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Wednesday, 9 March 2005
Page: 123

Senator EGGLESTON (6:04 PM) —The provisions of the Broadcasting Services Amendment (Anti-Siphoning) Bill 2004 have been the subject of an inquiry by the Senate Environment, Communications, Information Technology and the Arts Committee over the last two weeks. The committee received 14 submissions and held public hearings in Canberra on 21 and 28 February this year. The purpose of the antisiphoning scheme is, as has been said, to ensure that certain sporting events are widely available to consumers by preventing subscription television licensees from acquiring exclusive rights to events which are on the antisiphoning list.

The policy rationale of the antisiphoning regime is to give free-to-air broadcasters an opportunity to acquire the broadcast rights to important sporting events without having to compete against pay-TV operators. It aims to maximise the amount of sport available on free-to-air television. The former minister for communications, the Hon. Daryl Williams, described the policy rationale for the regime thus:

To protect the access of Australian viewers to events of national importance and cultural significance by giving priority to free-to-air television broadcasters in acquiring the broadcast rights to those events.

When pay TV commenced in Australia there was concern that major television sports events would migrate or be siphoned from the free-to-air networks to pay TV. While the popularity of pay TV is growing, fewer than one in four households in Australia have access to subscription television. Thus the rationale for the antisiphoning regime remains valid—those who have only free-to-air television can watch the listed events, or have the opportunity to do so. Under section 115(1) of the Broadcast Services Act 1992, the Minister for Communications, Information Technology and the Arts can gazette a list of events which the minister believes should be available to the public on free-to-air television. However, listing does not guarantee that these events will be screened on free-to-air television and such a decision is ultimately a commercial matter for the broadcaster concerned. That is a very relevant fact to bear in mind in the discussion on this issue.

Under the antisiphoning regime, subscription television licensees are prevented from acquiring a right to televise a listed event until such time as a right has been first acquired by the ABC, SBS or commercial free-to-air broadcasters reaching more than 50 per cent of the population. It is clear that the intention of the legislation was not to reserve specific events solely for free-to-air or to guarantee exclusive rights to free-to-air. The explanatory memorandum for the bill that introduced the provisions back in 1992 stated that the ‘process should ensure, on equity grounds, that Australians will continue to have free access to important events—it will, however, also allow subscription television broadcasters to negotiate rights to provide complementary, or more detailed, coverage of events’.

Some examples of events on the antisiphoning list at present include the Melbourne Cup, each match of the AFL premiership and finals, each match of the NRL premiership and finals, each rugby union match involving Australia and each match in the Rugby World Cup, each cricket test match involving Australia, and each match of the Australian tennis open and Wimbledon. Other sports included on the antisiphoning list are soccer, netball, golf and motor sports as well as the Olympic Games and Commonwealth Games. The inclusion or removal of an event on the list is a matter on which the Minister for Communications, Information Technology and the Arts has complete discretion. On 7 April 2004 the then Minister for Communications, Information Technology and the Arts, the Hon. Daryl Williams, announced that the government ‘had updated the antisiphoning list to better reflect the attitudes of Australians and the commercial realities of the sporting and broadcasting sectors’. The new list will apply from 1 January 2006 until 31 December 2010.

As I said, the Commonwealth Games and the Olympic Games have been added to the new list but otherwise it has been streamlined through the removal of a number of events, including basketball, overseas Formula 1 grand prix and motorcycle grand prix events, Australian National Soccer League events, the US Open golf and the Hong Kong Sevens rugby. The minister noted that many of the events to be removed from the list have received little or no free-to-air coverage despite their listing.

The antisiphoning scheme is complemented by an antihoarding scheme which came into effect in 1999 and is aimed at preventing free-to-air broadcasters from hoarding rights to live coverage of events that they do not broadcast. The antihoarding provisions require commercial television licensees who acquire the right to televise a designated event but who do not propose to fully utilise the right to offer the unused portion to the ABC and SBS for a nominal charge.

An automatic delisting period of six weeks for those sporting events which free-to-air television licensees have not demonstrated any interest in acquiring broadcast rights to came into effect with the passage of the legislation in 2001. However, it is important to note that automatic delisting of an event will not occur if the minister has published a declaration under section 115(aa) of the Broadcasting Services Act and that the event continues to be specified in the notice. The minister may only publish such a declaration if 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.

In April 2004 the minister for communications announced that the automatic delisting period would be doubled from six to 12 weeks. This bill gives effect to that announcement. According to the explanatory memorandum, this amendment is needed because:

Where no free-to-air broadcaster is interested in acquiring the rights to an event on the anti-siphoning list, the automatic delisting of the event six weeks before it occurs has proved ... insufficient time for pay television operators to acquire the rights, finalise program schedules, negotiate advertising contracts and promote the event. Extending this period to 12 weeks will provide additional certainty to industry.

