcasting Act 2009, the Competition and Consumer Protection Act 2014, the BAI Strategy Statement 2017-2019 and the BAI Broadcasting Services Strategy (2018).

1.  The Broadcasting Act 2009

The 2009 Act provides the statutory framework for the licensing and regulation of broadcasting and multiplex services in Ireland. This Act established the BAI to regulate content across all Irish broadcasting services. It sets out a range of general and specific objectives for the BAI including ensuring the provision of open and pluralistic broadcasting services. The Act also identifies the range of contracts that the BAI can enter into and provides the regulatory framework in which these contracts are awarded and operate.

2. The Competition and Consumer Protection Act 2014

The Competition and Consumer Protection Act 2014 contains statutory provisions for the control of media mergers by the Competition and Consumer Protection Commission and the Minister for Communications, Climate Action and Environment.

The 2014 Act imposes a number of new and additional functions and obligations on the BAI including, amongst other matters, providing advice to the Minister on the impact of a proposed media merger on plurality in the State, if requested; undertaking a retrospective review on the impact of ownership changes on plurality over a 3-year period and providing a report to the Minister on this; and, commissioning of and/or carrying out plurality-related research activities. In addition, in considering a request for a media merger the Minister will have regard to any relevant decisions made under the BAI’s Ownership and Control Policy.

The role of the BAI in respect of media mergers is set out in detail in Part 4 of the Competition and Consumer Protection Act 2014.^[1]

[1] A copy of the Act is available at: http://www.irishstatutebook.ie/eli/2014/act/29/enacted/en/html. Part 4 of the Act deals with media mergers and the role of the BAI. Additional information is available on the website of the Department of Communications, Climate Action and Environment: https://www.dccae.gov.ie/en-ie/communications/topics/broadcasting-media/media-mergers/Pages/Media-Mergers.aspx

3. BAI Statement of Strategy 2017-2019

Promoting diversity and plurality is a key theme in the current BAI Strategy Statement and this is given effect through a number of strategic objectives which include establishing and implementing policies, codes and procedures that promote and support plurality in terms of voices, viewpoints, outlets and sources.

The Strategy sets out four objectives in particular and they are as follows:-

• to facilitate a mix of voices, opinions and sources of news and current affairs in audio-visual media which enhances democratic debate and active citizenship in Ireland;
• to increase the production and availability of culturally relevant audio-visual content for Irish audiences;
• to foster and promote quality programming in the Irish language; and
• to foster a media landscape that is representative of, and accessible to, the diversity of Irish society.

In addition, the BAI’s Strategy Statement also emphasises the importance of sectoral sustainability. This is reflected in the strategic objective whereby the BAI commits to working with stakeholders to support the achievement of greater sustainability for the Irish audiovisual sector.

The BAI Ownership and Control Policy 2018 is a key statement in the realisation of these strategic objectives.

4. BAI Broadcasting Services Strategy 2018

The Broadcasting Services Strategy 2018 details the intention of the BAI to facilitate the long-term sustainability of the independent broadcasting sector, to support and foster plurality and diversity of content for Irish audiences including in the Irish language, and to support innovation and development, now and into the future. Alongside these aims, the Strategy is intended to facilitate a mix of voices, opinions and sources of news and current affairs in audio-visual media and to support the BAI’s commitment to work with stakeholders to achieve greater sustainability.

This Strategy will guide the BAI’s Licensing Plans in the coming number of years and sits alongside the Ownership and Control Policy as a means for achieving diversity and plurality in Irish media.

This section of the Policy remains largely unchanged from the current regulations. However, an important change relates to the inclusion of a policy objective which identifies support for the viability of individual broadcasting services and the sustainability of the broadcasting sector as a whole as an appropriate new objective. The issues of viability and sustainability were identified by broadcasters participating in the targeted consultation as ones that should be given greater emphasis in the Policy. The BAI agreed with this view and has updated the Policy accordingly. This issue is also reflected in the detailed policy provisions set out in Section 5 of the Policy. Separately, the objectives now highlight the importance of promoting diversity of ownership and content.  While diversity underpins the current version of the Policy, it was not articulated in the current Policy objectives and the updated draft Policy addresses this matter.

Eight policy objectives have been identified by the BAI as relevant to this Policy. The Policy objectives have been informed by the legislative and policy background set out in section 2. These objectives provide the overall context for the development and implementation of the Policy as well as the assessment of ownership and control proposals. The objectives also provide a framework to assist the BAI in responding to new issues emerging in licensing processes and ownership and control developments in the broadcasting sector.

