Research Paper no. 14 2009–10
Dr Rhonda Jolly
Social Policy Section
11 February 2010
- Siphoning refers to the practice used by pay television broadcasters by which they appropriate, or ‘siphon off’ certain events that have been traditionally shown on free-to-air television so that viewers who do not subscribe to their services are unable to view those events.
- Australia’s free-to-air broadcasters lobbied government extensively to ensure that a list of programs which could not be siphoned by pay television was in place to coincide with the introduction of pay television in the mid 1990s. The list detailed events that can not be shown on pay television until telecast rights have first been acquired by a free-to-air broadcaster.
- Pay television operators initially objected to the introduction of an anti siphoning list on the grounds that it would inhibit the development of pay television.
- The list has undergone considerable review since its introduction. This has resulted in some minor changes, but a list, per se, appears to be entrenched firmly as part of the media landscape in Australia.
- Arguments surrounding the maintenance of the list have been consistent. Free-to-air broadcasters claim that the list serves the public interest, and therefore it should be maintained. Pay television operators oppose the list, which they argue serves the interest of free-to-air broadcasters, not the public.
- The diametrically opposing stances of these powerful interest groups have ensured that anti siphoning is not an issue that governments can ignore. At the same time, anti siphoning has proven an issue that governments, despite various efforts at compromise, have not been able to resolve to the total satisfaction of the broadcasters or other participants, including viewing audiences.
- This paper traces the history of the anti siphoning regime in Australia. It discusses its development and explores the arguments for and against its retention, both in past context and in relation to a current government inquiry into the relevance of the scheme in a changing 21st century media environment.
The author is grateful for the constructive comments and suggestions made on a previous version of this paper by Professor Stuart Cunningham, Director, ARC Centre of Excellence for Creative Industries and Innovation, Queensland University of Technology and Professor Terry Flew from the Creative Industries Faculty, Queensland University of Technology.
Also thanks to my colleagues, Paula Pyburne and Amanda Biggs, for their contributions.
Free-to-air television services were first introduced in Australia in 1956. The first broadcast of subscription or pay television, however, did not occur until almost 40 years later.  But long before pay television became a reality, it was seen as a threat by free-to-air broadcasters, who were particularly alarmed that it would appropriate their most popular programs, such as sport and recent release films, for the exclusive use of those willing and able to pay for the privilege.
The free-to-air broadcasters therefore lobbied various governments to demand that some form of regulation accompanied the introduction of pay television to prevent this ‘siphoning’ from occurring. The efforts of the free-to-air broadcasters were rewarded when the Hawke Government, which oversaw the introduction of pay television, introduced an anti siphoning scheme under which the rights to certain listed events could not be acquired by pay television operators.
This paper traces the history of this anti siphoning regime. It discusses development of the scheme and explores the arguments for and against its retention, both in past context and in relation to a current inquiry into the relevance of the scheme in the changing 21st century media environment.
An anti siphoning regime in general prevents certain televised events, which have been listed by government, from being appropriated or ‘siphoned off’ by pay television operators so that only those that subscribe to a pay service are able to view the events. Siphoning is seen therefore as detrimental to free-to-air viewers.
A number of countries in Europe, as well as the United Kingdom, employ anti siphoning schemes (see Appendix A for more detail). Under the Australian anti siphoning scheme, pay television licensees are unable to acquire rights to televise listed events on pay television until rights have first been acquired by the Australian Broadcasting Corporation (ABC), the Special Broadcasting Service (SBS) or commercial free-to-air broadcasters who reach more than 50 per cent of the Australian population.
Section 115 of the Broadcasting Services Act 1992 (the BSA) details the Australian anti siphoning rules. Provisions in section 115 empower the Minister for Broadband, Communications and the Digital Economy to list in a formal notice, (known as the anti siphoning list), the events that must be available on free-to-air television for viewing by the general public.
While the intention of the anti siphoning list is to ensure that important events which have been traditionally available on free-to-air continue to be accessible for free-to-air viewers, the list does not:
– reserve sporting events solely for broadcast by free-to-air television
– compel free-to-air broadcasters to acquire the rights to listed events
– guarantee free-to-air broadcasters exclusive rights to listed events
– compel free-to-air broadcasters to broadcast events to which they hold rights.
There is provision in the rules for the Minister to delist an event on the anti siphoning list if no free-to-air broadcaster displays an interest in acquiring the broadcast rights. Events are automatically delisted if no free-to-air broadcaster expresses such an interest 2016 hours (12 weeks) prior to their staging. This period is considered sufficient to allow pay television broadcasters time to acquire the rights to an event and to promote that event. The automatic delisting period can be terminated if the Minister considers 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 concerned’.
In 1982, the Fraser Government asked the Australian Broadcasting Tribunal (ABT) to inquire into the possible social, economic or technical implications that could accompany the introduction of cable and subscription television to Australia. Free-to-air broadcasters argued before the inquiry that siphoning of programs would be an inevitable consequence of a pay television environment and that this would have considerable social costs for audiences. The only solution to this problem they contended was to introduce an anti siphoning scheme. In opposition, potential subscription television operators told the ABT that such a scheme would prevent them from competing with free-to-air broadcasters to buy programs. Some sporting bodies were also opposed to the introduction of an anti siphoning regime.
The ABT concluded that siphoning could adversely affect programming on existing television services and that this may not be in the public interest. On the other hand, it recognised that decisions about siphoning would need to involve consideration, not only of the rights of the viewing public, but also the rights of various commercial organisations. With regards to sport, these would need to acknowledge, for example, that while sport was enjoyed by the masses, it was also a business. As such, the owners of sports should be able to make the most revenue they could from the sale of broadcast rights to their products.
The ABT recommended that the Government introduce cable and pay television ‘as soon as practicable’, but it was not convinced that there was sufficient evidence that an anti siphoning scheme should be part of the pay television environment. It was, however, a long road from the ABT’s recommendation, to the actual introduction of pay television, and one paved with further inquiries.
The Fraser Government did not act on the ABT recommendation, and in 1983, it was defeated at the polls. Its successor, the Hawke Labor Government, took some time before it too commissioned an inquiry into the social impact of pay television. This was undertaken by the Department of Transport and Communications (DTC) in 1989. Siphoning was again a subject of contention with the two opposing positions previously presented to the ABT in 1982 restated. Complexities associated with introducing anti siphoning, such as how much protection should existing industries be afforded against new or alternative industries, were also reaffirmed.
The DTC suggested that there were two basic approaches to siphoning. The first was simple and easy to administer. Introduce a list of programs that subscription television operators could not acquire. The second option, which conferred no exclusive rights, required complex regulation and breaches could be examined only in retrospect.
The DTC reached no conclusion about whether an anti siphoning regime should be introduced. In contrast, in the same year a House of Representatives committee considered the equity argument in favour of anti siphoning rules was ‘an overriding one’. It recommended the adoption of a system of dual rights under which events would be available both to free-to-air and pay television. In 1991, in yet another consideration of anti siphoning, the Office of Regulation Review (ORR) echoed the earlier ABT view, concluding that a siphoning regime would involve arbitrary judgements and that extensive intervention by government to prevent siphoning was unnecessary.
After weighing the findings of these investigations, the Hawke Government decided to impose an anti siphoning regime on pay television. There are few who would deny that the powerful free-to-air broadcasters, such as Kerry Packer, had some considerable influence on this decision. Indeed, Mark Westfield in his study of pay television in Australia notes that the success of free-to-air broadcasters in denying pay television access to sports programming was ‘the big one’.
Parameters for the anti siphoning regime were established under the Broadcasting Services Act 1992 (BSA) which conferred the power to introduce an anti siphoning list and to specify events that should be televised free to the public. While the BSA did not define the meaning of the word ‘event’, it appeared that this meant something which happened ‘in the real world’—a sporting or cultural event, rather than ‘fictional constructs or imagined events’.
When subscription television operators commenced services in 1995, anti siphoning regulation operated in conjunction with a licence condition imposed on their broadcasting licenses. 
Following passage of the BSA, in February 1994 the Government initiated a specific investigation to determine what events would be reserved for free-to-air broadcast. The investigation, conducted by the Australian Broadcasting Authority (ABA), was once more confronted with vastly disparate views. These are summarised below.
One section of the viewing public was adamant that it did not want to pay to see events previously available for free; some viewers argued strongly that as tax payers’ money supported athletes, they should not be charged to view sporting performances. In contrast, other viewers saw advantages in pay television acquiring exclusive rights to events. They were commercial free and often included more timely and comprehensive coverage than free-to-air.
Once more the overarching argument advanced by free-to-air broadcasters was that siphoning disadvantaged the viewing public. People should not have to pay in the future for events they currently viewed for free, the broadcasters claimed. There was some difference in opinion amongst free-to-air broadcasters, however, about what events should remain free. The ABC considered only those of national significance should be on an anti siphoning list, but commercial broadcasters believed the list should include important state, regional and local events.
Pay television licensees argued overseas experience indicated that siphoning was not the significant problem free-to-air broadcasters claimed. In addition, pay television had proven to be a boon for sports, its coverage was more comprehensive and a greater range of sports could be televised overall. Pay operators wanted the protected list short; the shorter the list, they maintained, the less chance the development of pay television would be hampered.
