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Standing Committee on Communications and the Arts
07/03/2016
Broadcasting, online content and live production to rural and regional Australia

FAIR, Ms Bridget, Group Chief, Corporate and Regulatory Affairs, Seven West Media

ROBERTS-SMITH, Mr Ben, VC, General Manager of Seven Queensland, Seven West Media

WORNER, Mr Tim, Chief Executive Officer, Seven West Media

[14:07]

Witnesses were sworn—

CHAIR: I now welcome representatives of Seven West Media. Would you like to make an opening statement?

Mr Worner : Thank you very much for the opportunity to do that. We at Seven West Media have a very proud history of commitment to local content. In fact, you may or may not be aware that Seven is the largest producer of Australian content in the country. We are Australian owned. Through our involvement in regional television, radio and newspapers, we feel as though we are uniquely placed to comment on the drivers for local content in regional areas. Seven West Media owns: West Australian Regional Newspapers group which publishes 20 titles in regional Western Australia, including the South Western Times. Redwave Media, which operates nine regional radio licences in Western Australia; and Seven Queensland.

Seven Queensland provides seven nightly local half-hour news bulletins in the Sunshine Coast, Wide Bay, Townsville, Mackay, Rockhampton, Cairns and Toowoomba. We maintain local sales outfits, offices, journalists and news production facilities in each of those markets. We are very proud of that commitment, and we are proud of the commitment that we show to local communities through the content that we produce, the advertisers that we serve and the engagement that we have with community groups and, of course, our viewers. Seven Queensland, we think, is actually a good case study for success in regional television broadcasting. Although it is owned by Seven West Media, it is operated independently, running his own P&L and paying the same affiliation fees to Seven West Media as other regional affiliates, just like Win, Prime or Southern Cross.

Some other submitters to this inquiry have erroneously claimed that Seven Queensland is successful because it is owned by a company that also owns metropolitan television licences. We do not think that is correct. Today Seven Queensland enjoys a 53.3 per cent market share of advertising revenue in regional Queensland. We have achieved that result because of our commitment to local news and local engagement. Seven Queensland is actually bucking the trend of regional broadcasters cutting local services. In fact we launched a new nightly half-hour bulletin in Toowoomba in December 2015 and we now provide, as I have said, a half-hour nightly local news service to all seven local submarkets within the regional Queensland licence area.

Seven Queensland actually accounts for 20 per cent of all expenditure on local news by all regional broadcasters in Australia combined. We are also investing in new ways to deliver that local content through digital streaming of our content and digital delivery of even more local material online.

It is very true to say that all free-to-air broadcasters are operating in changing and challenging circumstances. There is no doubt about that. At Seven we are transforming our company in response to that. I have been there for 20 years and I can tell you our company has changed more in the last 18 months than it did in the preceding 18 years. The emergence of new competitors has placed significant pressure on what is an outdated regulatory framework. None of these new competitors are saddled with the same regulatory constraints that we are and most of them do not even pay tax. Some have focused on media ownership laws as a means to address the challenges facing regional content providers. With respect, we believe this is somewhat misguided. Changes to media ownership laws will not generate better services for regional Australians; in fact these changes to the law are likely to result in less, not more, local content and local presence in our regional communities.

There are a number of regulatory changes that would drive the ability of regional broadcasters to fund local content. The most important of these is to remove the current 4.5 per cent licence fee that is levied on gross revenue of commercial television broadcasters. Regional broadcasters paid around $33 million in licence fees in 2014 and spent around $32 million on local news. Comparable jurisdictions around the world reviewed their television licence fee arrangements some years ago. We are now well overdue for this matter to be addressed and properly considered. Other regulatory measures such as the antisiphoning rules help to ensure that regional viewers receive the best sporting content free of charge. Over 70 per cent of Australians exclusively rely on free-to-air television for their news, sport and entertainment content. The antisiphoning list needs to be maintained, not dismantled.

If we could leave this committee with one thought on how local content could be protected and maintained, it would be to recommend the urgent removal of the antiquated television licence fee network. More than anything else, that would genuinely help commercial television broadcasters to compete more effectively with new sources of competition from the likes of Facebook and Google. This change would allow us to invest in more and better local content and to transform our businesses for the future.

We would be happy to take questions.

CHAIR: Thank you very much. I might begin with what you have just said. You said the announced change in the rules would result in less local content rather than more. Would you like to expand on that?

