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Announcements from the Australian Government on media sector reforms

21 April 2020

#Technology, Media & Telecommunications, #COVID-19

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Announcements from the Australian Government on media sector reforms

In mid-April 2020, the Australian Government announced a number of short term measures benefiting the Australian media sector, in response to the negative economic impacts of the COVID-19 pandemic. The Government also announced it was moving forward with certain longer term significant media sector reform proposals, which were first announced in December 2019 in response to the Australian Competition & Consumer Commission’s (ACCC) Digital Platforms Inquiry. Those longer term regulatory reforms will assist in ensuring that traditional media companies are better placed to compete, and provide Australian consumers with the services those consumers are seeking, on a sustainable basis.

Short term relief package

As part of a package announced by the Minister for Communications, Cyber Safety and the Arts, the Hon Paul Fletcher MP, on 15 April 2020, the Australian Government has agreed to:

  • Suspend Australian content subquotas and expenditure requirements: COVID-19 related restrictions imposed by the Australian and State and Territory Governments has seen most production of content grind to a halt in Australia. Reflecting this reality, the Government has suspended Australian drama, children’s (including preschool) and documentary content obligations for free-to-air television broadcasters and also Australian drama expenditure requirements applicable for pay television. The suspensions apply for calendar year 2020 and the Government will make a decision whether or not to extend these to 2021 later in the year. Each free-to-air television broadcaster will still need to meet the requirement of the Broadcasting Services Act 1992 (Cth) that at least 55 per cent of the content shown between 6am and midnight on its primary channel is Australian content (and the obligation imposed to broadcast a minimum number of hours of Australian content on secondary channels remains in place as well). 
  • Provide relief from spectrum taxes: In 2017, the Australian Government replaced the spectrum licence fees payable by free-to-air broadcasters, both television and radio, with a commercial broadcasting tax. As part of this new reform package, the Government has waived that tax for the 12 month period from 14 February 2020. The total amount waived is approximately $41 million.
  • Implement grants aimed predominantly at regional public interest journalism: This has two components. First, the Government is bringing forward the 2020 $5 million round of funding under the Innovation Fund, which will be open to regional and metropolitan publishers and content service providers producing public interest journalism. The details of eligibility will be known when the Australian Communications & Media Authority (ACMA), which administers the Innovation Fund, releases the guidelines for that round. In addition, a $50 million Public Interest News Gathering (PING) program has been announced. The PING program will be available to support public interest journalism in regional and remote Australia, though the exact details of eligibility will not be known until the Department of Infrastructure, Transport, Regional Development and Communications, which will administer the PING program, release the guidelines. Only approximately $13 million of the PING program funding is new funding, with the remainder being unallocated funding from the Government’s Regional and Small Publishers Jobs and Innovation Package.

Australian content requirements: Longer term reform

The ACCC’s final report from the Digital Platforms Inquiry recommended the Australian Government develop and implement a new platform-neutral regulatory framework to ensure effective and consistent regulatory oversight of all entities involved in content production or delivery, with the aim of creating platform neutral, competition enhancing, regulations for Australia’s media (and advertising) markets. The Government determined that it would implement this recommendation in two phases. As part of the first phase, the Government agreed to address as a priority reform area the extent of Australian content obligations on free-to-air television broadcasters (including drama and children’s content) and whether there should be Australian content obligations on subscription video on demand services.

At the same time as announcing the short term relief package outlined above, the Minister for Communications, Cyber Safety and the Arts also released an options paper, Supporting Australian stories on our screens, which was jointly prepared by Screen Australia and the ACMA (Options Paper). The Options Paper addresses the Australian content regulatory reform proposed by the Government as part of phase one of its response to the ACCC’s recommendation.

The availability to audiences of Australian stories, whether in the form of drama, documentary or children’s content, is seen as an important policy objective. At the current time, the Australian Government supports the production of Australian content in a variety of ways. There are tax rebates for different types of Australian related production; funding provided, for example, by means of grants administered via Screen Australia and for educational institutions such as the Australian Film, Television and Radio School; and the ongoing funding and support of Australia’s two public broadcasters (the ABC and SBS). In addition, commercial free-to-air television broadcasters must meet Australian content quotas and pay television broadcasters must meet expenditure obligations for drama production. Online streaming services, including for example Netflix, although increasingly popular with Australian audiences, are not subject to any Australian content quota or expenditure requirements. 