Although their attitude to the anti siphoning list has since changed, in 1994 major sports, such as cricket, rugby league and Australian Rules football were ambivalent about an anti siphoning list. There were a number of reasons for this, not the least of which was that these sports had sold the rights to the broadcast of their competitions for some time. The Australian Cricket Board’s point, however, that it was important to achieve ‘a fair market price’ for its product, regardless of where it originated, indicated that this initial stance could change to reflect the realities of future contract negotiations.
Sports which received limited television coverage, such as surfing and baseball, were not overly enthusiastic about instigating an anti siphoning regime. They saw immediate disadvantages in having to negotiate exclusively with free-to-air broadcasters if their major events were placed on the anti siphoning list. These sports saw pay television as beneficial in raising their profiles and improving their support base.
The Australian Olympic Committee (AOC) was opposed to all Olympic events being included on an anti siphoning list. The AOC wanted to be in control of the rights to the Games and to sell them off as components rather than have the sole control rest with free-to-air broadcasters.
Such concerns about restriction of competition and the possible disadvantages for sports in maximising financial returns were more clearly stated by Trade Practices Commission (TPC). The TPC saw the denial of rights to broadcast an event as an ‘artificial constraint on competition’ which had the potential to disadvantage pay television operators.
The ABA presented the Government with four options. The first—a ‘sarcastic’ offering according to Westfield—was to institute a comprehensive list of events as nominated by the free-to-air broadcasters. At first glance, this option appeared to preserve the most viewer access, as it included every rugby league and Australian Rules football match, cricket test and one day international, each match in the tennis grand slam tournaments, the Tour de France, every national and international motor race, the Summer and Winter Olympics and the Commonwealth Games. But it was clearly impossible for the free-to-air services to broadcast all these events without displacing a significant amount of their other programming. So in effect, this ‘comprehensive’ option would inevitably mean either that some events were not broadcast, or only short snippets were shown. The ABA saw the option as anti-competitive, as it would give free-to-air services the right to ‘hobble’ pay television.
A further option suggested by the ABA was to include events on an anti siphoning list if they met certain criteria. Another option was to adopt a watching list of events to be considered for inclusion on a future list as contractual arrangements for the coverage of certain sports expired and information on the numbers of pay television subscribers and the nature of its programming became more apparent.
This latter option was the only one which in some way acknowledged that outcomes in the new pay television environment were uncertain. As one commentator had previously asked in relation to entrenching any anti siphoning approach:
What happens five or six years down the track when 60 per cent, 70 per cent or even 80 per cent of Australian homes with television are hooked into a pay-TV service … Can the Federal Government still argue that it is worth denying all the extra dollars to cash strapped sporting organisation (who from 1995 won’t be allowed to accept any sponsorship deals from tobacco companies) … in order to preserve the annual Melbourne Cup coverage for as few as 20 per cent of the population who aren’t hooked up?
The anti siphoning list announced by the Labor Minister for Communications and the Arts, Michael Lee, on 31 May 1994 was in effect the comprehensive list nominated by the free-to-air broadcasters. The Olympic Games was one notable exception. According to one source, this was because the Chairman of the Sydney Organising Committee for the Olympic Games, Gary Pemberton had asked for the omission to ensure potential sponsorship deals were not jeopardised. A watch list was also announced to accommodate the future changes in contractual arrangements noted in the ABA report. Only sporting events were on these lists, as the Government deemed that events of cultural importance were not subject to exclusive coverage rights.
Media analyst and academic, Jock Given, later commented that what the list lacked in cultural diversity, it made up for in size. In Given’s view, ‘[t]he Big Pineapple and the Big Merino had nothing on the Big Aussie Anti-Siphoning list’.
Most commentators saw the anti siphoning list as a victory for free-to-air broadcasters. From the outset, however, pay television operators challenged that victory. Pay operator Australis Media was the first to do so when less than two months after the list was announced, it claimed to have secured the rights to a number of international sporting events. These events included the Australia–West Indies cricket tests and the Rugby League World Cup in 1995. It appeared Australis had circumvented the anti siphoning regime by acquiring the events in a joint venture with the United States’ company Liberty Sports-Prime International before gazettal of the list.
Given that there were less than 180 000 Australian homes with subscription television the Australis deal would have meant that important contests in two popular sports were denied to most viewers. After the Nine Network responded angrily to the deal and the ABA questioned its legitimacy, Australis agreed to negotiate to give free-to-air broadcasters the opportunity to acquire first broadcasting rights. Negotiations faltered and in November 1995, the matter was complicated further when Australis requested that the Government delist the Australia–Pakistan cricket test series that had taken place the month before. In Australis’ view, as none of the free-to-air broadcasters had been interested in showing the event live, delisting would allow the games to be seen by viewers, albeit in retrospect.
While compromises were offered by the Government, including allowing the simultaneous telecast on free-to-air and pay networks, the Nine Network refused to move from the position that it was entitled to exclusive rights to the events in question. The impasse threatened telecast of the West Indies cricket series, until another free-to-air network, Ten, agreed to obtain the rights from Nine for a nominal fee. Ironically, around the same time the ABA declared that the timing of the rights purchase had been legitimate, which meant that Australis could have legally continued with its plans to cover the West Indies tour.
In 1993, Kerry Packer, Chairman of Publishing and Broadcasting Limited, purchased the broadcasting rights for rugby league on free-to-air television until 2000 for $80 million. Pay television rights were included in this deal at no cost. In 1994, Rupert Murdoch’s News Limited attempted to obtain the pay television rights, but Packer refused.
This situation sparked the Super League war.
Murdoch decided to establish an alternative rugby league competition with 12 privately owned teams—Super League. The rival competition was prevented from kicking off in 1996 after the Australian Rugby League (ARL) took Super League to the Federal Court. Following an appeal by Super League, the Court allowed the rival competition to take place in 1997.
Crowd attendances and corporate sponsorship were adversely affected by the existence of two competitions in 1997. A compromise agreement between the Australian Rugby League and News Limited was reached to restore a single competition format to be run by the National Rugby League from 1998.
As an alternative rugby league competition, it was thought by some that Super League would have been able to circumvent anti siphoning rules. But the Labor Government made it clear almost from the beginning of the saga that it would act to ensure that the ‘best rugby league’ would continue to be available free-to-air, regardless of what it was called. In 1995, the Government assured the public that if Super League were to become the premier league competition, it would be added to the anti siphoning list. In 1996, as expectations that a second competition would be inevitable the following year, Super League events were added to the list until 2004.
The Howard Government (1996—2007) was also forced to act to assure the public that rugby league would not migrate to pay television when the rumours of a merger between Super League and the ARL emerged. In November 1997, Minister Richard Alston pre-empted any deal between the two rival factions by announcing that a possible merged competition and any interim arrangements would also be added to the anti siphoning list.
A year after the election of a Howard Coalition Government in March 1996, the anti siphoning scheme was again in the news when a number of senior politicians, including the Prime Minister, expressed concern over limited free-to-air coverage of cricket. Added to the politicians’ concerns, there was widespread public outcry when the Nine Network did not show the first session of the Australia–England cricket test series being played in England. This was resolved by Nine by allowing the ABC to show the relevant test. But this compromise did not solve the basic problem—the free-to-air broadcaster could arbitrarily decide whether to show programs on the anti siphoning list, thereby undermining its stated intention. One commentator remarked also that Nine’s concession represented a poisoned chalice for the ABC. It would be the public broadcaster, not the commercial networks that felt viewers’ ire ‘whenever politicians and the public get upset about not seeing their sport on free-to-air TV’.
When a deal was done between the Seven Network and News Limited in 1997 which meant only highlights of the Australian cricket tour of South Africa were to be shown on free-to-air it appeared anti siphoning had not only been cleverly undermined, it was simply not working. Some redemption appeared at hand when the Nine Network challenged the South African deal in the Federal Court, however. Nine claimed that the contract did not amount to the right to televise an event as required under the legislation. The Court agreed, ruling that the agreement was contrary to the intent of the anti siphoning legislation.
Jock Given saw this decision as a confirmation of the powerful gate keeping role of the free-to-air broadcasters with regards to anti siphoning. Solicitor Stuart Byrne believed the case also ‘kicked a nicely executed goal for free-to-air viewers’. On the other hand, Byrne considered a follow up case in the New South Wales Supreme Court kicked a goal ‘the other way’. It was decided in this case that a subscription sports service which aired Australian Rules football games was not subject to the restrictions of the anti siphoning list because it could be defined as a narrowcasting service targeted at a special interest group. In Byrne’s opinion, while events on the anti siphoning list were included because of their general popularity, regardless of that appeal, pay television operators could package the events to ensure they cleared the anti siphoning hurdle.