The Policy objectives are as follows:

1. To promote open and pluralistic broadcasting services, with particular reference to radio and television services;
2. To support both the viability of broadcasting services and the greater sustainability of the broadcasting sector as a whole;
3. To ensure that the ethos of a broadcasting service is such that it will best serve the needs of the audience it is licensed to serve;
4. To contribute to the promotion of diversity in control of the more influential commercial and community broadcasting services;
5. To ensure that broadcasting and multiplex contracts are held by persons who are of suitable character, and who have available to them adequate expertise, experience and financial resources;
6. To promote diversity in voices, viewpoints, outlets and sources, that is, diversity in the opinions expressed, in programming delivery and content, in ownership and in the sources of information available to the public;
7. To contribute to the upholding of the democratic values enshrined in the Constitution, especially those relating to rightful liberty of expression, and;
8. To contribute to the achievement of a regulatory environment that will sustain independent and impartial journalism.

The bulk of statutory definitions included in the current version of the Policy have now been moved to an Appendix with a view to making the document more readable and with a view to providing the appropriate emphasis on definitions and key terms that are important for the operation of the Policy.  In this regard, the body of the Policy highlights the statutory definition of ‘Communications Media’ as it is an important definition in the decision-making process. 

Separately, as there are no statutory definitions for ‘control’ and ‘substantial interests’ (terms used in the context of assessing media concentration), it is necessary for the BAI to interpret the meaning of these terms.  These terms are interpreted in the current version of the Policy and views were invited as part of the targeted consultation on the BAI’s current interpretation. A range of suggestions were made about how these terms might be amended. A number of these were reasonable but the BAI has decided to retain the current interpretation. The BAI’s decision is informed by the fact that the targeted consultation indicated a good degree of support for the current interpretations, that suggested changes made during the targeted consultation supported the current flexible approach to the interpretation of these terms and because no significant issues have arisen when applying the terms in practice.  It is the view of the BAI that issues of control and substantial interests can be complex and context specific and the current approach has demonstrated that it can account in practice for this complexity. Notwithstanding this, the BAI welcomes and will have due regard to any additional views of this matter provided as part of this consultation.

Separately, participants in the targeted consultation also requested the Policy to elaborate on how the definitions and terms are applied in practice. The BAI would note that guidance is already provided on the application of the Policy and that the concerns of respondents can be better addressed via updated guidance rather than via changes to the Policy provisions.

The 2009 Act contains a number of relevant statutory definitions that are used in this Policy. In addition, the Act includes a number of terms that, in order to meet its statutory obligations, the BAI has interpreted. In both cases, the definitions and terms have been used by the BAI in setting the decision-making criteria to give effect to them in practice.  The statutory definitions are now set out and the BAI’s interpretation of terms used in the Act but not defined are then provided.

Statutory Definitions 

The 2009 Act includes a number of statutory definitions that are of relevance to this Policy. The statutory definitions for the following are provided at Appendix 2 :- Broadcast; Broadcaster; Broadcasting Contract; Broadcasting Service; Content Provision Contract; Electronic Communications Network; Multiplex; Multiplex Contractor; Sound Broadcasting Service; Wireless Telegraphy.

The 2009 Act also includes a central statutory definition which describes what constitutes ‘communications media’ for the purposes of assessing ownership and control limits and thresholds and which plays an important role in the BAI’s policy considerations.

In that context, ‘Communications Media’ means:-

a). The provision of a broadcasting service,

b). The provision of a broadcasting services platform, or

c). The publication of newspapers or periodicals consisting substantially of news and comment on current affairs.

Interpretations of Key Terms

Separately, and in order to meet its statutory obligations in respect of ownership and control, the BAI must interpret the relevant terms used in the 2009 Act. In this regard, the manner in which the BAI will interpret references in the legislation to ‘Control’ and ‘Substantial Interest’ is now set out.

The interpretations are intended to account for the different factors that can come into play in terms of ownership and control, for example, control of a legal entity can be attained even where the owner does not hold the majority of shares. The interpretations of the terms ‘Control’ and ‘Substantial Interest’ also focus primarily on programme output and reflect the BAI’s main objectives, in accordance with its statutory remit, which are to regulate content and to promote diversity in voices, viewpoint, outlet and source, thereby providing the public with access to a wide range of quality programmes from a variety of sources.

