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Home , Nine Entertainment, Prime Media Group, WIN Corporation

SUBMISSION TO THE INQUIRY INTO BROADCASTING, ONLINE CONTENT AND LIVE PRODUCTION TO RURAL AND REGIONAL

The Hon Bronwyn Bishop MP Chair Standing Committee on Communications and the Arts PO Box 6021 Parliament House 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 broadcasting, online content and live production to rural and regional Australia.

This letter is on behalf of the three major regional providers, (Prime Media), the WIN Network (WIN) and Southern Cross (SCA).

Prime Media and SCA are members of Free TV Australia, the television peak body which has also made a submission to this inquiry on behalf of the industry.

Prime Media broadcasts in northern , southern New South Wales, Capital Territory, regional , Mildura, the Gold Coast area of south eastern and all of regional .

WIN broadcasts in southern New South Wales, the Australian Capital Territory, regional Queensland, regional Victoria, , Griffith, regional WA, Mildura, Riverland and Mt Gambier in .

SCA broadcasts in northern New South Wales, southern New South Wales, Queensland, the Australian Capital Territory, Griffith, regional Victoria, Tasmania, the Northern Territory and the Spencer Gulf region of South Australia.

Through affiliation agreements, Prime Media, WIN and SCA purchase almost all of their programming from metropolitan networks1 and using more than 500 transmission towers located across the country, retransmit that programming into regional television licence areas.

1 , and Ten Network

SUBMISSION TO THE INQUIRY INTO BROADCASTING, ONLINE CONTENT AND LIVE PRODUCTION TO RURAL AND REGIONAL AUSTRALIA

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 regional centres were served by a single (“solus”) commercial television station which “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 regional areas had a choice of 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 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 forced to pay to metropolitan networks escalated dramatically.

Background to the local content licence condition

In 2002 the Australian Broadcasting Authority (ABA) conducted an investigation into the “Adequacy of local news and information programs provided by commercial television services in regional and rural Australia”.

This investigation was in response to political and public concern following the cessation of some regional television news services.

As a result of the investigation, the ABA introduced in April 2003 a local content licence condition for regional commercial television broadcasters in four aggregated markets – northern News South Wales, southern New South Wales, regional Victoria and regional Queensland. The local content obligation is contained in the licence condition that commenced on 1 February 2004.

In 2008, the successor to the ABA, the Australian Communications and Media Authority (the ACMA) expanded the local content condition to cover five aggregated markets (by including Tasmania) and a further condition was put in place commencing on 1 October 2014.

This licence condition remains in force.

SUBMISSION TO THE INQUIRY INTO BROADCASTING, ONLINE CONTENT AND LIVE PRODUCTION TO RURAL AND REGIONAL AUSTRALIA

Current local content requirements and compliance

The regional broadcasters in each of the five aggregated markets of northern New South Wales, southern News South Wales, regional Queensland, regional Victoria and Tasmania are subject to a licence condition requiring them to broadcast minimum levels of “material of local significance”. The licence condition defines material of local significance and establishes a system where each broadcaster must satisfy the condition by complying with a points quota system. Points accrue for each minute of material broadcast that directly relates to either the local area or licence area of the station.

Prime Media, WIN and SCA have consistently met their quotas and have in many cases exceeded the licence condition in both the five regulated markets and in the other unregulated markets2. The ACMA noted in its most recent annual report3 that during the reporting period there were “no complaints or investigations involving compliance with the local content licence condition”.

Prime Media broadcasts:

 two thirty minute weekday bulletins in northern New South Wales, two thirty minute weekday bulletins southern New South Wales, and one thirty minute weekday bulletin regional Victoria;  local news updates to the Newcastle/Hunter areas in northern New South Wales, the and Canberra areas of southern New South Wales, and the Shepparton, Bendigo, Ballarat, and Gippsland areas of regional Victoria;  a 30 minute weeknight local news service in regional Western Australia where there is no license condition. This service is produced in Bunbury and supported by 15 staff located throughout Western Australia, and including , Geraldton, Broome, Kalgoorlie and Albany.