Getting tough on hoarding
In 1999, the Howard Government introduced amendments to the BSA to formalise the precedent set as a result of the South African cricket tour incident. The amendments required broadcasters who did not intend to televise live a substantial portion of the events to which they had live rights, to offer the unused rights for a nominal charge to the ABC and SBS.  The ABC and SBS were then bound, under legislative obligations, to televise live the designated events they accepted, or to offer the rights (either in total or in part) to the other national broadcaster. Only if the public broadcasters did not want events, would they then become available to pay television. The provisions were intended to overcome the ineffectiveness of delisting provisions. They were also:
… to provide an ‘incentive for free-to-air broadcasters to only acquire live rights to a designated event or events in a series they can actually use’, and to discourage the acquisition of live rights to designated events or series occurring during the same period ’where it would be impossible to provide full live coverage of both events or series on the one television channel’.
In contrast to their support for the anti siphoning regime, commercial free-to-air broadcasters were vehemently opposed to these constraints on their broadcasting practices, despite the fact that the intention of these restrictions mirrored those of the anti siphoning list. In arguing also that this anti hoarding requirement would result in commercial uncertainty for broadcasters and affect their scheduling flexibility, the free-to-air representative organisation FACTS failed to recognise the double standards applied in its approach.
Initially, pay television opposed yet another limitation on its operating practices, and the ABC was unhappy that it may not be given sufficient time to reschedule its own programming to accommodate the vagaries of free-to-air decisions.
Following the passage of the anti hoarding amendments, the ABA considered what events should be on an anti hoarding list, but only the 2002 and 2006 FIFA World Cup soccer tournaments were eventually designated under the provisions. Anti hoarding was always going to be of negligible value in the short to medium term, however. This was because it did not operate retrospectively, and the rights to many of the events that could have been potentially designated were already secured for some time when the legislation came into effect.
Towards a new list
At various times throughout 2000 it was reported that the Howard Government was contemplating abandoning the anti siphoning list when it expired in 2004. The Opposition attempted to capitalise on this uncertainty by suggesting that Australians would know who to blame if they were unable to watch their favourite sports on television. But by December, when the Communications Minister, Richard Alston, directed the ABA to consider revision of the list, it appeared that the Government remained committed to its continuation. After evaluating what events had been aired consistently by free-to-air broadcasters the ABA recommended some culling. At the same time, it proposed the inclusion of certain soccer and swimming events on a new list which could operate for a further five years.
Not surprisingly, the views of major interest groups on the merits of the anti siphoning list, as reflected in the submissions received for the ABA inquiry, had not changed significantly since its introduction.
As part of its major inquiry into broadcasting in 2000, the Productivity Commission (also referred to in this paper as the Commission) reviewed the anti siphoning scheme and concluded that it was exclusionary. The scheme was categorised as giving free-to-air broadcasters ‘a competitive advantage’ over subscription broadcasters and increasing their revenue. Additionally, it disadvantaged sport organisations by decreasing their negotiating power in marketing their products.
In addition, it disturbed the Commission that there were no transparent criteria under which sports were chosen for inclusion on the anti siphoning list. For instance, popular sports such as swimming and athletics were not on the list, while games in the Hong Kong Rugby Union Sevens, which attracted little viewer interest, were listed. Anti hoarding provisions were also problematic, and possibly a product of the extent of the anti siphoning regime, the Commission concluded. So, if the list were shorter, the problem of hoarding would consequently diminish.
In effect, in the Commission’s view, anti siphoning was anti-competitive and the costs of the scheme to sporting organisations, the broadcasting industry and the community as a whole, exceeded their benefits.
Since 2000, issues such as the introduction of digital television, the multi channelling capacity for broadcasters associated with its introduction and anti siphoning have become increasingly entangled. Many aspects of these issues remain unresolved and are focal points in a current inquiry into anti siphoning which is discussed later in this paper.
For example, multi channelling has been divisive since 2002, when claims were first made that anti siphoning rules would be modified to allow free-to-air networks to deliver sport on digital multi channels. This suggestion was strongly criticised by pay television operators who considered that a less stringent anti siphoning list would not adequately compensate them for the benefits free-to-air broadcasters would gain from multi channelling. The Government denied that it was considering such a ‘trade-off’.
Pay television was later prepared to compromise on multi channelling, pledging support in 2004 in return for the Government’s agreement to abolish anti siphoning. At that time, however, the commercial free-to-air broadcasters were divided about whether they wanted to multi channel.
Rumours about the composition of the list persisted also. The Productivity Commission had suggested in its 2000 report, as had DTC in 1989, that a dual rights system of broadcasting rights may be one option that would satisfy pay and free-to-air broadcasters. Under this option, neither pay television, nor free-to-air broadcasters would be able to acquire exclusive rights to events on a nominated list. Dual rights could also provide viewers with the right balance of access to events.
Pay television operators were enthusiastic about this approach and lobbied the Government to adopt the option. But the Seven, Nine and Ten Networks used persuasive rhetoric in opposition. They argued that the people they labelled ‘Howard’s battlers’, that is, low and middle income families who had supported the Coalition at the 2001election, would be ‘punished’ if pay television operators ‘swooped’ on significant sporting events.
While it acknowledged that economic complications could accompany a dual rights system, an Australian Competition and Consumer Commission (ACCC) report published in 2003 similarly supported this option. Arguments put to the ACCC against varying the scheme to accommodate the option were: first, the option may result in audience fragmentation and a consequent loss of revenue for free-to-air broadcasters. Second, that content providers could refuse to deal with free-to-air broadcasters, believing they could gain higher revenues from dealing exclusively with pay television operators. Free-to-air television added to these arguments by noting that the British experience of a dual rights system had resulted in the migration of sport to pay television.
In July 2002, there was some suggestion in the press that the Government was contemplating the dual rights option. It intended to create two separate lists—an A list of premier events for which free-to-air broadcasters would have exclusive rights, and a B list for which free-to-air and pay operators could bid. Nothing came of these rumours as the Government resisted the pressure to contemplate this change. One commentator argued that this was because it would have been ‘politically dangerous in election year’ to consider making people pay to watch sports they had previously seen for free.
In May 2004, prior to the election, the Minister for Communications, Information Technology and the Arts, Daryl Williams, announced the composition of a new anti siphoning list. Notable additions to the list were the Olympic and Commonwealth Games. Events removed from the previous list included the Australian National Basketball League playoffs, the overseas Formula 1 Grand Prix and Motorcycle Grand Prix events, the Australian National Soccer League events, the United States’ Golf Open and the Hong Kong Sevens rugby. The new list was to come into effect on 1 January 2006 and continue until 31 December 2010 (see the list later in this section).
Understandably, free-to-air broadcasters welcomed the new list. Pay television was less enthusiastic considering that despite the delisting of some events, the new list still included sports they contended were consistently not broadcast by the free-to-air networks. According to the Australian Subscription Television and Radio Association (ASTRA) Chairman, Nick Greiner, the Government missed the opportunity to provide more live sport on television; it had simply extended a flawed system.
And so it seemed when Williams’ successor Senator Helen Coonan was confronted with familiar accusations that the free-to-air broadcasters were failing to air events on the list at acceptable times. In July 2004, a complaint was made to the new minister that Channel Nine had delayed the start of the telecast of the British Open Golf championships from 9 pm to 1 am to screen an old movie. Under agreement with Nine, Fox Sports had been able to show the golf for a certain time, but this telecast could have continued at least until the free-to-air broadcaster commenced its coverage. In Labor spokesperson Lindsay Tanner’s view, there was no excuse for the free-to-air broadcaster not to show the event live. Tanner considered either ‘use it or lose it’ should be the approach.
‘Use it or lose’ it had increasingly been advocated by pay television possibly as it realised the Government was not prepared to consider dual rights arguments. As Tanner’s comments indicated, the Labor Opposition saw merit in the idea and included it as a policy in its election campaigning. The Government, however, was not prepared to commit to ‘significant changes’ to anti siphoning without first consulting stakeholders. Labor also vowed to reverse a Government decision to delist the soccer World Cup.
Anti-siphoning list: (commencing 1 January 2006 and ending 31 December 2010)
1.1 Each event held as part of the Olympic Games.
2.1 Each event held as part of the Commonwealth Games.
3.1 Each running of the Melbourne Cup organised by the Victoria Racing Club.
Australian Rules Football
4.1 Each match in the Australian Football League Premiership competition, including the Finals Series.
Rugby League Football
5.1 Each match in the National Rugby League Premiership competition, including the Finals Series.
5.2 Each match in the National Rugby League State of Origin Series.
5.3 Each international rugby league test match involving the senior Australian representative team selected by the Australian Rugby League, whether played in Australia or overseas.
Rugby Union Football
6.1 Each international test match involving the senior Australian representative team selected by the Australian Rugby Union, whether played in Australia or overseas.
6.2 Each match in the Rugby World Cup tournament.
7.1 Each test match involving the senior Australian representative team selected by Cricket Australia played in either Australia or the United Kingdom.
7.2 Each one day cricket match involving the senior Australian representative team selected by Cricket Australia played in Australia or the United Kingdom.
7.3 Each one day cricket match involving the senior Australian representative team selected by Cricket Australia played as part of a series in which at least one match of the series is played in Australia.