Mr Worner : Yes, we can expand on that. Obviously we do not know what is going to happen if these new laws are passed or changes to the existing laws are passed. We can only suggest that there could be a merging of organisations. I think it is widely acknowledged that in that sort of a situation those newly merged organisations are going to be looking to reduce costs and I think the first place they would look is local content.

CHAIR: With regard to the question about removing the licence fees: licence fees are sort of rent for the spectrum, aren't they? Would that be a fair description of them?

Mr Worner : We do not really see them that way.

Ms Fair : We do not think they have ever been really defined. They were brought in but it was not clearly articulated what the licence fee was in respect of.

CHAIR: I think it was originally because you got a monopoly.

Ms Fair : That is right.

CHAIR: It has changed over time.

Mr Worner : It certainly has changed over time. These companies are not as easy to run as they once were. I certainly would have enjoyed running one of these companies 15 or so years ago. There are now a multitude of challenges with running these companies, and a lot of that is brought about by additional competition. A lot of that competition is not playing under the same rules as we are.

CHAIR: We are all very aware that we have players in the field now where people are taking news and entertainment from people who pay neither tax nor any licence fees. But we also hear that, despite the fact that people are using so many other devices, free-to-air television is still the major source of news and information that the population receives.

Mr Worner : Long may that continue.

CHAIR: If you were looking at the success of your endeavour in Queensland, where you say you have a 53.3 per cent market share of regional advertising, how much of your overall revenue does that 53.3 per cent make up? What is the break-up of national versus local advertising to you?

Mr Worner : Do you mean how much of our revenue for Seven Queensland is national versus local? I think it is about 60-40.

Mr Roberts-Smith : Yes. Forty per cent is local revenue. Sixty per cent would be national revenue.

CHAIR: Of the national revenue, what would be the nature of the advertisers? What sort of advertising? To whom are they pitching?

Mr Roberts-Smith : Government is a considerable part of that. That has been evident this year.

Mr Worner : Not as considerable as it once was.

Mr Roberts-Smith : Exactly. The reason I say that is that we have had a significant downturn in government revenue coming into Queensland, particularly with elections government election. The current talk of an election on the horizon has not put us in a position that we can actually forecast when any of that spending will happen. Quite frankly, we do not know what that is going to be, given what just happened with the Queensland election. I think the problem we face from a government point of view is that they simply are not spending as much as they used to.

CHAIR: You say government. When we have an election, there is not much government expenditure; it is party expenditure.

Mr WATTS: That ought to be the case.

Mr Roberts-Smith : We don't really discriminate!

Mr WATTS: The advertising boom accompanied the ideas boom, Madam Chair!

CHAIR: The innovative ideas!

Mr WATTS: It is an exciting time.

Mr Roberts-Smith : I think that is across the board. It is not just about the election; it is also just government spending in total.

CHAIR: So there is less government advertising of its products.

Mr Roberts-Smith : Correct.

CHAIR: Which is probably due to the fact that most governments are in debt and so have less to spend. The other figure we have heard—I would like your comment on this—is an estimate that other sources attracting advertising have taken $2 billion out of the market Australia-wide. Do you agree with that figure?

Mr Worner : Look, I do not know about the figure, but I would say that we definitely agree with the sentiment that there is money leaking away from television. That is very obvious, hence the observation that it is now far more challenging to run one of these businesses.

Mr WATTS: I am not sure whether you were here to see the preceding witnesses' evidence, but, in particular, they portrayed Seven Queensland as the paragon of all virtues that would flow to the world in a world without the reach rule and the 'two out of three' rule, and they attributed many of the successes of Seven Queensland to the notoriously slippery words 'synergies' and 'scale'. I noticed you rejected some of those plaudits in your opening statement.

Mr Worner : Yes. We were not here to hear all of it, and we certainly did not hear that bit, but it does not surprise us. I would reiterate what we pointed out in the opening statement, and that is that Seven Queensland is operated as an independent business. A lot of the so-called synergies with Prime, if there are any, have been harvested already. Seven Queensland pays affiliation fees, have a separate staff and a separate news organisation and are networked out of one location which provides a half-hour to each of those markets. I would not say that Seven Queensland should be held up as an example of what could happen. Seven Queensland is operating under the same terms and conditions or challenges as any of these businesses. We are streaming content into Seven Queensland's areas. It has had virtually no effect on the audience whatsoever. I cannot think of how Seven Queensland is advantaged versus how any of our Prime markets are advantaged. They are getting the same content from us.

