Report on the provisions of the Broadcasting Services Amendment Bill 1998
Table of Contents

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.