18/2/2010: EDITORIAL – A FISTFUL OF DOLLARS (MORE) FOR THE NETWORKS
If the film industry played the political card, it could get the sort of
largesse that commercial TV networks have always had – and are still getting,
says Andrew L. Urban.
With the latest $250 million ‘no strings’ gift from the taxpayers via Comms
Minister Stephen Conroy to the commercial TV networks (licence fee rebates,
February 2010), it’s a good time to suggest that the Australian film industry
needs to take a lesson from the commercial TV networks if they want to really
squeeze Governments of all colours for money. Over the years the networks have
managed to extract not only cash but extraordinary levels of legislative
protection. How? Because they once had the power to change Governments. That’s
no longer true, but the film industry does still have that power and always
will. It just hasn’t used it. Never mind ‘telling our own stories’ or worthwhile
realism about our society: get political. Make films that could change
Governments…. be a threat like Kerry Packer was.
The history of protectionist regulations has helped shield the free to air
networks from competition in ways that would run foul of the ACCC if they
weren’t implemented by Government – and the discredited anti-siphoning scheme is
just one of them. As we taxpayers and the entire screen industry awaits the
Government’s plans (if they have any) following the review of that scheme
undertaken at the end of 2009, there is little optimism that meaningful change
will be implemented, given the experience to date.
"the traditional fear of TV networks has softened the
spines of politicians"
In the corridors of Canberra, the traditional fear of TV networks has
softened the spines of politicians to such an extent that they would rather do
the wrong thing by the public than by the networks.
That weakness has been so well exploited by the old TV networks that the most
brazen anti-competitive actions have been re-packaged as consumer benefits. And
it’s not just the subscription TV sector who has complained. In its 2009 review,
the Productivity Commission was highly critical of the anti-siphoning list.
In its submission to the review, the ACCC has also criticised the anti-siphoning
regulations. The ACCC wants to see the anti-siphoning list drastically reduced –
both in absolute numbers of sports covered, and the number of events listed
within particular sports. The use it or lose it provisions should be formalised
in legislation and strengthened. In its current form, says the ACCC, the scheme
is more burdensome than necessary and should be modified.
Traditionally the networks have not broadcast up to 75 per cent of the sports
events on the list – either live or on delay or even in excerpted form. If this
scheme is meant to protect consumers, it’s obviously not doing a very good job
of it, quips Foxtel CEO Kim Williams. In a speech he gave to the Network
Insights Conference in Sydney in November 2009, Williams said: “In the past we
didn’t protect the stage coach from the train, propeller aircraft from jets, CB
radio from the internet, or VHS from the DVD. So it’s time we stopped protecting
the old television networks from subscription and other forms of digitally-based
competition. In today’s world, when delivery systems are converging rapidly, our
watchwords must be choice, competition, flexible responsiveness and efficiency,
not protecting incumbency.”
And the feeble claims that anti-siphoning helps the consumer are constantly
debunked. In January 2010, for example, the news that ONE HD’s new football show
would soon kick off “will be greeted with mixed feelings from fans of the game,”
wrote Adrian Musolino on The Roar sports opinion website.
“Football fans seem to have an aversion to free-to-air commercial networks being
involved in football, undoubtedly as result of the contrast between the
outstanding commitment to the game of SBS and Fox Sports compared to the
disastrous involvement of Channel 7 with Soccer Australia and Channel 9’s 2002
World Cup blunders (those dreaded time-zone delays!).”
The 7 & 9 Networks’ coverage of tennis Grand Slams is also notoriously
shoddy. Even covering the Australian Open in Melbourne, where there is no time
zone challenge, 7 broke away from the live coverage every day for the 6pm news,
followed by Today Tonight and the obligatory Home & Away. The Network kept up a
stream of news updates throughout its live coverage, which would have been
adequate without the 6pm bulletin repeating it all. Likewise, 9’s coverage of
the US Open and Wimbledon finals is compromised by similar programming
decisions, all of which annoy and frustrate the fans for whom anti-siphoning is
meant to deliver live sport coverage.