Mr WATTS: Are there back-end corporate synergies, like legal or governance?

Mr Worner : There are hardly any back office functions that are centralised. At the most I would say it would be half a dozen. It is certainly not an extravagant centralised operation from Sydney that is operating Seven Queensland; that is not the case at all. Ben is running the operation, headquartered in Maroochydore, and as I say, it is operated with a separate P&L and paying affiliation fees to us based on the same affiliation fees that our affiliate is paying.

Mr WATTS: You said that you are streaming into the Seven Queensland patch and that it is not having a noticeable impact. I always need to preface these things by saying I am a bleeding-edge early adopter—I love my gadgets. I loved watching the split-screen tennis streams and things like that coming out. You are in the best position to judge this of anyone who is appearing before the committee: in your view, that disintermediation is not eating into regional revenues in a major way?

Mr Worner : I will let Ben answer specifically on behalf of Seven Queensland, but I would also have some observations about the effect of that on the whole television market in Australia.

Mr WATTS: Sure.

Mr Roberts-Smith : The short answer is that it simply is not. When you talk about events such as the tennis, it is a very short time frame. If anything, it simply value-adds for us—yes, we understand that—but only for that short time frame of a week or two weeks.

Mr WATTS: And catch-up TV more broadly?

Mr Roberts-Smith : The adoption of those services in regional Queensland would be significantly less than anywhere else in the Seven markets. If you want to talk about streaming, to give you an idea, Maroochydore has a population of 300,000 people, and Queensland is obviously significantly larger than that. Our streaming would touch one per cent of Maroochydore, let alone Queensland. For Queensland, I could not even give you the percentage. It would be point—

Mr WATTS: We have had evidence from other broadcasters who have said they have had advertisers telling them that they are switching out advertising spend from their services into streaming services and catch-up services.

Mr Roberts-Smith : If they are saying to regional streaming, that would be incorrect. It is not happening. Again, it is a value-add for us. I am not denying that; of course it is. It is an advantage, but it certainly is not detracting from what is happening on broadcast television. Without a doubt, our flagship, and what gets us the ratings and revenue that we enjoy, is our local news. That sets us up every single day for the night. People watch our local news because we provide them with that from a market perspective and also a micro-market perspective, to the point where we have invested in areas like Gladstone and Bundaberg, which are not necessarily covered by our competitors.

Mr WATTS: I can tell you, as someone with much family in Toowoomba, I heard all about the launch. Everyone was very excited.

Mr Roberts-Smith : And, quite frankly, news does not make money. The amount of money we spend on creating news services is a big investment. The news itself does not generate the profit, so to speak. It is the relationship with the community that matters.

Mr Worner : In relation to streaming and the effect that it is having on audience behaviour in Australia—and you mentioned the tennis—it is our experience that a lot of the streaming that is occurring with an event like that is happening out of home; and then, once the audience comes back into the home, they switch the telly on. I feel as though the argument that streaming is having an effect is spurious.

Ms Fair : Also, we really only launched the service in November, so it would be very unusual to have seen any significant impact in such a short period of time.

Mr Worner : Let me say, I respect our regional counterparts a great deal, but I think what has had an effect is the talking down of regional television. That would make any advertiser think, 'Hang on. If I'm being told that there are problems with it, maybe I should be reviewing how much money I spend on it.'

Mr WATTS: There was also evidence that the regional TV audience skews dramatically demographically older and that that was eating into marketing. Is that your perspective in Seven Queensland, or do you have a broader spread?

Mr Roberts-Smith : To be honest, if there is anything that has been very noticeable to us from the tennis, particularly this year, it is that our younger demographics have increased. That is not to say that, traditionally, the older demographic was not our strongest demo, but it has been interesting from the point of view of the younger demographic picking up this year particularly.

Mr WATTS: Is there anything that might make you think that Queensland is unique or different in that respect and that it might be a different story in the rest of the country?

Mr Roberts-Smith : No.

Mr Worner : I think Seven's ratings on a national basis would be skewing a lot younger this year. We have just had an alignment of planets that has worked out exceptionally well for us, but, with regard to that observation, I would say that Seven's content generally has always resonated exceptionally well with regional audiences. I would not know—maybe members of the committee would—the population demographic between regional and metropolitan.

