Broadcasting licence fees reduction
Dr Rhonda Jolly
Under the Television Licence Fees Act 1964 commercial
television broadcasters are required to pay a proportion of their gross
earnings as fees for using the scarce public asset of radio spectrum.[1]
From 2010, there have been a number of reductions in these fees, the last being
in 2013 when the maximum rate of fees was reduced from nine to 4.5 per cent.
The argument for reducing fees in 2013 was that it would help counter ‘the significant
financial pressures faced by commercial television stations as a result of emerging
and convergent technology’ and an ‘increasingly challenging operating
environment’.[2]
The free-to-air networks have not been satisfied with
licence fee reductions; they consider that ‘onerous and restrictive licence
fees’ should be removed completely as they consider this will deliver a fairer
competition environment and give them capability to invest in Australian jobs
and production. [3] In support of its
position, Nine Entertainment has argued that currently multinational content
companies, such as Netflix, pay no licence fees and do not invest in Australian
content, talent or production staff. On the other hand, Nine argues, free-to-air
television directly employs over 7,000 people and contributes $4.7 billion in
direct value to the Australian production industry.[4]
In arguing for the removal of licence fees, Seven West Media
has noted that Australia’s licence fees are substantially more than those paid
in other countries. [5] In Britain, for example,
licence fees are 0.18 per cent of broadcasters’ revenues.[6]
In addition to this, Seven West Media has claimed that Australia’s content
obligations are greater than those imposed by many international regimes.[7]
Commercial Radio Australia (CRA), the industry body for
commercial free-to-air radio broadcasters, which also pay licence fees to
enable their use of spectrum, has maintained that radio broadcasting licence
fees are higher than their overseas counterparts. [8]
In response to the recent review of spectrum by the Department of
Communications, CRA has argued that it was important that the pricing of
spectrum for commercial free-to-air radio is considered in the context of
‘heavy regulation, local and Australian music content requirements, advertising
restrictions and mandatory tags required of radio broadcasters, as well as the
key role of radio in emergency situations’.[9]
This Budget has provided fora reduction in the amount of
licence fees free-to-air television and radio broadcasters will be required to pay,
but fees will not be abolished. Instead, they will be reduced by approximately
25 per cent from the 2015–16 licence period. This measure is expected to have
an impact of $163.6 million over the forward estimates.[10]
The Government stated in the budget papers that it will continue to consider
licence fees ‘as part of broader reforms to broadcasting and spectrum policy’.[11]
Reaction
Free-to-air television broadcasters appear not entirely happy
with the licence fee concession, given their efforts to have fees abolished and
the possibility that other media reform—to the 75 per cent reach rule and the
two out of three ownership rule—may be at least temporarily forestalled until
after the 2016 election.[12] However,
as one industry source remarked in 2015, licence fees are the priority
issue for free-to-air broadcasters and the issue is entirely separate from any
consideration of media ownership rules’.[13] This is most likely
because the broadcasters believe, as Seven
West Media’s Tim Worner has claimed, that abolishing licence fees may do more
to assist them to remain financially viable than removing cross ownership and
reach rules.[14]
Chairman of the television lobby group Free
TV, Harold Mitchell, however, has called the cut in this budget measure ‘disappointing’.[15]
While the lobby group appreciates the ‘modest first step’, according to Mr
Mitchell the change does not acknowledge that in the new media environment, action
needs to be taken urgently ‘to make sure broadcasters can continue to invest in
great Australian programming and in transforming [commercial free-to-air
broadcasting] businesses’.[16]
Commercial Radio Australia’s Chief Executive
Officer, Joan Warner, considers the licence fee cut ‘a welcome relief’,
but adds that the radio industry body is similarly disappointed that ‘the
relief is not greater’, given that commercial radio needs ‘to be able to better
compete against global players who are largely unregulated and do not carry the
many costs, obligations and restrictions that local radio broadcasters do’.[17]
The reduction in licence fees has disappointed the
subscription television industry. In the opinion of the Australian Subscription
Television and Radio Association (ASTRA) lobby group, the licence cut in the
Budget amounts to a ‘taxpayer-funded gift’.[18] ASTRA Chief Executive
Officer, Andrew Maiden, denies the free-to-air television broadcasters’
argument that they face significant financial pressures, contending that the
licence fees they pay ‘reflect the value of unusually significant protections
and privileges enjoyed by the major broadcasters, rendering invalid any
comparison with fees paid by their international peers’.[19]
According to Mr Maiden, in exchange for paying licence fees, free-to-air
broadcasters ‘enjoy a legislated ban on competition, guaranteed access to
broadcasting spectrum and the world’s most protected market for sports
broadcast rights’.[20]
[1].
Television
Licence Fees Act 1964.
[2].
Explanatory
Memorandum, Television Licence Fees Amendment Bill 2013, p. 2.
[3].
For example, the Nine Entertainment, Submission
to Senate Environment and Communications Legislation Committee, Inquiry into
the Broadcasting Legislation Amendment (Media Reform Bill) 2016, March
2016, p. 4. Submission cites information from Deloitte Access Economics, Economic
contribution of the film and television industry in Australia, [report
for] Australian Screen Association, February 2015.
[4].
Ibid., p. 5.
[5].
Seven West Media, Submission
to Senate Environment and Communications Legislation Committee, Inquiry into
the Broadcasting Legislation Amendment (Media Reform Bill) 2016, March
2016, p. 13.
[6].
Ibid., Appendix 5.
[7].
Ibid.
[8].
Radio Licence Fees Act 1964, accessed 4 May 2016 and Commercial
Radio Australia(CRA), Commercial
radio industry welcomes Government response to Spectrum Review, media
release, 25 August 2015.
[9].
Ibid. See also Spectrum Review, at: Spectrum Branch, Spectrum
review, Department of Communications March 2015
[10].
Australian Government, Budget
measures: budget paper no. 2: 2016–17, 2016, p. 8..
[11].
Australian Government, Budget
measures: budget paper no. 2: 2016–17, 2016, p. 8.
[12].
The 75 per cent rule (audience reach rule) states that a person, either
in his or her own right or as a director of one or more companies, must not be
in a position to exercise control of commercial television broadcasting
licences which have a combined licence area population that exceeds 75 per cent
of the population of Australia. The two out of three rule (cross-media
ownership rule) states that a person can only control two of the regulated
media platforms (commercial television, commercial radio and associated
newspapers) in a commercial radio licence area.
[13].
D White, ‘Malcolm
Turnbull expected to play hard ball on TV licence fee cuts’, Sydney Morning Herald (online), 22 July
2015.
[14]. D
Crowe and J Mitchell, ‘Forces massing to fight Fifield's media reforms’, The Australian, 2 March 2016, p. 6.
[15].
FreeTV,Budget
licence fee change, media release, 3 May 2016.
[16].
Ibid.
[17].
Commercial Radio Australia, Commercial
radio welcomes licence fees cut in Federal Budget, media release, 3 May
2016.
[18].
Australian Subscription Television and Radio Association (ASTRA), Taxpayers
foot $150 million handout to ‘free’ television, media release, 3 May
2016.
[19].
Ibid.
[20].
Ibid.
All online articles accessed May 2016.
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