Radio Christchurch, Ltd, Withdraws Application

Press, Volume CIX, Issue 32266, 8 April 1970, Page 28

Radio Christchurch, Ltd, Withdraws Application

The application for a private radio broadcasting warrant by Radio Christchurch, Ltd—a company in which the two Christchurch newspaper companies, New Zealand News, Ltd, and the Christchurch Press Company, Ltd, had proposed a 50 per cent shareholding—was withdrawn before the New Zealand Broadcasting Authority yesterday.

The withdrawal was made after counsel for the applicant company, Mr P. T. Mahon, had sought from the authority a ruling whether its decision given in an Auckland application—restricting newspaper shareholding in a private radio station to 30 per cent—was a blanket one.

Radio Christchurch, Ltd, Mr Mahon said, had been “surprised and dismayed” at the Auckland decision. The directors of each Christchurch newspaper company had considered the position. A 15 per cent interest was l not regarded as practical economically. The authority’s ehairman, Mr R. T. Peacock (Wellington), at the end of yesterday’s sitting, confirmed that the authority felt, in general, that the shareholding of a :news company should be 30 per cent. “That allows for some variation if the authority thinks the circumstances justify it,” the chairman said. “But in the main, it would have to be round the standard the authority thinks it should adopt” Mr Mahon replied that the authority had now made it clear that an application proposing a newspaper shareholding of more than 30 per cent could not succeed, unless there were exceptional circumstances. The applicant company was unable to show exceptional circumstances. “We take the view that we cannot succeed. 1 am instructed to withdraw the application by Radio Christchurch, Ltd,” Mr Mahon said. The chairman, a little earlier, had said that the authority thought it appropriate for Mr Mahon to consider an amendment of the company's application, as regards the percentage of newspaper shareholding—but Mr Mahon said he was not authorised to make any reduction below 50 per cent. “If this is the position, I take it we cannot succeed on these terms?" Mr Mahon asked.

The chairman: 1 don’t think I could give you ani assurance on that

The other members of the authority are Messrs R. B. Miller (Christchurch) and H. E. Duff Daysh (Wellington). “Sharp Discrimination” Mr Mahon, at the start of yesterday morning’s hearihg, noted that the 30 per cent shareholding limitation in the authority’s Auckland decision applied only to newspaper companies. “There is nothing to stop any other large company—or, indeed, a group of companies—from acquiring shares on allotment, or in the market, and Obtaining a controlling interest in a private radio station,” said Mr Mahon. “Voting-restric-tion clauses in the radio company’s articles of association could always be evaded, of course, by purchasing blocks of shares through nominees.” He therefore found it difficult to understand, said Mr Mahon, why there should be this sharp discrimination against newspaper companies. It was not a valid , answer to say that’ newspaper .Interests could obtain a monopoly in radio news services.

“It would he Impossible for newspaper companies to obtain any monopoly in radio news services for the simple reason that they would always be in competition with the New Zealand Broadcasting Corporation,” Mr Mahon said. Mr Mahon said that the capital of Radio Christchurch, Ltd, stood only at a nominal $2OO. The proposal was that if it obtained a warrant it would increase the authorised capital to $400,000, and that the combined sharehold ing of New Zealand News, Ltd, and the Christchurch Press Company, Ltd, would be restricted to 50 per cent, the balance of the shares being allotted to the public. “It therefore seems quite clear following the general

terms of the authority’s ruling in Auckland, that the application of Radio Christchurch has no chance of success unless we alter the proposed allocation of shares to 30 per cent for the two newspapers and 70 per cent to the public.” Mr Mahon isaid. News Service One of the main functions of a radio station was the provision of an accurate and objective news service, Mr Mahon said. The whole of the revenue from a private radio station was derived from advertising.