CHAIR: Yes, it is older.

Mr Worner : I imagine they would skew a fair bit older and, hence, viewers are going to be older as well.

Ms Fair : It is also, though, one of the reasons we are looking at more business transformation and investing in providing more digital content and not just sticking to our knitting and being a plain old television broadcaster. Ben has quite a few initiatives in regional Queensland aimed at that. You have to fish where the fish are, so that is where we are looking at taking some of our business initiatives.

Mr Roberts-Smith : Absolutely, and that is another interesting point. They have tried to talk about synergies, but we do not have a synergy from a digital perspective necessarily with our metro counterparts. We are not part of our digital deal. We do not sit inside the fold of Yahoo, so we are not part of that. When I came, I literally started a digital cell in the last six months. So, if you want to talk about synergies and that we leverage off these national counterparts, it is simply incorrect.

Mr WATTS: And you are not able to pick up the phone to anyone in say, 'How should I go about setting up this digital group'? You are doing that independently?

Mr Roberts-Smith : I have established a five-person cell that is completely independent. Clearly, if I was going to ring someone at Seven and ask for their advice, that is a different kettle of fish, but, from the perspective of whether I can assist Brisbane, no, I cannot because that is the Yahoo deal and so we are outside of that. The point I am trying to make is that it is another example—when we talk about the cross-levelling of these resources, that does not happen. We maintain our own P&L. We fund our own initiatives. Our R&D is funded by Seven Queensland. That is how we are structured, and I think it is evident with the uptake of social media that we have seen. Our social media has grown 25 per cent into the last six months. We currently rate in the top 10 of any social media site in regional Queensland. We have five to six consistently in the top 10, which is because we base it on local content. We generate news services, we take that footage and that content and we supply it back to people on those platforms because we know that is what they are looking at. That is, again, our play at trying to touch the younger demos and the regional communities.

Mr Worner : I think generally Seven has taken quite a different approach to local content, even to the other two big metropolitan networks. We create, originate, develop and produce a lot of our own content. we had done that for six, seven or eight years. We have seen that as very important to the future-proofing of our company. We maintain that today. We are actively trying to grow the amount of content that we make and we are now producing content for broadcasters other than Seven.

Ms MARINO: Regarding your Seven Queensland model, are you planning to expand that particular model that you use elsewhere?

Mr Worner : We do not have any other regional television assets at the moment. Do you mean if we are going to extend the amount of local content? These guys are going to develop their budget very shortly and I would be very surprised if they were not at least putting something in there that is a desire to actually produce more local content.

Ms MARINO: Given that it is three or four months and you are looking ahead, where do you see the potential for growth?

Mr Roberts-Smith : From a digital perspective?

Ms MARINO: Yes.

Mr Roberts-Smith : I say that because there is a great opportunity for us to get down to a cellular level from a regional perspective. We are talking about R&D projects that give a voice to communities at a much deeper level and what I would call organic content, whereby we enable them to tell us what they want to hear, or what they want to see, and have a voice, which you can fund through social means, without it being on broadcast, much more easily, and it is much more obtainable. It sounds a little bit vague because it is an R&D project that is in the works. As Tim has alluded to, we will be budgeting for that this year. To my mind, I see this as spreading out across the whole of Queensland. Again, it is an R&D project. My vision for this is that it would become a 200-site proposal, where we essentially touch suburban communities inside our regional communities.

Ms Fair : Importantly, it is also leveraging on that strong Seven Queensland brand that is underpinned by the local commitment, which is why you get people wanting to engage with the services that Ben is developing. They are both important parts of the strategy I would imagine.

Ms MARINO: Mr Worner, I am a rural and regional MP and a farmer as well.

Mr Worner : And a GWN viewer probably.

Ms MARINO: Absolutely. One of the things you touched on was the licence fees. Basically you said that it would give us the capacity to increase local content, but whether you did or did not increase local services as a result of the change in the licence fees would be a commercial decision that you would make. Would that be right?

Mr Worner : It would be a commercial decision but, as I have already indicated, we see it as being critical to the future of our company that we are able to continue to produce more and more local content. We see that as our lifeblood. If you look at the last time the licence fees were reviewed, you will find that all of that reduction has been ploughed into more Australian drama, more Australian reality and popular factual programming and more Australian live sport. That is what we did last time. I think that if you are running one of these companies you need to be continuing to mass an audience, and you cannot do that now without local content: local sport and local news. For us, funding that is one of the biggest challenges we face. I can say that if there were a reduction, yes, it is a commercial decision. But my very strong suspicion is that we are going to end up funnelling that money, just as we did last time, into more Australian content.

