International benchmarks and the broadcast license fee
In this guest post, Brett Savill, the CEO at FreeTV, responds to Tim Burrowes’ article of yesterday about the government’s $40m sweetener to Australian TV networks.
Free TV CEO Brett Saville says Productivity Commission "out of touch"
We appreciate your bringing attention to the issue of TV license fees if only to point out a number of errors in your article.
The first is that license fee reduction was something the government wanted to hide. In fact, license fee reduction was extensively flagged in the May 16 Budget. Moreover, it was passed with bipartisan support.
Throughout the western world, countries are realising that the old way of licensing broadcasters no longer makes sense. Australia has been slow to respond, and you quote Mr. Stokes’ comments last week about our current fees being 15 times higher than the UK and over 100 times higher than the USA. The 25% reduction had bipartisan support because Australia is out of line with international benchmarks.
The 25% reduction had bipartisan support because Australia is out of line with international benchmarks.
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You also argue that spectrum auctions may be attractive but then go on to say that ‘a winner of a competitive bidding process would find it remarkably tough to meet their financial obligations and …[local content obligations].’
We agree with your conclusion; the Free TV broadcasters invested $1.5b in local content last year. However, the comparison with the UK is flawed because it is currently enjoying a huge boom in film production.
The Office for National Statistics’ figures showed that the production sector jumped 16% in the three months to the end of September, compared with overall GDP growth of 0.5% in the quarter.
A reduction in license fees and production tax breaks has spurred the industry to reinvest in growth, exports and jobs. The comparison with Australia is salutary, the figures that you show in the article demonstrate that TV advertising revenue for the first half of 2016 was at its lowest point since 2009. Moreover, the Free TV broadcasters have suffered a $4.2b decline in the market
Moreover, the Free TV broadcasters have suffered a $4.2b decline in the market capitalisation since 2013.
And lastly, you compare UK licensing with that in Australia, suggesting that UK licenses are issued for 10 years and this is different to the Australian system. It is correct to say that the license terms are different, although not in the way you suggest; Australian commercial television licenses have a five-year term.
Brett Savill is the CEO at FreeTV
Maybe now Screen Australia won’t have to continue subsidizing commercial network’s Australian content programming and instead direct its funding towards independent Australian film financing. No?
Perhaps now Screen Australia can cease subsidizing the network’s Australian content obligations and programming and direct taxpayers funds to independent Australian films. Probably not. No media influence in that eh?
It would still appear, regardless of the drop in revenue, the networks still “have a license to print money”.