The Guardian February 16, 2000


"Cash for comment" business as usual

by Peter Mac

Sydney radio broadcaster John Laws smiled and waved last week when he 
emerged from a hearing by the Australian Broadcasting Authority (ABA) into 
the infamous "cash for comment" scam. And well he might! Laws and fellow 
broadcaster Alan Jones, and their employer Radio station 2UE, had just been 
found guilty of 90 breaches of the industry code and five breaches of the 
station's licence conditions. However, their collective "punishment" 
consists only of having to make a brief announcement as to the existence of 
a commercial arrangement with certain organisations before they are 
mentioned on air, and before any representative of the organisation is 
interviewed.

The scam came to light last year in a memorable episode of ABC TV's program 
Mediawatch.

The program disclosed that talk-show host Laws had entered into lucrative 
contracts with large firms to make favourable comments about their products 
or services, but without disclosing any financial interest in making such 
comments.

The subsequent inquiry by the ABA revealed that the value of such 
arrangements was approximately $18 million. The inquiry is now 
investigating the possibility of similar offences having taken place in 
other States.

Despite the scale of the offences, the ABA has not imposed any financial 
penalties, nor has it banned Laws or Jones from entering into similar 
arrangements with the same or other firms.

2UE immediately announced that it was "disappointed by, and disagreed 
with", its findings.

They nevertheless seem quite at ease with them, and in fact have set out to 
turn the findings to their commercial advantage by virtually claiming them 
as their own initiative!

Supreme gall

With supreme gall, 2UE Station Chairman John Conde last week announced that 
"2UE has already led the industry by voluntarily having in place on-air 
disclosure statements about its broadcasters' commercial interests. We are 
proud of these substantive reforms."

Not to be outdone, Laws now peppers his talkback program with statements 
that he has a commercial relationship with this or that organisation, and 
that he is, moreover, proud of it.

Repeated ad nauseum, these bland pronouncements soon cause the listener to 
mentally "switch off".

Alas, the listener is never told exactly what the arrangement actually is, 
i.e. that the broadcaster is paid to say only positive things about the 
organisation concerned during the broadcast.

If the ABA had decreed that this had to be stated clearly prior to any 
mention of the organisation, John Laws would probably have worn a quite 
different expression.

Business as usual

As it is, the effect on the broadcasters, from the point of both audience 
and advertising, will be minimal.

As one advertiser put it, "They will lose a little audience but it will not 
dent advertising prospects too much. A bit of damage has been inflicted but 
in another six months it will be forgotten. No advertiser has said outright 
not to use Jones or Laws.... They're the conduit to audience for us."

The Federation of Australian Broadcasters has, to its credit, stated that 
the ABA's new requirements for disclosure of commercial interest should 
apply to all stations. However, this is being strongly contested by, among 
others, Macquarie Broadcasting's John Singleton, who has called for 2UE's 
blood, but maintains that other broadcasters should not be penalised for 
the misdemeanours of his rival.

(He of course overlooks the fact that 2UE is not really being penalised at 
all, they're just being subjected to requirements that should, in truth 
apply to the whole industry in order to protect the listening public.)

Others have called for modification of the broadcasters' voluntary code of 
conduct. However, if there's one thing that Mediawatch has 
consistently shown, it's that voluntary codes of conduct, no matter how 
nobly written, are totally inadequate to promote a fair deal for the 
consumer.

No duty to listeners

In all the discussion on "cash for comment", the fundamental issue which 
has emerged is the contradiction between commercial interests and ethical 
considerations in broadcasting.

As another commentator noted bluntly: "the difficulty is that commercial 
transactions provide the rationale for the commercial media's existence ... 
The duty of those who run the (commercial) media is to make money for their 
shareholders".

Note that he acknowledges no duty to the public.

Broadcasters, like other businesses, will ultimately "follow the money". 
They are essentially amoral, not immoral.

Their behaviour will be determined by what they can get away with, not by 
ethical or moral considerations, unless these are embodied in strong legal 
constraints that are backed up with strict policing, adequate judicial 
procedures, and tough sanctions.

The banks, a major client of Laws, expressed their regrets over the "cash 
for comment" affair, but their regrets related to the "further erosion of 
confidence in the banking sector".

They appear to have expressed little if any regret over the deliberate 
deception of hundreds of thousands of radio listeners. They attribute 
responsibility for this deception to the broadcaster alone.

The ABA investigation has had an interesting aftermath. Richard Ackland, 
who blew the lid on the scam, is no longer the Mediawatch presenter.

Legitimised

The investigation has not resulted in a ban on cash for comment, but 
instead has in effect legitimised it, subject to minor constraints.

There are now deep concerns in media and advertising circles about the cash 
for comment practice which, if it became widespread, could in large part 
subvert the "orthodox" advertising industry.

As broadcaster John Singleton remarked, "If you were Telstra and Alan's 
paid by Optus, if you were Westpac and he's paid by Colonial State Bank, if 
you were Ford and Lawsie's paid by Toyota, or Ansett and they both get paid 
by Qantas, how would you expect a fair go?"

But there's much more widespread concern among the public about what is, 
perhaps, the most striking aspect of the ABA investigation.

That is, that while those who took the money were investigated and 
ultimately deemed to be culpable, those who offered the money, and paid up, 
were never called to account for their part in the scam.

Those who commissioned Laws and Jones to act as their covert mouthpiece 
include the major banks (as represented by the Australian Bankers 
Association), as well as Qantas, Colonial, Optus, Foxtel and Mirvac (which 
had a large stake in the infamous Walsh Bay redevelopment project).

Not one of these organisations received even a reprimand for their 
complicity in the "cash for comments" fraud.

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