SUBMISSION FROM MEDIAWORKS HOLDINGS LIMITED

TO

THE MINISTRY OF CULTURE AND HERITAGE

ON

“CONTENT REGULATION IN A CONVERGED WORLD”

16 OCTOBER 2015

2

1. Introduction

1.1 This submission is presented by MediaWorks Holdings Limited in relation to the discussion document “Content Regulation in a Converged World” (the “Paper”), which asks a number of questions in relation to (a) Options for audio-visual content; (b) Options for advertising restrictions; (c) elections programmes; and (d) NZ content.

1.2 MediaWorks TV and Radio (MediaWorks) is a cross-platform media company, providing news and entertainment content across TV, radio and digital properties. MediaWorks TV operates three free to air channels, TV3, FOUR and Edge TV. MediaWorks Radio has a large number of key commercial radio stations throughout New Zealand (prominent brands include The Rock, More FM, The Edge, Mai FM, George FM and Radio Live). MediaWorks also has a number of websites, including a news website, entertainment and music websites, and an audio-visual on-demand service.

1.3 Contact details for MediaWorks are:

Alex Nicholson Corporate Counsel MediaWorks 3 Flower Street, Eden Terrace, Auckland DDI: 09 928 9004 [email protected]

1.4 In this submission, MediaWorks provides its response to the issues raised in the Paper.

2. Executive Summary

2.1 MediaWorks agrees that there needs to be consistency between on-demand and broadcast programming, and that any proposed solution should be intuitive for consumers, and cost effective and efficient for broadcasters and on demand providers. MediaWorks’ preferred option is Option 3. Option 4 would not be workable.

2.2 Advertising Restrictions should be lifted, they are an anachronistic law which no longer makes any sense in the current media landscape. They create an imbalance between content providers, and no longer protect the NZ public from any perceived hard.

2.3 Any rules in relation to Election Programmes need to be media neutral, and there should not be any special rules for television and/or radio.

2.4 There should be a review of public broadcasting in New Zealand, which reviews what the appropriate role of the state is in relation to broadcasting/provision of content to the NZ content, and whether the current bodies owned or operated by the government are still relevant and fit for the purpose, in the current and evolving media landscape.

3. Options for audio-visual content

Principles

3.1 The current broadcasting regime in New Zealand primarily focuses on programme standards. New Zealand broadcasters, along with the Broadcasting Standards Authority (“BSA”) have established codes which detail the standards that apply to all broadcast programming. These standards do not currently apply to on-demand programming. Historically this has not been 3

an issue, as the majority of on-demand programming has been transmitted at or around the same time as being broadcast across a television channel – and accordingly any complaints made in relation to such content could be handled by a broadcaster under the relevant broadcasting code.

3.2 These circumstances have changed over the last few years, with more stand-alone on- demand services becoming available to the public, where the relevant content is not broadcast on linear channels. MediaWorks agrees with the principle of “treat likes alike” and that there needs to be a level playing field, and considers that it is an appropriate time to establish whether the current framework meets the expectations of the New Zealand public in relation to on-demand content.

3.3 There are three different components to any potential regulation of on-demand content:

(a) Classification of the relevant programming.

(b) The standards which should apply to such programming.

(c) How complaints in relation to the relevant programming should be handled.

MediaWorks submits that any regulation should consider these three components as a whole, and should ensure that a consistent and logical approach should be taken across all of these elements, from both a consumer and a broadcaster perspective. Any over- complication of the process (both in terms of number of processes and different regulatory bodies) could lead to consumer confusion.

3.4 Consumers are increasingly accessing programming in a dynamic way, across a number of different platforms and services. From a consumers’ perspective, there should be consistency of classification across all of these different means of accessing content. This is particularly obvious where a programme may be available on both a broadcast channel and on an on-demand service and it would be confusing if there were different classifications or approaches taken. It is more important to have this consistency across broadcast and on- demand content than, say, on-demand content and DVDs, as the method by which the programmes are accessed are almost exactly the same from a viewer perspective – they use their remote to access a channel or service on their television, and watch a piece of content on a live basis, time-delayed or on-demand basis. From their perspective, this is quite different to going and buying or renting a DVD.

