The Government's communications watchdog has warned against imposing more red tape on regional television stations, saying some could go bust under the burden of greater regulation.
It comes as Communications Minister Malcolm Turnbull moved to allay concerns among regional coalition MPs that media law changes might hurt country TV and newspapers.
A report released yesterday by the Australian Communications and Media Authority found regional Australia was generally well served by local media.
However, it said some broadcasters were battling low profits and high levels of financial risk.
The media authority said local broadcasters in weakened financial positions would be in no state to react to "changing market conditions".
"The costs associated with imposing any further regulatory obligation need to be closely considered," the report said.
The authority found 91 per cent of regional Australians had access to all the local content they would like.
The Abbott Government is considering wide-scale media reforms, including dumping the "reach rule", which ensures that no media company can own broadcast licences that cover more than 75 per cent of the country.
However, the Government's coalition partners the Nationals and some regional Liberals are resisting change, fearing local media voices will be drowned out by big city-based media outlets should the reach rule be junked.
WA Greens Senator Scott Ludlam has warned that with the Government considering budget cuts to the ABC, local media consumers could be facing a "perfect storm" in which the public broadcaster and private regional media had to reduce services.
Prime Minister Tony Abbott has promised any reforms will ensure major events such as AFL and Test cricket remain on free-to-air TV.
But industry figures say the frenzy of media mergers that would be unleashed with deregulation could see major sports on-sold to pay TV.
Mr Turnbull said yesterday no decision had been taken on removing the reach rule but the Government was "engaged in consultation" about possible changes.