Finally, common sense has prevailed. After more than a year of horse trading, posturing and behind closed door deals, we’ve finally gotten a comprehensive media reform package that addresses most stakeholder concerns and should allow for a much healthier industry going forward.
Communications minister Mitch Fifield deserves enormous credit for getting the package to this point, it's a real achievement.
It should not be underestimated the amount of political capital the government has had to invest in a broad reforms package that addresses key concerns in the best shape possible to find a passage through the Senate.
The major addition in this package is the abolition of the hugely unpopular and draconian broadcasting licence fees that essentially tax free to air TV and radio broadcasters, taking $130 million out of the industry each year.
The aim of the fees when introduced was to allow the government to raise money from a broadcaster’s ability to reach mass audiences, but ever since the internet, the tax has unfairly punished broadcasters when much larger digital mass reach platforms like Facebook and YouTube receive a free ride.
As Fifield correctly points out in his announcement: “In today’s media environment, licence fees are a relic of a bygone age of regulation.”
Spectrum fees are fairer
The new spectrum fees change the way spectrum is charged from a revenue based fee to a spectrum usage fee.
This means that broadcasters pay for each spectrum transmitter they use with higher value transmitters, such as those in large metropolitan areas, attracting a higher fee. The government says this should raise about $40 million, but the overall savings are significant when the licence fee is removed.
The government says only a small number of regional broadcasters may see slight increases in fees but it would compensate these operators in a five-year package.
In recent years TV networks have had to writedown their book values in line with the draconian licence fees at a time of declining ad revenue.
It’s affected the ability of TV networks to invest in local Australian content and given a huge advantage to the likes of global digital media companies, which don’t have to contend with these fees and don’t invest anything in local content production.
Trying to get the likes of Facebook and Google to pay a fair amount of Australian tax would be another step forward in leveling the playing field, but that far trickier battle is for another day.
Anti-siphoning changes overdue
Relaxing many international sports matches from the anti-siphoning scheme is another win for the media market in general.
The regime was initially designed in the 90s when there were concerns that Foxtel could usurp FTA broadcasters for sports rights, effectively forcing Australians to pay to watch their favourite sports.
Such fears were borne out of what has happened in the UK and US, where pay TV operators took control of major domestic codes, such as the English Premier League.
However, the scheme went too far and no longer reflects commercial realities of today. It is also protectionist policy that provides an unfair advantage to some players in the media.
FTA broadcasters are unlikely to pay for every match at the FIFA World Cup and will certainly not show every match live. When SBS has previously shows some of the more obscure fixtures, TV ratings have been woeful.
Protecting the Socceroos matches, which the revised list does, is a given, but allowing Pay TV and other subscription based services to pick up the rest in multi-rights packages makes commercial sense.
Another reason the anti-siphoning rules needed amending is that they didn’t include internet TV players because they were drafted at a time when digital media companies didn’t exist.
Changes to the scheme have long been overdue and this list provides protections for the major codes while allowing pay TV to pick up the rest.
Hedging bets
The tighter controls around gambling advertising reflect growing community concerns about the proliferation of gambling advertising across live sports.
AdNews covered this issue extensively last year, revealing just how much the gambling category was investing in sport and the potential damage this could do to children and young adults.
The government proposes to ban gambling ads during live sports matches between the hours of 5am and 8.30pm. This means that night matches could carry some gambling advertising after 8.30pm during breaks in a game.
The ban also extends to online platforms like Facebook, where a high volume of gambling advertising is served to people with an interest in betting and sport.
This is a sensible step forward in balancing societal concerns while respecting that gambling is legal activity for adults and invests a lot of money into sport and media companies covering them.
The package also relaxes ownership controls that prevent cross-media ownership and metropolitan networks merging with regional affiliates.
In other words, it provides the sort of flexibility required for media companies to join forces where necessary to compete in challenging media environment that is being eroded by advertisers shifting dollars away from traditional media platforms into digital players that do not invest anything in Australian content.
To this effect it won’t level the playing field because Google and Facebook still, legally, transfer much of their locally generated revenue to low tax regimes abroad, but it removes many of the barriers that unfairly punish the Australian media industry.
After a week in which Fairfax announced 125 journalists will be made redundant and a major TV network reported an earnings loss, I urge all sides of politics to get behind this media reforms package and help strengthen Australia’s vibrant media industry.