Ms MARINO: In spite of the significant disruption we are facing—not just that which we are facing now, but there is going to be even more disruption in this space—what is your best weapon in the marketplace in relation to the way that their content is provided, compared with yours?

Mr Worner : It is local. My Kitchen Rules is the No. 1 show in the country and it has been for the last five years and it will be this year. It is a concept originated by Seven; it is produced by Seven; you can only get it when the Seven Network allows you to get it. That is the most powerful weapon we have. Obviously, we will be looking at wanting to add to our armoury; it is coming up with the next My Kitchen Rules.

Ms MARINO: Is there any comment you wish to make about affiliation fees by the regional networks?

Mr Worner : When you say 'any comment', can you be more specific?

Ms MARINO: There is an issue for regional—

Mr Worner : I know there are various negotiations going on with affiliations fees at the moment.

Ms MARINO: Given there is probably a limited number of providers in this space and the impact it has on regional networks, I wondered about your particular view on that matter.

Mr Worner : We think our affiliates are getting a great deal because we are providing them with the leading content service in the country. A lot of the affiliation fees they are paying we are funnelling straight back into producing more for the following year.

Ms Fair : We also noted in our submission that the affiliation fees are not keeping pace with the increase in content costs that are borne by metropolitan broadcasters. There is a little bit of smoke and mirrors in some of this discussion in that there are these rapacious affliction fees and that the metropolitan networks are taking everyone to the cleaners when in fact the increase in content costs across the board—news, drama, sport and all of those areas—has been borne by metropolitan broadcasters. The increase in affiliation fees across the board has not kept pace with the increase in rising content costs.

CHAIR: Do you think there is something different about Queensland that makes your model work better than it might work somewhere else? It is truly the only decentralised state in the Commonwealth, isn't it?

Mr Worner : I do not think we have stepped back from our commitment to local content. If anything, we have stepped it up. I do not think we have stepped back from our commitment to the local communities.

CHAIR: I would think the reverse. The decentralised nature would give it a greater appetite for local news than a state that is less decentralised.

Mr Worner : I would think there is an appetite for local news everywhere. We are now seeing that. Our news bulletins in each of our capital cities are among our highest-rating programs because there is an appetite for local news. Each of those news bulletins are local to Perth, Adelaide, Melbourne, Sydney, Brisbane et cetera. We are seeing a very clear appetite for local news and, as you head out into regional areas, probably the further you get from the capital cities, the greater that appetite becomes. Certainly, in the case of Seven Queensland, the audience shares are sometimes astronomical for local news—up around the 60-70 per cent.

CHAIR: I think you said 59.5.

Mr Roberts-Smith : When we have our competitors remove themselves from the marketplace it becomes a one-horse race, which is not beneficial for the regional community and something we have tried to talk about. They also mentioned affiliated content and the fact that, if they wanted to generate more local content and introduce that into their programing, they would then be double handling, paying for their affiliated content. We find the content we produce, outside of news, is always as successful as you know the news is. Whatever we decide to create, whether it is a series on storms in Queensland, it will always rate well and it will always generate good revenue. That argument, in itself, does not fly either, to be frank. We proved this the other day with a storm series.

CHAIR: In a programing sense, you use news as a lead-in for shows where you can make a profit.

Mr Worner : Absolutely, yes. It sets up the night, and there is a halo effect around it—no question.

Ms Fair : But Seven Queensland does produce other local programming other than just news.

CHAIR: Can we hear a bit about that and whether there is any arts content?

Mr Roberts-Smith : Bridget has the actual—

CHAIR: You have got a brother who is an opera singer.

Mr Roberts-Smith : That is true. I am the black sheep of my family! My brother is actually with The Ten Tenors at the moment, and they are up in Caloundra.

CHAIR: I have actually heard your brother sing.

Mr Roberts-Smith : They are attending in Caloundra, and we will cover that across the news, as the others will, as we all do with that type of event. What we do is we focus on what is important to the local communities—for example, if there is a warning of a cyclone heading for Cairns and we produce those shows, funded by numerous commercial entities, to provide the information about how to deal with the storms. So it is beneficial to the community.

