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Submission to the Inquiry Into the Australian Film and Television Industry

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Submission to the Inquiry Into the Australian Film and Television Industry SUBMISSION TO THE INQUIRY INTO THE AUSTRALIAN FILM AND TELEVISION INDUSTRY 7 April 2017 Mr Luke Howarth MP Chair Standing Committee on Communications and the Arts Parliament House CANBERRA ACT 2600 By email: [email protected] Introduction Thank you for the opportunity to make a submission to the House of Representatives Standing Committee on Communications and the Arts inquiry into the Australian Film and Television Industry, and the factors contributing to the growth and sustainability of the Australian film and television industry. This submission is made on behalf of the three major regional television broadcasters, Prime Media Group (Prime), the WIN Network (WIN) and Southern Cross Austereo (SCA). Challenges to the growth and sustainability of the Australian television industry Prime, WIN and SCA play a vital role in their local communities, broadcasting free to air television to their viewers, employing locally, supporting local businesses and playing a central role in the life of their regional communities. With the proliferation of alternate sources of entertainment and the rise of tech media companies like Google and Facebook, the free to air television industry is facing a decline in audiences and revenue, and the regional television industry faces its own unique challenges above and beyond those faced by metropolitan networks. There is a significant question mark over the on-going ability of the industry to provide the current level of local, and other services, to all the regional viewers it seeks to serve. The aggregation model that was introduced in the late 1980s has not met the expectations of either the regional television industry or our regional television viewers. Despite enabling viewers to access more metropolitan channels, aggregation has, over time, resulted in less local content. SUBMISSION TO THE INQUIRY INTO THE AUSTRALIAN FILM AND TELEVISION INDUSTRY There are a significant number of factors contributing to the challenges and the long term sustainability of the commercial free to air television industry generally, and these are most keenly felt by regional television broadcasters who: - do not control the bulk of the program content (including Australian content) – or its placement on the main channel or the multi-channels; - have very little bargaining power in the affiliation negotiations and are charged excessive fees for content they licence from metropolitan networks; - do not control or derive any financial benefit from the metropolitan networks’ catch up television services (7Plus, Ten Play or 9Now) or the networks’ live streaming services that can be accessed via the internet anywhere in Australia; and - incur significant infrastructure and technical costs to deliver and maintain the broadcast signals to regional and remote parts of Australia. Across the board, over the past four years the regional television industry has witnessed more than an 11% decline of its audience numbers in prime time (6pm – 10:30pm). What we are witnessing is a change in viewing habits. On 3 April 2017 Freeview (the members of which are Nine, Seven, Ten, ABC and SBS), announced that Australians had watched 1.2 billion minutes of catch up and live streaming TV in the past month, according to the latest OzTAM VPM 28 Day Rolling Report and that, according to Nielsen DRM figures for February 2017, 5.14 million Australians are streaming free video on demand content. This ability to watch television “democratically”, using the internet as a means of delivering the service, coupled with the 3.5 million Australians who are watching subscription video on demand services such as Netflix and Stan (according to Nielsen), adds to the challenges faced by regional broadcasters. The market valuations of regional television companies have slumped by as much as 75% in the past 3 years, in part due to the uncertainty around media regulation reforms that could otherwise improve regional television’s prospects. Commercial television advertising revenue declined overall by 4.3% in the period from January to June 2015 compared to the same period in 2016, and in the regional television markets, the decline was higher, at 5.7%. SUBMISSION TO THE INQUIRY INTO THE AUSTRALIAN FILM AND TELEVISION INDUSTRY Who are the main regional broadcasters? Prime and SCA are members of Free TV Australia, the television peak industry body, which has also made a submission to this inquiry on behalf of the commercial television industry. WIN broadcasts the Ten Network’s services (Ten, Eleven and One) in southern New South Wales, the Australian Capital Territory, regional Queensland, regional Victoria, Tasmania, Griffith, regional Western