Media policy academic and Director of the Australian Research Council Centre of
Excellence for Creative Industries and Innovation at Queensland University of
Technology, Stuart Cunningham is one of the long term defenders of government
regulation “for explicitly cultural benefit eg the commercial TV content
regulations,” and continues to defend them. “The content regulations on pay TV
for local drama have been a clear incentive for the industry to invest in this
area. But I also clearly acknowledge much content regulation is a trade-off.
Regulation is a less-worse option, not all bad or all good,” he says.
“Anti-siphoning is a case in which the public interest argument is being eroded
not only by growth of pay etc, but also in the internal inconsistencies and
contradictions in the FTA case and in practice. The only defenders of the
so-called public interest arguments are the increasingly isolated and conflicted
free TV interests. Their capacity to maintain a purist public interest argument
has been significantly damaged by their contradictory desire to be allowed to
multi-channel their sports properties now that multi-channelling is beginning to
be well established and will inevitably grow in consumer uptake as household
conversion to digital rapidly increases towards the analogue shut off,” says
"a combination of fear and disdain"
Anti-siphoning is only one aspect of Government protection that the networks
have enjoyed. Motivated by a combination of fear and disdain when subscription
TV launched, the networks convinced the Government that this new service should
not be allowed to carry advertising. The Government complied, with regulation
that barred ads for the first two years of its operation. In any other
circumstance, that would be judged a most restrictive trade practice.
But even when Foxtel and Austar were finally allowed to sell ads (doesn’t sound
right in a free market economy, does it), they were compelled to keep ad
revenues below 50% of total revenue. Kerry Packer and his competitors had ganged
up on the sector in an attempt to protect their own advertising sales revenues.
More recently, the networks were allowed to run FREE TV ads on their own
channels (campaign against subscription TV services) without those ads being
counted as part of their advertising quota. An estimated $50 - $60 million worth
of advertising aimed at their competitors - without a cent of lost revenue.
Perhaps the most surprising thing about it all is how this clumsy but chummy
arrangement was enacted in full public view – with little public outrage (not
counting the subscription TV sector). Of course it was always presented as
policy to provide consumer benefits. Free access to major sporting events on
free TV was the slogan behind which the conspiracy was conducted.
At the end of 2009, almost 6 million households had taken fixed broadband and 8
million Australians chose to watch a subscription television service.
Price Waterhouse Coopers has forecast that over the 2011-2013 period the
compound annual growth in advertising revenue for the old TV networks will be
2.3 per cent while for magazines, the internet and subscription television it
will be 4.2 per cent, 12.2 per cent and 7.5 per cent respectively. “This trend
is no conspiracy against the old TV networks. It’s simply the marketplace at
work. And the answer must not be to offer the networks ever increasing and
always renewed amounts of protectionism,” warns Williams.
His words were still echoing around the blogs and newspaper columns of Australia
when Communications Minister Stephen Conroy announced another round of
protection for the old TV networks on Sunday, February 7, 2010. Media Day
reported: “Australia’s commercial broadcasters are receiving further protection
from the federal government, with communications minister Stephen Conroy
yesterday announcing a set of license fee rebates totalling around $250 million
in the next two years to help continue to meet required levels of local content.
The rebates will “ensure TV audiences have strong levels of Australian programs”
and recognize “the new technologies and commercial challenges facing the sector
including the switch to digital television,” Conroy said.
Writing in Crikey, Canberra based Bernard Keane (Feb. 9, 2010) sank the Minister’s
justification: “Stephen Conroy said in his press release: ‘The Government
recognises that the commercial television broadcasters will require some
assistance to maintain Australian content production, while investing in a new
delivery platform nationally.’
"based on compensating the free-to-air broadcasters"
The only problem with that is that the free-to-air broadcasters have
repeatedly – repeatedly – been compensated previously for the transition to
digital television. The entire digital television framework introduced at the
start of this decade is based on compensating the free-to-air broadcasters.