3.5 It is widely accepted that there are different viewer expectations in relation to the types of standards which should apply to on-demand programming compared to programming broadcast on linear channels. This is primarily due to the fact that viewers are making active choices about the programming that they want to make in an on-demand context. But it is still likely that there will be some standards which will need to apply to the content of on- demand programming, for example fairness, legality and violence. Where appropriate, there should be consistency between these standards and those for programming which is broadcast across TV channels (an obvious example is with news/current affairs).

3.6 Finally, this consistency is equally important in relation to any complaints regarding programming – both in an on-demand and broadcast context. It would be counter-intuitive for a member of the public to be required to make a complaint to two different bodies, and potentially receive two different responses, in relation to the same piece of content. 4

3.7 It is also important that the regulation of on-demand content be implemented efficiently, in a cost-effective way. Given audience expectation around viewer protection is of a lower level in relation to on-demand content, it would be illogical if the classification and complaints- handling for on-demand services was subject to greater regulation, expense and administrative burden than broadcast services. In an increasingly divergent market, it is paramount to keep costs at a reasonable level, to ensure that a level playing field is maintained and start-up costs for any new entrants are not prohibitive.

3.8 The current regime works well in relation to the classification of content which is broadcast across linear TV channels. Broadcasters are able to manage the process effectively and efficiently across their own channels. Classification of content is closely linked with scheduling decisions, and broadcasters are able to work with their in-house scheduling teams to ensure that content is classified and scheduled appropriately. Broadcasters and on- demand service providers should be entitled to classify their on-demand content in a similar way, as they are best placed to ensure that their content is classified consistently and appropriately across the relevant service. Speed of clearance is of particular concern, as programming as increasingly only available to a broadcaster / on-demand service provider for a number of hours before it is either broadcast or uploaded onto an on-demand service. This is in the best interests of the NZ public, to ensure that local providers are able to make content available to them in a timely, effective and legal way.

3.9 Broadcasters and on-demand service providers should be able to determine complaints in- house. This will provide consumers with a clear and simple process for making any complaints – whether they are making the complaint about a programme which has been broadcast or available on an on-demand only basis (or both), they will know that they always go to the broadcaster/on-demand provider first. It also assists in minimising the costs/administrative burden for any external regulator, as there are a lesser number of complaints which will reach the regulator by virtue of the fact that broadcasters/on-demand providers will answer the bulk of complaints.

3.10 The additional benefit, from broadcasters/on-demand providers being the first port of call for complaints, is that complaints can be handled expeditiously and viewers receive a response quickly. It also means that broadcasters/on-demand providers are able to implement any changes in their service in a dynamic and responsive way.

3.11 It would be logical for there to be one appellate body established for both broadcast and on- demand content complaints. That appellate body should be able to triage complaints and deal with complaints about online content expeditiously. Ideally this body would have representation from both broadcasters/on-demand providers and the public.

Preferred Options

3.12 MediaWorks’ preferred options are either Option 2 or a version of Option 3, Option 5 or Option 6.

3.13 If Option 2 was implemented, the process could be handled by OMSA, could be quickly set up and has the benefit of working under a system which has already proven it can operate effectively. OMSA could also work with the BSA to ensure that it is managed consistently with BSA approach. OMSA also has the experience and expertise necessary to establish codes quickly around regulation of on-demand content. If this Option was taken, it would be necessary to review the funding of the body to ensure there is not a disproportionate burden on broadcasters. 5

3.14 MediaWorks considers that a version Option 3 could be workable, provided that the principles outlined above are implemented in relation to both broadcasting and on-demand content.

3.15 MediaWorks considers that Option 4 would not be workable. There would be inconsistency between broadcast and on-demand programming and potential confusion for the audience. The additional complication and administrative/resource burden on broadcasters/on- demand providers would stifle competition and innovation. In addition, this Option would not deal with the issue of content regulation which is broader than classification. It would be illogical for on-demand content to be classified by one body, but standards set and complaints handled under a different regime.

