Investigation Report No. 2913

File No. ACMA2012/1524

Licensee Melbourne Community Television Consortium Ltd

Station C31 – Melbourne, VIC

Type of Service Community television

Issues Constitution provisions: number, composition and expertise of directors

Organisation structure and governance arrangements

Policy and procedure for meeting community needs

Policy and procedure about the community and its programming needs

Handling of complaints to licensees

Relevant Codes Codes 1.1(b), (c) and (d), 1.2, 2.1, 2.2 and 7.3(b) of the Community Television Broadcasting Codes of Practice 2011

Date Finalised 12 February 2013

Decision Breach of Codes 1.1(b), (c) and (d), 2.1 and 2.2 of the Community Television Broadcasting Codes of Practice 2011

No breach of Codes 1.2 and 7.3(b) of the Community Television Broadcasting Codes of Practice 2011

ACMA Investigation Report – C31 Melbourne – Compliance with Codes

The complaintOn 15 October 2012, the Australian Communications and Media Authority (the ACMA) received a written complaint of the same date. The complainant alleged that Melbourne Community Television Consortium Ltd, the licensee of C31, was in breach of Codes 1.1(b), (c) and (d), 1.2, 2.1, 2.2 and 7.3(b) of the Community Television Broadcasting Codes of Practice 2011 (the Codes).

The serviceC31 is the licensee of long-term community television broadcasting licence no. 1150808. C31 is licensed to represent the general community interest of the Melbourne TV1 licence area. C31 commenced its service on 1 August 2004 and its current licence is for the period from 1 August 2009 to 31 July 2014.

AssessmentThe assessment is based on:

a written complaint, dated and received by the ACMA on 15 October 2012 (Attachment A); a submission from C31, dated and received by the ACMA on 29 November 2012; a submission from C31, dated and received by the ACMA on 12 December 2012; a submission from C31, dated and received by the ACMA on 1 February 2013; and information from C31’s last licence renewal application received by the ACMA on 1 August

2008.

Issue 1: Constitution provisions – number, expertise and composition of directorsRelevant provisions of the CodesCode 1: Governance Arrangements

Licensees will: 1.1 Have a constitution that, among other matters, contains provisions in the following areas – [. . .](b) the minimum number of directors to be set at seven and the maximum number of

directors to be set at 12;(c) the licensee board having directors with demonstrated expertise in key areas such

as finance, law, business management and television broadcasting;(d) the licensee board having a composition which has a balance between directors

with demonstrated expertise in the key areas outlined in subclause (c) and directors who are involved in the production and provision of programming;

[. . .]

Complainant’s submissionThe complainant submitted that C31 is in breach of Codes 1.1(b), (c) and (d).

Licensee’s submissionsOn 29 November 2012, C31 submitted that:

A copy of [C31’s] current constitution, as adopted at an Extraordinary General Meeting held on 15 November 2-12, is attached [copy provided]. This constitution has been adopted by the

ACMA Investigation Report – C31 Melbourne – Compliance with Codes 2

members of [C31] specifically to address [Codes] compliance issues. In particular, clause 7.2(a) of the constitution addresses Code 1.1(b); clause 7.4 addresses Code 1.1(c); and clauses 7.2(b), (c) and (e) address Code 1.1(d).

This constitution is the result of 18 months of work, including 13 drafts and over a dozen Governance Committee meetings. There was also input from numerous board meetings and several general meetings of members. Two Extraordinary General Meetings of the company were required to be held, as the first attempt to pass a Codes compliant constitution in February 2012 was unsuccessful with only 66% of the vote in favour. The second attempt in November attained an 85% vote in favour, well over the statutory 75% required.

Unfortunately there was a small but vocal faction of members of the company who fundamentally disagreed with the constitutional requirements under Code 1.1 and so did not wish to comply with them. In particular, there was a feeling that the Board should be comprised only of member-based program makers, and that “outsiders” were not welcome on the Board. These members strongly resisted rewriting the constitution to comply with the Code, and attempted to stymie and undermine the process of constitutional change. This significantly contributed to the delays in adopting a compliant constitution. Fortunately, when the final vote was put, there was a sufficiently large majority of members who saw the wisdom in complying with the Codes of Practice.

FindingThe licensee was in breach of Codes 1.1(b), (c) and (d) of the Community Television Broadcasting Codes of Practice 2011.