The discrepancy between the manner in which free-to-air and subscription television broadcasters are regulated as compared to the providers of online streaming services is considered to be particularly problematic. The regulation imposed on broadcasters imposes a high cost burden on those broadcasters, while the fact that audiences are migrating to online streaming services means that the objective of ensuring the availability of Australian content may not be achieved with the current regulation.

The Options Paper sets out four potential options to address the issue of the inconsistencies in the regulatory framework as between broadcasters, on the one hand, and streaming services on the other. The first is to make no change to the status quo and the final option is to move to complete deregulation. Neither of those options is feasible or likely to be considered by the Australian Government. The remaining two options are:

  • A minimalist approach:
    • Retaining the existing commercial free-to-air and subscription television broadcaster obligations largely unchanged but with increased flexibility.
    • Asking the two public broadcasters to provide better reporting of Australian content hours and expenditure.
    • Requiring subscription streaming services to set voluntary content investment targets.
    • Amending the producer offset, which provides for tax rebates for qualifying Australian production expenditure, so that the same rebate applies for all types of content (which is not currently the case).
  • More significant reform: 
    • Commercial content services providers, including providers of subscription streaming services, to be required to invest a percentage of revenue in new Australian content.
    • An obligation to be imposed on the national broadcasters to allocate funding for Australian children’s programming.
    • A new tax rebate model would be proposed.

There is a two month consultation period and it is hoped the Australian Government will not only consider other options that may be put forward during the consultation phase but will quickly move to implement reform following that consultation period. The reform is well overdue. 

And, finally, some action against tech giants

One of the initial criticisms of the package of short term relief and longer term reform announced by the Minister for Communications, Cyber Safety and the Arts on 15 April 2020 was that it did not address the question of requiring tech giants, particularly Google and Facebook, to pay for news stories carried on their platforms. That criticism may no longer be applied as, on 20 April 2020, the Treasurer announced that the Australian Government had directed the ACCC to develop a mandatory code to address bargaining power imbalances between digital platforms (particularly Google and Facebook) and media companies. Importantly, this will require those digital platforms to pay for news by sharing the revenue that is generated from news content. The code will also cover the sharing of data and the ranking and display of news content. The draft of the code is required to be released by the ACCC in July with the Treasurer promising that it will be finalised shortly thereafter. 

This is a different approach to that proposed in the Government’s response to the Digital Platforms Inquiry. Last December, the Government directed the ACCC to work with the digital platforms and news media businesses to develop a voluntary code. The ACCC was to provide a report to Government on the progress of negotiations by May 2020, with the code to be finalised by November 2020. However, the Treasurer decided to move quickly to a mandatory code on the basis of advice from the ACCC that there appeared to be no prospect of a voluntary agreement, primarily because the digital platforms would be very unlikely to agree to pay media companies for news content.

More action required

The media sector reforms discussed in this note are not the only regulatory reforms required to ensure a robust Australian media sector, which meets the requirements of Australian consumers in a sustainable way. The Australian content review and the mandatory digital platforms code are only part of the reforms recommended by the ACCC’s Digital Platforms Inquiry. The Government, in responding to those recommendations, has accepted that there is also a need to move in other key areas including:

  • As part of phase one of the media sector regulatory reforms, to develop a uniform classification framework across all media platforms and reform other aspects of the policy framework to support Australian film and television content.
  • As part of phase two of the media sector regulatory reforms, to reform the advertising rules and restrictions applicable across all delivery platforms, remove redundant legislation and implement a more coherent regulatory framework as well as ensure workable mechanisms to monitor and enforce that regulatory framework across all platforms.

There are other reforms that will be important, including for example copyright reform and the recommendations that are made from the ACCC’s current Adtech Inquiry, which is looking at competition issues arising in the online advertising markets in Australia.

Author: Angela Flannery

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

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