Chapter 2
Key issues
2.1
While submissions addressed the provisions of the Bill,
most raised wider issues about the operation of the anti-siphoning scheme.
These issues were explored at some length during the public hearings.
2.2
This chapter discusses the key issues that arose,
namely:
- support for, and opposition to, the Bill;
- the existence and effect of a so-called 'loophole'
in the current anti-siphoning regime;
- the potential effect of the extension of the
automatic delisting period on the process of negotiating rights, including the
Minister's power to override delisting;
- the 'use it or lose it' principle and rights to
the whole or part of an event; and
- monitoring of the operation of the
anti-siphoning scheme.
Support for the Bill
2.3
Submissions from the pay TV sector generally supported
the extension of the automatic delisting period from 6 weeks to twelve. ASTRA
fully supported the extension, recognising the Government's commitment to the
anti-siphoning scheme, while reiterating its general opposition to the scheme
on the basis that it is anti-competitive in nature.[22] The Hon
Nick Greiner,
on behalf of ASTRA, also described the Bill
during the public hearings as 'really just a practical administrative change
which is intended to provide greater certainty ... it is simply an administrative
improvement. We strongly support it.'[23]
2.4
ASTRA's views put forward in this inquiry are
consistent with its previous position. When the automatic de-listing period was
introduced in 2001, ASTRA proposed a longer period of 10 weeks on the basis
that free-to-air networks acquire rights to major sporting events as far as
possible in advance.[24] In response to
the Minister's announcement in 2004 of the proposal to extend the de-listing
period to 12 weeks, ASTRA said it was a 'step forward' but argued:
... the overall changes do not address fundamental problems
with the scheme. The new list still includes a large range of events which are
never covered by the free-to-air television networks. There is no logical
reason why they should remain there.[25]
2.5
During this inquiry, Premier Media Group (PMG) endorsed
ASTRA's submission and added:
... this administrative reform will have a positive efficiency
effect because once the twelve week automatic window is in place, it is likely
that there will be fewer requests made of government and far more use of the
automatic de-listing procedure. This will reduce the resource strain on and
time spent by the Australian Broadcasting Authority in responding to formal
requests to de-list events.[26]
2.6
ASTRA acknowledged that the extension of the automatic
de-listing period represents an attempt:
... to better balance the interests of subscription television
and free-to-air television broadcasters and will improve the efficiency of the
operation of the de-listing provision of the anti-siphoning scheme to the
benefit of sporting bodies and viewers[27]
2.7
ASTRA further acknowledged that 'A twelve week period
provides a better opportunity for subscription television operators to acquire
rights to events and market and promote those events to subscribers and
potential subscribers'.[28]
2.8
In its submission, PMG contended that the current six week
automatic de-listing period 'is too narrow'.[29]
PMG noted that it requires sufficient time to make appropriate arrangements for
coverage, stating that:
Each of the subscription television distributors and PMG
itself needs sufficient time to ensure that appropriate coverage plans for the
relevant events are in place, time to finalise program schedules, and
sufficient time to market these events to existing and potential subscription
television subscribers. There have been a number of occasions when we have to
delay our programming, marketing and coverage plans because the de-listing
process has not been completed.
Although the proposed amendment is only a minor
administrative change, it is common sense that compared to six weeks, twelve
weeks provides PMG and these entities with greater opportunities to finalise
all these arrangements.[30]
2.9
During the hearing, Mr
Marquard, Chief Operating Officer, PMG
provided an example of the difficulties that the six week automatic de-listing
period has caused:
A recent example was the
Australian cricket tour of Sri Lanka last year, which was delisted under the six-week automatic
delisting provisions. We were unable to market that effectively and to work
with Foxtel, Optus and Austar in relation to promoting that event effectively
because of the six-week window that the current automatic delisting provides.