7.4 Each World Cup one day cricket match.
8.1 The English Football Association Cup final.
8.2 Each match in the Fédération Internationale de Football Association World Cup tournament held in 2006.
8.3 Each match in the Fédération Internationale de Football Association World Cup tournament held in 2010.
9.1 Each match in the Australian Open tennis tournament.
9.2 Each match in the Wimbledon (the Lawn Tennis Championships) tournament.
9.3 Each match in the men’s and women’s singles quarter-finals, semi-finals and finals of the French Open tennis tournament.
9.4 Each match in the men’s and women’s singles quarter-finals, semi-finals and finals of the United States Open tennis tournament.
9.5 Each match in each tie in the Davis Cup tennis tournament when an Australian representative team is involved.
10.1 Each international netball match involving the senior Australian representative team selected by the All Australian Netball Association, whether played in Australia or overseas.
11.1 Each round of the Australian Masters tournament.
11.2 Each round of the Australian Open tournament.
11.3 Each round of the United States Masters tournament.
11.4 Each round of the British Open tournament.
12.1 Each race in the Fédération Internationale de l’Automobile Formula 1 World Championship (Grand Prix) held in Australia.
12.2 Each race in the Moto GP held in Australia.
12.3 Each race in the V8 Supercar Championship Series (including the Bathurst 1000).
12.4 Each race in the Champ Car World Series (IndyCar) held in Australia.
Coverage of the cricket was again the focus of controversy in a saga that began in 2003 when FoxSports bought the rights to the Ashes 2005 cricket tour. It appeared that this was able to occur as the result of a loophole in legislation which allowed pay television channels, as opposed to pay television broadcasters, to acquire the rights to events on the anti siphoning list before they were offered to free-to-air broadcasters. Both the Seven and Nine Networks, indicated that they were not interested in acquiring free-to-air rights because the series would be shown on pay television. Seven cited past difficulties experienced associated with the different time zones involved as another major reason for its lack of interest. The Nine Network was also sensitive to past criticism of its programming decisions.
Despite the ABC’s concern that it would experience similar programming difficulties as a result of the time difference between England and Australia, the ABC was once more seen as a solution which could counter public outrage reflected in campaigns such as the West Australian newspaper’s ‘Keep the Ashes Free’ (the campaign logo is illustrated later in this section). In return for broadcasting the series and to accommodate its usual programming schedule better, the ABC sought government permission to show the first session of play on a digital channel to be launched in March 2005. The Government was unwilling to make this concession, however, and from February 2005, the public broadcaster engaged in negotiations with English cricket authorities to deliver a wholly free television coverage of the series.
The ABC encountered difficulties with English cricket authorities which rejected its initial bid. SBS was then coaxed into negotiating for the Ashes rights, which it eventually won. Surprisingly, the SBS coup was achieved with a modest bid of between one and two million dollars. Reportedly, it was the result of ‘gentle prodding’ from Prime Minister Howard, a self confessed passionate cricket fan.
The crucial issue in this chapter of the anti siphoning saga was the so called legislative loophole. This became an additional focus for the Senate Committee investigating legislation to amend the anti siphoning scheme to increase its automatic delisting period from six weeks to 12 weeks. The free-to-air broadcaster organisation, Free TV, argued before the Committee that the loophole had to be closed to ensure that pay television broadcasters were not entitled to televise events on the anti siphoning list simultaneously with the free-to-air broadcast. The loophole was a furphy according to the pay television representative groups ASTRA and Premier Media Group (PMG).
The waters were muddied by the claim from the English and Wales Cricket Board that it had given Australian free-to-air broadcasters ample opportunity to bid for the series before it had approached subscription television. Free-to-air broadcasters were emphatic that they had lost out on the exclusive rights because the loophole allowed FoxSports to sign a deal before they had had sufficient time to make a commitment.
As the Committee noted, this disagreement was not new. It had surfaced during the ABA’s 2001 investigation, at which time the ABA had not been 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’. ABA had considered, however, that the issue could be revisited in the future if monitoring showed that the role of third parties had become problematic. The Committee appeared to be of the same opinion, and recommended only that the Government consider investigating the loophole.
The West Australian Ashes campaign logo
Source: The West Australian 
With regards to the focus of the Senate inquiry—extension of the automatic delisting period—pay television was generally supportive. Indeed, the pay television association ASTRA had proposed a longer period when the provision was introduced in 2001. While ASTRA was in favour of this change, it argued, as did others, that it did not address fundamental problems with the anti siphoning scheme.
Both the commercial and public free-to-air broadcasters, on the other hand, not surprisingly, were opposed to extending the delisting period. They maintained an extension would only provide more opportunity for subscription broadcasters and also sports rights holders to circumvent anti siphoning rules by prolonging negotiations until events were automatically delisted.
But despite the free-to-air objections pay television won this skirmish. The anti siphoning provisions were amended in April 2005 to extend the automatic delisting period.
From the time of its first election victory in 1996 the Howard Government signalled its intention to overhaul what it saw as antiquated regulation of the media in Australia. But its first attempts at reform lapsed due to a lack of numbers in the Senate. When the Government won control of both Houses at the 2004 election, the way was finally open to introduce change. During 2005, there was considerable speculation about the precise form the media transformation would take. It appeared, however, that it would not be as radical as first thought. Indeed, it was reported that the Prime Minister did not ‘intend to die in a ditch over media legislation’ and various media groups would have to be prepared to compromise to accommodate the Government’s policy objectives.
How these objectives would apply in the case of the anti siphoning regime was addressed in a speech to the National Press Club in September 2005 by Communications Minister, Helen Coonan. Coonan suggested that it would be ‘foolhardy’ not to look at pruning the anti siphoning list, introducing a ‘use it or lose it’ policy and lifting restrictions on multi channelling as part of a long term objective to move to a more open and competitive media environment. At the same time, Coonan noted some of these changes may be best introduced gradually.
The Government’s March 2006 blueprint for media reform, Meeting the Digital Challenge, sought comments in relation to three broad areas: relaxation of cross-media and foreign ownership restrictions, modification to the anti siphoning regime and changes to digital television laws.
Meeting the Digital Challenge was accused of being deliberately vague in skirting over key issues such as anti siphoning and by heavily qualifying changes. Nonetheless, it clearly stated a ‘use it or lose it’ option as the Government’s preferred approach to delivering more scrutiny over the presentation of events. The Minister’s earlier suggestion that the list may be pruned was also modified. It was suggested that this occurred because the Prime Minister did not want to take the political risk of taking sports away from the people.
Following a short period for public response, a final reform package of three bills was introduced into the Senate in mid September 2006. Of these, a digital television Bill updated the anti siphoning regime to account for the multi channel environment. This was to ensure that a listed sporting event could not be broadcast on a national or commercial multi channel service, in whole or in part, before it was broadcast on a main simulcast service. The Bill allowed that events could be simultaneously broadcast on a main simulcast service and a multi channel service. An exception was allowed in the case of excerpts of an anti siphoning event included in news or current affairs programs broadcast on a multi channel service. The Bill required the Government to review the anti siphoning scheme before the end of 2009. (This review is discussed later in this paper).
Fundamentally, the media reform package was about removing foreign ownership restrictions and revising cross-media rules to allow cross-media transactions to proceed, however. From the perspective of some in the media, particularly News Limited, these proposals did not go far enough, because they did not deliver full deregulation. Nor were the proposals seen as fully resolving issues surrounding anti siphoning, multi channelling, datacasting and the allocation of a fourth commercial television licence to the satisfaction of certain media players.
Lack of consensus among media companies about issues such as multi channelling and datacasting, could be said to have been the reason the Government took the ‘easier option’ of only removing cross-media and foreign ownership restrictions. The same lack of consensus had consistently surrounded anti siphoning; the 2006 media reforms were another chapter in the saga. As the Senate Environment, Communications, Information Technology and the Arts Committee which considered the media reform package restated, anti siphoning had been:
… a constant source of tension between those with interests in subscription television services and the FTA [free-to-air] broadcasters. Subscription television broadcasters argue the anti-siphoning provisions unfairly advantage the FTA broadcasters and that many listed events are not shown at all or shown as a delayed broadcast.
The Government argued that its use it or lose it scheme, would adequately address this long-standing problem.
Pay television operators were less convinced that this would be the case. As late as mid- September 2006 they were still attempting to convince the Government to look at more radical changes. They were especially concerned about the subtleties involved with the definition of ‘use’ of a broadcasting right. Would use, for instance, only entail the live showing of events or would the concept of use also be satisfied if the broadcast of an event was delayed, and if so, how long would it be possible to delay that telecast.
Subscription broadcasters were convinced that whatever the outcome, it would inevitably be more advantageous to free-to-air operators. Nonetheless, they continued a campaign to make the public more aware of what they saw were the omissions of free-to-air broadcasters, The industry organisation ASTRA distributing packs of playing cards entitled ‘A Pack of Abuse: 52 of Free to Airs' Sporting Sins’, which it maintained tallied with important sports events on the anti siphoning list that free-to-air networks had failed to telecast. In an unusual show of unity, the three major football codes all supported the pay television stand.
