Chapter 2 - Anti-hoarding
Introduction
2.1 "Hoarding" refers to the practice of purchasing the rights
to a TV event and then not showing the program. A notable example of alleged
hoarding that attracted considerable public interest was the Nine network's
purchase of the "live" rights to the Ashes cricket series. Although
it had purchased the rights, Nine subsequently decided not to show the
first session of the Ashes test matches because this would disrupt its
scheduled prime time programming. Nine's decision provoked considerable
public protest by cricket fans.
2.2 The Broadcasting Services Act 1992 (the BSA) already contains
provisions that are intended to ensure that significant sporting events
continue to be broadcast on free-to-air television and do not become the
preserve of pay-TV. These provisions, known as the anti-siphoning provisions,
give priority access to purchase rights for a number of major sporting
events to the free to air broadcasters.
2.3 The free to air broadcasters are, however, not obliged to televise
the events for which they have purchased the television rights. There
are a number of reasons why this might occur. For example, a broadcaster
might purchase the rights to two different events and not be able to televise
one of them. Alternatively, a broadcaster may, after purchasing the rights
to an event, judge that televising the event is not in its best commercial
interests.
2.4 The Government has therefore decided to introduce "anti-hoarding"
amendments to the BSA with the objective of actively encouraging broadcasters
who acquire the TV rights to events to show these events, without directly
interfering with programming decisions.
2.5 In order to achieve this objective, the proposed amendments in this
legislation will establish a "must offer" regime. This regime
will require that broadcasters that acquire broadcast rights to events
on the anti-hoarding list either broadcast the events live or offer them,
at a nominal cost, to one of the national broadcasters. The Minister for
Communications, Information Technology and the Arts will designate the
events subject to these provisions.
Anti-siphoning
2.6 The proposed anti-hoarding provisions will operate independently
of the anti-siphoning provisions that were incorporated into the BSA in
1994 to coincide with the introduction of pay-TV in Australia. The Government
introduced the anti-siphoning provisions in order to ensure that television
coverage of major sporting events would continue on free-to-air television
and not be restricted to those persons willing and able to pay for the
right to view these events on pay-TV.
2.7 The anti-siphoning provisions empower the Minister to specify a list
of events that should be available to be televised free to the general
public. This is known as the anti-siphoning list. It is a condition of
license that a pay-TV licensee not acquire the right to broadcast an event
specified on the anti-siphoning list unless a national broadcaster (ie
the ABC or SBS) or a commercial broadcasting licensee (who is part of
a network reaching at least 50 per cent of the population) has acquired
the right to broadcast the event.
Proposed anti-hoarding amendments
2.8 Under the provisions in Schedule 1 of the Bill, a licensee or national
broadcaster that has acquired rights to televise live the whole or a substantial
portion of a designated event or series will be required to offer the
rights to any part of the event or series it does not intend to televise
live to the national broadcasters (where the rights have been acquired
by licensees) or to the other national broadcaster (where rights have
been acquired by either the ABC or SBS). This offer is to be made at the
nominal charge of one dollar. The provisions also apply to program suppliers
to free-to-air broadcasters.
2.9 The operation of the anti-hoarding amendments will be confined to
events and series designated by the Minister. This will generally be only
in limited circumstances where, for example, there is a widespread public
expectation, based on past practice, that such events will be televised
live and in full on free-to-air television. [1]
2.10 The provisions amend the BSA to make compliance with the anti-hoarding
rule a condition of each commercial television broadcasting license and
impose civil penalty sanctions on program suppliers who contravene the
rule.
Industry views on proposed anti-hoarding amendments
2.11 The commercial television stations and the pay-TV industry were
critical of the proposed anti-hoarding provisions. In summary, the commercial
broadcasters disputed whether hoarding actually takes place and questioned
the need for the amendments. For its part, the pay-TV industry questioned
whether the amendments would be effective.
2.12 While not directly criticising the proposed amendments, the national
broadcasters and other groups also made a number of comments with regard
to the amendments.