If there had been a longer period ... we would have much more effectively been
able to market and promote that event.[31]
2.10
Representatives of the free-to-air broadcasters, on the
other hand, were opposed to extending the period from 6 weeks to twelve. Free
TV argued the extension:
... provides greater opportunities for subscription broadcasters
and rights holders to circumvent the anti-siphoning rules by stringing out
negotiations for rights until the event is automatically delisted.[32]
2.11
Free TV also argued strongly that if the extension were
agreed to, the 'loophole' that 'allows subscription channels to acquire rights
to listed events before they are offered to Free TV broadcasters should be
closed.'[33] Free TV expressed concern that:
... if passed, the combination of the amendment and the
loophole will rapidly undermine the integrity and effectiveness of the
anti-siphoning list.[34]
2.12
The issue of the loophole is discussed in more detail
below. Ms Julie
Flynn on behalf of Free TV told the
Committee during the public hearings that her organisation would have less
concern with the Bill if other issues,
particularly the loophole, were addressed.[35]
SBS[36] and the ABC[37] expressed similar views, the ABC
noting also its views that extension of the period 'would put pressure on
rights negotiations'.[38]
2.13
Free TV, formerly known as the Federation of Australian
Commercial Television Stations (FACTS),[39]
has consistently expressed concern about the delisting provisions. As discussed
in the Committee's previous report on the anti-siphoning provisions,[40] FACTS opposed the original proposal to
provide for automatic delisting at 6 weeks. FACTS expressed concern then that
the changes had the potential to subvert the original intent of the
anti-siphoning regime, considering there would be a shift in the negotiating
power away from the free-to-air broadcaster towards the rights holder, which is
often affiliated with a pay TV operator.[41]
2.14
During this inquiry the Committee also received
submissions from various peak sporting bodies, namely the National Rugby League
Limited (NRL),[42] the Australian
Football League Limited (AFL),[43] the National
Basketball League (NBL)[44] and the England
and Wales Cricket Board Limited (ECB).[45]
All argued that regulation such as the anti-siphoning scheme inhibits their
ability to maximise rights negotiations to the benefit of their respective
sports. The NBL and the ECB did not comment directly on the Bill.
However, the NRL and AFL supported the Bill, the
NRL on the basis that it would 'help find a better balance between the
interests of free-to-air and subscription broadcasters'.[46] The NRL also argued:
In our view this change is minor and will apply to a small
number of sporting events as most rights negotiations are concluded well in
advance of twelve weeks before the event takes place. However, the automatic
period of twelve weeks is an important safety net in that it will assist in
finalising broadcast plans for those events to which it does apply well before
they occur, rather than having to rely on the current period of six weeks.[47]
2.15
Similarly, the AFL noted that:
All sporting organisations and their broadcasters seek to
finalise broadcast plans well in advance in order to make appropriate
logistical, operational and marketing plans. A 12-week period is much more
appropriate than the current six-week period as it will enable sports bodies to
better plan their works and allow broadcast partners greater certainty about
broadcast arrangements.[48]
2.16
The Committee also received a small number of
submissions from other parties. The Australian Hotels Association (AHA)
supported the proposed amendment, particularly relating to pay TV, arguing 'our
members need to know what will be included on each of the channels as far as
possible in advance in order to best market and promote these services to the
public.'[49] Two individuals argued that
the anti-siphoning provisions 'need to be more rigidly enforced, and amended if
necessary so that channel holders cannot be allowed to screen a product which
is a delayed product, cut to highlights, or otherwise reduce to a second-hand
product.'[50]
2.17
Thus most submissions supported the Bill,
while expressing a range of concerns about other aspects of the scheme.
The 'loophole'
2.18
As noted above, Free TV's main concern about the Bill
was its belief that, combined with a so-called loophole in the current
legislative scheme, the extension of the automatic delisting period may operate
to undermine the scheme's effectiveness. The anti-siphoning scheme does not
prevent parties related to the pay TV broadcasters from acquiring the rights to
events. As outlined in Chapter 1, the anti-siphoning restrictions apply via a
condition imposed on the licences of subscription television broadcasters.
Therefore the restrictions do not apply to related companies which package
content for pay TV services but are not themselves broadcasters. While they obviously
have no capacity to broadcast those rights, they are able to trade broadcast
rights to a licensee.
2.19
Free TV argued that this 'loophole' 'is being
increasingly used to get around the rules'.[51]
Free TV argued that once a channel provider has rights, it becomes less commercially
viable for free to air broadcasters to take up the rights as they are not
exclusive. Simultaneous broadcasts by pay TV and free-to-air broadcasters had enormous
practical implications:
In the complex world of sporting rights exclusivity is of paramount
importance to advertisers ... Simultaneous coverage on pay TV fragments the
available audience, reducing the amount of revenue a free-to-air broadcaster
can raise.