Free TV on the other hand launched an advertising campaign which claimed pay operators and ‘some big sporting bodies’ were ‘waging war’ on anti siphoning. It urged the public to oppose any changes to existing legislation.
On 18 October 2006, the Government’s media reform package, with some amendments, was passed by Federal Parliament. While the reforms to accommodate multi channelling noted earlier in this paper were enshrined in the legislation, the use it or lose it proposal had no new statutory basis, as the power to implement the measure was present under existing legislation.
The use it or lose it scheme which commenced 1 January 2007, was based on initial monitoring undertaken by ACMA of free-to-air television coverage of events on the anti siphoning list. The scheme set out guidelines which could assist the Government to determine which events should be included on the list and ACMA continued to monitor free-to-air coverage of events between January 2006 and September 2008 to this end. While there were some instances where ACMA was critical of free-to-air coverage during that time, such as the delay in telecast of football matches in certain states, in general the regulator found that the broadcasters provided adequate coverage of events to which they had secured rights.
The Minister’s release of guidelines on how the new scheme would work was greeted with scepticism by the Labor Opposition and free-to-air broadcasters, who warned they did not provide certainty that popular sports would not be siphoned by pay television (a summary of the guidelines is shown below). They considered, for example, that a requirement to broadcast events to 50 per cent of the population put at risk free AFL coverage in states with smaller populations, where viewers could see games involving their local teams rather than a single national game. As usual, pay television put a contrary view, expressing concern that the rules would not be enforced and free-to-air broadcasters would still dictate terms to pay television, sports fans and sports codes. Moreover, if Minister Coonan’s response that free-to-air operators would not lose rights because they failed one guideline was any indication of how the scheme would function, pay television most probably was justified in showing some apprehension.
‘Use it or lose it’: summary of rules
Source: The Australian
Despite the use it or lose it rules, ensuring that free-to-air audiences were able to see popular sport remained problematic in the lead up to the 2007 election. A Seven/Ten Network deal with pay television which ‘carved up’ the telecast of Australian Rules matches for the period from 2007 to 2011, for example, meant that many AFL games were not shown free-to-air or live. Under the agreement, for which Seven and Ten paid $780 million, AFL Friday night games were telecast live on Fox Sports into New South Wales and Queensland, while Seven provided a delayed telecast for AFL fans in those states.
The AFL benefited from the pay television broadcast of live matches into country New South Wales and Queensland as it was seeking to expand its support base in those areas. In addition, Seven’s campaign to assume ratings supremacy over the Nine Network was boosted by not having to broadcast AFL at prime time into the Sydney and Brisbane markets, where rugby league shown on Nine dominated. Many traditional AFL supporters were disadvantaged by the deal, however, as they were deprived of free-to-air coverage of AFL. Supporters in Perth and Adelaide in particular were required to subscribe to pay television if they wished to see live telecasts of all games played by their teams.
While this arrangement did not breach anti siphoning regulations, it illustrated the ease with which the list could be disregarded for commercial gain. Indeed, it could be argued that Labor's communications spokesman Stephen Conroy accurately summed up the situation when he noted that the deal ‘showed contempt for the spirit of the anti siphoning list’.
The Football Australia agreement signed in 2006 which sold broadcasting rights for Socceroos soccer games to pay television for seven years was yet another chapter in the anti siphoning saga. The soccer deal was said to have convinced many fans to sign subscription television contracts. Substantial audience ratings for the Australian performance in July 2007 against Oman in the Asian Cup seemed to indicate that may have been the case.
Football Australia had no qualms about signing the deal. Nor did it appear disturbed by the fact that its contract with pay television meant that many avid soccer supporters and the public in general would not be able to see World Cup qualifier matches in 2010 and other important games for free.
The Labor Opposition was critical of the Government’s failure to add soccer matches of public interest to the anti siphoning list and soccer’s international governing body, Fédération Internationale de Football Association (FIFA), also expressed concern the games would not be available on free-to-air television.
The Rudd Labor Government, elected in November 2007, had pledged while in opposition to retain an anti siphoning list. In early 2008, the Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy iterated the commitment, and confirmed the new Government’s support for use it or lose it. No mention was made of a further pledge to close the loophole about which free-to-air broadcasters had so often complained, however. In March 2008, in accordance with the legislative requirement in the BSA, Senator Conroy also committed to an early review of the anti siphoning regime. Despite this commitment, the review process did not commence until late 2009. At that time, the Government released the paper, Sport on Television (see discussion of the paper below). The Government promoted the paper as a means through which public debate about the effectiveness and appropriateness of anti siphoning could occur in the context of a contemporary digital television and sports rights environment.
Prior to the release of the review discussion paper, however, the Government alienated pay television operators by suggesting that it may consider easing multi channelling restrictions on free-to-air broadcasters.  Despite what could be labelled good intentions, its decision to add Socceroos games to the anti siphoning list from 2014, when the code’s current contract with pay television concludes, also antagonised Football Federation Australia which saw no benefit for the sport in this move.
As noted earlier in this paper, the Productivity Commission reviewed the anti siphoning scheme as part of its March 2000 inquiry into broadcasting. The Commission once more considered the anti siphoning regime in its annual review of regulatory burdens on business in 2009. While the 2000 report was critical of the regime, the 2009 assessment was more disparaging. It saw anti siphoning as ‘a blunt, burdensome instrument that is unnecessary to meet the objective of ensuring wide community access to sporting broadcasts’.
The Commission considered anti siphoning ‘inherently anti-competitive’. It imposed ‘a protracted negotiation process on subscription television broadcasters’ and prevented them from using exclusive coverage as a means to attract subscribers. The regime also had negative impacts on sporting bodies, because it reduced the bargaining power of these organisations. In addition, the Commission considered anti siphoning probably distorted the relative price of broadcast rights of listed events relative to that of non-listed events. Thereby, potentially reducing the price received by sporting organisations if their events were listed.
The Commission believed that shortening the list would alleviate some of the problems it had identified; it added that the option to abolish the list should also be explored.
The Sport on Television discussion paper emphasised that Australians love to watch sport on television. The ten most popular programs on free-to-air television in 2008 were sports programs, as were nine out of ten of the most popular programs on subscription television (see the tables below). By stressing this point the paper appeared to attempt to shift the anti siphoning debate away from what effect it had on sports organisations and broadcasters, to refocus on how it enhanced or detracted from people’s viewing experiences. Whether this was the underlying intention of the paper is, however, speculation. Suffice to say that the Government has promoted the paper as a means through which public debate about the effectiveness and appropriateness of anti siphoning could occur in the context of a contemporary digital television and sports rights environment.
Sport on Television sought comments on the operation of:
- the anti siphoning scheme in general and whether the scheme should be amended or repealed
- the licence condition on pay television operators restricting access to listed events and whether the condition should be amended or repealed, and
- the restrictions on commercial television broadcasters in relation to listed events on standard definition and high definition multi channels and whether these should be amended or repealed.
Sport on Television: most popular sports programs on free-to-sir television 2008
Source: Sport on Television
Source: Sport on Television
While there is some suggestion, as noted above, that the Sport on Television inquiry attempted to refocus the anti siphoning agenda, it clearly was unable to ignore issues consistently raised by broadcasters and sport organisations. The review revisited the ‘usual’ questions about the purpose of an anti siphoning scheme; what should be included on an anti siphoning list and how long should events remain on the list. Additionally, however, it formally raised issues which have resulted from changes in the scope and nature of television broadcasting. These are generally reflected in the current transition to digital television and the increase in the numbers of people subscribing to pay television. In particular, they are reflected in the emergence of new media options. The new media has, in turn, prompted questions about the appropriateness of the current anti siphoning regime in a rapidly changing broadcast and media landscape.
As noted previously in this paper, the anti siphoning regime prohibits a free-to-air broadcaster from showing a listed event on a multi channel unless that event has previously been shown, or is simultaneously shown on the broadcaster’s main channel. The multi channel restriction was introduced when digital television was new to Australia. Given that over 50 per cent of households have converted their main television to digital, however, Sport on Television posed the question of whether it was time to reconsider this restriction.
The present anti siphoning scheme affects television broadcasters only. It does not apply to sports coverage on other media platforms, such as the Internet and mobile phones. The paper asked, therefore, if the establishment of the Government’s National Broadband Network will:
… prompt telecommunications companies and internet service providers to enter the market with a subscription Internet Protocol television service in a similar manner to that of pay television and attempt to secure exclusive coverage to events.
As the discussion paper noted, there is little evidence to indicate that sporting events are being ‘siphoned’ to new technology platforms. This is most likely because at present the largest audiences can only be achieved through traditional broadcasting platforms. As the technical capability of other platforms improves, this situation may change.
Both sides of the anti siphoning debate presented comprehensive arguments espousing their cases in response to Sport on Television. The arguments from all stakeholders, however, were effectively a restatement of those advanced for more than twenty years.
From mid September 2009 the pay television industry association (ASTRA) website told its visitors:
We believe that you should be able to watch important sporting events live because modern TV should be about choice.
However the current rules mean that old TV stations get first grab at 1,300 sporting events. And traditionally, they have only managed to show 16% of them live.