CHAIR: The emergency aspect.

Mr Roberts-Smith : Absolutely. We try to help them in those regards. We also provide content around local activities. We have a show, for example about the local surf clubs in Maroochydore or in the Sunshine Coast. We promote the surf clubs and the activities that they can do. Content like that which means something to the community, because it is what they do every Sunday—it is what they do with their families—always succeeds. It works for the community and it works for us, and we will continue to do that, because that is what the community asks for. I think you will find that the difference between Seven and our competitors in these markets is that we have listened to them. That is why, within three months, we are already winning the news hour in Toowoomba. That is unheard of. That is because we listened to the community and ran community stories that they asked for. As you have said, it was a big event in Toowoomba. Everyone was looking forward to it. Streaming started at exactly the same time as the Toowoomba news, and we have had a bigger uptake of the Toowoomba news than we have of streaming, which proves the point.

CHAIR: Yes, it does. Perhaps it is bigger screens too. People like the image of the bigger screen if it is home viewing.

Mr Roberts-Smith : Sure.

CHAIR: Streaming is more likely to be what? Do you know where the take-up of streaming is strongest—for what programs?

Mr Worner : Anecdotally, a lot of streaming is through convenience. When people are waiting, commuting, that sort of activity—that is where a lot of streaming occurs. Also, there can be a second screen open at times when you are watching television. But your attention is going to be mostly on what is on the big screen.

CHAIR: But you might want to catch up with something else at the same time. Going back to the arts content, what you are discussing about what you are covering—and there is no greater supporter of surf lifesaving than me—do you do that in the context of news, as distinct from a separate program? It is in that coverage?

Mr Roberts-Smith : Absolutely, depending on the stories, obviously, because the news maintains its integrity at all stages. So that is driven by the requirement of the event or the actual story itself, as the news director will select. Through the news, it is very different. We go out of our way to create other content, which we have highlighted is then taking away from the fact that we pay affiliation fees and we are putting other content to the side to create that, because it still works. We know that. The news itself will always cover stories of interest. My point about talking about micro-markets before was simply that. We have gone to the extent of trying to locate news offices in very small communities to ensure that, if we run the news in somewhere like Wide Bay, then Bundaberg, for example, does not miss out; there are still stories about what is happening in Bundaberg. Where we have been able to do that, that has worked very well again. So, in Rockhampton or Central Queensland, we also cover Gladstone, and we have a news office in Gladstone. But these are very small news offices. But what it does for us is engage with that community further out again than just Rockhampton and further into Central Queensland. We have a certain footprint around that that we utilise to tell those stories.

Ms MARINO: There are a lot of people who want immediacy. They are looking at their mobile—or any form—for whatever news as soon as they want it. Often the only thing that is new at the end of the day can be, sometimes, your really local news. That is what they tune in for. Even regional newspapers have found it particularly difficult and a very fluid market because so much of what they used to cover is covered live and their positioning in the market is now a whole lot different. In your view, are you saying that you are capturing that particular aspect of the rural, regional and remote market?

Mr Roberts-Smith : Absolutely. What we are trying to do is develop our digital capability to enhance immediacy for remote regions of Queensland. But at the end of the day what we are providing through our news services are stories and content about these communities that would otherwise not be told. We are doing that; not necessarily everyone else is. I think that is the really important part. That in itself is an investment in infrastructure, in people and in those communities, which we believe in. If you look at our engagement across Queensland and, in particular, some of the smaller markets, you will see that Seven is always in pride of place supporting everything from the arts through to sport through to surf lifesaving. I think there is a list in the annex to our submission.

Ms MARINO: Yes, there is.

Mr Roberts-Smith : We can certainly supply that.

Mr Worner : I think that what this pilot program is aimed at in Seven Queensland is not just local content; it is hyperlocal content—it is even more local. To your point, it is harder now to hang on to news and information that is going to be fresh, because of the abundance of it and its availability. There are two ways to approach that challenge, and I guess we have chosen the path that says: 'Okay, if that's the way the landscape is going to be, we're going to have to change what we do. We're going to have to match the speed of change going on out there in our market, inside our own company, inside our own businesses. We need to change, so how can we get one step ahead and go beyond local to hyperlocal?' I think that is what this pilot program is aimed at. It is the gathering of news and information using phones.