2.13 The comments made by the commercial, pay-TV and national broadcasters
and other groups fell into the following broad categories:
- Extent of hoarding;
- Effectiveness of the amendments;
- Offer timeframe and conditions;
- Exceptional circumstances;
- Extent of Ministerial discretion; and
- Immunities from prosecution.
Extent of hoarding
2.14 The commercial free-to-air TV operators, represented by the Federation
of Australian Commercial Television Stations (FACTS) questioned the necessity
for the anti-hoarding amendments and denied that commercial television
stations hoard rights to events. FACTS asserted that there are no instances
of stations buying TV rights to events to keep them from other stations
or pay-TV, and that hoarding has erroneously been equated with failing
to broadcast an event live and in full. [2]
2.15 FACTS representatives considered that the alleged problem of hoarding
had been exaggerated:
To be fair, I think in 1996 to 1998 something like 700-odd hours of
live sporting events went to air; 86 per cent of that sport went to
air live. The only instance that has come up on anti-hoarding happens
to be the first session of the cricket. It is one instance in a massive
exercise of sporting telecasts. I think it has been taken out of proportion
a little bit, even though it be a sensitive one. [3]
2.16 FACTS noted that the Australian Broadcasting Authority (ABA) had,
in three different reports to the Minister since the instigation of the
anti-siphoning list, 'determined that the coverage of sporting events
of importance to Australians by commercial free-to-air television is both
comprehensive and timely'. [4]
Effectiveness of the amendments
2.17 Representing the pay-TV operators, the Australian Subscription Television
and Radio Association (ASTRA) and FOXTEL, a pay-TV company, also criticised
the proposed anti-hoarding provisions and the existing anti-siphoning
provisions. ASTRA argued that the current anti-siphoning rules are not
operating as intended, and that the proposed anti-hoarding amendments
'do nothing to rectify the basic flaws of these rules'. [5]
2.18 ASTRA argued that the anti-siphoning rules establish a statutory
monopoly on sporting events for the free-to-air operators, without any
corresponding obligation to show these events. ASTRA cast doubt on whether
the amendments would lead to more of the events in question being televised:
They [the events] are going to be passed on to the national broadcasters
for a nominal fee with no requirement for the national broadcasters
to broadcast them, so it does not even seem to solve the hoarding issue
and it denies the pay TV operator an opportunity to access that programming.
[6]
2.19 In a separate submission to the Committee, FOXTEL argued that the
anti-hoarding principles had already been informally tested and found
wanting. FOXTEL submitted that when the Nine Network decided not to telecast
the first "Ashes" series, it offered the sessions to the ABC
and SBS. However, these broadcasters declined because of their own regular
programming commitments. [7]
2.20 FOXTEL submitted that the anti-hoarding amendments would 'add another
layer to the already over-complicated and unnecessarily broad anti-siphoning
list and associated rules'. [8]
2.21 ASTRA and FOXTEL suggested that establishing separate broadcast
rights for free-to-air and pay-TV operators would increase the likelihood
that events would be televised:
Our wider proposal on anti-siphoning, of which this anti-hoarding is
a subset, is that there should be two separate rights: there should
be a right for the free to air broadcasters and a market for that where
they can make their allocation decisions, and a pay TV right where,
presumably, the pay TV broadcasters will compete for that. The net effect
of that is that you will generally ensure that there will be some television
coverage somewhere of all major sporting events,or other events, for
that matter. [9]
2.22 FOXTEL submitted that a similar "dual rights" system has
been proposed for use in the United Kingdom. [10]
2.23 The commercial television industry strongly opposed ASTRA's and
FOXTEL's suggestion. FACTS representatives told the Committee that such
a proposal would prevent the purchase of exclusive rights, which would
have the effect of reducing the commercial attractiveness of the events
in question. Mr John McAlpine, Chief Executive of Network Ten, considered
that the loss of exclusive rights would lead to the demise of sport on
free-to-air television:
So commercially, then, for the free to air networks to survive that
process, if there is no exclusivity provision in there for us in a commercial
sense, those sports will disappear off free to air television, without
question. [11]
2.24 Ms Jane Marquard of the Nine Network concurred:
It is integral to sporting rights around the world that what you purchase
is exclusivity. That is what is attractive to sponsors. If there were
going to be arrangements like that as suggested by ASTRA, free to air
broadcasters would lose exclusivity and they would not be able to sell
that package to sponsors. Therefore, it would provide a really huge
disincentive to purchase sporting events, which in any event are fragile
in the economic balance. [12]
Offer timeframe and conditions
2.25 While the anti-hoarding amendments will require broadcasters to
offer the television rights to events to the national broadcasters, there
will be no obligation for them to take up the offer. The timing of the
offer and the terms under which it is made are likely to be critical factors
in any decision to accept and broadcast an event offered under the anti-hoarding
provisions.