WIN broadcasts:

 six thirty minute weekday bulletins in regional Queensland, three thirty minute weekday bulletins in southern New South Wales, and five thirty minute weekday bulletins in regional Victoria;  a 60 minute news service seven nights a week in Tasmania;  a 30 minute weeknight local news service in Wide Bay in Queensland where there is no licence condition;  local news updates in Mt Gambier and in the Riverland in South Australia where there is no licence condition.

2 Unregulated markets are: Griffith, Mildura, Loxton/Mt Gambier, Port Pirie/Broken Hill, Darwin, Central Remote Australia and regional Western Australia 3 p. 75 ACMA Annual Report 2014-2015, tabled in Parliament on 28 October 2015

SUBMISSION TO THE INQUIRY INTO BROADCASTING, ONLINE CONTENT AND LIVE PRODUCTION TO RURAL AND REGIONAL AUSTRALIA

SCA broadcasts:

 local news updates to seventeen areas across regional Queensland, southern New South Wales, northern New South Wales, and regional Victoria;  a 60 minute news service seven nights a week in Tasmania;  a 30 minute weeknight news service in Broken Hill, and the Spencer Gulf (sourced from reporters in Port Pirie, Port Augusta, Port Lincoln, Whyalla and Broken Hill) where there is no licence condition;  local news updates for Remote Central and Eastern Australia and Darwin where there is no licence condition.

Regional networks’ capacity to provide local content

The capacity for a regional network to invest in local content is dependent on the viability of the service in the relevant licence area and scale of its operations. In cases where regional broadcast licences are owned by metropolitan television networks, it has been clearly demonstrated that there is a greater capacity for them to invest in local content. A. Seven Queensland in regional Queensland, which is a wholly owned subsidiary of (owner of the Seven Network capital city stations in , , , and Perth), produces seven local news bulletins in regional Queensland; and

B. NBN, which broadcasts the Nine signal in northern New South Wales, became a wholly owned subsidiary of in 2007. Since Nine Entertainment (also owner of the Nine’s capital city stations in Sydney, Melbourne, Brisbane, Adelaide, Perth and Darwin) acquired NBN, it continues to produce six local news bulletins in the northern NSW licence area. Through economies of scale, and by availing themselves of common “back room” operations including management, sales, marketing, PR, procurement, legal, finance and HR, there is greater capacity for metropolitan networks who own regional licences to produce more local content. In contrast, stand-alone regional commercial broadcasters face more constraints when considering their investment in the production of local content. With the collective expense of operating and maintaining more than 500 regional transmitters (in comparison to less than 20 in all metropolitan areas), high affiliation fees paid to metropolitan networks and the licence fees paid to the ACMA there is less capacity to invest. This pressure is exacerbated by the fact that the regional broadcasters merely act as a broadcast transmitter for the metropolitan networks, who otherwise retain all the rights and revenue to exploit

SUBMISSION TO THE INQUIRY INTO BROADCASTING, ONLINE CONTENT AND LIVE PRODUCTION TO RURAL AND REGIONAL AUSTRALIA and monetise their content ubiquitously disregarding licenced broadcast areas through live streaming of the broadcast feed on the internet and the prevalence of their own catch-up TV services4. All three metropolitan networks are using the internet to stream some, or all, of their television broadcast signal across Australia with no regard for the exclusive broadcast licence areas and regardless of any cannibalisation this may cause to viewing5 or revenue6 in regional licence areas. If you have any queries about this submission or would like to discuss the issues, please contact either: - Andrew Lancaster: CEO, WIN Corporation on - Emma McDonald: General Counsel and Company Secretary, Prime Media Group on ; or - Creina Chapman: Head of Regulatory Affairs and Corporate Communications, on

4 Plus7, 9Jumpin, tenplay 5 Seven Network recently reported that there were more than 7.4 million streams (46.4 million minutes) of the Seven Network’s broadcast of the 14 days of the Australian Open tennis.

6 KPMG figures revealed that total regional television advertising revenue fell -6.6% (YOY) for the period 1 July 2015 – 31 December 2015