PBL Media CEO Ian Law failed to mention the D word in his defence of the $250 million handout to the indigent Australian free-to-air TV industry in The Australian’s Media section this morning.

That’s D for debt, the stuff that Law’s employer CVC loaded onto PBL Media when it bought it from James Packer. Law and other PBL media executives then effectively approved that huge debt burden (more than $4 billion at the time), by signing up for shares in the company.

Law trotted out the usual suspects, e.g. “A quick look around the world shows that the licence fees in Australia are far higher than in comparable countries.”

Well, so what? As we’ve pointed out before, that argument is irrelevant.  US, Canadian and UK TV companies do not compete with Australian companies, so how is the level of licence fees affecting Australian TV important, apart from allowing Australian FTA TV companies to buy offshore programs a bit more cheaply?

Law is on safer ground  when he said “then we had the claim by one radio executive that radio would now also be seeking a 50% reduction in its fee. It’s interesting logic, given radio now only pays about 3% of its revenue as a licence fee, compared with up to 9% paid by free TV.” In fact radio also chopped costs to the bone, especially in regional Australia where many stations only have one live broadcast a day, the breakfast shift. And that’s only because they are being forced to by the Senate.

The Australian’s Media section carries a story today trying to have those controls watered down to make it easier to cut staff and costs. No one on The Australian managed to appreciate that irony.

Law then went on to float the other furphy:

“It is clear that the government wants to ensure there is a strong and viable local drama and production industry.

“To achieve this, a viable free TV sector is important. Put bluntly, any serious weakening of the free TV sector, which will be the inevitable outcome of unrealistic licence fees, will over time mean a reduction in the hours of local drama and entertainment that are produced.

“Local production is expensive and it can be turned on and off. We can definitely say the licence fee relief has contributed to Nine planning more confidently for more local entertainment and drama production this year and next and in 2011-12.”

So what. Would Nine NOT produce programs that viewers want to want to watch, just to save money? The top programs at the moment (and in 2008 and 2007), were locally produced shows. Underbelly, Packed To the Rafters and MasterChef Australia are just three of the best-watched local programs in 2009. Would Nine not produce Underbelly 3 (and 4 next year) just because it couldn’t afford to? Ten is a low-cost operator and manages to produce quality local shows that viewers lap up.

Foreign (cheap) programs are no longer the big drawcards for viewers.

If high costs mean, as Law says “a reduction in the hours of local drama and entertainment that are produced” then he should hand back his licences now and allow someone else to have a go.

Nine’s high costs have nothing to do with the cost of local production (nor do Seven’s). It is all to do with the absurdly high levels of debt Seven and Nine deliberately took on (thanks to James Packer and the greed of CVC in the case of Nine, and thanks to Kerry Stokes and KKR, in the case of Seven). Ten has relatively lower levels of debt, but still about a nasty $500 million or so.

The commercial networks have to meet local content rules that call for 55% of all material broadcast from 6am to midnight has to be Australian (or New Zealand). They’ve been doing that for years without complaint. So why whine now.

The answer is because they are desperate to defend the cash hand-out to the industry and eager to help take the pressure off a  compliant minister.

Law, by the way, didn’t forget to claim that the sports anti-siphoning rules should not be relaxed.

The old media owners had no shame in raiding the public purse, then demanding protection from competition: the new manager class in charge have learned well by observing their former proprietors’ greed.  Law has worked for John B Fairfax at Rural Press, West Australian newspapers (no one there to learn from) and ACP and the Nine Network (James Packer up to the sale).

And finally, there was one justification for the rebate from Law and that was pretty thin. He wrote: “The three commercial free TV networks are not owned by either of the two big print media groups, and that has to be a good thing for diversity of opinion.”

Well they aren’t, but PBL Media owns ACP Magazines, the country’s biggest magazine publisher and Seven Media Group contains its chief rival, Pacific. And the controller of 50% of Seven Media, with management control is Seven network Ltd. It is 48% owned by Kerry Stokes and is the biggest shareholder in West Australian Newspapers and the second biggest shareholder in Consolidated Media behind James Packer. Consolidated Media has 25% of Foxtel and 50% of Premier Media Group (Fox Sports).

So much for Law’s diversity of opinion..