Control: refers to an individual or legal entity that is in a position proprietarily, financially or in terms of voting rights to determine or direct the policy of the company, with regard in particular to programme output that is, sourcing, production, supply or delivery to the audience.

Substantial Interest: refers to an individual or legal entity that has sufficient proprietary, financial or voting strength within a relevant company or companies to be able to influence directly or indirectly to an appreciable extent the strategic direction or policy (which shall include editorial policy) of the company (companies), with regard in particular to programme output, that is, sourcing, production, supply or delivery to the audience.

Guidance on Substantial Interest

With regard to a substantial interest, the BAI takes the view generally that a “small shareholding” does not constitute a substantial interest. A small shareholding is one to which both of the following criteria apply:-

1. The votes which the holder may exercise at a general meeting of the company do not exceed 10% of the total votes which may be cast at that meeting;
2. The nominal value of the shareholding does not exceed 10% of the nominal value of the entire issued share capital of the company.

A shareholding which does not meet the above criteria i.e. “a large shareholding” may be deemed by the BAI to constitute a substantial interest. A determination as to whether a large shareholding is deemed to be a substantial interest will be made by the BAI on a case-by-case basis with reference to the overall shareholding structure of the relevant company. (Where shares are convertible, the tests set out above will be applied on the basis that conversion has not taken place and on the basis of notional conversion).

This section of the Policy details the provisions that will be applied by the BAI in the context of its consideration of matters relating to ownership and control as they arise either in the license application process or where a contractor requests a change to the ownership and/or control of a broadcasting service. Depending on the details of the change requested, a number or all of the provisions may be relevant. The policy provisions include a range of tests that the BAI will apply before making a determination. The tests will be applied on a case-by-case basis and decisions will be made with a view to achieving the policy objectives set out above as well as the wider statutory and strategic obligations and objectives of the BAI as they pertain to media plurality.

The provisions of the draft Policy include one new provision and also remove two provisions in the current Policy.

The draft Policy also includes a new provision dealing with matters of viability and sectoral sustainability. This is discussed in more detail in Section 5.3 below.

The current Policy includes provisions dealing with the ‘Assignment of Contracts’ and ‘Concrete Indicators of Diversity’ and it is proposed to remove these provisions. In this regard, the current provision dealing with the ‘Assignment of Contracts’ places restrictions on changes of ownership in respect of new sound broadcasting contracts and the television service licenced further to section 70 (currently held by Virgin Media). It is the view of the BAI that, given the maturity of the broadcasting sector, having regard also to the property rights of shareholders and taking account of the changes in the wider media market, that these restrictions are no longer necessary. The BAI is also of the view that the other policy provisions, including amended provisions in respect of programming, as well as the terms of broadcasting contracts, are sufficient to ensure that the integrity of the licensing process and the services licenced will be maintained following any assignment of a contract.

Regarding the section on ‘Concrete Indicators of Diversity’, this was included in the current Policy in anticipation of the introduction of new media mergers legislation (subsequently introduced in 2014). The current Policy states that the BAI will consider the potential for introducing into its Ownership and Control Policy concrete indicators of diversity within media organisations.

It is the view of the BAI that indicators of diversity are now reflected in the licensing process, are addressed in various sections of the Policy, are considered also in the context of performance reviews and are dealt with via other activities, such as the BAI’s Gender Action Plan. More generally, the BAI will publish a Media Plurality Policy in 2019 and this will link the BAI’s media plurality activities under one policy, a policy centrally concerned with matters relating to diversity of ownership and content.

For these reasons, it is proposed to remove this policy provision. The BAI also notes that this section of the current Policy is explanatory rather than being one that had any practical effect in assessing ownership and control changes. As such, this change will not impact on the application of the Policy.

The Policy details are divided into eight sections as follows: –

5.1 – Character, Expertise and Experience;

5.2 – Financial Resources;

5.3 – Viability and Sectoral Sustainability;

5.4 – An undue number of sound broadcasting services;

5.5 – An undue number of sound broadcasting services in a specified area;

5.6 – An undue amount of communications media in a specified area;

5.7 – Programming;

5.8 – Non-EU Entities.

These policy provisions will be used by the BAI to assess the ownership and control element of applications and to assess relevant requests for variations and any compliance issues that may arise subsequently in respect of such contracts.

Section 5.1 of the Policy reflects the obligation of the BAI to consider matters relating to the character, expertise and experience of individuals/legal entities whether as applicants for a new licence or as those requesting changes to the ownership and control of a broadcasting service. The draft Policy provisions are broadly similar to the current Policy but a number of changes are proposed. 

