You would think that the Government handing a quarter of a billion dollars over two years to a powerful industry, ostensibly for protectionist purposes of maintaining local production, would garner a bit of attention in the media. And you’d be right. There’d be a decent-sized splash in the press. Free marketeers would emerge to attack the Government. Press Gallery commentators would muse on the electoral politics of the handouts.  Economists would count the cost of subsidies.

But the Government’s weekend handout to the free-to-air television networks – $100-odd million this year and $150m next – has sunk with barely a trace in the media. What coverage there was was nearly all flat reporting.

It didn’t sink without trace in the markets. Ten’s share price rose 9%, Seven’s 2%. Goldman Sachs substantially lifted its earnings and cash flow forecasts for the networks. And why not? It’s a direct transfer of a quarter of a billion dollars from taxpayers to the owners of the free-to-air networks – which as Glenn Dyer pointed out yesterday include most of the senior television executives in the country.

The rationale from the Government for this handout was a one-page press release. One lousy page. 400 words. This Government normally at least does the pro forma thing and conducts a review before handing out hundreds of millions of dollars. In this case, the “review” was a laughable “independent analysis” of overseas licence fees by the networks’ lobbying group FreeTV Australia (we await the angry missive from Julie Flynn).

Boiled down, the justification for this staggering generosity is that free-to-air broadcasters are facing a converging media environment and costs associated with digital television.

“Rolling out multiple digital television channels to regions which have previously had limited services is a particular challenge,” Stephen Conroy said in his press release. “The Government recognises that the commercial television broadcasters will require some assistance to maintain Australian content production, while investing in a new delivery platform nationally.”

The only problem with that is that the free-to-air broadcasters have repeatedly – repeatedly – been compensated previously for the transition to digital television. The entire digital television framework introduced at the start of this decade is based on compensating the free-to-air broadcasters. Here’s what they get already:

  • a moratorium on competition, with a ban on a new free-to-air network despite plenty of spectrum for it;
  • 7Mhz of spectrum for broadcasting, handed to them for free and without any bidding process, ostensibly so that they could drive digital take-up for digital switchover in 2008;
  • a ban on subscription television buying attractive sports content via the most restrictive anti-siphoning list in the world (most of which the free-to-airs never show);
  • regional broadcasters are getting $260m over an extended period to directly offset their digital transmission costs.

The free-to-airs also get access to a 20% tax rebate for their production costs, under the Producer Offset.

There hasn’t been any significant increase in television production costs lately, and the sector is anticipating a big year of advertising revenue growth as the economic growth picks up.

This is an absolutely wretched decision by the Government. It’s up there with the very worst policy calls of the Howard Government. It’s a disgrace, bordering on outright corruption with an election around the corner. And taxpayers are paying for it.

Which makes the media’s silence all the more culpable. Where’s The Australian, with its anti-protectionist editorial line and hostility to Labor? If it was some other form of domestic manufacturing, The Oz would have been first in line to deliver a kicking. Silent, except to report that free-to-air share prices rose and the subscription sector is up in arms.

Then again, it has, to use Rupert’s phrase, a dog in the fight — News Ltd is still hopeful that Stephen Conroy will reduce the anti-siphoning list as part of his review this year, which will directly benefit Premier Media, which News half-owns, and Foxtel, which it one-quarter owns. News will also be more concerned than ever for the Government to put its international news service up for tender again, so that Sky News (one-third owned by BSkyB) has a chance of snatching it from the ABC. Without the international contract, Sky News faces a difficult future against the new ABC news channel.

Given News Corporation’s track record in international broadcasting in the Asia-Pacific, in the form of Star TV and its readiness to comply with the demands of the Chinese communist party, the Government would be mad to hand its international reputation to Rupert, but doubtless it will keep News in suspense until after the election comes and goes.

The failure of the Fairfax papers to go after this disgrace is more confusing. Only Peter Martin had a go, pointing out the broadcasters were being given huge handouts with no requirement for increased production.  Perhaps Fairfax holds out some hope that the Government will give it some relief on regional radio news.

Nor has the Federal Opposition gone after it, not even via Senate Estimates to demand how the generous levels of handouts were determined.  But they, like the Government, will be acutely aware of the power of the free-to-air networks in an election year.

And while Stephen Conroy’s name is on the press release, the author of the decision is Kevin Rudd, doubtless in consultation with his former boss Wayne Goss, head of FreeTV Australia.

This disgusting, cynical decision would be ripped apart by a media or Opposition with a genuine commitment to accountability. Instead, everyone is keeping their heads down and staying quiet while taxpayers gift vast sums to the most cosseted cartel in Australia.