The inquiry, secured by the Greens, will report by the end of March 2021.
The inquiry’s terms of reference state it will look at “media diversity, independence and reliability in Australia and the impact that this has on public interest journalism and democracy”.
It will examine public interest journalism in Australia, the effect of media laws on concentration of ownership, changes in business models and the impact of online platforms such as Facebook, Google and Twitter on the media industry and sharing of news in Australia.
Regional media and the role of the Australian Associated Press newswire will also come under the spotlight.
“Australians are worried about the health of our media landscape and as a parliament we should act,” Greens senator Sarah Hanson-Young said.
Former Liberal former prime minister Malcolm Turnbull publicly supported the petition set up by former Labor prime minister Rudd.
Both will be invited to give evidence to the inquiry, as will News Corp editors and executives.
Rudd and Turnbull believe Murdoch media partisanship is at risk of driving Australia down the American path to deep division.
Turnbull said last weekend that the Murdoch media used to be a group of traditional right-leaning outlets but has now become “a vehicle of propaganda” and that Australian democracy was suffering for allowing the “crazy, bitter partisanship” of social media to creep into the mainstream.
“We have to work out what price we’re paying, as a society, for the hyper-partisanship of the media,” Turnbull said.
“Look at the United States and the terrible, divided state of affairs that they’re in, exacerbated, as Kevin was saying, by Fox News and other right-wing media.”
He warned that allowing the media to become increasingly partisan was bad for democracy because people ended up being unable to agree on shared facts to form the basis of political debate.
“We are seeing people are being able to live in a siloed echo chamber that reinforces their prejudices, that appeals to the worst demons of their nature rather than the better angels,” Turnbull said.
“And if you want to see an example of what that does to a country, look at the United States.
“So I reckon we’ve got some very big issues with the media. It has changed dramatically, the whole environment.”
Rudd earlier this week said he hoped an inquiry would recommend ways to maximise media diversity because the Murdoch media was like a monopoly.
“It’s symptomatic of a broader cancer on our democracy, and my principle motivation in putting this petition together has been to bring to the surface this national conversation – rather than people being too frightened to talk about it,” he said.
“Murdoch has engendered a culture of fear in Australia about this discussion because he goes after people individually who raise this question, including myself, including Malcolm.”
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