In this regard, the current Policy applies the character tests to Directors, management positions approved by the BAI and shareholders whose shareholding constitutes a substantial interest, or control, as defined. The draft Policy retains the character tests in respect of shareholders holding control or a substantial interest and Directors but limits the application in terms of management positions to the Chief Executive Officer and the company secretary. If this approach is adopted, the tests would no longer be applied to Programme Directors or Chief Financial Officers, as is currently the case. The BAI is proposing this shorter list of management positions given the maturity of the broadcasting sector and the importance of minimising administrative burden. Nevertheless, the draft Policy gives the BAI the discretion to consider the character of other management positions on a case-by-case basis. This may occur where there is a significant change in ownership and control, for example, where a group of services or a very significant player in the market changes ownership.

Under the specific tests set out at section 5.1.1, the first test dealing with criminal offences has been amended to exclude “spent convictions”. This is changed to take account of the BAI’s experience of applying the Policy and having also had regard to new legislation dealing with spent convictions – the Criminal Justice (Spent Convictions and Certain Disclosures) Act 2016.

The draft Policy also clarifies that a failure to pass a character test does not automatically disqualify an applicant (in the case of a licence application) nor will it lead to a request for a change of ownership and control being rejected. While this reflects current practice, the targeted consultation highlighted uncertainty on the part of some stakeholders about the impact of failing a character test on a decision of the BAI. This is not to say that a failure won’t be the basis for rejecting a specific request or application, rather, the Policy has been updated to clarify that this will not follow automatically.

Separately, the BAI is seeking views on whether other offences should be included as part of the character test, in addition to fraud or dishonesty and also whether adverse findings of civil/public bodies, but which do not constitute a criminal offence, should also be taken into account.

The BAI is not proposing any changes to the assessment of Expertise and Experience provisions contained in the Policy.

The 2009 Act requires the BAI, when awarding certain broadcasting contracts or multiplex contracts, to have regard to:

“the character, expertise and experience of an applicant or, if the applicant is a body corporate, the character, expertise and experience of the body and its directors, manager, secretary or other similar officer and its members and the persons entitled to the beneficial ownership of its shares.” [1]

Assessments of Character

In assessing character, the BAI will apply the ordinary meaning of the word and will consider, in particular, if the applicant, as set out above, is a fit and proper person to hold a broadcasting, content provision or multiplex contract (as appropriate) with reference to the provisions of sections 66 or 137 of the Act (as appropriate) and in the context of its compliance with other relevant statutory and regulatory provisions.

In addition to these character tests being applied at application stage, the BAI shall also apply these to commercial broadcasting services as a matter of policy during compliance reviews and when considering proposals for changes to the ownership and control of contractors. The tests shall apply in general to the following positions approved by the Authority:-

• Directors;
• Chief Executive Officer;
• Secretary;
• Shareholders whose shareholding constitutes a substantial interest, or control

The Authority retains the right to apply character tests to other positions having regard to the particulars of an application or in the context of a change in ownership and/or control.

[1] Sections 66(2)(a) and 137(2)(a) of the Act. A specific provision in relation to character, expertise or experience of content provision contract holders is not set out in the Act. However, the BAI, as a matter of Policy, will continue to consider the character of an applicant when considering applications for section 71 and 72 content provision contracts.

Tests applied by the BAI in respect of Character

In relation to character, the BAI will apply the following seven tests:-

1. Has the applicant ever been convicted of an offence involving fraud or dishonesty (but excluding ‘spent convictions’)?
2. Has the applicant ever been restricted or disqualified as a Company Director, or convicted of any offence under the Companies Act 2014 in this jurisdiction or under equivalent legislation in any other jurisdiction?
3. Has the applicant ever been adjudicated a bankrupt, become insolvent or entered into a voluntary arrangement with creditors, or had a receiver appointed to any of its assets, in this or any other jurisdiction?
4. Has the applicant ever been a director of a company to which a receiver was appointed, which went into compulsory liquidation, creditors’ voluntary liquidation, examinership or which made any arrangement with its creditors or class of creditors?
5. Has the applicant ever been convicted of an offence under any legislation by which Broadcasting and/or Wireless Telegraphy is regulated in this or any other jurisdiction?
6. Has the applicant ever had a licence or contract issued by a broadcasting licensing body or any other statutory body suspended or revoked in this or any other jurisdiction?
7. Is the applicant aware of any reason why it may not be a fit and proper person to be awarded a contract?

