Spare a though for Australia’s struggling commercial TV networks, down to their last cent, they send their chief spinner, former Labor Premier of Queensland Wayne Goss, to see his former staffer Prime Minister Rudd with begging bowl outstretched.

The PM, who has never met a media outlet he disliked (that includes The Australian, which made him Man of The Year), listens attentively and agrees with his former boss saying “Yes, commercial TV is doing it tough remaining on air and keeping to their licence restrictions to provide 55% Australian content between 6am and midnight. So here’s a rebate of all those nasty licence fees we are charging you.”

The three commercial networks, Seven, Nine and Ten, went weak at the knees in congratulating the Government for its decision yesterday.

Need I point out that it is an election year?

On Seven, for example, the Prime Minister is back on Sunrise, after doing two interviews (town hall meeting types) with the network’s Sunday Night program (Rudd is on the ABC’s Q&A tonight in a similar format).

And, that dear reader, is how policy and revenue decisions are made in Australia. John Howard listened to the blandishments from the networks and media owners, led by Keith Murdoch, James and Kerry Packer and Kerry Stokes, and introduced changes to media ownership laws that saw James Packer now the heir, and Kerry Stokes sell out for huge bucks and enfeeble their networks with billions of dollars of debt just when debt got expensive and markets and the economy slowed.

James Packer took his money out of media (except for pay TV) and invested it in gambling, and lost a lot of his punt. Kerry Stokes has used the billions got from selling half of Seven to grow in the media here by grabbing control of West Australian Newspapers and becoming the second biggest shareholder, after James Packer, in Cons Media, which owns shares in Foxtel and Fox Sports.

So the financially crippled commercial TV networks now get a large cash transfusion this year and next from the federal Government, ostensibly for several reasons.

Senator Stephen Conroy said the Australian networks faced higher licence fees than networks overseas and were facing challenges including the switch to digital television.

He said they “are faced with a converging media environment and [the] switch to digital television, as well as the impact on revenue created by a decline in advertising spend as a result of the global financial crisis.

“The government recognises that the commercial broadcasters will require assistance to maintain Australian content production, while investing in a new delivery platform.”

And that brought this from the networks:

“Free TV Australia today welcomed the announcement by the Rudd government that it will provide licence fee rebates to protect Australian content on commercial television,” the FTA networks said in a press release yesterday .

Julie Flynn, Free TV CEO, said in the statement: “The licence fee rebates are a timely recognition of the key role played by commercial broadcasters in delivering Australian content on television.”

Really this was announced two weeks late: it should have come on Australia Day, along with AOs for the network heads and free passes to Canberra.

The decision was: the Government will cut licence fees paid by the networks — calculated at 9% of gross advertising revenues — to the government by 33% for the 2010 financial year and 50% for the 2011 financial year. That’s about $237 million for the period ending June 30 this year, and upwards of $250 million for 2011.

Fees after 2011 will be reviewed by the Government in the run up to the ending of analogue TV in 2012-13. The present analogue spectrum will revert to the federal Government. The payments could be seen as backdoor way of paying the networks to keep quiet about the spectrum return. This raises the quite tricky point that the networks have acknowledged the analogue spectrum is a public good by paying fees yearly to use it. Now the federal Government will pay at least half a billion dollars over the next 17 months in a way that could be seen as defacto compensation for that spectrum ahead of auctioning it off for mobile phone use. There’s something wrong with that, especially morally.

The TV networks complain that the fees they pay Canberra are out of alignment with what network in the US and UK pay, for example. That’s a network claim, with support from consultants paid for by free TV Australia. the counter argument is that successive Australian governments have set a scale of fees that accurately reflects the value of that spectrum to the sector and that the UK, US and other countries are under-pricing those to pander to the media owners in their countries (such as R Murdoch in the US and UK).

Finally, the first payment to the networks will be compressed into four and a bit months (by June 30) and the next will be made over a year. That’s more than $6 million a week, which will more than cover the interest payments on the billions of dollars in debt at Seven Media Group, PBL Media and the Ten Network, plus regional broadcasters Macquarie Media (Ten), Prime and WIN. WIN is wholly owned by billionaire Bruce Gordon, Prime is part controlled by Seven, Lachlan Murdoch and Paul Ramsay.

The likes of David Gyngell, Ian Law and other senior managers at PBL Media will get some benefit because they have small equity stakes in the group, along with the major shareholder, the private equity mob, CVC.

At Seven, Kerry Stokes controls the Seven network, which owns around half of Seven Media Group. The US buyout group KKR owns about 47%, Seven Network and Media Group managers own about 3%.

The Ten Network is actually relatively clean: its controlling shareholder, Canwest of Canada, sold out last year and then went broke. Ten has public shareholders.

In effect the Rudd government is transferring hundreds of millions of dollars in fees back to these small groups of executives and rich people and their investors here and offshore. That will help relieve the obscene debt burdens they themselves took on to further the business ambitions of the current and former owners in the cases on Nine and Seven. The likelihoods of these over-geared businesses at Seven and Nine (and to a lesser extent Macquarie Media and Ten) collapsing under their debt burdens will be eased considerably by these payments.

Why these groups need any extra payment for Australian content is beyond me, but it is clear Senator Conroy doesn’t understand (or ignored) one important point that might have not sat nicely in his press release.

His statement was headed  ”Government to protect Australian content on commercial television”. That’s a miss-statement. The Government already subsides local production through Screen Australia. As the website for Screen Australia shows, that support is extensive and ongoing. Millions of dollars a year flow to the networks and their producer clients for Australian programs (and this includes the ABC and SBS).

So the commercial networks already raid the public purse by way of rebates and other finance for Australian TV series (such as Underbelly, etc) production. These fee rebates are in effect another form of subsidy (similar to payments to Toyota for the much touted green Camry car). The rebates can be 20% of the production cost (under an agreed scale of hourly charges).

This would have to be one of the most obscene decisions from the Rudd government in its very short time. No doubt the May Budget will contain cuts to important Government programs, accompanies by the rhetoric about everyone having to share in the pain to return the nation’s financial position to its former strength. The rebates to the networks are nothing of the sort and are an ugly bribe.

Next up from Senator Conroy, the Sport anti-siphoning decision.