ABA finds no breach in Jones ownership of 2GB

The Australian Broadcasting Authority has found “no failure by any person to comply with the requirements of the Broadcasting Services Act” regarding Alan Jones’ part ownership of commercial radio licences 2GB and 2CH, but has criticised the network for inadequate disclosure in its early responses to the ABA.

Although the ABA found that Jones “was not in a position to control the 2GB and 2CH licences prior to October 2002,” in its investigation report it says “information that was publicly available prior to October 2002 did not give the full picture about Mr Jones’ company interests in Macquarie Radio.”

“In particular, the statements did not make it clear that Mr Jones’ entitlement to shares in Macquarie Radio (the ultimate owner of the two licences) would accrue over time, and that Mr Jones would only be entitled to 20 per cent of the increase in value of Macquarie Radio that occurred after he joined 2GB.”

The ABA made a number of inquiries to Macquarie Radio in 2002 about whether Alan Jones was in a position to exercise control of the 2GB and 2CH licences, and was told that he was not. On the material available, it is apparent that these responses were legally accurate. However, they did not explain to the ABA the full position in relation to Mr Jones’ entitlements.

As a result, “the ABA had only the limited responses to its questions of Macquarie Radio and such information as was publicly available on which to draw conclusions about the control position of Macquarie Radio and the 2GB and 2CH licences. This led to the public confusion aired in the media and, ultimately, to the need for a full investigation by the ABA with consequent expenditure of time and resources.”

The ABA found that the Macquarie Radio directors as a group “did not take sufficient care in respect of issues arising under the Broadcasting Services Act, including in respect of statements made to the ABA and the Senate Environment, Communications, Information Technology and the Arts Legislation Committee.”

“The ABA does not accept that it is adequate for non-executive directors to leave significant matters of compliance such as control to management, without taking any steps themselves to monitor such compliance.”

The ABA expected Macquarie Radio to be more forthcoming in response to its inquiries. The ABA is able to receive information on a confidential basis. In his examination, John Singleton acknowledged that Macquarie Radio should have kept the ABA better informed, saying:


‘Chairman, I just apologise to you that we didn’t keep you advised on an ongoing basis. I would have thought when it was raised so publicly and so incorrectly in the newspaper, …it was at least the right thing to do to advise you what the correct situation was and I really assumed that that had happened. If you had asked me, I would happily have advised you fully. I regret that.’

“If licensee companies are to comply with the control rules in the Broadcasting Services Act, it is reasonable to expect that the directors of those companies will understand those rules, at least in a non-technical but substantive way,” says the ABA says in its report.

In light of the ABA’s concerns about Macquarie Radio’s corporate governance, the report says it would be appropriate for Macquarie Radio to improve its system for division of responsibility for compliance, as well as executive understanding of the control rules.

Evidence tendered to the ABA for the investigation disclosed that John Singleton promised Alan Jones options over 20% of the increase in the
value of Macquarie Radio which occurred after he joined 2GB. The options would be progressively taken up over the seven-year contract with Jones.

As well as equity, Jones was offered a large sign-on fee, a
monthly salary and a minimum profit share if Macquarie were sold before March this year.