Individuals, contractors and other relevant parties should note that failure to pass any of the tests set out above may not automatically disqualify an applicant or a request for a change of ownership and control. The BAI will have regard to all of the relevant information provided and subsequent clarifications provided, as deemed necessary.

Assessment of Experience and Expertise

In addition to assessing character the BAI will also apply tests in respect of the experience and expertise of applicants. In addition to these tests being applied at application stage, the BAI shall also apply these to commercial/community broadcasting services as a matter of policy during compliance reviews and when considering proposals for changes to the ownership and control of contractors.

Tests applied by the BAI in respect of Experience and Expertise

In relation to experience and expertise, the BAI will apply the following two tests:-

1. Does the Board of Directors of the applicant include sufficient personnel with the necessary experience, expertise and knowledge having regard to the nature of the contract proposed?
2. Is the management structure of the applicant appropriate and does the membership and make-up of the management team have sufficient experience and expertise having regard to the nature of the contract proposed?

In applying these tests the BAI shall examine the proposed arrangement in terms of the relevant individuals within the structure, (e.g. is there an over-reliance on one individual in the corporate and/or management structure) and the overall membership and structure of the Board and management team (e.g. are there any independent directors).

The BAI believes that structures which reflect best practice in terms of corporate governance are key components in ensuring the delivery of quality services for audiences.

In assessing these matters the BAI shall also take into account the specific nature of the service involved, e.g. local, community, multiplex etc. In the case of community services the BAI requires that the ownership and management structures facilitate and support active participation by the community served at all levels within the service.

In relation to the composition and structure of an entity, the BAI does not differentiate between either a natural person or persons or the corporate status of the applicant i.e. type of legal entity.

This section remains unchanged from the current Policy. Some respondents from the Community Broadcasting sector stated as part of the targeted consultation that this section was not appropriate for their industry, which is not-for-profit. However, it is the view of the BAI that this section provides for a distinction between commercial and community broadcasters. More generally, regardless of the type of service, the Broadcasting Act 2009 and good licensing processes are appropriately focused on ensuring that those granted licences have in place financing and a business model that will ensure the ongoing viability and sustainability of the particular service licenced.  For these reasons, the BAI considers the current provisions to be appropriate.

In considering applications for the award of contracts, further to the provisions of Section 66(2) and Section 137(2) of the Act, the BAI is required, inter alia, to have regard to:

“the adequacy of the financial resources that will be available to each applicant and the extent to which the application accords with good business and economic principles.”

In the case of Community Sound Broadcasting Contracts and Community Content provision contracts the BAI must also be satisfied that the contractor has the sole objective of achieving monetary reward of no greater amount than is reasonably necessary to defray the expense that is incurred in providing the service.

Commercial Broadcasting Services (including the contract provided for under Section 70) [1]

In implementing the above provisions, the BAI shall have regard, inter alia, to the following:-

• Does the applicant have available to it adequate financial resources and does its approach accord with good business and economic principles, having regard to the nature of the service proposed?

Community Broadcasting Services

In the case of community sound broadcasting and community content contracts the BAI shallso have regard to the following:-

• The extent to which the service is being operated on a not-for-profit basis and is maintaining its independence by attracting funding from a variety of sources.  In this context, community services are required to ensure that advertising and sponsorship together do not account for more than 50% of all income annually.

Broadcasters licensed further to Section 71 of the Act

This section does not apply to contracts awarded under Section 71 of the Act.

[1] This contract is currently held by Virgin Media Television Limited.

A good deal of responses about the current Policy provided in the context of the targeted consultation focused on matters of viability and sustainability. A principal mechanism used by the BAI for dealing with these issues is the Broadcasting Services Strategy, from which licensing plans emerge. Issues of sustainability and viability have also been a common factor highlighted by broadcasters when requesting changes in ownership and programming.

More broadly, the Mediatique report produced by the BAI in the context of the review of the Broadcasting Services Strategy highlighted issues of viability and sustainability and recommended that the BAI have regard to these issues in the context of its Ownership and Control Policy. In addition, the BAI’s Strategy Statement 2017-2019, the Broadcasting Services Strategy and the licensing process undertaken in the context of the 2009 Act highlight the importance of ensuring that broadcasting services are viable and remain so and, more broadly, that the sustainability of the broadcasting sector is supported. 

