Multi-Channels: Digital YES, but not yet local
The generous license fee rebate is supposed to protect local content on TV, but it doesn’t require a specific production investment. Digital channels are growing their audiences, yet they don’t have a local content quota. How are Australian creatives going to thrive in this new environment? Micah Chua writes
It’s been almost eight years since the first free-to-air digital multichannel was launched with the now defunct SBS World News Channel, and the television environment has since been going digital with a slew of more channels joining the lineup over the past yearwith a promise for full conversion by the year 2013.
Opportunities are expanding as the household penetration rate of digital TV stands at 61 percent, according to Free TV, with each major commercial network broadcasting a digital multichannel with plans for a second in the near future. The public broadcasters are also embracing the digital environment with SBS’s commitment to launch SBS THREE and ABC’s 24-hour news channel on the horizon.
Nine’s Go! reached a milestone in February as the first multi-channel to hit a double digit share at a 5-city level in the key night-time slot with a share of 10.1 percent for the 16-39 demographic.
However, one need only dig a little deeper to uncover a more sobering statistic: while Go! enjoyed a large audience share that Sunday night, the catalysts that drove its impressive ratings were the sitcom The Big Bang Theory and the film Blades of Glory, none of which were produced locally. Industry estimates show that in the first week of 2010, between the hours of 6m and 12pm, Go! featured a mere 3.2 percent local content; 7TWO, 15.1 percent; and Network Ten’s One HD, 14.3 percent. None of these programs were first-run local content.
The current standard of local content for the commercial multi-channels is off to a rocky start with no clear promise for brighter skies for producers, having no local content obligations.
REBATE DEBATE
The situation was further thrown into confusion early February in a bold $250 million move – a figureestimated from the proposed two-year license fee cut, with 33 percent in the first year and 50 in the second – from the Minister for Broadband, Communications and the Digital Economy Stephen Conroy to ‘protect Australian content’.
It’s a rebate that many parties are still scratching their heads over, and with the way it has been delivered, the future of local content for the digital multi-channels is anything but ‘protected’.
While the banner above the rebate announced publicly was one that championed the ‘importance of the Australian Content Standard in ensuring TV audiences have strong levels of Australian programs’, as stated in a media release from Conroy himself, next to nothing was done to ensure the money would be used to meet this objective, making the $250 million what Foxtel chief Kim Williams called ‘an extraordinary piece of government largesse’ and ‘frankly, a direct grant’.
The lack of proviso or requirement attached to the rebate to feed local content represents a significant shortcoming to protect the production sector. The rebate has sparked a fiery debate between the FTA networks and the production sector as to what its actual design is.
“The rebate really is about recognizing the role of the commercial free-to-air sector in the whole digital switchover’, head of corporate communications for Network Ten Jeanette McLoughlin told Encore. The mission behind the rebate to protect local content seems to have been waylaid by a number of other objectives.
She continues: “We are involved in a whole range of projects to help the transition to digital, which includes handing back spectrum, helping viewers in blackspot areas, and also a major project to restack the spectrum.” “As we are readying to hand back this spectrum,”
Ten CEO Grant Blackley stated in his speech at the Australian Broadcasting Summit in March, “the FTA TV sector is funding a range of projects to ensure Australia makes a smooth transition to digital… let’s not underestimate the potential disruption inherent in
a situation involving some 11 million sets in the metro markets alone.”
A $250 million leg up may seem justified in the wake of a monumental analogue to digital shift in the FTA television sector. Or is it? “None of us believe that [the commercial FTA networks] should have got the $250 million relief”, Geoff Brown, executive director of the Screen Producers Association of Australia (SPAA) disagrees.
“The cost of digital switchover should have been met in balance sheets going back the last 10 years, with money put aside like any other business had to.’
QUOTA, THREAT OR ALLY?
SPAA has been meeting with the PM’s senior advisors in Canberra to discuss complimentary measures that can be put into place to reinforce Australian content in the face of the $250 million rebate. What we saw was an opportunity to push for strengthening the supply base of content rather than the platform base,” explains Brown, “so we put a couple of measures to the government.”
“Primary amongst those was a recommendation that the government immediately request the Australian Communications and Media Authority to review the Australian content standard in respect to the sub-quotas for adult drama, children’s programs and documentary and increase those levels immediately,” he added.
Local content quotas for the digital multi-channels are currently non-existent, an omission raising concerns particularly for the independent production sector. However, in an appeal to the government, Free TV Australia requested for a permanent exemption from local content quotas for the multi-channels, and so it seems $250 million have fallen onto the laps of the networks who are reluctant to commit to a set standard of local content for the new channels.
A December 2009 Free TV submission to the Department of Broadband, Communications and the Digital Economy outlines the strategy behind the push for the exemption: “These [digital] channels could not continue in their current form if content obligations were imposed and this would threaten their ongoing viability in any form.”
It continues, “It is unlikely that a multi-channel could generate sufficient revenue to offset the significant fixed cost of complying with Australian and children’s content quotas. Content quotas would represent a substantial financial penalty on Free TV broadcasters who are already facing increased competition from largely unregulated emerging commercial media platforms.” Geoff Brown is not convinced. SPAA rejects the claims from the FTA commercial networks that a local content quota would threaten the industry.