Australia, Mildura, Riverland and Mt Gambier in South Australia. SCA broadcasts: the Nine Network’s services (Nine, GEM, GO and 9Life) in northern New South Wales, southern New South Wales, regional Queensland, the Australian Capital Territory and regional Victoria; the Ten Network’s services (Ten, Eleven and One) in northern New South Wales;1 and the Seven Network’s services (Seven, 7mate and 7TWO) in Tasmania, Darwin and Remote Central and Eastern Licence area. Prime broadcasts the Seven Network’s services (Seven, 7mate and 7TWO) in northern New South Wales, southern New South Wales, the Australian Capital Territory, regional Victoria, Mildura, the Gold Coast area of south eastern Queensland and all of regional Western Australia. In addition to the above-mentioned licence areas, each of SCA, WIN and Prime have joint venture licences (under s.38B of the Broadcasting Services Act) as follows: - Mildura Digital Television (MDT), a joint venture owned by WIN and Prime, which broadcasts Nine, GEM and GO in Mildura; - Tasmanian Digital Television (TDT), a joint venture owned by WIN and SCA, which broadcasts Nine, GEM and GO in regional Tasmania; - West Digital Television (WDT), a joint venture owned by WIN and Prime, which broadcasts Nine, GEM and GO in regional WA; - Darwin Digital Television (DDT) a joint venture owned by SCA and the Nine Network, which broadcasts Ten, Eleven and One in Darwin; and 1 SCA announced on 28 March 2017 that it has reached agreement in principle with WIN Corporation for the sale to WIN of SCA’s northern NSW Proposed Sale of NNSW TV Operations (ASX Release) SUBMISSION TO THE INQUIRY INTO THE AUSTRALIAN FILM AND TELEVISION INDUSTRY - Central Digital Television (CDT), a joint venture owned by Imparja and SCA, which broadcasts Nine, GEM and GO in Central Australia. There are also “solus” licence areas (under s.38A of the Broadcasting Services Act) that service: - Griffith – where WIN holds the licence to broadcast Seven, 7mate, 7TWO, Nine, GEM, GO, Ten, Eleven and One; and - Riverland/Mt Gambier – where WIN holds the licence to broadcast Seven, 7mate, 7TWO, Nine, GEM, GO, Ten, Eleven and One; and - Spencer Gulf /Broken Hill – where SCA holds the licence to broadcast Seven, 7mate, 7TWO, Nine, GEM, GO, Ten, Eleven and One. Through affiliation agreements, Prime, WIN and SCA licence almost all of their programming from metropolitan networks2 and using more than 500 transmission towers located across the country, and satellites, deliver that programming into regional television licence areas. In addition, the regional broadcasters produce and transmit local content to their audiences. This content includes local news bulletins, news and weather updates, specials for local events such as the Gympie Muster and on-air community services announcements for regional charities. Background - Aggregation Until 1989, all regional centres were served by a single (“solus”) commercial television station that “cherry picked” program content from the three metropolitan networks, generally at low cost. These single regional television stations were highly viable. In 1989 the Federal Government introduced a policy of regional television equalisation, usually referred to as aggregation, which resulted in a phasing in of two additional television stations in each of the regional markets where aggregation was to occur. The result of the aggregation policy was that viewers in certain regional areas had a choice of up to three commercial television stations, whereas previously they had one. While providing a varied slate of programs via the metropolitan networks (mainly US drama and comedy series) the result of aggregation substantially reduced the profitability of regional television stations and subsequently, the demise of regional television programing produced specifically for the unique attributes of the regional audiences. These programs included 2 Seven Network, Nine Network and Ten Network SUBMISSION TO THE INQUIRY INTO THE AUSTRALIAN FILM AND TELEVISION INDUSTRY localised children’s shows, local sports coverage and even ‘tonight show’ style programs; all of which were no longer sustainable under the affiliation model as the fees regional broadcasters were required to pay to metropolitan networks escalated dramatically, and continue to rise year on year. Aggregation did not occur in all regional areas until the commencement of digital switchover. Background – Switch from analogue to digital television Section 38B licences were introduced in the Broadcasting Legislation Amendment (No 2) Bill 2001 by the Coalition government as part of the process of switching to digital transmission. At the same time, the Government introduced a Regional equalisation plan3, which had as its objectives (inter alia), “bringing to regional licence areas a similar range of entertainment and information services as are available
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