In view of this, the draft Policy includes a number of proposed changes.  As already noted above, these concerns are reflected in the draft Policy objectives set out in Section 3. In addition, it is proposed to address these issues via the inclusion of a new policy provision that focuses on viability and sectoral sustainability. The draft Policy provision set out in Section 5.3 states that where a change of ownership and control is proposed, the BAI shall have regard to the extent to which the proposal will support the viability of a contractor and/or sectoral sustainability. In addition, the suitability of the change in the context of the Broadcasting Services Strategy shall also be considered.

In the context of proposed changes to the ownership and control of broadcasting services, the BAI shall have regard to the following:-

• The extent to which any proposal to vary the ownership or control of the contract will support the viability of the Contractor?
• The extent to which any proposal to vary the ownership or control of the contract will support the sustainability of the Broadcasting Sector as a whole?
• The suitability of any proposal in the context of the objectives and provisions of the BAI Broadcasting Services Strategy.

Sections 5.4, 5.5 and 5.6 of the draft Policy give effect to Sections 66 (2)(g)(h) and (i) of the Broadcasting Act 2009. These statutory provisions require the BAI, when assessing applications for new contracts, to consider the desirability of allowing any individual or group of persons to have control of, or substantial interests in an undue number of the total number of broadcasting services in the State, as a whole (Section 5.4), or in a specified geographical area (Section 5.5).

In addition, the BAI must consider the desirability of allowing any individual or group of persons to have control of, or substantial interests in, an undue amount of communications media (Section 5.6). Communications media include broadcasting services and platforms and newspapers and periodicals consisting substantially of news and comment on current affairs but do not include digital media. These sections of the Policy are those which provide a key mechanism for managing plurality and diversity in terms of ownership and they are applied not only at the licensing stage but also in the context of consideration of requests for changes in ownership and control.

A number of those participating in the targeted stakeholder consultation, and who represent broadcasting services, set out a view that the tests used by the BAI when considering market dominance, substitutability, and plurality under each of these Sections of the Policy were either wholly unnecessary or in need of either clarification or updating to account for online media. These positions were centrally informed by the view that the media market has radically changed in recent years and the Policy and the BAI should be updated to take account of the role of digital media when making decisions about ownership and control.

It is the view of the BAI that the current Policy, while operating effectively in practice, is based on a legislative framework that has remained largely unchanged since 1988. It does not accommodate significant developments in media content, distribution and streaming. Nevertheless, the BAI must operate within this legislative framework and it is of the view that in respect of Sections 5.4, 5.5 and 5.6 of the Policy, its scope for updating the Policy is limited. The provisions of the 2009 Act which are given effect by the Policy deal solely with sound broadcasting services and communications media and do not include reference to digital media. In practice, this limits the BAI’s assessment of a changes of ownership as they pertain to a consideration of the desirability of an individual/legal entity owning an undue number of communications media (section 5.6).

Regarding Section 5.4 and 5.5 which deal with Sound Broadcasting Services only, maintaining healthy pluralism in this sector is a key strategic concern for the BAI. For this reason, the BAI is proposing to retain the current upper threshold of 25% of the total number of sound broadcasting services that any one individual or legal entity may own. The BAI’s decision is informed by the fact that the radio sector in Ireland remains viable and sustainable and the loosening of the 25% maximum level is therefore not desirable since it would raise the potential of a reduction in media pluralism without any basis.  

Having said that, the BAI does not consider the number of thresholds and the current tests applied in respect of ownership of the total number of services remain warranted. For this reason, the number of thresholds to be applied is being reduced from four to three and the extent of the tests that are applied in the case of higher percentages of ownership are reduced.  In this regard, a person or legal entity will be permitted to own up to 20% of the total number of services without any tests being applied. In the case of ownership between 20-25% of the total number of sound broadcasting services, individuals or legal entities seeking ownership to this level will be required to successfully pass a compliance audit but the five additional tests currently applied at this level of ownership are not retained.

Section 66(2)(g) of the Act requires the BAI to have regard to:

“the desirability of allowing any person, or group of persons, to have control of, or substantial interests in, an undue number of sound broadcasting services in respect of which a sound broadcasting contract has been awarded under this Part”.

In order to provide guidance and a degree of certainty for entities, the BAI will continue to provide minimum and maximum thresholds in respect of what it considers an “undue number”. These are designed to ensure that a reasonable range and number of different voices are available to the public.