ReasonsOn 12 December 2012, C31 provided the ACMA with a copy of its Constitution dated 5 March 2009 (the 2009 Constitution), which was in place at the time the complainant made his complaint to the ACMA in August 2012. A review of the 2009 Constitution shows that it did not contain provisions that complied with the Codes in the following areas:

Code 1.1(b) - the minimum number of directors to be set at seven and the maximum number of directors to be set at 12;

Code 1.1(c) - the licensee board having directors with demonstrated expertise in key areas such as finance, law, business management and television broadcasting;

Code 1.1(d) - the licensee board having a composition which has a balance between directors with demonstrated expertise in the key areas outlined in subclause (c) and directors who are involved in the production and provision of programming.

Therefore, C31 was in breach of Codes 1.1(b), (c) and (d) at the time the complaint was made to the ACMA in August 2012.

However, on 29 November 2012, C31 provided the ACMA with a copy of its current Constitution, which was adopted on 15 November 2012. A review of the current Constitution shows that it now contains provisions at subclauses 7.2(a), 7.4(a) and 7.2(e) that comply with Codes 1.1(b), (c) and (d), respectively.

ACMA Investigation Report – C31 Melbourne – Compliance with Codes 3

Issue 2: Organisation structure and governance arrangementsRelevant provision of the CodesCode 1: Governance Arrangements

Licensees will:[. . .]1.2 Ensure that their organisation structure and governance arrangements do not

present undue barriers to participation by members of the community.[. . .]

Complainant’s submissionThe complainant submitted that C31 is in breach of Code 1.2, as:

[. . .] the organisation's structure and governance arrangements present undue barriers to participation by members of the community by requiring any member of the community who wishes to participate in the organisation's governance to become a member of a third-party organisation in the form of the company's body corporate members and therefore subject to the whims of the acceptance procedures of those body corporate members.

Licensee’s submissionsOn 29 November 2012, C31 submitted that:

The organisational structure and governance arrangements are detailed in the company’s constitution. In summary, the company’s members are corporate bodies based within the Licence Area, which have as a primary purpose the production of community television content. These member organisations are obligated to be open to accepting people from the community as members of their organisation; to provide content which embraces and reflects the diversity within the member’s community; and to allow its community of interest to have a say in determining the content being produced and provided for the community. The members elect a board of directors at the Annual General Meeting. The board is then responsible for making appointments to the various committees, including committees for programming, finance, membership and governance.

The complainant’s point about individuals having to join “third party organisations” is noted; however this is the structure that has been decided upon by the members of the company. During the process of redrafting the constitution to comply with the Codes of Practice, the option to include membership by individuals was proposed and roundly rejected by the existing members. It was felt that having the member organisations act as gatekeepers to the membership structure of the company provided stability and reduced the risk of control of the company being wrested away by outside concerns who might marginalise the existing members.

I would note here that this is exactly the same membership structure that the company has always had, and which was found to be acceptable and compliant by the ACMA during the 2004 licence allocation process and the 2009 licence renewal process.

I would also note that one of the conditions of membership of MCTC Ltd is that the organisations must be open to having people from the community join as members of the organisation (clause 3.1(b)(iv)). A member organisation would face disciplinary action if found to be in breach of this. Clause 3.5 of the company constitution provides for an annual audit of members to ensure that they are meeting their membership obligations. One aspect of that audit is a question as to

ACMA Investigation Report – C31 Melbourne – Compliance with Codes 4

whether any membership applications had been rejected by the organisation. Admittedly this does rely on the member organisations self-reporting their compliance and therefore requires an assumption of a certain level of honesty by the members. However, we would hope and expect that anyone who seeks to join a member organisation and is rebuffed would make a complaint to MCTC Ltd. Indeed, MCTC Ltd, when referring people to join a member organisation, informs them that they should report any difficulties they encounter so that the appropriate investigations can be made.

It is also important to note that individuals are not required to be part of the membership structure in order to have a program broadcast on C31. A considerable number of the local programs broadcast by C31 are produced by individuals who approach C31 directly with no member involvement. Thus there is absolutely no governance or structural barrier to individuals participating in the provision of programs. The only limitation on individuals providing programs is that they must comply with community television regulations arising from the Broadcasting Services Act and the Codes of Practice, and they must meet some base-line technical proficiency requirements.

Additionally, the company constitution does not require potential directors or committee members to be drawn only from the member organisations. The positions are potentially open to any member of the community of interest who has the necessary skills and experience to contribute.

FindingThe licensee is not in breach of Code 1.2 of the Community Television Broadcasting Codes of Practice 2011.

ReasonsThe complainant considers that C31’s organisation structure and governance arrangements present undue barriers to participation, as members of the community who wish to participate in C31 are required to become members of third-party organisations.

The organisation chart provided by C31 with its 2008 licence renewal application shows that C31 had:

an Assembly comprising three delegates from each member organisation; a Board of Directors drawn from members of the Assembly; and five committees drawn from members of the Assembly and/or Board (Membership,

Constitution Review, Programming, Finance, Strategic Review).

