Key points: Senate hearing into Fifield's media reforms

By AdNews | 31 March 2016

The Senate Environment and Communications Committee is considering the government's media reform package today.

Metropolitan and regional broadcasters will appear before the committee to discuss Mitch Fifield's reforms.

This includes Seven West Media CEO Tim Worner, Southern Cross Austereo (SCA) CEO Grant Blackley, WIN boss Andrew Lancaster and Prime's Ian Audsley, who are due to appear just after 10am.

The competition watchdog ACCC and media watchdog ACMA will appear later in the day. 

Submissions to the committee can be found here.

AdNews will update with highlights of the hearing throughout the day. 

Highlights so far:

University of Canberra professor Matthew Ricketson is concerned the reforms will erode media diversity. He supports the abolition of the 75% reach rule as the emergence of SVOD makes those laws irrelevant.
Ricketson urges the senate to consider introducing regulations of global media companies.

Ricketson also supports relaxing the two-out-of-three rule if mechanisms are in place to support quality journalism.

He is concerned about large scale redundancies of journalists. “Media executives committing themselves to quality journalism are sounding increasingly hollow as it is the journalists who appear to be bearing the brunt of cost cutting in media companies,” he says, while citing recent cuts at Fairfax. 

Seven West Media CEO Tim Worner holds up Seven Queensland as an example Seven's commitment to producing local content.

“Seven QLD enjoys 53.3% market share of ad rev in regional QLD. We've achieved that result because of our commitment to local news and local engagement,” he said.

Seven QLD provides seven 30 mins local news bulletins to Sunshine Coast, Wide Bay, Townsville, Mackay, Rockhampton, Cairns and Toowoomba markets.

Worner also takes a swipe at regional broadcasters WIN, Prime and Southern Cross.

“The difference between Seven QLD and other broadcasters is that it's not asking to be bought out so someone else can save our voices. It's simply going about its business of investing in local news services to make sure it has a future,” he says.

On the media reform package: Worner says media reforms do not go far enough and warns they could have unintended consequences.

“These changes to the law are likely to result in less, not more local content, and less local presence in regional communities,” he says.

He feels the scope of Fifield's reforms are too narrow and "piecemeal", and there has not been enough debate about the impact of the rule changes.

Worner says the most important law to amend, which is not part of Fifield's reform package, is the 4.5% licence fee levied on the gross revenue of all commercial TV broadcasters. Abolishing this, he says, will enable local broadcasters to compete with global media players like Facebook, Google, etc. 

“This change would allow us to investing more and better local content and allow us to continue to transform our companies for the future,” he says. “Netflix and Google wont be investing $1.5 billion plus every year in Australian content the way this industry is."

Worner says Seven does not have the finances to produce any more local content than what it currently does, which he claims is the most of any network in Australia.

On anti-siphoning laws: Unsurprisingly, Worner says the anti-siphoning list needs to be maintained to ensure live sports reach “70% of the population”. 

He also takes aim at the scope of the reforms, arguing "it is almost impossible to make changes in the isolated to media ownership without the need to consider related areas of media regulation".

Worner says it is possible that Ten and Foxtel could merge and such a move could provide a way to side-step the anti-siphoning rules as a sport could be run on both free-to-air and pay TV. He uses V8 Supercars as an example of how this might work, Ten and Fox Sports both cover it but Ten only has six races this season. 

On consolidation: Worner believes market consolidation could impact on regional content production. 

“If entities are merged, the controlling entity is going to look very quickly for efficiencies. When they do that they will find the biggest costs are in local content production and I believe that is where they'll go first," he said.

When asked if Seven would consider mergers and acquisitions if the ownership laws are changed, Worner replied: "It's always a possiblity and it would be irresponsible of us not to look at things."

Now it's the turn of subscription broadcasters.

Astra CEO Andrew Maiden opens by saying they do not support "piecemeal approaches that provide what we believe are a leg up to certain companies on a selective basis".