Ms MARINO: If you were to look at it in the printed media sense, you have almost, in a sense, become the community newspaper—that is, there are several layers of newspaper.

Mr Roberts-Smith : That was the increase on social media that we have been talking about. It is all about immediacy and, as Tim has alluded to, that is exactly why we have gone from being obsolete in the social media space to now leading it in Queensland. We have done that in six months, because we put specific effort into enabling that immediacy for news. It has not affected the broadcast; it has driven people to it. What I was talking about before in relation to having 200 sites is literally that. I am talking about social sites, so the outlay for that is not significant, but it provides people with the opportunity to upload their own content about their location, and we simply filter it.

Ms MARINO: On the accuracy side of the information that you are carrying, how does that work for you? If people are uploading their own content, one of the things that we hear about is the accuracy, or not, of information that is provided. Unfortunately, we see this particularly during emergency situations. I have spoken about it a bit today. We had the fires in Yarloop in my electorate and, more recently, Uduc. One of the challenges with social media is the accuracy of the information that is provided, because frequently it is not accurate. That creates a risk in itself to those in that situation, as we saw with Yarloop and Uduc, and I suspect they are not the only ones. In that space—not just in the emergency space, but in the uploading of information and the truthfulness and accuracy of the information that is provided by individuals or others—how do you manage that?

Mr Roberts-Smith : Our model calls for a hub, and that hub retains all of the information that is uploaded. We disseminate that information accordingly to the platforms and the region it is relevant to and we release it.

Ms MARINO: So there are people who edit or—

Mr Roberts-Smith : That is right; there is. It is part of this cell. And, given that this is an R&D project that we are talking about, the social media news pages are done by journalists under the direction of the news director. The accuracy is clearly as good as it can be. There are always going to be things that people get wrong, but that is rectified. But the news pages are news pages, and they are very distinct from hyperlocal content. Hyperlocal content is something that is additional. That is my point about engaging in additional services: this is not news; this is hyperlocal content. This is someone talking about the traffic on the way to school in Buderim, or the surf report, or that the Ten Tenors will be located at Caloundra this evening—the kinds of things that people in that area are interested in, but not necessarily anywhere else. But you give them a voice and a platform to air that, and we manage it. So we are going to provide that platform; we are going to promote that platform and we will service it. It is organic content—we still have control—separate to our news, which is us creating news and uploading, as accurately as possible, the news of the day on our social media news pages. Does that answer your question?

Mr Worner : I think we recognise that we have a responsibility—

Ms MARINO: Yes, you do.

Mr Worner : to filter that content.

Ms MARINO: Yes, you do.

Mr Worner : We definitely do.

Ms MARINO: We have seen instances—and I referred to it today, when we had the ABC in—of a range of challenges around Twitter feeds and how they are managed. The responsibility that goes with those who manage those platforms is quite significant and will, I suggest, become more so.

Mr Worner : Yes.

CHAIR: I would just like to go back to the terms of this inquiry—that is, the delivery of arts and other services into the regions and the role that commercial and public broadcasters play, including online and live performances. Basically, from your point of view, it seems that the only way you deliver arts and other services is through news. There is no availability for the creation of specific arts programs per se. One of the other witnesses explained that, because of affiliation fees, if you do that, you are paying for the space twice. But you would be relying on any arts program that was made by Channel 7 itself to come through just as it would for My Kitchen Rules.

Part of the whole process of aggregation in the first place was to make sure that rural and regional Australia did not miss out on the sort of entertainment and variety that metropolitan cities were getting. If we were looking at the role that commercial regional broadcasters play in the delivery of arts, specifically—services other than news—it is really very limited. Would that be a correct assessment?

Mr Worner : I think that is probably correct. That is not to say that we do nothing, because we do a fair bit for the arts.

Mr Roberts-Smith : We support the arts. By that I mean we have a number of charitable deals we support—

CHAIR: Yes, but that is not—

Mr Roberts-Smith : broadcasting.

Mr Worner : What we cannot do is provide large swaths of programming that are not going to be watched by a great many people. We are governed very much by what our audience is telling us they want to watch. We do do some arts programming. Just recently we covered the Edinburgh military tattoo in Melbourne, and that will be going to air at some point. There are other arts programming initiatives that we undertake. But I would not say that it is a huge part of commercial broadcasting, because not enough people are interested in watching it.

CHAIR: It is quite interesting. Obviously you are broadcasting sport in very large slabs because there—

Mr Worner : are very, very large, dedicated audiences.