We want this to change. But we are not seeking to remove a single event that is currently shown on old TV.
ASTRA continued the theme of old and new in its submission to the inquiry, labelling pay television as modern and innovative, and free-to-air television as old, tired and unresponsive to viewer demands. The anti siphoning scheme needed reform because it is ‘antiquated, anticompetitive and dramatically limits Australian viewers’ choice to watch live sport’. Moreover, it is detrimental to sports codes and grass roots sports competitions.
ASTRA also maintained its argument that the majority of sport on the anti siphoning list is not shown on free-to-air television. According to pay television industry research, many sports fans did not consider that the free-to-air digital channels would improve coverage of sport. In addition, almost 50 per cent of Australians considered that free-to-air television should only have exclusive access to the sporting events they actually intended to broadcast. ASTRA listed examples of sports events that were not shown or not shown live on free-to-air. Some of these from 2008 and 2009 are shown in the tables below.
Examples of free-to-air television events delayed or not broadcast—2008
Source: ASTRA submission to Sport on Television
Examples of free-to-air television events delayed or not broadcast—2009
Source: ASTRA submission to Sport on Television
Foxtel also took up the old and new theme, labelling anti siphoning an ‘historical relic’ which does not serve the interests of consumers and stunts broadcasting industry growth. The Foxtel submission criticised the anti siphoning list as a product of a pre digital age. According to Foxtel, it is no longer relevant, there is no rationale for including events on the list, it overly regulates pay television and it ‘puts the old networks in charge of sport rights negotiations’.
Interestingly, the Foxtel submission expended considerable effort in criticising the methodology of the Sport on Television paper. It argued that there was little discussion of the use it or lose it policy and that the paper adopts ‘softer’ language when describing the implications of multi channelling by free-to-air for sports rights holders and the pay television sector. There was also insufficient analysis of the relationship between Australians and sport in the paper, in Foxtel’s view.
An Optus submission emphasised the new media aspect, noting that many new media services complemented, rather than replaced viewers’ experience of an event, ‘as they travelled to and from work and on their lunch breaks’. It also played an important role in increasing the size of the broadcast viewing market for an event. As such, Optus was ‘strongly opposed’ to the extension of the anti siphoning scheme to new media platforms.
Similarly, Telstra was of the view:
New media platforms provide new and innovative ways for sports events to reach existing and new fans and so facilitate the Government’s policy objective. Examples of how new media supports rather than substitutes existing consumers’ television consumption of sporting content are video-on-demand highlights, replays of key moments, immediate access to event results, player statistics and other related information. While these are valuable services to the consumers who access them, they do not replace current television offerings.
Free TV, on the other hand, argued in its advertising campaign ‘Keep sport free’ that sport on free-to-air television is ‘too good to lose’. All Australians should have access to free sport on television it maintained, not just the minority who can afford to pay more than $650 a year for a subscription television package. It continued these lines of argument in its submission to Sport on Television, noting that pay television is an added expense for family budgets and that sports channels are not part of the basic subscription package. It argued that there would inevitably be consequences for the viewing public if anti siphoning were abandoned, citing the situation in the United States and New Zealand where ‘sporting events are regularly shown exclusively on pay television’. It noted also that since Test Match cricket was removed from the anti siphoning list in England, audience numbers have declined dramatically.
Free TV has for some time refuted pay television’s claims that it hoards 1300 events, and its submission iterated this position. As almost three quarters of the 1300 events were matches in the Australian Open and Wimbledon tennis tournaments, half of which were not broadcast, it claimed pay television was attempting to mislead people by citing this figure. It argued that the events currently not broadcast due to scheduling and other restrictions would increase significantly if free-to-air broadcasters were to be allowed to make better use of their multi channels. Indeed, it saw the current restriction as contrary to the underlying objectives of the anti siphoning scheme. This was illustrated by the fact that pay television was able to run multiple channels of Olympics coverage, whereas free-to-air was restricted to coverage on a broadcaster’s main channel. The ABC and SBS agreed. The ABC noting that the opportunity for free-to-air broadcasting to multi channel would assist them to contend with the vagaries of sport broadcasting due to weather, extra time or other disruptions.
Both commercial and public free-to-air broadcasters were of the view that the various iterations of new media had the potential to undermine the anti siphoning list. Both groups sought closure of the loophole they saw illustrated in the sale of the 2005 Ashes cricket.
Sport on Television illustrated that the arguments of the free-to-air and pay television operators surrounding anti siphoning were conspicuous by the fact that they had changed little in over twenty years. On the other hand, sporting organisations have changed their views of anti siphoning. Organisations which receive little free-to-air coverage were most concerned in 1994 that their sports were not placed on an anti siphoning list, as they believed it would be detrimental to their development. In 2009, however, they appeared more willing to evaluate anti siphoning from a whole of sport perspective and to conclude overall in favour of either substantially shortening the list or abolishing it. For example, Basketball Australia suggested the list should include only the Olympics and the Commonwealth Games.
In opposition to their previously ambivalent stance on anti siphoning, popular sports such as cricket and rugby league, wanted to see the demise of the list. Cricket Australia cited a number of reasons for this, but principally its stance was motivated by the belief the list restricted the power of its administrators to negotiate the best deal for its product. In support of its argument, Cricket Australia contended removing the Ashes from the British anti siphoning list had resulted in increased revenue for cricket from the sale of rights to the series. This additional revenue had then been used to support the grass roots game. This argument was of course in direct opposition to the free-to-air focus on audience loss for the Ashes, which also resulted from the move. The Australian Rugby League (ARL) agreed with Cricket Australia’s approach to anti siphoning. It claimed that the existence of an anti siphoning list had had a major negative impact on ARL revenues, and any expansion of the scheme would have equally adverse implications for the provision of grass roots programs.
In general, sporting groups appeared less than supportive of the free-to-air broadcasters and agreed with pay television that free-to-air operators should not be allowed to multi channel prior to the switch off of analogue broadcasts. In addition, sports groups identified the opportunities the rise of new media presented for them to repackage and redistribute their products. They agreed with the view that new media coverage complemented traditional sports broadcasting.
The ACCC and others called for the use it or lose it scheme to be formalised in legislation. In the ACCC’s view, the anti siphoning regime was at cross purposes with the objectives of the BSA which are to provide an environment that both facilitates the development of broadcasting and is responsive to audience needs.
Apart from a number of public submissions which were in favour of the retention of the anti siphoning regime, one of the few stakeholder submissions in support was from Australia’s professional golfing association.
One commentator’s view of the anti siphoning regime
Source: The Age 
Anti siphoning was also discussed in the report of the Independent Sports Panel. This report (the Crawford Report) was released by the Government on the 18 November 2009. In the context of investing in sport and improving revenue for low profile sports in particular the Crawford Report suggested that the Government reconsider the operation of the anti siphoning regime. The Independent Sports Panel view reflected the arguments most sports organisations had presented to the Sport on Television inquiry—that anti siphoning limited earning potential for sports and reduced the quantity and quality of sports coverage on television.
In the opinion of the Panel, free-to-air television networks’ decisions to buy and show sports that are popular with the users of their service reinforced the popularity of those sports. Revenue generated, in turn could be reinvested to make those sports ‘more attractive, more marketable and more profitable’.
Social equity arguments are often used to justify the imposition of anti siphoning rules. One commentator argues, however, that while social equity is a ‘noble sentiment’, in reality it unfairly disadvantages certain commercial media groups. The argument being that under an anti siphoning regime pay operators and sports rights holders are singled out for restrictions,
... while retailers in other fields are free to make commercial decisions. Certainly governments do not dictate to Woolworths where to establish the next supermarket. While it is understandable that politicians would seek to protect access to the Melbourne Cup for all, it does raise a dilemma as to what is in the national interest and what is a national sacred cow.
In reality, the Victorian Racing Club [VCR] is unlikely to want to sell the Melbourne Cup exclusively to a Pay TV enterprise until it is assured of maximum exposure across the country. Thus the VRC is certain to exercise commercial criteria anyhow. It will be an interesting debate should Pay TV offer a much higher rights fee than a free-to-air channel. If by regulation, the VRC is precluded from selling to the highest bidder, perhaps it could ask the government to make up the difference.
Furthermore, the notion that particular sporting events possess a special national cachet is questionable. To single out the AFL Grand Final or the NSW Rugby League Grand Final, neither constitute[s] a national event. Indeed in one context, both events manifest the sporting divide between the States. There is some argument in the case of Test cricket, but it is doubtful Australia v Sri Lanka evokes the same passions as do the Ashes series.
The question Sutton essentially asks is why it is imperative that government should intervene to ensure that a service is provided in this particular instance, and not in other cases. This leads to the question: if government sees some sort of moral obligation to intervene to ensure that those who cannot afford, or do not choose to subscribe to pay television are able to view events, why does it not do something for those who cannot afford to buy a television set in the first place, or a radio or mobile phone for that matter?