2.26 The ABC and SBS both agreed that fair warning of an offer is important.
The ABC recommended that the "offer time", where possible, be
at least 30 days before the event is scheduled to commence. The Corporation
considered that if the offer time was too short, this would create difficulties
in respect of program changes and informing viewers. [13]
2.27 The ABC also expressed concern that the conditions attached to the
offer of the event are not defined in the legislation, and that clause
146G(1) implies that the event can be offered on the terms or form made
by the licensee or program supplier. This might include advertising material,
which the Corporation considered would be unacceptable. [14]
Exceptional circumstances
2.28 Exceptional circumstances such as the Thredbo disaster can cause
unscheduled program changes, including non-carriage of live events. The
ABC and SBS sought an amendment permitting broadcasters to transmit coverage
of events of national importance without breaching the legislation. [15]
Extent of Ministerial discretion
2.29 FACTS questioned the 'unfettered' discretion given to the Minister
to designate events as subject to the anti-hoarding provisions. While
acknowledging that 'it is envisaged that the Minister will only use his
designation powers in limited circumstances' [16],
FACTS expressed concern that the provision, if applied to events that
are not traditionally broadcast live, would have an impact on the value
of the product and inadvertently lead to less sport on free to air television.
[17]
Immunity from prosecution.
2.30 The ABC expressed concern that in some circumstances, it might not
be able to negotiate a contract that complies with S146P of the Bill.
Similarly, the SBS pointed out that a broadcaster might be unable to obtain
a contractual right to sub-license a designated event to another broadcaster
and might be exposed to legal action from a licensor if it offers an event
to another broadcaster in compliance with the legislation. The ABC [18]
and SBS [19] sought an amendment to provide
that no action can be taken against a broadcaster as a result of complying
with the legislation.
Committee's views
2.31 The Committee accepts that there is a need to actively encourage
broadcasters who acquire the TV rights to events of national significance
to show these events. The Committee believes that the "must offer"
regime established through the proposed amendments will provide adequate
incentive for broadcasters to acquire only those events they fully intend
to show.
2.32 The Committee draws to the Government's attention two related issues
raised in evidence for further consideration:
- the possible need for exceptional circumstances provisions; and
- the possible need to include an immunity from prosecution in certain
circumstances.
Footnotes
[1] Second reading speech.
[2] Submission, p. 21.
[3] Mr McAlpine, Evidence, p. 238.
[4] Submission, p. 22.
[5] Submission, p. 1.
[6] Mr Tom Mockridge, Evidence, p. 236.
[7] Foxtel Submission, p. 5.
[8] Submission, p. 7.
[9] Evidence, p. 238.
[10] Submission, p. 9.
[11] Evidence, p. 238.
[12] Evidence, p. 240.
[13] Submission, p. 2.
[14] Submission, p. 3.
[15] ABC Submission, p. 3, SBS Submission,
p. 2.
[16] Explanatory memorandum.
[17] Submission, p. 23.
[18] Submission, p. 3.
[19] Submission, p. 2.
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