The economies of advertiser funded broadcasting mean that if
sufficient revenue is not available the cost of acquiring the event (or the
revenue forgone if it is acquired) cannot be justified.[52]
2.20
The Committee notes, however, that it is not the
intention of the anti-siphoning rules to provide free-to-air broadcasters with
exclusive access to the broadcasting rights to a listed event. This was
confirmed by the Minister for Communications, Information Technology and the
Arts at the February 2005 Additional Budget Estimates when she observed that
'It is my understanding – and we can go back to the debates – that they [the
anti-siphoning rules] were never intended to convey exclusive rights on
free-to-airs. They were intended to provide free-to-airs with an opportunity to
bid for the rights before pay.'[53]
2.21
During the public hearing, Free TV acknowledged that
free-to-air broadcasters have on occasions been offered rights by such channel
providers, but stated that these offers related to events in which they were
not very interested and which were subsequently removed from the anti-siphoning
list.[54]
2.22
There has been argument about the existence and effect
of the 'loophole' for several years. In its submission to the ABA's
2001 investigation into events on the anti-siphoning list, FACTS (now Free TV) argued
that the loophole undermined the efficacy of the list.[55] In response, ASTRA argued that there
was 'no evidence that any sports rights holder, or intermediary, has attempted
to withhold' free-to-air rights from Australian free to air television 'in
order to deal exclusively with pay TV'.[56]
The ABA concluded that it did not support changing
the rules to restrict the activities of related companies and associates of pay
TV licensees, noting:
The ABA is not
convinced that the ability of third parties to purchase rights to listed events
ahead of free-to-air broadcasters operates to thwart the purpose of the
legislation, that is, to prevent the migration of sports events exclusively to
pay TV.[57]
2.23
The ABA
did, however, state that this was an issue that could be revisited in future if
monitoring showed that the role of third parties had become problematic.[58]
2.24
After the release of the ABA's
report, FACTS contended that the report did not recognise 'contrived
arrangements between Foxtel, the pay television licensee, and its associate Fox
Sports'.[59] FACTS highlighted the rights
negotiations of the 500cc motorbike event in 1999-2000 as an example of exploitation
of the loophole so as to undermine the anti-siphoning scheme, and stated that this
was 'not an isolated instance':
It appears to be nonsensical that operators such as Fox
Sports are able to circumvent the rules by virtue of the fact that the Act
licenses the pay television platform and not the individual channels. Fox Sport
is the organisation, which is running its business, planning its schedule and
securing rights for the channel.[60]
2.25
During the public hearings Mr
Michael Ward
reiterated the ABC's views:
... the extension of the delisting from six to 12 weeks would
not be a significant matter if this apparent loophole could be removed.
It is our view that the spirit and intention of the
legislation is that free-to-air television should be given unencumbered access
in the first instance to events on the anti-siphoning list and that cannot be
achieved if it is the case that access is mediated through a third party – for
example, a pay television channel provider.[61]
2.26
ASTRA and PMG both contend that there is no loophole. Mr
Malone of PMG asserted to the Committee that
'We do not believe that there is any loophole. As Nick
[Greiner] said in his opening statement, we believe it is a furphy.'[62]
2.27
Likewise, the NBL submitted that in its view, there was
'no loophole'.[63] Noting that the NBL
final series is included in the current anti-siphoning list, the NBL briefly
outlined the history of its negotiations with Fox Sports and stated that
outside its agreements with Fox Sports, NBL games had also appeared on free-to-air
broadcasters at various times:
The NBL and I would suggest all of the broadcasters, are
fully aware of what is on the list and the requirements that have to be met.
Over the past few years the NBL has been open to all reasonable opportunities
to have our sport appear on free-to-air television and have in fact actively
[sought] free-to-air exposure. Unfortunately recent history demonstrates none
of the free-to-air broadcasters were prepared to work with the NBL in promoting
and televising our game, unlike our subscription television partner, Fox
Sports.[64]
A case in point: the 2005 Ashes series
2.28
During this inquiry, the rights negotiations process
for the forthcoming 2005 Ashes cricket series in England
was raised as a current example of where such a loophole may be being exploited.
