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Australia – Ground Gained By Pay TV Service Providers: Anti-Siphoning Bill Introduced.

28 October, 2012

 

Legal News & Analysis – Asia Pacific – Australia – TMT


In brief

 

  • The Broadcasting Services Amendment (Anti-siphoning) Bill 2012 aim to make the anti-siphoning scheme more competitive and more relevant to the digital environment

 

On 22 March 2012, Senator Stephen Conroy introduced the Broadcasting Services Amendment (Anti-siphoning) Bill 2012 (the “Bill”). The second reading of the Bill has been adjourned and the debate has been adjourned for a later sitting. The Bill seeks to amend the anti-siphoning and anti-hoarding provisions in the Broadcasting Services Act 1992 (Cth) (the “BSA”) and is designed to implement the proposed reforms from the Government’s report on the review of the anti-siphoning scheme announced 25 November 2011 (the “Report”).

 

The amendments aim to make the scheme more competitive and more relevant to the digital environment. They are intended to enhance televised coverage of events by imposing tighter controls around what is shown, where and by whom. The Bill proposes the following changes:

 

  • the introduction of a two-tier anti-siphoning list with different coverage requirements attaching to the different tiers;
  • an extension of the automatic de-listing period from 12 weeks to 26 weeks;
  • revised “must offer” obligations on commercial free-to-air broadcasters;
  • the introduction of obligations on the minimum number of hours of broadcasting of an event;
  • the extension of the anti-siphoning restrictions to “content service providers”; and
  • notification requirements on commercial free-to-air broadcasters, national broadcasters and program suppliers.

 

The Bill also proposes that wide discretion would be afforded to the Minister for Broadband, Communications and the Digital Economy, often in circumstances where the legislation does not provide any clear or specific guidelines about how that discretion should be exercised. The Australian Subscription Television and Radio Association has argued that these discretionary powers have the potential to substantively alter the scope and effect of the scheme.

 

We consider the proposed amendments in further detail below.

 

Two-tiered anti-siphoning list and coverage requirements

 

The BSA empowers the Minister to list, in a formal notice, events that must be available on free-to-air television for viewing by the general public (the anti-siphoning list).

 

When the Minister amended the anti-siphoning list on 1 January 2011, he allocated the events in the new list as Tier A or Tier B events. Those tiers are currently of no effect, but the commencement of the amendments set out in the Bill will trigger the differential treatment of events depending on their allocated tier.

 

Tier A events compromise nationally iconic events such as the Melbourne Cup, the AFL and NRL Grand Finals, finals of the FIFA World Cup and finals of the Australian Open. Free-to-air broadcasters will be required to broadcast Tier A events live and in-full, or with as short a delay as is technically feasible.

 

Tier B events will comprise events that are of regional and national significance such as the AFL and NRL regular games, the State of Origin series and the Olympic Games. The Bill provides the Minister the discretion to assign Tier B events to a “designated group” and to specify Tier B events that comprise a “quota group”, each with different coverage obligations attached.

 

Designated groups

 

The “designated events” comprise multi-round tournaments such as the Australian Open and various golf competitions. The designated groups do not cover weekly NRL and AFL games. The free-to-air broadcasters who hold the right to televise the designated events will be required to televise the event with no delay or within 24 hours of the start of the event. In addition, the broadcasters will be required to televise the event in accordance with the total minimum number of hours or the daily minimum number of hours prescribed by the Minister.

 

Quota groups

 

The quota groups are designed to cater for multi-round interstate matches of AFL and NRL competitions. There are two categories of quota group, Category A and Category B, again each with different broadcasting rules attached.

 

For Category A quota groups, the Minister is required to specify a quota number which indicates the number of events in that quota group that must be shown on free-to-air television. For example, each round of the AFL and NRL Premiership quota is capped at 4 and 3, respectively. This means a subscription television broadcaster could acquire the exclusive rights to the remaining number of matches exceeding the quota number.

 

For Category B quota groups, in addition to specifying a quota number for the quota group, the Minister is to set one or more associated set conditions for a quota group. Associated set conditions are a filter used for assigning an event to count towards the quota number. This allows different treatments in different licence areas and the Minister may assign multiple attributes to an event. For example, the Minister may specify that for an event to count towards the quota number for broadcasting licensees in the Queensland area, the event has to take place on a Friday night and involve at least one of the Queensland NRL teams.

