The government's media reform package needs to extend well beyond abolishing the audience reach rule and cross-media ownership restrictions if it is to receive the backing of the subscription TV industry and metropolitan free-to-air heavyweights.
Australian Subscription Television and Radio Association (ASTRA) chief executive Andrew Maiden tells AdNews only a holistic media reform package that strips back the onerous requirements placed on Australian free-to-air and subscription TV companies, such as excessive licence fees, the anti-siphoning list and other compliance costs, will receive industry backing as TV’s top brass would prefer an "all-or-nothing" approach to reform rather than “piecemeal adjustments”.
In a frank interview about challenges facing the industry ahead of next week's ASTRA Conference, Maiden says Australians have been duped by protectionist laws that ringfence certain sports for free-to-air television under false pretenses and the rise of SVOD players like Netflix has helped lift subscription TV penetration levels to record levels. But he warns Fifield's media reforms package does not go far enough in addressing the cost and regulation impediments having the greatest impact on Australian TV companies.
Ownership focus too narrow
The once-in-a-generation media reforms, reintroduced to the Lower House of Parliament by communications minister Mitch Fifield yesterday, will now face further parliamentary scrutiny at the behest of Labor despite minor changes to the bill since the first senate hearing.
In its current form, the package repeals media ownership and control rules that unfairly restrict Australian broadcast and publishing companies from building the scale and cross-media capabilities needed to take on global digital media rivals.
While this is important, it only represents one part of a broader media reform agenda that TV chiefs would rather hold out for than adopt a phased approach.
Australian media companies are shackled by broadcasting regulations put in place in the 1990s when there were legitimate concerns about media concentration and moguls wielding too much power in an era before the internet.
Protectionist policies such as the anti-siphoning laws that prevent Foxtel from bidding on certain sports may have been a reasonable precaution when pay TV first arrived in the mid-90s, but advances in digital technology and the fact the list doesn't apply to over-the-top streaming companies means it has become little more than a blunt instrument to curtail one competitor.
Then there's the government's excessive broadcasting licence fee (3.375% of annual sales), which is more than 15 times the rate in the UK. This tax only applies to TV and radio services that use radiofrequency spectrum, eroding funding in other areas such as local content production.
These hurdles place local content producers at a huge disadvantage to the likes of Google, Facebook and Netflix, which operate virtually unregulated and are luring ad dollars away from traditional channels and into digital.
TV's unity ticket
Maiden says the rise of SVODs has had a halo effect on the wider pay TV industry, with more than 50% of households now paying for at least some television content - the highest penetration recorded in Australia. However, deregulation is urgently needed to create a level playing field so that local TV companies can focus on producing more Australian content to compete with an endless production line of highly quality blockbusters from the US and elsewhere.
Maiden says the free-to-air and subscription TV sectors are broadly aligned on a deregulation “unity ticket” as well as a focus on local content. This includes binning red tape on minimum content requirements for TV networks, such as how much they must invest in locally-produced drama, children's programming and other areas they frequently exceed.
“Australian incumbent TV networks are facing a series of costs to comply with 1990s regulation. These rules actually undermine the case for investing in Australian content, which is self-defeating,” Maiden says. “Every dollar that has to be spent on filling in paperwork for Canberra regulators is a dollar that can't be spent on giving Australians local stories.”
Maiden explains the rules do not apply to SVOD players and other digital media companies that distributes content to Australia because regulating global players who operate on the internet would be “as dangerous as it is impractical”.
“When we're facing competition from digital and SVOD and we are the only people investing in local stories, you'd hope that regulation would encourage us to invest rather than discourage us,” he adds.
All or nothing
Free-to-air TV network bosses have long championed abolishing or trimming Australia's draconian TV licence fees. Previously, Seven West Media boss Tim Worner said he would not back any media reform package without licence fee amendments, while Nine’s CEO Hugh Marks has made clear this is their primary concern.
Maiden says ASTRA will adopt a similarly robust position but tailored to include competition barriers that are unique to ASTRA members such as the anti-siphoning list that prevents Foxtel from bidding for live sports that are deemed to be of 'national interest'.
He argues that only solving one part of the media reform puzzle, such as ownership, will distort the market even further in favour of “whoever wins that round of reforms”.
Maiden accepts that a major sticking point between free-to-air and subscription TV agenda will be finding middle ground on how to wind-back the anti-siphoning list.
Subscription TV chiefs have come to accept the “political reality” that some sports will always be protected, but their gripe is the length of the list.
Maiden says the anti-siphoning list is 1,800 events long, which counts individual matches at global tournaments as an event.
“Australians are being conned by the anti-siphoning scheme because it does not guarantee sport will be free. It only guarantees that pay TV defined in the 1990s cannot bid for sport,” he adds. “It's obvious the scheme was designed to protect moguls in the 1990s from competition and not to assure Australians access to free sport.”
“You have the absurd situation where Channel Seven can charge Australians to watch Olympic sports using an app but Foxtel is banned by law from doing the same thing.
“Nothing Channel Seven has done is underhanded, it's commercially pragmatic. The point is either the rules should apply in the same way to every player or wound back and applied to none.”
A softening on siphoning?
Maiden says there is nothing to prevent a digital platform or ISP today from buying sports rights to the Ashes or World Cup as they aren't covered in the wording of the law.
He believes free-to-air networks are softening their position on anti-siphoning list as they have “commercially more important fish to fry” and remains “optimistic” the government can deliver reforms that not only deregulate the TV market incumbents, but also “strips away some of the protections that have accumulated over the last 20 years for free-to-air television”.
“If a package of reforms is not successful, Australia will be consigned to a future market with everyone shrinking themselves to greatness by cutting costs rather than by innovating and creating new jobs,” he warns.
“We're coming to a period where change is urgent because of the increasing challenge presented by digital with its exaggerated claims about audience and the opportunity to create jobs and expand the sector is too big to ignore.”
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