C31’s current Constitution shows that it contains provisions for:

Assembly meetings, that is, general meetings of member organisations of C31; a Board of Directors that complies with of Codes 1.1(b), (c) and (d); at least four committees (Membership, Programming, Finance, Governance) comprising

at least two Directors and appointees drawn from member organisations or elsewhere as considered necessary by the Board.

Consequently, C31 has ensured that its organisation structure and governance arrangements do not present undue barriers to participation by members of the community by making provisions in its Constitution that balance community involvement with the expertise required to operate a community television broadcasting service.

ACMA Investigation Report – C31 Melbourne – Compliance with Codes 5

Issue 3: Written policy and procedure outlining how licensee will meet the needs of the communityRelevant provision of the CodesCode 2: Representing the Community Interest

Licensees will: 2.1 Have a written policy and procedure outlining how they will meet the existing and

perceived future needs of the community within the licence area.

[. . .]

Complainant’s submissionThe complainant submitted that C31 is in breach of Code 2.1, as:

[. . . ] there appears to be no written policy outlining how Channel 31 will meet the existing and perceived future needs of the community within the licence area.

Licensee’s submissionsOn 29 November 2012, C31 submitted that:

After the revised Codes of Practice were registered in June 2011, the Board and Governance Committee of C31 prioritised the adoption of a new, Code-compliant constitution. As noted above, this transpired to be a process which was much more time consuming and involved than first anticipated. A draft Community Engagement Policy [copy provided] has been prepared which aims to address Codes 2.1 and 2.2, but it has not yet been ratified by the Board. It is expected that this will occur early in 2013.

On 12 December 2012, C31 submitted that:

As regards policy relating to Codes 2.1 and 2.2, the closest we would have had at the time of the complaint would be clauses 2 and 3 of the Programming Policy (attached) [copy provided]. But [it is admitted] that they don’t directly address the issues in Codes 2.1 and 2.2, hence the drafting of a new Community Engagement policy to meet the specific needs of the codes.

FindingThe licensee is in breach of Codes 2.1 of the Community Television Broadcasting Codes of Practice 2011, as it does not have a written policy and procedure outlining how C31 will meet the existing and perceived future needs of the community in the licence area.

ReasonsCode 2.1 requires licensees to have a written policy and procedure that outlines how they will meet the existing and perceived future needs of the community within their respective licence areas.

C31 has a Programming Policy, however, as C31 has admitted, clauses 2 and 3 of the Policy do not directly address the requirement at Code 2.1.

C31 also has a draft Community Engagement Policy, however, it does not meet the requirements of Code 2.1 because it is yet to be finalised and formally adopted. It is noted that the Policy, in its current form, contains insufficient detail of the plans and strategies that C31

ACMA Investigation Report – C31 Melbourne – Compliance with Codes 6

intends to implement over the coming years to enable it to meet the existing and perceived future needs of the community within its licence area.

Issue 4: Written policy and procedure for establishing the nature and diversity of the community and addressing the programming needs and community interests identifiedRelevant provision of the CodesCode 2: Representing the Community Interest

Licensees will:[. . .]

2.2 Have a written policy and procedure on how they will establish the nature and diversity of the interests of the community within the licence area and how they will address the programming needs and community interests that are identified.

[. . .]

Complainant’s submissionThe complainant submitted that C31 is in breach of Code 2.2, as:

[. . .] there appears to be no written policy relating to how Channel 31 will establish the nature and diversity of interests of the community with in the licence area and how Channel 31 will address the programming needs and community interests that are identified.

Licensee’s submissionsOn 29 November 2012, C31 submitted that:

After the revised Codes of Practice were registered in June 2011, the Board and Governance Committee of C31 prioritised the adoption of a new, Code-compliant constitution. As noted above, this transpired to be a process which was much more time consuming and involved than first anticipated. A draft Community Engagement Policy [copy provided] has been prepared which aims to address Codes 2.1 and 2.2, but it has not yet been ratified by the Board. It is expected that this will occur early in 2013.

On 12 December 2012, C31 submitted that:

As regards policy relating to Codes 2.1 and 2.2, the closest we would have had at the time of the complaint would be clauses 2 and 3 of the Programming Policy (attached) [copy provided]. But [it is admitted] that they don’t directly address the issues in Codes 2.1 and 2.2, hence the drafting of a new Community Engagement policy to meet the specific needs of the codes.

FindingThe licensee is in breach of Codes 2.2 of the Community Television Broadcasting Codes of Practice 2011, as it does not have a written policy and procedure on how it will establish the nature and diversity of the interests of the community within the licence area and how it will address the programming needs and community interests that are identified.

