The free-to-air networks get their way. Again
Welcome to a midweek update from Unmade.
Today: Communications minister Michelle Rowland makes up her mind on the media law reforms; and ARN admits it broke ASX rules by tipping off the AFR about its Kyle & Jackie O Show extension.
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Maybe for the last time, the free TV machine wins on anti-siphoning
Tim Burrowes writes:
The English philosopher Gary Lineker once observed: “Football is a simple game; twenty two men chase a ball for 90 minutes and, in the end, the Germans always win.”
The Australian media version of that aphorism comes in the television industry. Media law is a simple game. Everyone lobbies the government for a year and, in the end, the free-to-air networks always win.
But, maybe, not always.
Last night’s win for the free-to-air lobby comes around renewing the anti-siphoning legislation, which gives the networks a leg up over subscription streamers and Foxtel when it comes to sport. It will be the last time that can be justified in its current form.
This time round, communications minister Michelle Rowland will not be changing what constitutes allowing viewers to see sport for free. Streaming alone, even when there’s no paywall, will not count. Tough luck, Kayo, Optus Sport et al.
That means that Seven, Nine and Ten, along with the ABC and SBS, get first dibs at major sports rights.
On that point, fair enough. Australian culture has evolved a psyche that expects its sport to be accessible without a subscription (even if the price to be paid is experiencing a wall of advertising instead).
However, anti-siphoning has always looked like a sweetheart deal for the TV networks (who politicians never forget have the opportunity to influence where people vote at 6pm every night).
When the broadcaster does not fully take up those rights they can pass them on to others, so the content can still end up behind a paywall, albeit with the free to air network clipping the ticket along the way.
The law – which Rowland will take to Parliament shortly – does more to protect the TV networks than it does the audience.
That’s why Foxtel pays more than Seven for its slice of the AFL rights, for instance. Effectively the anti-siphoning rules mean that Foxtel is subsidising Seven for the full cost of the rights. And yet for the public, content can still end up behind the paywall.
You could almost hear the resigned sigh in last night’s statement from Foxtel: “This could have been a great opportunity for the Government to bring anti-siphoning laws into the 21st century to reflect viewing habits of Australians today and to protect the future value of much-loved Australian sport. The regime is already anti-competitive and clearly favours free-to-air broadcasters above Australians and above the needs of sporting bodies whose ability to invest in grassroots will be limited.”
However, this is likely to be the last time. This time round, the argument that some Australians – particularly older ones – might not have access to streaming services is just, just sustainable.
Next time new legislation comes along, perhaps in a decade or so, every home will have a smart TV with streaming apps built in. This year is the first where more people consume their television via streaming rather than over the airwaves.
Unmade discussed the inflection point back in March:
There will be no sustainable argument that what Australians have is a divine right to receive free sport only from those capable of delivering it via amplitude modulated signal in the appropriate frequency at 175 to 225 megahertz on the VHF band.
For now though, the extension of the arrangement shores up the value of a TV broadcasting licence.
For Nine and Ten, it gives their streaming offerings Stan and Paramount+ a leg up against the pureplay international streaming services.
Now there’s some medium term certainty, it makes Seven a more intriguing target for acquisition if one of the global players could face the hassle of investing in the declining medium of free to air. If Kerry Stokes was ever a seller, the Seven licence would be a useful asset for any streaming service serious about Australian sports rights.
And in the meantime the legislation also provides Seven with the means of partnering with any other pay player, whilst Nine and Ten are locked into monogamy with Stan and Paramount+.
In theory, the semi-commercial SBS could play a similar game, although the politics would be a minefield.
Meanwhile, last night’s announcement from Rowland – and bear in mind the actual wording of the legislation has not yet been released – also seems to give the TV networks half a win on prominence for their apps within smart TVs.
Unmade tackled the prominence agenda last Friday:
After a transition period, TV manufacturers will need to make apps from the free-to-air players – the likes of 7+, 9Now and 10play – easy to find. Whether that means pre-installed on the home screen remains to be seen.
And it sounds as though the secondary battle – of having their free content prioritised in search on smart TVs – has been lost for now. As Dan Barrett from the excellent Always Be Watching has previously observed, ranking highly in every search for content may have even higher value.
Not that the lobbying on this will end until the law is actually passed. The statement from Free TV CEO Bridget Fair last night contained the hint: “While we are still awaiting full details of the legislation it is clear that there are still a few issues to be resolved with the Government’s proposed model. We look forward to participating in the next stage of discussions around this important issue.”
This may well be the last media legislation around linear broadcasting. That world is changing.
In the end, history catches up. England’s women beat the Germans in last year’s Euro final.
Unmade Index back above 600-points as ARN owns up to disclosure breach
The Unmade Index made it back above the 600-point milestone on Tuesday, rising by 0.84% to 603.9 points.
However, that still means that our index of ASX-listed media and marketing stocks is nearly 40% off its 1000-point opening from the beginning of last year.
Yesterday was a particularly good one for Ooh Media, which rose by 4.74%.
Enero was up by 2.52%; Southern Cross Austereo by 0.97% and Nine by 0.78%.
Meanwhile ARN Media admitted to the ASX yesterday that it had breached listing rules in how it communicated last week’s new deals with Kyle Sandilands, Jackie Henderson and Christian O’Connell.
How Unmade reported last week’s big ASX announcement:
ARN conceded that it gave details of the announcement to the Australian Financial Review several hours before filing them with the ASX. In a mea culpa to the ASX the company said “In the urgency of the moment the plan was not executed correctly”.
ARN’s proposed takeover of SCA has also fallen foul of regulators, with the Takeovers Panel ruling that ownership stakes in both SCA and ARN from shareholder Allan Gray constituted “unacceptable circumstances”. ARN said on Monday it was seeking a review of that ruling.
ARN shares dropped slightly yesterday, by 0.54%. Domain lost 0.86% and Aspermont 9.09%
Time to leave you to your Wednesday.
We’ll be back tomorrow with an audio-led edition featuring a conversation with Medium Rare boss Nick Smith on the branded content company’s evolution since the departure of its founders.
Have a great day.
Toodlepip
Tim Burrowes
Publisher – Unmade
tim@unmade.media