Other arguments against anti siphoning encapsulate a property rights dimension. The issue being whether it should remain the exclusive right of those who produce an event to control how, when and by whom that event is televised. Three of Australia’s football codes were of the opinion in 2006 that it was indeed their right to decide who televised their games, and not that of any government. Understandably, this view is about the codes wanting to maximise the returns they can make from selling television rights. From this perspective, as a number of sports have argued, the existence of an anti siphoning scheme influences their bargaining position and unfairly advantages free-to-air broadcasters in relation to their dealings with sporting organisations. The football codes have maintained it is vital for sports to be able to achieve this balance between exposure and revenue so they are able to invest at the grass roots level. This view has been supported by a number of studies and reports, including the recent Crawford report.
Pay television arguments provide a complementary dimension to the property rights perspective. The anti siphoning list imposes a significant burden on subscription broadcasters as a result of their having to negotiate with their competitors for the right to broadcast sports. These negotiations are more complex, drawn out and burdensome than if subscription broadcasters could negotiate directly with the underlying rights holder.
The arguments against anti siphoning in Australia add that the scheme should be abandoned because it has not achieved what it set out to do. The purpose of the Australian anti siphoning legislation was to protect consumers, but all it has meant is that the interests of free-to-air broadcasters prevail. What has occurred in essence is that free-to-air networks are the gatekeepers of access. Consequently, consumer choice is diminished. As one sports commentator phrases it, ‘populist garbage legislation’ remains in place which supposedly protects viewers’ rights. In reality, the legislation protects free-to-air broadcasters from competition and allows them to ‘cherry pick’ what they allow the public to see.
It has also been argued that the multi channelling issue illustrates the hypocrisy of the commercial free-to-air broadcasters. This point of view sees their only agenda being to ensure the maintenance of their dominant broadcasting position; not concern with the public interest. Giving them multi channelling rights to listed sports would not necessarily mean that the public sees more sports, but it would ensure that pay television presents less of a threat to that position. One observer comments in relation to the free-to-air petition for the right to show sports on their multi channels, that they have argued since the 1990s that maintaining an anti siphoning list was crucial to the fabric of the nation. They now want the list abolished—for them only.
The arguments used in favour of maintaining an anti siphoning list have centred around two interconnecting issues—serving the public interest and creating and maintaining national identity. From this perspective, it is in the public interest for all people to be able to see the important events that reflect Australia’s national identity. The public interest is imperfectly served if important sporting events migrate to pay television. Hence, governments impose licence conditions and regulations on free-to-air broadcasters which oblige those broadcasters to act in the public interest.
Proof that allowing a competitive market to operate with regards to events of national importance will mean that these events are inaccessible, is often illustrated by the example of live coverage of English cricket team home matches in recent times. Prior to 2005, these games were available on free-to-air and pay television. Since that time, they have been shown only on pay television. A significant audience decline has resulted (see the table below and the section on the United Kingdom in Appendix A).
Average viewing figures for live test match cricket in England, 2000-08
Source: Frontier and Futures Sport & Entertainment
It is claimed also that maintaining an anti siphoning list in the public interest does not impede pay television operators as significantly as these operators claim. Their profit margins demonstrate this to be the case. For example, while it must be acknowledged that Foxtel did take until 2006 to make a profit, its business has grown substantially since then. In the year ended 30 June 2009, despite the global financial crisis, its revenue was $1.84 billion, an 11 per cent increase on the previous year.
Sport has traditionally been the promotional vehicle for national pride and the Australian collective identity. What it means to be Australian, it is often said, has been forged, not only on the battlefields of war, but also on the sports battlefields. It follows that it would be ‘un Australian’ if some people were not able to view events that define the Australian identity. In effect, such a situation would offend the Australian sense of a ‘fair go’ for all. There would appear to be a number of flaws in this ‘sport as national identity’ argument. For example, how can the various football codes on the anti siphoning list promote national identity when they are fundamentally divisive? It remains that the perception sport and national identity are inevitably intertwined is part of the national consciousness. It would be bold, and perhaps foolhardy to be seen to be depriving the less fortunate from continuing to share in that consciousness and identity.
In effect, the arguments for anti siphoning culminate in the conclusion that it is a public good; the benefits it achieves for all Australians outweigh any benefits that broadcasters may derive as a result of its demise. The SBS submission to Sport on Television summarises the view well:
The anti-siphoning list is not about balancing the interests of competing broadcasters [or other players] it is about preserving access to key sporting events for the Australian public.
The commercial free-to-air broadcasters have exploited the public interest argument for many years. However, as noted earlier in this paper, their recent demand for rights to show listed sports on their digital multi channels, to which not all Australians currently have access, has seriously damaged their credentials as defenders of the public interest.
In addition, pay television considers that research recently undertaken on its behalf for the Sport on Television inquiry makes it clear that free-to-air claims that the anti siphoning list represents what the public wants are no longer legitimate. This research indicated that only 21 per cent of the population is passionate about sport and wants to watch it live on television. Similarly, 78 per cent of Australians think there is enough or too much sport on television and 65 per cent think that anti siphoning is bad for sport. According to pay television operators, these findings explode ‘the myth that all Australians want sport to dominate their TV viewing and that changes to the anti-siphoning list would cause widespread backlash’.
While the pay television research responses do make a point, it must also be noted that sports on the anti siphoning list frequently appear in the top twenty ratings list on free-to-air television, as do sports not on the list, such as Twenty20 cricket. It is far from conclusive therefore that only a minority of Australians are passionate about sports. It is equally inconclusive that there would not be a backlash if these sports were unavailable to the current majority of viewers. Submissions to the Sport on Television inquiry were divided in their support for anti siphoning. Some believed it would be unAustralian to deprive people of the simple pleasure of watching sport or the joy of seeing amazing sporting achievements. Others disagreed with how the current list operated, but remained committed to watching sport. The public views in fact mirrored those of the main protagonists, and in a number of cases, appear to have restated the free-to-air/pay television arguments.
There has been constant criticism also that government maintains the anti siphoning list because it is unwilling to face electoral consequences which may follow if families are made to pay for what some have labelled is their most passionate leisure pursuit; one which they have been able to watch all their lives for nothing. There is a considerable degree of journalistic rhetoric in these claims and some cynicism about the extent to which all government actions can be linked to electoral considerations. No doubt governments of both persuasions have considered the possible electoral consequences associated with the anti siphoning issue for many years. At the same time, it appears that all have been genuinely aware of the need to consider the public interest in making sports programs that reflect the Australian national identity available to all viewers. It has been convenient to date for governments that the most powerful broadcasters have chosen to echo the public interest argument. Their lapses with regard to that interest have mostly been able to have been satisfactorily resolved by governments also. The current free-to-air campaign for multi channelling rights illustrates however, as have past incidents noted earlier in this paper, that judgement about what is in the public interest cannot be the prerogative of commercial interests of any persuasion.
The media environment is now very different from the one in which anti siphoning was introduced. It is time to consider therefore whether there should be a new approach that can better serve the public interest, provide everyone with a ‘fair go’ and reflect national identity. For example, the idea pay television is the province of an elite few who can afford to subscribe is not as convincing as it once was. While for the moment free-to-air television dominates, over thirty per cent of Australian homes subscribe to pay, and this figure increases with each year. So is there a level of penetration at which it is not feasible, but also contrary to the best interests of audiences to retain anti siphoning? Niche markets that pay television has targeted in the past also have the potential to become important for free-to-air broadcasters as the conversion to digital television progresses. Fragmented viewing markets, rather than one mass audience are the norm of the future. Does this mean that the idea that any program or any sport can reflect a national interest becomes irrelevant at some point?
The media environment will be further enhanced by the establishment of a national broadband network. The recent announcement by Google that it intends to compete for the rights to sports and entertainment events and that it has purchased the rights to the Twenty20 Indian Premier League cricket competition illustrates just one aspect of how viewing experiences will change in the near future. Google intends ‘to transform YouTube from a video search engine and repository for home-made videos to a global internet and mobile TV channel’. The future will be one where people will be able to choose to see sport broadcast in its ‘full glory’ on television or ‘just dive online and watch it’. Does the existence of an anti siphoning list seem incongruous in such an environment? Or does the fundamental issue still apply—everyone, regardless of their ability to pay for new media gadgetry, should be entitled to see certain iconic sporting events?
It is likely that the anti siphoning issue will once more prove too complicated to resolve in the short term, for one reason the media environment is indeed diversifying and evolving quickly, as the Google example illustrates. In such an environment, what constitutes the public interest will not be easily identifiable. Additionally, as in the past, any government decision on anti siphoning will be contentious. There will be winners and losers and numerous interpretations about who fits into which category.
An anti siphoning regime applies across the European Economic Community. This has been in place since 1989 when the Television Without Frontiers Directive (TWFD) was introduced. The objective of the TWFD was to provide framework conditions under which European member states were to deliver free access to television coverage of sporting and cultural events of major importance to their citizens (see appropriate section of the TWFD below).
The TWFD has been updated by the Audiovisual and Media Services Directive (AMSD) which applies from 19 December 2009 in all member states. The AMSD preserves the core principles of the TWFD and adapts them to the new media environment.