Here’s what they get already:
* a moratorium on competition, with a ban on a new free-to-air network despite
plenty of spectrum for it;
* 7Mhz of spectrum for broadcasting, handed to them for free and without any
bidding process, ostensibly so that they could drive digital take-up for digital
switchover in 2008;
* a ban on subscription television buying attractive sports content via the most
restrictive anti-siphoning list in the world (most of which the free-to-airs
* regional broadcasters are getting $260m over an extended period to directly
offset their digital transmission costs.”
ASTRA (the subscription TV industry association) says it is surprised and
disappointed by the decision. “Taxpayers are yet again being asked to subsidise
the businesses of foreign owned broadcasters to help them meet existing content
obligations – it’s an outrageous affront to Australians, said Petra Buchanan,
“Giving the old TV networks yet more protection just to maintain existing
standards is the antithesis of modern media reform,” she said in a statement
issued February 8, 2010. “It is couch potato policy that reduces their incentive
to invest, compete and innovate, and ignores innovators such as the subscription
television sector, which has no trouble meeting its own Australian content
obligations year after year without a cent of Government assistance. By using
taxpayers’ money to prop up the old players, innovation and competition in the
television space will continue to be curbed.”
What’s more, the $250 million handout requires no local content action by the
networks – who were briefing financial analysts how it would go straight to the
bottom line. Profits, that is. An editorial in The Australian (Feb 10, 2010)
reminds us of the long history of this sort of shameful practice: “ … cutting
licence fees in an election year smack of the Howard Government’s helping Kerry
Packer’s Nine Network by maintaining restrictive cross-media ownership laws.
Now, as then, viewers and taxpayers are the biggest losers.”
"What is this Government thinking? Or rather, why
isn’t it thinking?"
Then there is the question of misleading the public: the Feb. 7 Ministerial
press release about the $250 million gift is titled: ‘Government to protect
Australian content on commercial television.’ But Conroy admitted on Feb 12 to
the Australian Financial Review that the rebate contained no requirement for the
networks to produce more local content nor to maintain current levels. In fact,
“there is no test for them to meet,” Conroy said. Misleading parliament is a
serious and punishable offence even in the current circus atmosphere; misleading
the public should be equally penalised.
What could the film and TV production industry do with the largesse handed to
the old TV networks? Just taking the latest gift of $250 million over two years,
we suggest it would make a terrific investment in a package of producers and
writers over the same period. And we’d get something for it, instead of boosting
the profits of TV networks, many of whose shareholders are foreign corporations.
What is this Government thinking? Or rather, why isn’t it thinking?
Published February 18, 2010
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MISLEADING THE PUBLIC:
The Feb. 7, 2010 Ministerial press release about the $250 million gift is
titled: ‘Government to protect Australian content on commercial television.’ But
Minister Conroy admitted on Feb. 12 to the Australian Financial Review that the
rebate contained no requirement for the networks to produce more local content
nor to maintain current levels. In fact, “there is no test for them to meet,”
Conroy said. Misleading parliament is a serious and punishable offence . . .
misleading the public should be equally penalised.
DOING THE WRONG THING:
In the corridors of Canberra, the traditional fear of TV networks has softened
the spines of politicians to such an extent that they would rather do the wrong
thing by the public than by the networks.
THEY WOULD SAY THAT:
“The only defenders of the so-called public interest arguments are the
increasingly isolated and conflicted free TV interests. Their capacity to
maintain a purist public interest argument has been significantly damaged by
their contradictory desire to be allowed to multi-channel their sports
properties now that multi-channelling is beginning to be well established and
will inevitably grow in consumer uptake as household conversion to digital
rapidly increases towards the analogue shut off,” says media policy academic
“In the past we didn’t protect the stage coach from the train, propeller
aircraft from jets, CB radio from the internet, or VHS from the DVD. So it’s
time we stopped protecting the old television networks from subscription and
other forms of digitally-based competition. In today’s world, when delivery
systems are converging rapidly, our watchwords must be choice, competition,
flexible responsiveness and efficiency, not protecting incumbency.” –
Williams AM, CEO, Foxtel