The Committee heard conflicting evidence on this matter. Free TV stated that pay
TV rights to the series were purchased by Fox Sports prior to any rights being
offered to free-to-air broadcasters, and when they were offered to free-to-air,
they were offered only on a non-exclusive basis.[65]
2.29
However, Octagon Australia,
which was acting as an agent for the ECB in marketing its overseas broadcasting
rights, stated that given a 'lack of any firm interest' from free-to-air they
then commenced discussions with Fox Sports.[66] Octagon Australia
also stated that non-exclusive free-to-air rights remained with the ECB and
were still available to free-to-air broadcasters.[67] In a subsequent submission Free TV confirmed
its statement 'that the formal negotiations over the rights to the 2005 Ashes
series took place in 2003/04 after
the sale of the Pay TV rights to Fox Sports'.[68]
Free TV provided the Committee with commercial-in-confidence records of
negotiations between each of the relevant Free TV members and the ECB, which
the Committee has resolved to keep confidential.
2.30
Bearing in mind that it is not the intention of the
anti-siphoning rules to give free-to-air broadcasters the exclusive rights to a
listed event, it is important to note that the rights were sold to Fox Sports
on a non-exclusive basis, meaning that they were still available to free-to-air
broadcasters. Ultimately, the decision as to whether or not to acquire these
rights is a commercial one for the broadcasters concerned. The Minister made
this clear when she noted that:
I have been advised that Fox Sports has acquired only the pay TV
rights, which means that the free-to-air rights for Australia
are still available should the free-to-air broadcasters wish to purchase them
from the England
and Wales Cricket Board ...
The acquisition of broadcast rights is, I am sure all would
agree, a commercial decision for the relevant broadcasters. They would take
into account various factors such as the cost of the rights and the network's
programming priorities, such as what time it can be shown, whether it is going
to be held against the gate and a number of other issues.[69]
2.31
PMG argued that the fact that channel providers can bid
for rights before the free-to-air broadcasters did not undermine the principle
underlying the legislative scheme, that is, that the free-to-air broadcasters
must have a 'reasonable opportunity' to acquire broadcast rights.[70] When asked how the free-to-air
'privileged position' was maintained if rights had already been sold to someone
else, Ms Debra
Richards from ASTRA responded:
Because we cannot show something if they have taken up the
rights, unless it is proven that they have not taken the opportunity to take up
the rights because they do not want them.[71]
The intent of the anti-siphoning scheme
2.32
In the course of examining the concerns that had been
raised, the Committee explored parties' understanding of the intent of the
anti-siphoning legislation. The Committee notes that when the legislation was
drafted, subscription television was in its infancy, and specific channel
providers like Fox Sports did not exist in Australia.[72] There was some debate as to whether
the scheme was intended to offer free-to-air broadcasters the first opportunity
to acquire rights and whether those rights were to be exclusive. Again, much of
this discussion was centred around the 2005 Ashes series.
2.33
The Explanatory Memorandum for the original Bill stated
that the intent of the anti-siphoning scheme was to 'ensure, on equity grounds,
that Australians... continue to have free access to important events... however,
also allow subscription television broadcasters to negotiate rights to provide
complementary, or more detailed coverage'.[73]
2.34
ASTRA in describing the intent of the anti-siphoning
list referred to a press release by the then Minister for Communications and
the Arts, the Hon Michael Lee MP, in which he stated:
This is not a list of events that are reserved solely for
free-to-air television. Rather it is a list of events for which Pay TV
licensees cannot acquire exclusive rights.[74]
2.35
Free TV, however, noted that the same release went on
to say:
The list honours a promise made by the government that the
introduction of pay TV would not force viewers to pay to watch events which
were currently broadcast free.