Television Without Frontiers Directive
Each Member State may take measures in accordance with Community law to ensure that broadcasters under its jurisdiction do not broadcast on an exclusive basis events which are regarded by that Member State as being of major importance for society in such a way as to deprive a substantial proportion of the public in that Member State of the possibility of following such events via live coverage or deferred coverage on free television. If it does so, the Member State concerned shall draw up a list of designated events, national or non-national, which it considers to be of major importance for society. It shall do so in a clear and transparent manner in due and effective time. In so doing the Member State concerned shall also determine whether these events should be available via whole or partial live coverage, or where necessary or appropriate for objective reasons in the public interest, whole or partial deferred coverage.
Under the European system, each state produces a list of events it considers are of sporting or cultural significance. These events must be broadcast unencrypted, even if exclusive rights have been bought by pay television broadcasters. Each state must ensure that broadcasters under their jurisdiction respect the lists of other member states.
Lists are approved by the Commission of European Communities. Individual events are added to lists if they satisfy at least two of a number of criteria which have been designated as indicators of the importance of events for society. These are that the event:
- has a special general resonance; it is not simply of significance to those who ordinarily follow the sport or activity
- is recognised as one of distinct cultural importance and contributes to cultural identity
- involves the national team, and
- has traditionally been broadcast on free-to-air television, and has commanded large television audiences.
The following countries have a designated list of events: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy and the United Kingdom. Examples of events that are listed by countries include the participation of their national teams in international competitions, such as the Fédération Internationale de Football Association (FIFA) World Cup); domestic competition finals, such as the Football Association Challenge Cup (FA Cup) final) and world tournaments, such as the Olympic Games. Other listed events include the Tour de France, major domestic horse races and cultural events, such as the Queen Elisabeth Music Competition in Belgium and the San Remo Italian Music Festival.
As a member of the European Community the United Kingdom administers an anti siphoning list that functions in conjunction with the Television Without Frontiers Directive as noted above. The Broadcasting Act 1996 empowers the Secretary of State to list an event that is deemed to be of national interest within England, Scotland, Wales or Northern Ireland separately. The scheme is administered by the Office of Communications (Ofcom).
Under the scheme, events are designated as Group A and Group B and broadcasters are classified as qualifying, or other broadcasters. Qualifying broadcasters provide channels that are available without payment to at least 95 per cent of the United Kingdom population. The United Kingdom is the only European state which divides its listed events into categories.
The rights to listed events—live rights in the case of Group A events (for example, the Olympics, FIFA World Cup, Wimbledon and European Football Championship) or highlights in the case of Group B events (for example, Cricket Test Matches, Six Nations Rugby or Commonwealth Games) must be offered to qualifying broadcasters. Qualifying broadcasters are not obliged to bid for these rights, however, so it is possible that listed events are not shown by a qualifying broadcaster.
The United Kingdom has recently completed consultations as part of a review of free-to-air events listings. This took place from April to July 2009.
Generally, live coverage rights for Group A events must be made available to broadcasters on all platforms. Ofcom can give consent for exclusive coverage of Group A events only if it is satisfied:
- the availability of the rights was generally known
- all broadcasters had a genuine opportunity to acquire the rights on fair and reasonable terms at a price that was non-discriminatory between categories, and
- a non-qualifying broadcaster had not bid for, or expressed an interest in acquisition of the rights.
Group B events may not be broadcast live exclusively unless adequate provision has been made for secondary coverage by a qualifying broadcaster. Secondary coverage includes edited highlights or delayed coverage of at least 10 per cent of the event, or 10 per cent of the day’s play where the event takes place over several days.
Live radio commentary of the event must also have been acquired by a radio station with national coverage or an organisation providing a sports service to radio stations which form a national (or near national) network.
Where no qualifying broadcaster is interested in providing adequate secondary coverage, Ofcom can give its consent to exclusive live coverage, without secondary coverage under the same criteria applied to Group A events.
Group A events
Group B events
|The Olympic Games
||England’s home cricket test matches and Cricket World Cup matches
|Football World Cup and European Championship Finals Tournaments
||The final stages of the Cricket World Cup
|The FA Cup Final and Scottish FA Cup Final (in Scotland)
||Home nation matches in the Six Nations Championship
|The Grand National
||All other matches in the Rugby World Cup
||Non-finals play in the Wimbledon Tennis Championship
|Wimbledon Tennis Finals
||The Commonwealth Games
|Rugby World Cup Final
||World Athletics Championships
|Rugby League Challenge Cup Final
||The Ryder Cup
Open Golf Championship
Source: Frontier Economics
Cable subscription television was established in the United States in the early 1950s and by the 1960s, its expansion led to concerns that programs would be siphoned from free-to-air networks. Sporting events, it was believed, were in particular danger of being siphoned. In 1968, the Federal Communications Commission (FCC) first imposed restrictions intended to prevent siphoning, and in 1975 it issued rules which regulated the broadcast of certain events.
Under these rules, specific events, which had been telecast on free-to-air television during any one year of a previous period of five years, were eligible for broadcast on subscription or cable television. Non specific sports events, which were divided into four major categories of pre season and season home and away games, were available for broadcast on pay television:
- if fewer than 25 per cent of the events in a given category were broadcast live over conventional television during that season among the preceding five years in which the most events in that category were telecast, then the number of events available would be the remaining events not telecast
- if, however, 25 per cent or more of the events in a given category were broadcast live during the season, then only 50 per cent of the remaining events may be made available to pay television, and
- any reduction in the number of free-to-air broadcasts telecasts required proportionate reduction in the number of events available to pay television.
The validity of the FCC anti-siphoning rules was legally challenged by the pay television industry. The United States Court of Appeals deciding in the case that the ‘rules exceeded the FCC’s jurisdiction over cable television.’ They were also found to be arbitrary and capricious and unconstitutional under the First Amendment to the United States’ Constitution.
In response to an increase in the number of cable networks and further concerns about the amount of sport programs available on pay television in 1992 the American Congress ordered the FCC to conduct a study into the carriage of local, regional, and national sports programming by free-to-air stations, cable programming networks and pay-per-view services. The FCC found that while the number of sports events shown on cable television had dramatically increased since 1980, this had not been accompanied by a similar decrease in the number of sports events shown on free-to-air television. The FCC concluded also that the cost of subscribing to subscription television ‘was not likely to be burdensome for the average consumer’. It therefore believed there was no case for government intervention in the sports programming market at the time.
In 2001, United States’ lawyer, James Perrine, argued that despite the absence of an anti siphoning scheme regulation in the future the idea may be reconsidered in response to technological innovations. Perrine noted also that the FCC has said it will not hesitate to act, ‘consistent with its statutory authority’ if a significant threat to access to sports programs develops. There appears to be no indication however, that the FCC is planning to re consider anti siphoning at present.
New Zealand currently has no anti siphoning regime in place. A review of regulation as it applied to digital broadcasting initiated by the Labour Government and undertaken in 2008 by the Ministry for Culture and Heritage revealed that broadcasting rights issues were of concern to many New Zealanders. At the same time, pay broadcasters, particularly Sky TV, and sports organisations, such as the New Zealand Rugby Union, were strongly opposed to the introduction of any form of anti siphoning or anti hoarding. The 2008 review recommended that potential options to ensure greater free-to-air access to sporting events should be investigated. It remained cautious in its support however, adding that those options should only have minor impacts on the commercial revenue available to sporting bodies and the enhanced future participation in sport.
Following Labour’s loss at the 2008 election, the new National Party Government undertook its own analysis of the anti siphoning issue and concluded ‘there was strong competition in the broadcasting sector, which [was] seen to safeguard consumer interests and remove the need for reform’. It decided not to proceed further with a review of the broadcasting environment.
Anti hoarding: under Part10A of the Broadcasting Services Act 1992,commercial television licensees who acquire the right to televise a designated event, but who do not propose to use that right fully, are required to offer the unused portion to the ABC and SBS for a nominal charge within a specified offer time. The national broadcasters must also offer unused portions of rights to each other.
Datacasting: a datacasting service is defined in section 6(1) of the Broadcasting Services Act 1992 as a service which delivers content in the form of text, data, speech, music or other sounds, visual images or in any other form; or in any combination of forms to persons having equipment appropriate for receiving that content. The service must use the broadcasting services bands which are the designated parts of the radiofrequency spectrum referred to the Australian Communications and Media Authority for planning under section 31 of the Radiocommunications Act 1992.
Internet Protocol Television (IPTV): television content received through technologies used for computer networks. IPTV is often provided in conjunction with Video on Demand and may be bundled with other Internet services such as Web access.
Narrowcasting: sections 17 and 18 of the Broadcasting Services Act 1992 define narrowcasting services as broadcasting services whose reception is limited by: being targeted to special interest groups; intended only for limited locations; provided during a limited period of time; because they provide programs of limited appeal; or for some other reason. Narrowcasting services operate under a broadcasting class licence regime, with minimum levels of regulation. Subscription narrowcasting services differ from open narrowcasting services in that they are made available only on payment of subscription fees.
Multi channelling: multi channelling makes use of digital spectrum for the broadcast of several different channels simultaneously. Spectrum refers to the range of frequencies available for over the air transmission.
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