Australian broadcasters and free-to-air television networks may be able to make a ‘one-time transition’ to a new broadcaster’s licence with reduced tax and content quotas on multichannels.  In exchange, those who take up the ‘new licence’ must agree to transmit content on reduced radiofrequency spectrum, with surplus spectrum to be auctioned off to the telecommunications industry and proceeds used to fund a Create Australian Screen Trust (CAST) and Public Interest News Gathering Trust (PING Trust).  Additionally, large Subscription Video-on-Demand (SVOD) services and Advertising Video-on-Demand (AVOD) providers may be forced to invest into Australia’s screen industry.

The ‘new licence’ and forced investment are two of a number of proposals made in the Australian Government‘s Media Reform Green Paper – Modernising television regulation in Australia (Green Paper) released onFriday 27 November 2020.  The Morrison Government hopes the proposals in the Green Paper will bring the Australian media industry one step closer to platform-neutral regulation, including to ensure that Australian audiences are supported in their thirst for Australian content, regardless of their preferred broadcasting medium.

We outline the Green Paper’s key proposals below.

Lower cost model using less radio frequency and reduced regulatory obligations

The Green Paper outlines that metropolitan commercial broadcasters are paying roughly $9.5 million – $12 million in broadcasting tax each year. Where broadcasters transition to the new licence (an irrevocable decision) the Government will relieve the new licence holder of broadcasting tax, as well as content quotas on multichannels. 

In exchange, new licence holders must agree, at some point in the future, to transmit content using a lower radio frequency spectrum and do so using shared multiplexes. According to the Australian Government, this will have no visible impact on viewers and the current service levels of the metropolitan commercial broadcasters will be maintained.  The Government recognises that there will be costs involved in upgrading the transmission equipment and technology of broadcasters, which will be particularly challenging for the ABC, SBS and regional broadcasters given the high transmission costs required to serve regional and remote audiences.  The Government intends to assist with these challenges by contributing some of the proceeds from spectrum auctions to the costs associated with transitioning to the new licensing regime.  

It is envisioned that the reduced use of spectrum by the commercial broadcasters will bring further cost reductions due to the decreased transmission costs of the participating television networks.  It will also free up spectrum for use by other spectrum users, including for telecommunications services, although The Hon Paul Fletcher, MP, made it clear in his discussion at the Communications and Media Law Association on the morning of 27 November that the focus of this current Green Paper is broadcasters and not the telecommunications industry.  

Secure alternate funding sources for regional news, Australian drama, documentaries and children’s content

The Green Paper proposes that the unused spectrum derived from the transition of free-to-air (FTA) networks and broadcasters to the new licencing regime should be auctioned off to the telecommunications industry, with proceeds used to:

  • Create CAST and PING Trust (however two commercial television broadcasters must take up a licence before these trusts are created); and
  • Support the ABC and SBS to move to multiplexes.

Whilst the PING Trust would provide support to regional news services, it is envisioned that the CAST will fund drama, documentary and children’s content in Australia. Such an approach is consistent with the Government’s announcement regarding the greater flexibility that will be provided to FTA television broadcasters in meeting drama, children’s television and documentary quotas under the ‘media reform package’, which we outline here: Reform of regulation of Australia’s screen industry now underway.

The Government hopes that by creating a legislative framework to govern the respective trusts, the traditional Australian media and production sectors will be given the necessary support to function and survive in an increasingly disrupted media environment.  It is also hoped that the trusts will enable broadcasters to access local content at a lower cost, further supporting their sustainability.

Legislate SVOD and AVOD compulsory investment into Australia’s screen industry

The Australian Government acknowledges that the framework regulating traditional Australian FTA content providers is inconsistent with the lack of obligations imposed on SVOD and AVOD services.  To address this discrepancy and create a more equitable regulatory framework, on 30 September 2020 the Government announced that large SVOD services must report to the Australian Communications and Media Authority (ACMA) on their investment in Australian content.

In the recent Green Paper, the Australian Government has also proposed that legislation should be implemented to:

  • Set a clear expectation of SVOD and AVOD businesses about their investment in Australian content;
  • Monitor the performance of SVOD and AVOD businesses against the set expectations;
  • Implement formal regulatory requirements on SVOD and AVOD businesses that fail to meet those expectations; and
  • Make Australian content more easily discoverable to Australian audiences on SVOD and AVOD sites.

The details of the minimum investment obligations have not yet been determined and will be informed by the consultation process for the Green Paper, as well as the reports provided by SVOD services to the ACMA on their current levels of investment.  For example, it is not currently clear whether SVOD and AVOD investment will result in local content quotas, investment or commission quotas or in direct contributions to the CAST and PING Trust.

Legislate to codify the role of the ABC and SBS

In the Green Paper, the Government proposes to legislate and formalise the role of national broadcasters as key providers of Australian content.  The ABC and SBS play a significant role in the commissioning and broadcasting of Australian content.  However, currently these national broadcasters are not explicitly required to create or broadcast Australian content of a specific type and do not have content quotas like the commercial broadcasters do.  Instead, the respective charters of the ABC and SBS describe their responsibilities in a more qualitative manner – being to provide content that ‘depicts Australian voices and obligations’.

To comply with the proposed obligations on the other sectors of the Australian media industry, the Government has suggested amending the existing legislation to provide an explicit requirement that the ABC and SBS provide new Australian programming.  Additionally, it has been proposed that the ABC and SBS should be required to provide information about the availability of Australian content on their services and their investment in such content to the ACMA on an annual basis.  Again, whether this will result in content, investment or commission quotas for the ABC and SBS is uncertain at this time.

Key takeaways

The Green Paper report represents a significant push by the Australian Government to correct the imbalances in the current media broadcasting regulatory framework, which largely burdens traditional media services and places minimal constraints on newer and online platforms.  This imbalance is placing increasing strain on the FTA business model and its ability to compete, which the Australian Government believes is essential to maintain the diversity of Australian voices and stories in the current media landscape.  This is even more pointed for regional broadcasters who do not have on-demand services to supplement their advertising revenue.

By implementing a new licensing regime, a surplus of spectrum may become available and auctioned off to the telecommunications industry.  The Government intends to use these proceeds to create a CAST and PING Trust, which will provide financial support to regional news services, as well as documentary, drama and children’s content providers.  Further, it is envisioned that by requiring SVOD and AVOD services to invest in Australia’s screen industry, as well as codifying the role of the ABC and SBS, Australian content and perspectives will be preserved.

If you are a broadcast provider, digital platform or work in the screen industry and require assistance in understanding the proposed obligations, please contact our media law team at McCullough Robertson.

Thanks to Tara Taylor (Lawyer) for their assistance in putting this article together.