It means that free-to-air broadcasters must have the first
opportunity to acquire the rights to broadcast. I expect that pay TV will
complement and expand the coverage of sport provided by free-to-air.[75]
2.36
Discussion of the intent of the anti-siphoning
legislation also focussed on the notion of 'priority' in rights negotiations. ASTRA and PMG were asked whether they believed that
the 'intent of the legislation at the time [of negotiations for the 2005 Ashes
cricket series] was that free-to-airs got first crack at the rights'.[76] Mr
Jon Marquard
of PMG, whilst stating that they 'must have a reasonable opportunity to have
acquired those rights', also agreed that free-to-air broadcasters should have
'first crack' at acquiring the rights. However, Mr
Malone of PMG stated that they did not
consider that the fact that channel providers could bid before the free to air
broadcasters undermined that principle.[77]
2.37
ASTRA
supported this view:
I think we always understood that the free-to-air
broadcasters would have the privileged position around the negotiating table in
that the sporting bodies would need to negotiate with them in the first
instance.[78]
2.38
When queried about whether the 'privileged position' was
maintained where a channel provider has purchased rights (non-exclusive) prior
to free-to-air broadcasters securing rights, Ms Debra Richards from ASTRA stated:
Certainly, because the operator cannot actually broadcast
the event until the free-to-air broadcasters have obtained those rights or
decided they did not want them or do not want to show them and the event is
delisted. So they still retain that. [79]
2.39
It is clear from the evidence to this inquiry that
negotiations with other parties have commenced prior to free-to-air broadcasters
completing acquisition of the free-to-air rights. Bodies other than free-to-air
broadcasters have sought and obtained free-to-air rights in the past,
particularly with overseas cricket matches involving Australia.[80] When queried as to how they use those
rights, PMG advised 'We would offer them to free-to-air broadcasters, and if no
free-to-air broadcaster wishes to take up those rights then they are not used.'[81]
2.40
During the public hearings, representatives of ASTRA
and PMG were asked for examples during the last 10 years where pay TV had
acquired rights to listed events not acquired by free to air broadcasters. PMG
advised that this has occurred on a number of cricket tours involving the
Australian team and now 'most of those international tours have been taken off
the list because they were list events which never received free-to-air
coverage'.[82] However, 'free-to-air
broadcasters were not cut out of that process; they were given an opportunity,
and this is how the delisting kicks in.'[83]
Senator
TCHEN – But this is the sort of example
being cited as the shortfall of the Bill. In
those instances that you referred to, was it raised as being a problem? Where
there any objections or outcries?
Mr Malone – No, there were not.
Senator
TCHEN – So these are fairly selective
outcries?
Mr Greiner – I think that this is a fair
observation.[84]
The view of the Department and the ABA
2.41
When asked about the 'loophole' and whether any work
had been done on how commonly channel providers acquired the rights to listed
events before free-to-air broadcasters, Mr
James Cameron
from the Department of Communications, Information Technology and the Arts (DCITA)
stated:
The department is aware of the examples that I think the
Free TV submission has given and also some of the examples provided by the
ASTRA and Premier Media Group witnesses today ... It is not an unheard of
practice.[85]
2.42
Mr Cameron
commented that the practice 'is more common in relation to certain types of
events':
It is probably a practice which has occurred more regularly
in relation to cricket events which are played overseas – one day
internationals and tests involving Australia.[86]
2.43
Mr Cameron
made clear that the intention of the anti-siphoning scheme is:
... that free-to-air broadcasters should have a real opportunity ...
to acquire the free-to-air broadcast rights for an event. The way in which that
is achieved is to prevent a pay TV licensee from acquiring the pay rights until
those free-to-air broadcast rights have been either acquired or delisted.[87]
2.44
Mr Cameron
considered, however, that it was 'fair to say' that the government's view was
that the anti-siphoning scheme was working as intended.[88]
2.45
At the hearing, Mr
Tanner of the ABA
acknowledged that the ABA is 'well
aware' of the so-called loophole.[89]
2.46
Mr Tanner
explained the intention of the anti-siphoning scheme in similar terms to Mr
Cameron. Mr
Tanner said:
And certainly the effect of the provision is that the
subscription licensee is not able to negotiate rights according to the
condition until the event has been delisted or the rights have been obtained by
free-to-air broadcasters.[90]
The potential effect on negotiations
2.47
Another issue that was raised during the inquiry was
the likely effect of the provisions of the Bill on
negotiations to acquire broadcast rights. As noted above, it was a particular
concern of the ABC that extension of the automatic delisting period would put
pressure on rights negotiations.[91]
2.48
Free TV also expressed concern that extending the
automatic delisting period to three months would give 'greater opportunities
for pay TV and rights holders to circumvent the anti-siphoning rules by
stringing out negotiations for rights until the automatic deadline approaches'.[92] Free TV considered this would impact
mostly on 'smaller and less powerful sports', for example, 'overseas rugby
tests where the rights are negotiated much closer to the deadline'.[93]
2.49
The premise for this argument is that sports bodies
will be able to attract greater revenue from pay TV where pay TV hold exclusive
rights, something which can only occur where the event is delisted. This
concern was raised by Mr Balding
of the ABC during the Committees' recent Additional Estimates hearings, where
he referred to the 2005 Ashes cricket series:
I think what really concerns me is that it appears that the
ECB may be of the view that the rights are worth a lot more if they are kept
exclusive to pay TV as opposed to being available at a reasonable rate to a
free-to-air broadcaster.[94]
2.50
The Committee notes that on 1 March 2005 it was announced that SBS had secured the
free-to-air rights to broadcast the 2005 Ashes series.[95]
2.51
Free TV agreed that most sports rights are negotiated
well in advance and that where there has been no interest by free-to-air
broadcasters, events have been delisted on application without any problem.[96] However, Ms Julie
Flynn on behalf of Free TV gave an example
of where she considered rights negotiations had been strung out:
There was an incident in 2001 with the preliminary games
involving the Australian soccer team where the rights holder sought to hold out
the negotiations and the matter was acted upon by the Minister to ensure that
there was free-to-air coverage.[97]
The Minister's power to stop automatic delisting
2.52
Under subsections 115(1AA) and 115(1AB) the Minister
may override the automatic delisting where the Minister is satisfied that at
least one commercial television broadcasting licensee or national broadcaster
has not had a 'reasonable opportunity' to acquire the right to televise the
event.
