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Why new media reforms are bad news for Australian content

Should there really be “sympathy” for the free-to-air networks as their protected oligopoly crumbles in the face of competing platforms and services?

Two of the government’s six media reform bills passed in the House of Representatives with multi-party support on Tuesday night. While most attention and debate has focused on the regulation of the news media and ownership, the changes approved on Tuesday are both significant and far-reaching.

In essence, the two bills shore up the privileged position that commercial free-to-air television networks have long held in the media landscape. At the same time, they will weaken the quid pro quo that has been at the heart of broadcasting regulation for decades. And they will be particularly bad news for Australian content, for producers, and for audiences.

The passage of the Television Licence Fees Amendment Bill 2013 and the Broadcasting Legislation Amendment (Convergence Review and Other Measures) Bill 2013 through the lower house represent a major victory for the television networks. Despite the public ambivalence of their bosses in parliamentary hearings earlier this week towards the prospect of permanent licence fee reductions and new Australian content requirements, privately they will be delighted.

The Television Licence Fees Amendment Bill will make permanent the 50% “temporary” reduction they have enjoyed for the last two years, following an initial a 33% reduction granted by Communications Minister Stephen Conroy in 2010. The fees will be capped at a maximum of 4.5% of gross earnings. This was the least controversial of any of the Government’s six media reform bills. Both Government and Opposition MPs expressed “sympathy” for the free-to-air networks as their protected oligopoly crumbles in the face of competing platforms and services. Reducing the far from onerous licence fees – which will result in a saving to the free-to-airs of around $140 million per year, with no strings attached – was, it seems, the least the Parliament could do in their hour of need.

In addition to this gift, the Broadcasting Legislation Amendment (Convergence Review and Other Measures) Bill 2013 will kill the prospect of further competition in free-to-air television. Under the Bill, no additional commercial television licences will be made available, meaning that there is now no prospect of a fourth commercial television network.

This Bill also grants the free-to-air networks greater flexibility in the acquittal of their Australian content requirements. The 55% Australian content transmission quota on the free-to-airs’ main channels is now elevated from a regulatory instrument made by the Australian Communications and Media Authority into primary legislation for the first time. And for the first time the networks will also be required to meet Australian content quotas on their digital multi-channels. Between 6am and midnight, each licensee must broadcast on their multi-channels a minimum of 730 hours of Australian programs in 2013, rising to 1095 in 2014, and 1460 in 2015 and each year thereafter. There is nothing to stop commercial networks meeting these quotas by screening re-runs of old programs.

The proposed new legislation also affects the sub-quotas for first-run drama, documentary and children’s programming. The Commercial broadcasters can now meet these obligations by screening these programs on either their main or multi-channels. However, the proposed legislation may actually reduce the amount of Australian content; should the networks choose to screen first-run Australian content on the multi-channels, each hour of new programming will count as two under the quota.

The Convergence Review proposed to balance “flexibility” for the free-to-air networks with increases to the sub-quotas, new requirements for subscription TV and for the public broadcasters, and increased tax credits for producers. The proposed legislation includes none of these.

The proposals will also likely place downward pressure on the amount that the broadcasters are prepared to pay for Australian content. As the Ten Network’s CEO Hamish McLennan admitted in the Senate committee hearing on Monday, the free-to-airs already pay less for content on the multi-channels than on their main channels because of the lower audience numbers and lower advertising revenues. Should commercial broadcasters choose to screen first-run Australian programs on their multi-channels, it is highly likely that they will seek to pay less for them.

All in all, while these proposals are good news for the free-to-airs, they are bad news for producers of Australian content, and for audiences.

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