Thresholds applied by the BAI in respect of an “Undue Number”

The BAI shall operate three thresholds in respect of what it considers an “undue number”. They are as follows:-

1.  A number equivalent to 20% or less of the total number of commercial sound broadcasting services licensed under the Act is considered an acceptable level for any one entity.

In applying this threshold, the BAI shall not differentiate between whether an entity has ‘control’ or ‘substantial interests’ in a service when making a determination with regard to the number of sound broadcasting services held by that entity.

2. A number equivalent to between 20-25% of the total number of commercial sound broadcasting services licensed under the Act requires additional consideration by the BAI as to whether it is an acceptable level for any one entity.

The BAI shall make such a consideration with reference to a Compliance Audit, submitted by the entity, in respect of all of its sound broadcasting services over a two-year period.  This period shall commence twelve months in advance of the date on which the application is received.  The Compliance Audit shall set out the relevant contractor’s compliance with regard to all of the statutory, policy and contractual provisions. Guidelines for the submission of a Compliance Audit are available from the BAI.

In applying this threshold, the BAI shall not differentiate between whether an entity has ‘control’ or ‘substantial interests’ in a service when making a determination with regard to the number of sound broadcasting services held by that entity.

3. A number equivalent to over 25% of the total number of commercial sound broadcasting services licensed under the 2009 Act would be unacceptable; regardless of whether an entity has control of, or substantial interests in, the relevant services.

Section 66(2)(h) of the 2009 Act requires the BAI to have regard to:

“the desirability of allowing any person, or group of persons, to have control of, or substantial interests in, an undue number of sound broadcasting services” [in a specified area].

In applying its Ownership and Control Policy under the 2009 Act, as set out above, the BAI gives effect to the term “undue number” as meaning “more than a reasonable share of the range of sound broadcasting services available in the specified area”. The BAI will assess this requirement with respect to geographic areas.

The BAI takes the view that there is no obvious practical matrix for determining what constitutes a “reasonable share of the range of sound broadcasting services” in all cases.  Therefore, the BAI will consider the context in which each application is made, on a case-by-case basis, examining:-

1. the total number of the sound broadcasting services in the relevant geographical area;
2. the share of the total audience[1] of the various sound broadcasting services in the relevant geographical area (the “audience share” model).

[1] In the case of radio, “audience” refers to listeners.

Tests applied by the BAI in respect of ‘a reasonable number’ of Sound Broadcasting Services in a Specified Area

The BAI shall apply two tests in order to determine if an individual or entity has more than a reasonable share of the sound broadcasting services in a specified geographical area:-

1. A test of substitutability i.e. in assessing the extent to which one sound broadcasting service may be deemed to be a substitute for another;
2. Regarding an applicant’s ability to influence opinion-forming power, a test of dominance, applying the applicant’s audience share of the sound broadcasting services (in which it holds a substantial or controlling interest) in the relevant geographical area.

In applying these tests, the BAI shall differentiate between whether an entity has “control of” or “substantial interests in” a sound broadcasting service.[1]  It shall also have regard to the different characteristics of the sound broadcasting service in question e.g. format and content; delivery mechanism/platform; the nature of the service (national, local, regional) and the target audience.

[1] Control: refers to an individual or legal entity that is in a position proprietarily, financially or in terms of voting rights to determine or direct the policy of the company, with regard in particular to programme output that is, sourcing, production, supply or delivery to the audience.  Substantial Interest: refers to an individual or legal entity that has sufficient proprietary, financial or voting strength within a relevant company or companies to be able to influence directly or indirectly to an appreciable extent the strategic direction or policy (which shall include editorial policy) of the company (companies), with regard in particular to programme output, that is, sourcing, production, supply or delivery to the audience.

Sections 66(2)(i) and 137(2)(i) of the 2009 Act require the BAI to have regard to:

“the desirability of allowing any person, or group of persons, to have control of, or substantial interests in, an undue amount of the communications media” [in a specified area].

Section 71 of the 2009 Act does not include a specific provision in relation to media concentration in respect of applicants for other content contracts under that Section.  However, the BAI, as a matter of policy, applies this test when considering applications for all Content Provision Contracts.

In applying its Ownership and Control Policy under the 2009 Act, as set out above, the BAI gives effect to the term “undue amount” as meaning “more than a reasonable share of the range of communications media, as defined in the 2009 Act, available in the geographical area covered by the relevant contract”.  The BAI takes the view that there is no obvious practical matrix for determining what constitutes a “reasonable share” of the communications media in all cases.