I “It follows that a newspaper, with its specialised knowledge and skill in news services and advertising, must be a logical contender for the grant of a private radio warrant,” he said. The authority would be aware that newspaper ownership of both radio and television stations was known and recognised all over the world. In Australia there were no fewer than 116 private radio stations, many of which were owned either wholly or in part by newspaper companies Acceptance Of Conditions “In our application we took great care—as the newspapers did in Auckland—to see that the public could subscribe for 50 per cent of the share capital,” he said. “In our application in Christchurch we went even further. We not only proposed to restrict the maximum shareholding of the newspaper companies to 50 per cent at all times —we also made a proposal to the authority that we would accept a direction or condition attached to a warrant to ensure that the directors nominated by the newspaper companies would always be in a minority for voting purposes. “We did this because we recognise that modern companies are, in fact, controlled by directors, a proposition which the authority itself has recognised in the text of its Auckland decision. We therefore in our application attempted to ensure that the interests of newspaper companies in Radio Christehuroh, Ltd, would be restricted to a monetary investment allied with the provision of a firstclass news service to the radio station and the public. “We were prepared to accept any terms which the authority might see fit to impose in the interests of securing the operations of Radio Christchurch, Ltd, as an independent commercial enterprise not dictated to, or controlled by, newspaper companies. In addition, I pointed out to the authority when I opened this case on March 18 that the policy of control by outside directors, could be maintained and supervised by the Authority itself under Section 30 of the act, which empowers suspension: and revocation of a broadcasting warrant if the rules and conditions of the authority are not complied with,” Mr Mahon said:

“Not Practical Possibility” In consequence of the authority’s decision as to newspaper shareholding, the Christchurch newspaper companies were restricted to 15 per cent each of the total shareholding of the company, if a warrant should be granted. “A 15 per cent interest in the company is not regarded as a practical economic possibility. The need for providing news services involving consequential reorganisation and adjustment Of staff duties—together with other factors—made a 25 per cent participation only a marginal economic operation. With participation at only 15 per

cent, the margin is taken away.

"If one of the other Christchurch applicants obtains a private broadcasting warrant it will be quite unable, in our view, in the fields of I news service, to match the combined reporting staff of more than 100 persons maintained by the newspaper companies," he said. “We believe, therefore, that it would ‘pirate’ newspaper news items and also the news items broadcasted for the N.Z.B.C. If our company got the broadcasting warrant, many news items would be on the air before they were read in the newspaper. If one of our opponents obtains a warrant, most news items will come on the air after they have been read in the newspaper.” Counsel’s Comments

Mr R. B. Cooke, for the New Zealand Broadcasting Corporation, submitted that the authority’s ruling in Auckland made very little difference to what had always been the position. The matter had been fully argued at the Auckland hearing. “I suggest the Authority's ruling in Auckland has not altered the position one whit,” Mr Cooke said. “That ruling was generous to the newspaper companies. But that ruling makes no difference to the present application because when a company comes forward proposing a 150 per cent holding, that ensures newspaper control. Mr A. D. Holland, for the Canterbury Broadcasting Company, Ltd, submitted that Mr Mahon’s seeking of a ruling from the Authority would have the effect of invalidating the proceedings. “The proper time, with respect, for determining the application is at the end. of the hearing,” Mr Holland said. “If my learned friend wishes to withdraw, that is his right. But there should be caution over any interim decision.” Mr Mahon was suggesting that in its Auckland decision the authority had made a decision affecting the whole of New Zealand. There should be caution over that.” “No Legal Quibbles” Mr Mahon said he entirely disagreed with Mr Cooke. The relevant section of the Broadcasting Act spoke of "ownership and control of news media.” It was ridiculous to say that degree of shareholding by a newspaper could infringe that section. But while the application of Radio Christchurch, Ltd, was part-heard, an important decision had been given in the

Auckland case. “1 submit I am perfectly entitled to ask the authority for a ruling on this point,” he said. As for Mr Holland’s submission—the significance of which he did not grasp—if he possessed the “legal niceties” of his learned friend he might continue and fail on the present application—and then appeal, and upset the whole pattern of decisions. "But my client company has no intention of getting into legal quibbles,", Mr Mahon said.