ACMA Investigation Report – C31 Melbourne – Compliance with Codes 7

ReasonsCode 2.2 requires licensees to have a written policy and procedure on how they will establish the nature and diversity of the interests of the community within the licence area and how they will address the programming needs and community interests that are identified.

C31 has a Programming Policy, however, as C31 has admitted, clauses 2 and 3 of the Policy do not directly address the requirement at Code 2.2.

C31 also has a draft Community Engagement Policy, however, it does not meet the requirements of Code 2.2 because it is yet to be finalised and formally adopted. It is noted that the Policy, in its current form, contains insufficient detail of the plans and strategies that C31 intends to implement over the coming years to enable it to establish the nature and diversity of the interests of the community within the licence area and how C31 will address the programming needs and community interests that are identified.

Issue 5: Handling of complaints to licenseesRelevant provision of the CodesCode 7: Handling of Complaints to Licensees

Licensees will:[. . .]7.2 Not respond to a complaint about a matter that is covered by the Code where a

licensee has:[. . .](b) determined that the complaint is frivolous, vexatious or not made in good

faith; or[. . .]

7.3 Ensure that:[. . .](b) complaints are registered, investigated if necessary, and a written

response is provided to the complainant as soon as practicable, but no longer than 60 days from the date of receipt of the complaint; and

[. . .]

Complainant’s submission

The complainant submitted that C31 is in breach of Code 7.3, given the lack of a proper response to his complaint.

Licensee’s submissions

On 29 November 2012, C31 stated that:

ACMA Investigation Report – C31 Melbourne – Compliance with Codes 8

It is not denied that C31 did not respond to the complainant. Code 7.2(b) states that licensees will not respond to a complaint about a matter that is covered by the Code where the licensee has determined that the complaint is frivolous, vexatious or not made in good faith. It is our assessment of the situation that the complaint was vexatious and not made in good faith, in which case Code 7.2(b) applies.

The first contact C31 had with [the complainant] was on 4 July 2012, when he wrote via email:

From: [Complainant]Sent: Tuesday, 3 July 2012 11:23 PMTo: info [C31]Subject: C31 constitution and policies

Dear Channel 31,

I have been reading some of the information on your website about your station, and I have some questions.

1. Is the copy of the "Melbourne Community Television Consortium Ltd" constitution dated 5 March 2009 the most up to date version of the constitution?

2. I cannot find the policies which relate to meeting the existing and future needs of the community, and how the needs and interests of the community will be established. Could you please send me a copy of the relevant policy.

Thanking you,

[Complainant]

Our receptionist, having conferred with [C31’s Regulatory and Business Affairs Manager] on the matter, responded:

From: info [C31]Sent: Wednesday, 4 July 2012 11:19 AMTo: [Complainant]Subject: RE: C31 constitution and policies

Hi [Complainant],

Thanks for your email.

1. Yes the constitution dated 5th March 2009 is the most recent version. Our Governance committee is currently in the process of developing a new constitution, and it will be posted on the website when it is completed.

2. Our Governance committee is currently in the process of developing the policies you refer to and they will also be posted on the website when they are completed.

All the best

C31 Reception

ACMA Investigation Report – C31 Melbourne – Compliance with Codes 9

So in fact, [the complainant] was already fully aware that a process was in place to revise [C31’s] constitution and develop policy to address the Codes of Practice. His subsequent formal complaint email on 6 August 2012 was written knowing that this process was not yet complete. At this stage, we began to suspect that this was not a serious complaint but a vexatious attempt to cause trouble.

With this in mind, the complainant was invited to meet with the Chairman of the Board to discuss the matters raised. The invitation, as you have seen, was issued twice; on neither occasion did [the complainant] respond in any manner, either by email or telephone. This suggested to us that the complaint had not been made in good faith; and that the complainant had been called out by our invitation to meet.

Notwithstanding the fact that the complaint has now been referred to the ACMA, we are still of the opinion that this complaint was not made in good faith, and was a deliberate attempt to cause trouble at a time when the company was engaged in the process of adopting a new constitution.

On 1 February 2013, C31 provided a copy of the minutes of a C31 Board of Directors meeting held on 4 September 2012 at which the complaint was discussed. The minutes state:

The station has received a letter of complaint challenging the organisation’s compliance with the industry Codes of Practice. Following advice from the Chair, the General Manager attempted to contact the complainant twice, inviting him to meet and discuss the governance matters raised in the [complaint]. A reply has not been received.