“The modest ask that we’ve put to government will not send those channels broke. You’d be asking, for a whole year, for imaybe 20 hours of Australian adult drama on these multi-channels per network. It’s a modest ask and they should be able to achieve it.”
It seems that the industry bodies are pushing the old regulatory system down with the old analogue ship to pave the way for a more flexible future. The government has called for a review of all media regulation in a converged environment. “And we very much welcome that review,” says Julie Flynn, CEO of Free TV. “We think that this is a long overdue review and we very much support the need to have a look at the regulatory environment.
The regulations we currently operate under were put in place prior to there being pay TV, IPTV and the NBN.” “Many current regulations are out-of-date already”, Senator Conroy told the Australian Broadcasting Summit in March. “Others will be, as soon as the national satellite television service and NBN are up and running; and others are well-intentioned but inadequate for the convergent media era.”
And back and forth the debate has been raging. But the question remains, what does the future for local content on the digital multi-channels actually look like and what’s being done?
COSTLY EXPERIMENTS
While the future is sobering, the FTA commercial networks remain optimistic. “Obviously we really value domestic content’ says Network Ten’s head of programming Beverly McGarvey. “It’s really important to our audience. When you get the right domestic show, it can rate incredibly well.”
One only needs to look at each commercial networks’ local production behemoth- Ten’s Masterchef, Seven’s Packed to the Rafters and Nine’s Underbellyto see the truth in that. Local content will always be culturally and commercially important for the industry.
“We’ve already used our extra channel to experiment with a lower budget Australian-made show,” Seven’s director of programming Tim Worner said about 7HD’s short-lived This Is Your Laugh, starring Andrew O’Keefe. “I see more of that in the near future, and down the track, a digital television landscape that is actually dotted with local productions. They may not have the budget of something made for the main channel, but they will happen and they will prove to be one of the best ways to show viewers a channel’s signature,” he told Encore.
While This Is Your Laugh along with another Seven experiment The All In Call were both axed, these efforts represent a risk that networks should keep taking. “After 2013 when digital penetration renders all the multi-channels ubiquitous,” SBS director of strategy and
communications Bruce Meagher said, “you’d hope that a number of broadcasters will look at the possibilities of original content on those channels. They give you the opportunity to do a bit of experimenting.”
Networks experimenting with local content would be an ideal future in the multi-channel universe. The production community would love to see more of this, but the problem remains: there is no proviso to do so. Conroy takes an optimistic note: “It is content that drives take-up, and new channels have to offer attractive programs. That’s why I firmly believe that Australian audiences will demand Australian content on all the many, varied channels they will come to take for granted in a few short years,” Conroy expressed at
the SPAA conference late last year.
But is a simple ‘supply and demand’ attitude to the situation with no firm regulation enough to keep the local content rolling from the multi-channels? Brown doesn’t believe it is. “The bean counters are there, $330 000 an hour is the standard license fee for an adult drama… and with their output deals out of the US, a high flying US series might be $50,000.” “The cost difference is just absolutely enormous’, ABC managing director Kim Dalton told Encore. “And even if you look at weekly turn-around shows, much lower-budget shows, nonetheless you’re still looking at Australian content costing more by a factor of five to 10 times or more. It’s just a lot more expensive.”
ABC2 has taken the plunge having recently commissioned a new Australian series from emerging producers Mum’s Spaghetti called I Rock (see page 30). But will other networks take the same initiative? Ten’s McGarvey adds that the risk a network takes in its multi-channels is the same risk they take every time they produce something, that “you spend a lot of money and they don’t work”.
So, amidst an agenda to digitise the television environment and with the rebate money planned to fund the different conversion projects, are networks going to take these risks? Producers could rest easier if local content quotas were put in place to guarantee at least that shot.
“It’s naïve to think they’d continue to carry those (content obligations) if they didn’t have to,” said Brown.
A CONVERGED MEDIA FUTURE
According to Kim Dalton, it would be a shame if Australia doesn’t come up with a solution which allows the networks to have some level of Australian content on their digital channels. “Otherwise, what Australians are being provided with are an addition of 5-10 channels, yet no increase in their local programming, and that’s a problem for audiences and for our local industry.”
FreeTV’s Flynn agrees that this is an important moment to determine how the industry is going to continue to deliver local content, in an environment where the NBN will deliver hundreds of IPTV channels, “which won’t even be considered as broadcasting”.
“The FTA industry will be looking for a more level regulatory playing field coming out of any review of regulation in a converged media environment.” Local content on the multi-channels is vital if Australians want to continue to see their stories on air.
The ball is in the government’s court to construct the architecture where the conditions exist that creatives and networks can both run a business and spend the required amount on local content. What that infrastructure will look like may have to wait for the government’s review of the current regulations.
“The government shouldn’t underestimate the audience appeal and strength going into the election year to cast their votes whichever way will prop up Australian content going forward,” Brown confidently stated.