CHAIR: Is it predominantly rugby league?

Mr Worner : No. Unfortunately, we do not have any rugby league, although we did have the last Rugby League World Cup.

CHAIR: Yes, you did.

Mr Worner : We will be broadcasting AFL, the Olympics—

CHAIR: The tennis, of course.

Mr Worner : Tonight—and last week—we will be broadcasting the Matildas, the Australian women's football team. They are doing exceptionally well, I might add—and the Australian Open tennis, which you were watching on your app.

CHAIR: I have to say that there are going to be a hell of a lot fewer people watching women's football than other blockbuster sports broadcasts. Edmund Capon, when he used to be the director here at the Art Gallery of New South Wales used to say that he would put more people through the Art Gallery of New South Wales every week than people attended football matches all over the state.

Mr Worner : I do not disagree with that. I go to art galleries myself. But it is not terribly gripping television. Whereas women's football moves around a bit. It is quite exciting—

CHAIR: I was not suggesting that we took them around the gallery.

Mr Worner : I did not expect to get into a programming discussion. However, it does not surprise me. I just think that a tour of the art gallery is probably not going to pull the sort of audience we are after.

CHAIR: I was thinking of other things. I was just saying that there is an arts appetite out there.

Mr Roberts-Smith : We also have the AFL; we do not have NRL.

CHAIR: That is artistic. That is aerial. A lot of ballet goes on, doesn't it?

Mr WATTS: The bears are not doing well.

Mr Roberts-Smith : It is. When you talk about that in Queensland, it is a significant disadvantage. We go up against the NRL.

Ms MARINO: How do you go?

Mr Roberts-Smith : We will generally lose that time frame but we will win the night and we win the night because we win the news.

Mr Worner : NRL audiences in Queensland would be much greater than those of AFL.

CHAIR: Well of course they would!

Mr Worner : Unless the Brisbane Lions are doing well. At one stage they had won three premierships and the audience flocked to it.

Mr Roberts-Smith : We have been asked if we could televise the local rugby league—the Intrust cup—but we cannot because the outlay for this individual standalone business would be the same as for filming a performance of the 10 Tenors at the Caloundra music hall. Financially it is simply not viable for us to put that together. That is because we run our own P&L. We do not have the big swaths of cash that are potentially available to some of the national broadcasters.

Mr Worner : Just hypothesising for a moment: if we were to run these businesses together and collapse the affiliation fees and the separate P&L, Ben still would not be able to cover those events because they are just not commercially viable.

CHAIR: If there is a need for that gap to be filled, it should be a public broadcaster that answers that need?

Mr Worner : That is not for me to say, Chair, but that may well be appropriate.

CHAIR: The bottom line is that commercial broadcasters are not about to do it because of all the reasons that you have outlined.

Mr Worner : It is not likely that we are able to do it. Certainly it is a lot less likely than it was 15 or 20 years ago.

Ms Fair : I think in the future there will probably be an increasing role for digital dissemination of some of this stuff. We could have maybe not so much state-of-the-art production. We are seeing now that people go to the movies to watch theatre productions that have been filmed in London.

CHAIR: You can watch the Metropolitan Opera from New York in the local theatre live.

Ms Fair : Correct. As time marches on we will see people covering arts programming in a more cost-effective way and disseminating it in a more cost-effective way. At the moment it is a very high-cost enterprise.

CHAIR: Somebody still has to transmit it. Who does it? Who actually pays for its filming or the transmission from a theatre into a cinema? Who does that? Who pays for it?

Ms Fair : That is the beauty of digital dissemination. At some point, hopefully, people will be able to get some of this stuff through Facebook or on YouTube.

CHAIR: But someone actually has to pay for it.

Ms Fair : Someone has to film it. That is where the cost is.

CHAIR: Who does pay for it?

Ms Fair : Advertisers in the long run or you could do it on a direct subscription model.

CHAIR: Thank you very much for coming. It was very interesting to have regional presenters in a bloc and to hear the different points of view. We thank you very much for that. If we have asked for anything that you have agreed to let us have, we would be most grateful if you could give that to the secretariat. We will send you a copy of the evidence, which you are free to make changes to in terms of grammar and fact. Thank you very much for coming. We do appreciate it very much.

Ms Fair : Thanks for your time.

Mr Roberts-Smith : Thank you.