In light of the complainant’s previous correspondence with the station, in which he sought copies of the constitution and policies and was informed that development of a new constitution and policies was currently being undertaken, the view has been formed that the complaint has not been made in good faith, and is a vexatious attempt to cause trouble at a time when the company is grappling with serious governance issues. In such cases, the Codes of Practice states that the station does not have to respond to the complaint.

FindingThe licensee did not breach Code 7.3(b) of the Community Television Broadcasting Codes of Practice 2011.

ReasonsCode 7.2(b) enables a licensee to not respond to a complaint about a matter that is covered by the Codes where the licensee has determined that the complaint is frivolous, vexatious or not made in good faith.

Code 7.3(b) requires licensees to ensure that complaints are investigated, if necessary, and a written response is provided to the complainant as soon as practicable, but no later than 60 days from the date of receipt of the complaint.

C31 states that Code 7.2(b) is applicable in this case, as it had assessed that the complaint was vexatious and not made in good faith and provided minutes of the meeting of its Board of Directors on 4 September 2012 to substantiate its claim.

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ATTACHMENT A: Complainant’s submissionOn 15 October 2012, the complainant sent the following email to the ACMA:

Dear Sir/Madam,

Please find below correspondence related to a Codes of Practice complaint which I made to Channel 31 in Melbourne in August 2012. Having examined the constitution and policies of Channel 31, I found that there are numerous areas in which the station does not comply with the relevant Codes of Practice.

I have not received any substantive response to the issues raised in my email, only an offer, which I did not accept, to meet with the Chairman of the station which I can only presume was intended to dissuade me from taking my complaint further. Given the lack of a proper response to this complaint, I now refer the matter to the Australian Communications and Media Authority for investigation, and note that Channel 31 has now also breached Code of Practice 7.3 regarding complaint handling.

Thanking you,[Complainant]

----- Forwarded Message -----

From: [C31 General Manager]To: [Complainant] Cc: [C31 Chairman]Sent: Wednesday, 15 August 2012 3:40 PMSubject: RE: Codes of Practice complaint

Dear [Complainant],

I wrote to you a week ago extending an invitation to meet from the Chair of MCTC Ltd, [...].

If you would be kind enough to reply indicating either acceptance or decline, I can progress this matter through the appropriate channels.

[Yours] sincerely,

[. . .] | General Manager

[. . .]

From: [C31 General Manager]Sent: Wednesday, 8 August 2012 2:40 PMTo: [Complainant]Cc: [C31 Chairman]Subject: FW: Codes of Practice complaint

Dear [Complainant],

I have been forwarded your Codes of Practice complaint email.

This matter had been referred to the Chairman of the Board of Directors of MCTC Ltd, [...].

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He has asked me to extend an invitation to meet with you to discuss your complaint and to provide an opportunity to openly discuss the governance matters you have raised.

If you would kindly contact me on the phone number below I will be able to coordinate a meeting suitable to both you and [the Chairman].

Trusting that you will avail yourself of the opportunity to meet.

Yours sincerely,[. . .] | General Manager[. . .]

________________________________________

From: [Complainant]Sent: Monday, 6 August 2012 3:44 PMTo: info [C31]Subject: Codes of Practice complaint

For the attention of the Channel 31 Complaints Officer:

Dear Sir/Madam,

I have examined your policies and your constitution dated 5 March 2009. I wish to make a formal complaint that Channel 31 is in breach of several areas of the Community Television Codes of Practice:

Breach of code 2.1, in that there appears to be no written policy outlining how Channel 31 will meet the existing and perceived future needs of the community within the licence area.

Breach of code 2.2, in that there appears to be no written policy relating to how Channel 31 will establish the nature and diversity of interests of the community with in the licence area and how Channel 31 will address the programming needs and community interests that are identified.

Breach of code 1.1(b), in that the company constitution does not contain a provision that the minimum number of directors be set at seven and the maximum number of directors be set at twelve.

Breach of code 1.1(c), in that the company constitution does not contain a provision requiring the licensee board to have directors with demonstrated expertise in key areas such as finance, law, business management and television broadcasting.

Breach of code 1.1(d), in that the company constitution does not contain a provision requiring the licensee board to have a composition which has a balance between directors with demonstrated expertise in the key areas and directors who are involved in the production and provision of programming.

Breach of code 1.2, in that the organisation's structure and governance arrangements present undue barriers to participation by members of the community by requiring any member of the community who wishes to participate in the organisation's governance to become a member of a third-party organisation in the form of the company's body corporate members and therefore subject to the whims of the acceptance procedures of those body corporate members.

These are serious issues and I look forward to your comments before I refer the matter to the Australian Communications and Media Authority.

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Thanking you,

[Complainant]

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