2.53
DCITA advised that there had been one instance when the
Minister had taken such action, under the previous anti-siphoning list.[98] This concerned matches scheduled for
November 2001 in the preliminary competition for the 2002 FIFA World Cup,
involving the senior Australian representative team played in Australia and
overseas. As referred to above.
2.54
The Committee asked departmental representatives about
what factors may be taken into account in considering whether a free-to-air
broadcaster has had a 'reasonable opportunity'. When asked whether a factor
might be 'an unreasonably high price being demanded by the owners of the TV
rights', a DCITA officer responded:
In theory, I think that could be the case. However it would
depend on the circumstances ... [i]f a price was in fact unreasonable and in
addition the rights holder was not prepared to enter into any negotiations then
that may well be evidence that could be brought to bear.[99]
2.55
The Committee observes that in a situation where a
rights holder strung out negotiations with free-to-air broadcasters with the
deliberate intention of the automatic delisting period coming into play (that
is, not bargaining in good faith), it could be plausibly argued that the
free-to-air broadcasters had not been given a reasonable opportunity to acquire
the rights to the event, and it would therefore be open for the Minister to
exercise her discretion to override automatic de-listing.
2.56
This point was made by Mr
Malone of PMG when he noted:
If the minister feels that the free-to-air broadcasters have not
been given an adequate opportunity to acquire those rights prior to a
subscription broadcaster purchasing them, the minister does not have to delist,
even with the automatic period.[100]
2.57
Free TV raised concern about whether the Minister would
be able to stop the automatic delisting where a channel provider rather than a
pay TV broadcaster acquired the rights. Ms
Julie Flynn
stated:
... the legislation refers to the acquisition of rights; it
does not refer to the broadcasting of rights.
We understand that it is open to question whether or not the Minister
could stop the delisting because Foxtel has not acquired the rights.[101]
2.58
Free TV subsequently provided a further submission to
the Committee referring to legal advice they had obtained. The legal advice was
quoted as saying:
In the situation where subscription television rights in a
sporting event are acquired by a subscription television channel provider such
as Fox Sports, and the channel is communicated to the public by means of the
Foxtel subscription television service, it is unlikely that Foxtel is itself
acquiring the rights in the relevant sporting event within the meaning of the
ant-siphoning Licence Condition.[102]
2.59
Mr Cameron
from DCITA acknowledged that Free
TV's contention as to whether the Minister would be able to stop the automatic
delisting 'may well be the case'.[103] DCITA
subsequently provided the following advice to the Committee:
The acquisition of broadcasting rights to an event could
occur through a formal contract of acquisition or through some less formal acquisition
arrangement.
If the licensee broadcasts an event, without committing some
breach of the law (for example, breaching a contract or infringing copyright),
it follows that the licensee has the 'right' to do so, and must have 'acquired
the right' at some stage.
This applies even if another person publicly and formally
acquires the rights to broadcast the event. That person must have 'permitted'
the licensee to broadcast the event before the licensee can broadcast the event
without committing some breach of the law.
The permission may be a formal assignment of rights, or some
less formal arrangement and this applies even if the person who initially
acquires the rights to broadcast the event is related to the licensee.[104]
2.60
The Committee notes that this issue has not been
settled.
'Use it or lose it' principle and 'whole of event' issues
2.61
The issue of what events should be on the
anti-siphoning list has been a matter of continued debate. Pay TV broadcasters
have questioned the necessity for the anti-siphoning regime and have sought to
have the number of events on the list reduced.
