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The Foxtel-BBC deal: implications for Australian television and content

The ABC will be left with significant holes in their schedule after the BBC signed a deal to share their content with Foxtel last week - will they fill it with more local content? EPA/Andy Rain

The ABC’s 50-year TV partnership with the BBC is at breaking point after a landmark deal between the British broadcaster and pay TV provider Foxtel was announced last week.

Under the new deal Foxtel will host a new BBC channel that will screen first-run, “fast-tracked” British programming, meaning ABC viewers will no longer have free-to-air access to popular shows such as Silent Witness and The Thick of It.

The deal between Foxtel and the BBC’s commercial arm, BBC Worldwide, has major implications not only for the two partners, but also for the ABC and potentially for Australian screen content.

What does the deal mean for the ABC?

The ABC appears to be the biggest loser from the deal, although it may not be all bad news. The ABC’s current three year deal with BBC Worldwide has just over a year to run, meaning the BBC-Foxtel arrangement will not come into place until July 2014.

Negotiations to extend the long-term partnership between the public service broadcasters were on the horizon. But in the words of ABC1 Controller Brendan Dahill, Auntie was “completely blindsided” by the Foxtel announcement. “We had not been told that it was happening, and we were not invited to counter,” Dahill told ABC Sydney radio last week.

British programming has long been a core part of the schedule of a broadcaster once dubbed “Anything British Considered”. A brief glance at current listings reveals the holes that the Foxtel deal could blow in the ABC’s offerings, particularly on Saturday nights.

But at the same time it should be noted that much of the ABC’s most popular British programming is not affected by the Foxtel deal. Dr Who is covered by a separate “run of series” deal, and will continue to be available on the ABC, as ABC managing director Mark Scott was quick to tweet last week.

Some first-run BBC content will remain on ABC TV, such as Dr Who - which is covered under a different deal. AAP/Adrian Rodgers

Shows like Midsomer Murders and Grand Designs (which is consistently one of the highest rating shows on Foxtel) are not produced by or for the BBC. And the Foxtel deal does not cover children’s, arts, natural history or news and current affairs content.

What does the deal mean for Australian content?

As some commentators have observed, the ABC could fill the holes in its schedule with new Australian content. This ignores to some extent the massive discrepancy in the cost of local production versus acquired programs. Even if the ABC spends all the money it will save when its BBC Worldwide deal ends on Australian production (thought to be around $15 million), it is highly unlikely that it will be able to substitute the lost programs with like-for-like local content.

Hopefully, ABC managers and schedulers will look on the new settlement as a challenge and an opportunity. We all know that television is changing as new viewing habits take hold. The ABC has long been a leading innovator in both programming and technology. Now it has a chance to concentrate its energies on locally-derived content, and to cement its place as a major force in the new multi-platform landscape.

The Foxtel deal may also provide another boost to local production. As a channel that screens mainly drama, the new BBC channel will be subject to the subscription television expenditure quota. This regulation requires subscription drama channels to devote at least 10% of their revenue to local production. Should the new BBC channel prove to be a runaway success, then more money will need to be made available for local programs, such as Top of the Lake.

Earlier this year, Australian actor David Wenham expressed his disappointment that the ABC had withdrawn from an agreement to fund this Jane Campion-directed international co-production. Top of the Lake was produced by the BBC, the US-based Sundance Channel, and UKTV, which stepped in when the ABC pulled out because it objected to the production employing a US lead (Elisabeth Moss, who plays an Australian detective).

Leading Australian actor David Wenham expressed his dismay that his new show Top of the Lake is not airing on the ABC. AAP/TV1

As a direct result of the ABC’s withdrawal and UKTV’s involvement, the program will not be seen on free-to-air television for at least another two years. The series has been rating well on UKTV compared to the channel’s other offerings, but its audience is still perhaps one-tenth or less of the potential viewership on free-to-air.

Implications for Foxtel and BBC Worldwide

Foxtel subscribers can expect to pay an additional fee for the premium, first-run BBC drama, comedy and lifestyle productions that will screen on a new, BBC-branded Foxtel channel. In return, they are promised “fast-tracked” programs, available within hours of their first screening in the UK. Free-to-air viewers will have to wait for at least a year to see the same programs.

The deal marks a major expansion of a long-term and mutually beneficial partnership. In June 2008, Foxtel and BBC Worldwide announced that a new channel, BBC HD, would screen in Australia. It was the first high definition BBC channel broadcast outside the UK.

The following month, BBC Worldwide assumed full ownership of UKTV, a channel that screens a mixture of BBC, ITV and independently produced British programs. The following year, the documentary channel BBC Knowledge and the children’s channel CBeebies were launched in Australia.

For Foxtel, the new BBC deal is another landmark achievement in a strategy to acquire exclusive rights to quality British and American content. The pay television operator has stolen a march on its free-to-air rivals by effectively denying them access to popular British programs.

Foxtel is banking on the BBC deal giving a much-needed boost to subscriber numbers. Subscriptions have hovered at around 30% of Australian households for some time. As the new BBC channel will be ad-free, new subscriptions will be vital for Foxtel to recoup its unspecified outlay.

Viewers who do not wish to take out a full Foxtel subscription may be able to view these programs via the BBC’s iPlayer app. Subscription is currently A$9.49 per month, or A$89.99 per year - considerably more than subscriptions in other countries - although it is possible an arrangement will be reached to exclude the Foxtel content. Alternatively, viewers could use virtual private network services, proxies or anonymisers to circumvent geoblocking and view programs via iPlayer as if they were in the UK.

For BBC Worldwide, the ambition of the deal is to help meet its strategic objectives to “become more international” and “grow the scale of our TV channels”. But BBC-branded channels already have a high profile on Foxtel; BBC Worldwide’s 2012 Annual Review highlights these pay TV offerings, and notes that Australia is one of its most important and fastest growing markets. And pay TV viewing figures for BBC programs are fairly low, with only UKTV’s Eastenders, Coronation Street (an ITV program), and Top of the Lake making the weekly top 10 this year.

The deal is the first major announcement since the BBC’s main commercial arm underwent a corporate restructure, effective from April 2.

Last year, BBC Worldwide returned £216 million to the British public service broadcaster from content sales and licence agreements. With the BBC under pressure to deliver efficiency savings of over 3% per year from an annual budget of over £4 billion, any increase in income or production investment is very welcome.

Clearly, the new BBC leadership team see better prospects ahead with Foxtel than with the ABC. But get set for a massive shake-up of the ABC schedule from next July onwards, with hours of programming to fill and more content needed to fill it.

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