Therefore, the BAI will consider the context in which each licence application or an application for a contract variation is made, on a case-by-case basis, examining:-

1. the totality of the communications media in the relevant geographical area;
2. the share of the total audience[1] of the various communications media in the relevant geographical area (the “audience share” model).

[1] In the case of radio, “audience” refers to listeners; in the case of television, “audience” refers to viewers; in the case of print media, “audience” refers to readers; in the case of broadcasting services platforms, “audience” refers to subscribers.

Tests applied by the BAI in respect of ‘a reasonable share’ of Communications Media

The BAI shall apply two tests in order to determine if an individual or entity has more than a reasonable share of the communications media:-

1. A test of substitutability i.e. in assessing the extent to which one communication media may be deemed to be a substitute for another;
2. Regarding an applicant’s ability to influence opinion-forming power, a test of dominance, applying the applicant’s audience share of the communications media (in which it holds a substantial or controlling interest) in the relevant area.

In applying these tests, the BAI shall differentiate between whether an entity has “control of” or “substantial interests in” a communications media.[1]  It will also have regard to the different characteristics of the communications media in question e.g. type, cost to the user, size and nature of the target audience. An applicant shall be required to justify its proposals in the context of the above.

[1] Control: refers to an individual or legal entity that is in a position proprietarily, financially or in terms of voting rights to determine or direct the policy of the company, with regard in particular to programme output that is, sourcing, production, supply or delivery to the audience. Substantial Interest: refers to an individual or legal entity that has sufficient proprietary, financial or voting strength within a relevant company or companies to be able to influence directly or indirectly to an appreciable extent the strategic direction or policy (which shall include editorial policy) of the company (companies), with regard in particular to programme output, that is, sourcing, production, supply or delivery to the audience.

Section 5.7 of the draft Policy highlights the requirement on the BAI (further to the 2009 Act) to consider the quality and/or type of programming proposed by applicants for new contracts. As a matter of Policy, the BAI also has regard to these considerations when assessing proposals to change ownership at the level of ‘substantial interest’ and ‘control’. In this circumstance, the contractor must set out its proposals in relation to the programming remit of the service. 

Under the current Policy, these proposals are assessed with reference to a number of criteria. The draft Policy retains the current criteria and adds a further criteria as follows:-

 “Whether, in the context of news and current affairs programming proposals and/or practices, the proposals reflect a sufficient and demonstrable commitment to achieving and sustaining impartial, credible and independent journalism.”

This additional criteria is intended to ensure that changes of ownership secure a mix of voices, opinions, outlets and views in respect of news and current affairs and reflects the BAI’s commitments regarding plurality.  In addition, it also allows the BAI to consider whether the news and current affairs practices of the applicant for a change of ownership will support impartial, credible and independent journalism.

The statutory framework of the 2009 Act requires the BAI to have regard to the quality and/or the range and type of programming proposed by applicants. The BAI believes that it is important, when considering applications for licences, and proposals that involve changes at the level of “substantial interests” or “control”, to ask the applicant to set out its proposals in relation to the programming remit of the service.

The BAI shall consider these proposals with reference to the following four criteria:-

1. Is the general quality and/or range, type and schedule of programming to be provided appropriate with regard to the audience to be served?
2. In the context of services licensed under Sections 63 and 70, does the Programme Policy Statement of the service reflect sufficient commitment to:-

• Serving audiences in the relevant franchise area?
• The creation of new opportunities for Irish talent in music, drama and entertainment?
• Programmes relating to Irish language and culture?  

3. Whether, in the context of news and current affairs programming proposals and/or practices, there is sufficient and demonstrable commitment to achieving and sustaining impartial, credible and independent journalism.

4. In the context of community services licensed, does the Programme Policy Statement of the service:-

• Have the sole objective of specifically addressing the interest of and seeking to provide a social benefit to, the community concerned?
• Facilitate and support active participation in all aspects of programming by the community concerned?

Section 5.8, this reflects the current Policy position. While the BAI is cognisant that issues arising from Brexit may need to be reflected in this heading, it is not proposed to make this change in advance of any outcomes to current negotiations with the EU.

In considering ownership and/or control proposals, the BAI requires that non-EU entities shall have established a registered office within the EU. The BAI shall also have regard to the extent to which reciprocal arrangements for investment and licensing are in place with the relevant non-EU state. Relevant provisions of the Audio Visual Media Services Directive will be applied as required.