The submissions from the subscription TV sector to the inquiry were supportive of the extension of the automatic delisting period. They noted that the extension of the automatic delisting period will give subscription TV operators a longer period in which to acquire events and make appropriate arrangements for their broadcasting. The Australian Subscription Television and Radio Association, ASTRA, supported the extension of the automatic delisting period from six to 12 weeks describing it as ‘a reform that at least attempts to redress the anti-competitive nature of the scheme’. They added that ‘a period of 12 weeks is obviously timelier and more useful that the current automatic delisting period’.

ASTRA acknowledge that ‘the bill attempts to better balance the interests of subscription television and free-to-air television broadcasters and will improve the efficiency of operation of the delisting provision of the antisiphoning scheme to the benefit of sporting bodies and viewers’. They also noted that ‘a 12-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’.

Premier Media Group endorsed ASTRA’s submission and observed that 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 delisting procedure. They concluded that this will reduce the resource strain and time spent by the Australian Broadcasting Authority in responding to formal requests to delist events. PMG described the current six-week delisting period as being too narrow and said that sufficient time is needed to make the necessary arrangements for coverage, stating that each of the subscription television distributors and PMG itself need sufficient time to ensure that appropriate coverage plans for the relevant events are in place.

The committee also received submissions from the AFL and the NRL which supported the extension of the automatic delisting period. In particular, the AFL noted:

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.

While the extension of the automatic delisting period provided for in this bill has been welcomed by the subscription TV industry, representatives of the free-to-air TV broadcasters indicated that they are opposed to this extension. In particular, free TV justified its opposition on the basis that the extension would provide ‘greater opportunities for subscription broadcasters and rights holders to circumvent the antisiphoning rules by stringing out negotiations for rights until the event is automatically delisted’.

This argument is based on a view that sports bodies will be able to attract larger revenues from subscription TV licensees where they hold exclusive broadcast rights—something that is possible only once an event has been delisted. However, the minister does have the discretion to override automatic delisting. In a situation where a rights holder has strung out negotiations with free-to-air broadcasters with the deliberate intention of automatic delisting 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 to the minister to exercise discretion to override automatic delisting. This tends to mitigate the concerns expressed by free TV.

Given that this is a simple bill that doubles the existing delisting period, to a large degree the attention of the committee was focused on matters which were, strictly speaking, tangential to the bill. In particular, the issues of the so-called loophole and the broadcast rights to the Ashes cricket series were consistently raised. The antisiphoning list does not prevent third parties, such as channel content providers, from acquiring broadcast rights to a listed event prior to either its delisting or acquisition by a free-to-air licensee. While these third parties cannot themselves broadcast the rights, they can trade them to a licensee. This is the so-called loophole which was referred to in the hearings and which has been the subject of debate for a number of years.

Free TV contends that the intent of the antisiphoning regime is being circumvented by the so-called loophole. Its major concern is that, once a channel provider has rights, it is no longer as commercially attractive for free-to-air operators to pick up those rights because they would not be available on an exclusive basis. However, it was never the intention of the antisiphoning rules to provide free-to-air broadcasters with exclusive access to the broadcasting rights to a listed event. The broadcast rights to the Ashes cricket series were submitted to the committee as an example of the apparent loophole at work. The committee received claim and counterclaim about the negotiations of the broadcast rights. However, I note that it is not the committee’s role to adjudicate on this matter, and the committee came to no conclusion about who had a better or more righteous case.

What was apparent to the committee was that, whilst Fox Sports, a channel content provider, had purchased the rights to the Ashes series, it had done so on a non-exclusive basis. Bearing in mind that it was never the intention of the antisiphoning rules to provide free-to-air broadcasters with exclusive access to the broadcasting rights to a listed event, it is important to note that the rights were still available to free-to-air broadcasters. The free-to-air broadcasters could have negotiated these rights with the England and Wales Cricket Board at any time. Ultimately, the decision as to whether to acquire these rights is, I repeat, a commercial one for the broadcasters concerned. In passing, I would note that last week SBS was successful in obtaining the free-to-air broadcast rights to the Ashes.

Nevertheless, 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, the question has arisen as to whether the intention of the antisiphoning scheme is being circumvented. Accordingly, the committee has recommended that the Minister for Communications, Information Technology and the Arts should consider examining the issue of the so-called loophole and determine whether the intent of the antisiphoning scheme is in fact being circumvented. The committee has recommended that this bill be passed without amendment, and I commend it to the Senate.