Today’s massive cross-media merger reveals for the first time how the Government’s media reforms are leading to reduced media diversity.

The Fairfax-Macquarie Bank-Southern Cross deal leads to a greater media concentration, despite reassurances by the Communications Minister, Helen Coonan, that her reforms would protect consumers from the excesses of greedy media companies.

Under the plan, two of Melbourne’s major agenda setters, The Age and 3AW, will become partners alongside old Sydney rivals, The Sydney Morning Herald and 2UE.

The deal also puts the serial “media-hubber,” Macquarie Media, in charge of regional TV stations as well as its existing 85 regional radio stations.

The National Party forced last minute changes to Coonan’s package of media reforms last year to protect local content on commercial radio in the regions. These are under review – and it would be interesting to know what Macquarie has been promised.

In the carve-up, Macquarie Bank will buy up Southern Cross’s radio and TV stations for $1.26 billion and on-sell Southern Cross’s influential city radio stations and television production facilities to Fairfax for $500 million.

The three-way deal signals two things clearly. The first is that Fairfax is now committed to radio as well as newspapers and will develop its digital and online media as a substitute to owning TV stations.

The second is that Macquarie Bank is serious about TV as well as radio and is on course to become a major media player – which, given its record on content diversity, is alarming to say the least.

It’s no surprise that MacBank’s media division wants to get bigger. It’s been inevitable since it started buying up radio stations across regional Australia in 2004.

Macquarie Media signalled it was targeting TV as well as radio when it bought into Southern Cross in November, giving it an influential stake in 14 regional TV stations in every state except Western Australia.

These manoeuvres also reveal a deficiency in Helen Coonan’s “two out of three” rule – the stipulation that media moguls can own only two out of the three main media types of radio, TV and print. While Fairfax is barred from owning TV stations in some markets because it owns newspapers and radio, it is allowed to own TV production houses that churn out ubiquitous shows like Big Brother and Blue Water High.

So Fairfax can and will dominate content in newspapers, radio and TV even though it only owns newspapers and radio stations.

Regulating greedy media companies to protect diversity is a gruelling task. This deal shows just how crafty the big players are at redesigning the landscape for their own ends and how the Government’s reforms have helped their efforts.

Why didn’t the government follow the 2001 Productivity Commission recommendation and hold off lifting cross-media ownership rules until new media had delivered on its promise of diversity?