2.62
ASTRA has also proposed a 'use it or lose it' approach
to listed events that are not televised by free-to-air broadcasters:
If a free-to-air network acquires the rights to televise a
listed event but hoards it and does not televise it in full, the event will be
removed from the list for the duration of the period in which the relevant
Anti-Siphoning Notice is in force.[105]
2.63
ASTRA also suggested that the anti-siphoning list
covers too many events that are not taken up by free-to-air broadcasters. ASTRA
suggested this problem 'could be reduced in part by listing only the most
important components of the relevant tournament instead of whole tournaments
being included on the list'. Such action would in ASTRA's view 'act as a
positive incentive for the free-to-air broadcasters to televise listed events'.[106] ASTRA mentioned as an example the
broadcast of Wimbledon.[107]
2.64
Ms Julie
Flynn from Free TV responded:
Which game would you like to watch on free-to-air? The one
on the Outer Mongolia court between two people ranked
450 and 455 or the one between two people who may be Australian? ... You never
know in advance what are going to be the key games. The Australian Open has
recently demonstrated that.[108]
2.65
However, Ms Flynn
did acknowledge that there was less interest in the French Open '... and that is
why the recent changes to the antisiphoning list have limited the games to the
quarter-finals, semifinals and finals and not to the early rounds. We have no issues
with that'.[109] Ms
Flynn claimed this showed the system was
working. The Committee also heard that there are many examples of where the
system of complementary coverage was working well.[110]
2.66
Free TV advocated an approach based upon complementary
coverage by pay TV, that is, free-to-air broadcasters selecting the most
appropriate coverage of events and providing pay TV with all other events not
able to be telecast live. Free TV advised:
Complementary coverage maximises the broadcast hours
(live/delayed and repeat) of these sports available to viewers while ensuring
that they are delivered in an economically viable framework for both
free-to-air and subscription television.[111]
2.67
However, Free TV does not support a system of dual
rights where events may be telecast simultaneously, arguing that this system
would reduce advertiser and sponsor appeal due to the splitting of the target
audience.[112]
Monitoring the operation of the anti-siphoning scheme
2.68
In light of the various concerns that were raised about
the operation of the scheme, the Committee was interested to ascertain the
extent of monitoring of the scheme.
2.69
The Hon Nick
Greiner on behalf of ASTRA expressed concern
about the lack of monitoring:
ASTRA is very much of the view that regular reviews and
regular independent monitoring of the antisiphoning scheme are essential. That
has not happened. The truth is that the scheme has been reviewed once since it
was brought in in 1994. We think the nature and essence of it is that it is a
living document, one that changes as markets and events change. So we do
believe that regular reviews and, in a sense more importantly, regular and
independent monitoring of how the scheme is working in practice are very
important. It is fair to say that such monitoring was promised by both sides of
the parliament under the previous minister and shadow minister, and we would
urge that on the committee. The truth at the moment is that the only monitoring
is done by ASTRA. Whilst we are the epitome of fairness and objectivity, I
think it is obvious that someone like ACMA ought to be doing the monitoring in
order to make it meaningful for the minister, the government and
decision-makers to contemplate.[113]
2.70
The Hon Nick
Greiner pointed to two areas of reform that
regular independent review and monitoring would assist: the concept of
"whole of competition" and the "use it or lose it" scheme.[114] In a supplementary submission, ASTRA
provided the Committee with copies of its monthly monitoring of free to air
broadcasts of listed events from May to December 2004, as a potential model.[115]
2.71
The Committee notes that soon after publication of the
first anti-siphoning list in 1994, the then Minister directed the ABA
to monitor and report to the Minister at six-monthly intervals on the operation
of the anti-siphoning list. In
particular, the ABA was to report
on:
-
the extent to
which rights to televise events were both made available and acquired by
national and commercial broadcasting licensees;
-
the extent to
which those events acquired were televised; and
-
whether there
were any other grounds for the Minister to consider specifying other events for
the list.[116]
2.72
The ABA
submitted three reports to the Minister before a new directive was issued on 30 September 1996. The new directive
removed the requirement for six monthly reports, requiring the ABA
to:
...report to the Minister, in a comprehensive and timely
manner, if the ABA considers that
the Minister should be made aware of particular matters pertaining to the
operation of the Act in relation to the free availability of certain types of programs
to the general public.[117]
2.73
In 2001 the ABA
conducted a larger review, at the directive of the Minister, of the events
contained on the anti-siphoning list and published the findings of the review.[118] The directive provided by the Minister,
No 2 of 2000, advised that in conducting its investigation the ABA
is:
[T]o have regard to the policy that an event should only be
included on the Notice if the event has been consistently broadcast by
free-to-air television broadcasters in the last five years.[119]
2.74
During this
review the ABA examined events on the list in the context of 'consistently
broadcast' by free-to-air, as this was the main criterion it was required to
have regard to as directed by the Minister.[120]
2.75
As a result of its 2001 investigation, the ABA
recommended the removal from the list of nine events which had not been
consistently broadcast by commercial or national broadcasters over the previous
five years, and the addition of three new events.[121] Some of the recommendations of the ABA
are reflected in the latest anti-siphoning list.