This includes winding back the reach rule in isolation from broader reform.

"Such an outcome would exacerbate existing regulatory and competitive imbalances, which skew resources away from innovation and towards terrestrial free-to-air TV," Maiden said.

He said winding back the reach rule would “oil the perennially squeaky wheels of free-to-air TV...but it fails to deregulate the broader sector and fails to dismantle the costly protections that shelter some from competition”.

They want broader reform that levels the playing field for all media players. A holistic approach to regulation after the next election.

Maiden has taken a swipe at "old technology models like terestrial free-to-air television", suggesting that abolishing the reach rule will skew investment towards FTA TV and away from "leading edge" streaming companies.

Maiden said the price paid by FTA TV networks to use public spectrum doesn't "reflect the market value" and a media reform package should look at this.

On anti-siphoning list: “We take a principled approach to reform of anti-siphoning, which accepts the political reality that iconic national sports with a wide following are not the kind of thing you can delist," Maiden said. "But you could consider de-listing events that are played overseas in unfriendly timezones. Events that don't include Australia and don't attract large audiences.”

Examples are the protection of the FIFA World Cup. For example, a match between the Ivory Coast and North Korea watched by 11,000 people across Australia is not an event of national significance. Maiden says subscription TV works on a model of many smaller audiences for its programming compared to FTA, which requires large audiences to attract advertising revenue.

Maiden says the government position is that the anti-siphoning list doesn't currently have enough parliamentary support to amend it.

Subscription TV would be happy with a "modest trimming" of the list.

Foxtel group director of corporate affairs Bruce Meagher points out that streaming companies can get around the list and pay over the odds for sports rights. "It's discriminatory in that the list only applies to Foxtel in effect."

Meagher believes media reform in Australia has generally favoured "one group" (FTA TV) with some minor concessions to other groups to "keep them quiet".

Now it's the turn of regional TV network chiefs.

In a joint statement read by Prime chief executive Ian Audsley, the networks agreed the current media ownership laws are outdated and “act as a brake on regional media being able to organise itself in an economically efficient manner”.

The networks support proposals to abolish the 75% reach rule and two-out-of-three cross-media rule.

"While we support provisions under which local content requirements will increase upon a trigger event, we do have concerns about how the definition of a trigger event is currently drafted," Audsley said.

This trigger event refers to acquiring a 15% or more stake in a regional TV netowrk, a level which Audsley says is unlikely to lead to consolidation.

"We think it needs more of a consumation of a marriage rather than a daliance," he added, refering to the level of control required. 

Audsley said regional networks are at the "very extremities of a television lake" and in a drought, those extrmities dry out first. "That structural change or drought has hit us already. Three years ago my company was worth $360 million, today it has a market value of $130 million."

By drought Audsley is refering to dwindling advertising revenues and audience figures that have hit regional networks hard.

"If we are working in the same regulatory environment, it's hard to see how we can grow our businesses," Audsley added.

SCA's Blackley said he is confident that any merged metropolitan/regional broadcaster would ensure local content requirements will be maintained, citingSeven Queensland and Nine's NBN as examples.

Regional networks support the anti-siphoning list.

WIN's Lancaster says that consolidation will not lead to a reduction in local content, as suggested by Seven West Media's Worner earlier today.

Audsley said that consolidation could lead to the consolidation of assets, such as pooling the use of studios in major regional centres rather than having them in every town. Content producers such as reporters and camera operators would continue to live locally to where news is gathered.

Regional broadcasters are waiting to see the outcome of WIN's court battle with Nine over streaming into regions.

In summary: A lot of the discussion has been rather self-serving with FTA wanting to abolish licence fees and subscription TV crying foul over the anti-siphoning list.

Where there is consensus is that both parties believe Fifield's approach to reform is "piecemeal" and they would prefer a broader, holistic review of media regulation. There is also agreement that the tax offset to produce local TV programs (20%) should be in-line with the offset for filmmaking (40%). 

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