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(Australian Associated Press)
Shares in Australia’s free-to-air TV and radio networks have jumped after the federal government regulated a cut in broadcasting licence fees in a bid to ease pressure from foreign tech companies and online streaming services.
Nine Entertainment shares hit a year-high of $1.42, up 6.55 per cent at 1130 AEST on Wednesday, while Southern Cross Austereo had gained 5.86 per cent to $1.27.
Seven West Media’s shares were also trading higher, up 3.9 per cent to 73.3 cents.
The federal government on Wednesday announced it will use its regulatory powers to abolish $127 million in broadcast licence fees for 2016/17 as an interim measure ahead of legislation for permanent cuts passing parliament.
The government has proposed replacing licence fees with cheaper spectrum usage charges for broadcasters that are expected to raise $43.5 million.
Nine Entertainment Co says the move will save it approximately $33 million, and now expects its full year earnings to lift between $200 million to $210 million, up from $158 million to $187 million previously expected.
Southern Cross Austereo said it will save $11.8 million in the current financial year.
Networks welcomed the announcement on Wednesday, with Free TV Australia’s chairman Harold Mitchell describing the abolition as a “relief” for the industry.
“In the internet age, it makes no sense to continue to impose the world’s highest licence fees when these foreign media tech companies pay nothing,” Mr Mitchell said.
“Licence fee relief is critical for broadcasters to invest and transform their businesses.”
Commercial Radio Australia said the temporary relief will result in around $20 million in cost savings for the financial year to commercial radio broadcasters.
The licence fees cut was a key component of the media reform packaged announced in the federal government’s budget in May.
Communications Minister Mitch Fifield said it will help businesses that are under competitive pressure from technology and online streaming services.
Mr Fifield said a permanent financial relief will be provided through the Government’s Media Reform package if passed by the Senate as a whole.
He said Labor has voted against the entire package twice in the House or Representatives, despite claiming they support elements of it.
Federal Labor has opposed the scrapping of the two-out-of-three ownership rule, which is included in the legislation.
Parliamentary debate on the Media Reform package will commence in early August.