2.76
The Committee heard from Free TV that its broadcasters
provide reports to the ABA every
six months.[122] When queried about
those reports, Mr Giles
Tanner of the ABA
advised that information is collected but not published.[123] Mr
Tanner advised the reason that information
was not published was that the purpose of collection was to advise the
Minister. Mr Tanner
further stated:
The ABA's
returns, which are obtained in confidence for that purpose that I have
described, only go to some issues. In
fact, broadly what we ask about is what rights are held, the nature of those
rights in broad terms and whether events have been offered.[124]
2.77
Mr Tanner
further advised that the ABA does
not collect as much information as it did for the 2001 review on a monthly
basis. According to Mr Tanner,
the ABA's current view is that
looking for trends:
... is something which one can do perfectly adequately by
taking a periodic sample or waiting for someone else, someone well funded and
able to advocate, to come along and say, "We think there is a trend. You'd
better look into it".[125]
2.78
Mr Tanner
told the Committee that the ABA is
an 'exceptions based' regulator and that it 'only really has recourse to
ongoing monitoring of a particular compliance when there is some particular
reason why it believes that is essential.[126]
Committee conclusion
2.79
This inquiry concerned the provisions of a very short
bill which has a straightforward aim: to extend the automatic delisting period
from six weeks to twelve weeks, as foreshadowed by the then Minister in 2004
following a review of the anti-siphoning scheme. The Explanatory Memorandum
states, and the Committee has received persuasive evidence, that the six week
period provides insufficient time for pay TV operators to acquire the rights
and prepare for broadcasting where an event has been delisted.
2.80
The Committee notes that most submissions supported the
extension of the automatic delisting period, although the free-to-air
broadcasters had some serious concerns about the interaction of that extension
and the so-called 'loophole' in the scheme whereby bodies other than
broadcasters may acquire the rights prior to delisting. During this inquiry,
the Committee was also told of other concerns about the operation of the anti-siphoning
scheme. Pay TV operators argued for various amendments, including amending the
list to include only parts of events rather than whole events, and inclusion of
a 'use it or lose it' mechanism to remove an event from the list if a
free-to-air broadcaster did not broadcast the event in full. They also argued
for regular monitoring of the amount of broadcast coverage of listed events.
2.81
These concerns are strictly speaking outside the terms
of reference for this inquiry, which relates to an examination of the
provisions of the Bill. However, the issues
raised in submissions and during public hearings show concern about the broader
context in which these provisions will operate. The Committee heard conflicting
evidence on some issues, particularly in relation to the process of
negotiations for the 2005 Ashes series. It is not the Committee's role to
determine the truth of these competing claims within this inquiry.
2.82
However, the Committee considers that the concerns that
have been raised reinforce the desirability for regular monitoring of the
operation of the anti-siphoning scheme. In particular, the Committee recommends
that the Minister examine the issue of the so-called loophole and whether it
undermines the efficacy of the anti-siphoning scheme.
2.83
To the extent that third parties, such as channel
content providers, can acquire broadcast rights to a listed event prior to
either its acquisition by a free-to-air broadcaster or its delisting, it brings
into question whether the intention of the anti-siphoning scheme is being circumvented.
Accordingly, the Committee recommends that the Minister consider examining the
issue of the so-called loophole and determine whether the intent of the
anti-siphoning regime is being circumvented.
Recommendation 1
The
Committee recommends that the Bill be passed
without amendment.
Recommendation 2
The
Committee recommends that the Minister consider examining the issue of the so
called 'loophole' in the anti-siphoning scheme and whether this may circumvent
the intent of the anti-siphoning scheme.
Senator
Alan Eggleston
Chair