4. Options for advertising restrictions

4.1 There are no reasonable grounds upon which to maintain the advertising restrictions imposed on broadcasters. As the current restrictions do apply to other media (including online media, for example Facebook, Google, YouTube) there is disproportionate regulatory burden placed on television broadcasters. This burden is not logical, given the FTA broadcasters in this country are not state-funded and have no other sources of revenue.

4.2 It is difficult to see how the restrictions have any relevance to consumers, in terms of expectations and actual experience. The NZ public is consuming a large amount of information and entertainment in a number of diverse ways, all of which are not subject to the advertising restrictions. As a result, the current advertising restrictions do not provide any meaningful protection in relation to the amount of advertising which consumers are exposed to on the restricted days/times.

4.3 Audiences now have so much choice, if they want to view television on an advertisement- free basis, they are able to access the many subscription services available, and / or view content on a time-shifted basis.

4.4 MediaWorks’ preference is for Option 4, i.e. to remove all current restrictions. Next preferred option would be to remove the restriction in relation to public holidays only. Following that, the preferred option is to remove restriction on Sundays.

4.5 MediaWorks estimates that the removal of advertising restrictions would result in the following incremental revenue across its TV and radio businesses: $XXX - $XXX per annum. An increase in such advertising revenues would assist MediaWorks in its current strategy of investing in local content, local producers and growing delivering content to NZ audiences in the most relevant and engaging way.

4.6 MediaWorks would not support Option 5. It would be illogical to extend an anachronistic piece of legislation to these services and would disproportionately affect the FTA broadcasters, who provide on-demand services on an ad-funded basis.

5. Election programmes

5.1 MediaWorks considers that the current rules create uncertainty in relation to the application of the Broadcasting Act and the Electoral Act, and it is not clear what benefits are provide by the Broadcasting Act restrictions. If any restrictions are to be included in the Broadcasting Act, they should be media neutral to adequately protect against any perceived harms, and to ensure there is a level playing field between media platforms in New Zealand. 6

6. New Zealand content: the Government’s toolbox

6.1 There should be a review of public broadcasting in New Zealand, which reviews whether the current bodies owned or operated by the government are still relevant and fit for the purpose, in the current and evolving media landscape. The review could ask a number of questions, which might include the following:

(a) What is the appropriate role for a state-owned broadcaster?

(b) How has the market changed since the inception of TV ONE (and latterly the formation of TVNZ)? Do these market changes mean that the roles of the state broadcasters need to be reviewed? Is there still a need for a state-owned broadcaster that focuses on entertainment, given the current market conditions where there is no lack of access to international entertainment content for the New Zealand public?

(c) Do the activities of a state-owned broadcaster (who is not subject to the same level of commercial pressures as private broadcasters/on demand providers) distort competition in the marketplace, both in the procuring of content and the selling of advertising?

(d) Should state-owned broadcasters have a quota for the provision of public interest shows, and news / current affairs shows?

(e) Are there alternative models which would better serve the public interest and the public purse? For examples, would a model where the government owned TV ONE with a public service charter, and TV2 was privately owned (and thus put on an equal basis in content and funding markets with other competitors) be more appropriate?

(f) MediaWorks acknowledges the importance of the role of the state funder (NZOA), in assisting local FTA broadcasters (whose content is available to all New Zealanders) bring high quality local content to NZ audiences. Funding contributions are made by both NZOA and the relevant FTA broadcaster, ensuring that both parties are investing in and committed to the local industry. But a number of questions could be asked around the operating processes of NZOA, including:

(i) Should it have a performance improvement review framework, like other government agencies? (ii) Should it be more flexible in its criteria for funding and consider funding in categories like local entertainment content? (iii) With the increasing changes to viewing habits, should the criteria and definitions used by NZOA around "prime time" projected ratings be changed to "audience levels - real time and consolidated". 6.2 There should be a review of the conditions by which broadcasters are able to access sports content in New Zealand, which an assessment of whether anti-syphoning laws should be implemented.