 

Highlights packages

 

While the Bill provides subscription television broadcasters with the opportunity to acquire rights to the remaining number of events in a quota group, it limits the acquisition of rights by subscription broadcasters to televise highlights of an anti-siphoning event that is not in a quota group.

 

Multichannel broadcasting

 

To assist the free-to-air broadcasters to comply with the coverage requirements, the Bill provides that the broadcasters may choose to televise Tier B events on their digital multi-channels simultaneously – an option that was not previously available. Tier A events, however, continue to be subject to the requirement of first premiering on a fee-to-air broadcaster’s primary channel, with limited exceptions where the event overlaps with regularly-scheduled news coverage or other Tier A events.

 

Extension of automatic de-listing period

 

Currently, an event on the anti-siphoning list is automatically de-listed if no free-to-air broadcaster expresses an interest in acquiring the broadcast rights at least 12 weeks before the start of the event. The Bill seeks to bring forward the automatic de-listing period to 26 weeks, thereby providing greater opportunity for sporting bodies to engage in open competitive commercial negotiation with subscription television broadcasters.

 

Under the Bill, the Minister has the discretion to terminate the automatic de-listing on the basis that at least one free-to-air television broadcaster has not had a reasonable opportunity to acquire the right to televise the event.

 

The “must offer” rule

 

The Bill provides for revised anti-hoarding requirements that apply to free-to-air broadcasters of events on the anti-siphoning list. If a free-to-air broadcaster cannot comply with the coverage obligations outlined above for Tier A and Tier B events respectively, the licensee must offer to transfer to each other free-to-air television broadcaster, the right to televise the event live for nominal consideration of $1. It is only if no free-to-air broadcaster accepts the offer, that the right must be offered to subscription television broadcasters.

 

The Department of Broadband, Communications and the Digital Economy described the $1 arrangement as a disincentive to hoard. The prospect that the rights must be offered to a free-to-air broadcaster’s free-to-air competitors for $1 may well encourage free-to-air licensees to use rather than lose their rights. Of course, if all other free-to-air broadcasters must be given an opportunity to take the rights for $1, the prospect of subscription broadcasters ever picking up the rights in such circumstances is remote.

 

Extension of anti-siphoning scheme to content service providers

 

For the first time, anti-siphoning rules will apply to “content service providers”, such as IPTV operators. Content service providers has the same definition as in Schedule 7 to the BSA, being essentially a person providing a content service in Australia by means of a carriage service. Interestingly, the provisions appear to capture all content service providers, including those providers that do not actually charge for access to their content.

 

The anti-siphoning rules that will apply to content service providers are slightly different from those that apply to subscription television. For example, the rules apply only to those events that occur in Australia.

 

Separately, while the provisions applying to subscription broadcasters prevent them from acquiring rights except as expressly permitted, in the case of content service providers, the restrictions are imposed on rights holders rather than on the content service providers themselves. The provisions propose that rights holders must not confer on content service providers rights except as permitted. Accordingly, it seems that a content service provider may avoid the application of the rules if it were to acquire the rights from an overseas “person” or licensor outside the regulatory jurisdiction of Australia.

 

Notification requirement

 

On a housekeeping note, the Bill will require free-to-air broadcasters to notify the Australian Communications and Media Authority, in writing within 10 business days, of acquiring or ceasing to hold any broadcasting rights relating to an anti-siphoning event.

 

Next steps

 

While the amendments will result in some tightening of the anti-siphoning rules to seek to ensure that key events are broadcast and not hoarded, the amendments are likely to be considered as mere tinkering by some. The broad discretion provided to the Minister may also undermine any optimism that the new system will be more robust than the existing. It is likely that despite the amendments, the system will continue to be one of the most controversial aspects of our broadcasting regulation.

 

The Bill provides for a statutory review of the new regime which is required before 31 December 2014. As part of the process, the Minister is required to prepare a report of the review. This will be an opportunity for the key players to examine the effectiveness of the implementation of the proposed reforms and address concerns arising from the new measures.

 

 

For further information, please contact:

 

Anita Cade, Partner, Ashurst

[email protected]

 

Alysha Salinger, Ashurst

[email protected]

 

 

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