Government scraps children’s content quotas in revamp of commercial TV regulations

From next year, free-to-air TV networks will no longer be bound by the requirement to air at least 260 hours of children’s programs and 130 hours of pre-school programs annually, as part of a government shake up of the TV regulatory system.

While 55% of the programs TV networks broadcast between 6am and midnight will still have to be local content, the simplified quotas mean that each network’s level of Australian content can be a mix of drama, children’s content, or documentaries.

Seven, Nine, and Ten will also have to continue broadcasting 1,460 hours of Australian content each year on their multi-channels.

Fletcher (left) announced the reforms after free to air bosses complained and threatened to abandon their legal content obligations

In announcing the update, the federal government said that, with the exception of a cap on the number of documentary hours that can count towards the quota, “the particular mix chosen will be a matter for each broadcaster based on its business strategy and judgement of audience appeal” from 1 January 2021.

The government will also ask streaming platforms such as Netflix, Stan, and Amazon Prime to report on their investment in local content to industry watchdog, the Australian Communications and Media Authority. But they still won’t face strict quotas, like their free-to-air counterparts, despite ongoing pressure from TV companies and the industry’s union for such quotas to bind the likes of Netflix.

However, the government has promised to continue looking at whether an Australian content spend obligation should be placed on larger streaming services in the local market.

Foxtel’s local content obligations will drop from 10% to 5% next year. Pictured: Foxtel CEO Patrick Delany

It will also introduce laws that halve the existing local content spend obligations applying to subscription TV businesses such as Foxtel, reducing the requirement from 10% to 5% from 1 July 2021.

Foxtel’s chief executive Patrick Delany said the update will “see more home-grown stories on our screens”.

“The government’s package represents a starting point for Foxtel’s future investment in award-winning Australian drama and entertainment,” Delany said.

“They provide us with flexibility as we plan new productions, and importantly they recognise television is now producing world-class drama that is much-loved in Australia and sought after internationally.”

The changes follow this year’s temporary suspension of content quotas as TV companies navigated the impact of COVID-19 on advertising revenues. Before that suspension, Seven CEO James Warburton and Nine CEO Hugh Marks argued that the quotas should be removed, with Warburton signalling Seven would be willing to breach its legal requirements next year if the rules weren’t reformed.

“We’ve been clear for a long time that the children’s content quota was not a sustainable one for us and the wider commercial television industry in Australia,” Warburton told The Sydney Morning Herald at the time.

CEO of Free TV Bridget Fair also argued free-to-air broadcasters must be “unburden[ed]” from “last century rules”, and Communications Minister Paul Fletcher agreed the existing rules were unsustainable.

Fair welcomed today’s decision, and said the “real winners in this reform package are TV audiences”.

“The old quota system was collapsing under its own weight,” she said.

“There has long been a need for the onerous and outdated framework, in place since the 1980s, to be updated.

“By ensuring broadcasters are incentivised to make the programs that are most relevant to their audiences rather than slavishly meeting sub quota obligations, these reforms will assist to maintain the health and sustainability not only of commercial television broadcasters, but of the entire content production ecosystem.”

Fair welcomed the changes

Nine’s Marks said the changes are part of “vital reform”, adding: “It will not only provide a much needed boost to local content production but enable us to better compete in the global content industry.

“We will work with the government to finalise some of the details, but overall this is an important and much needed overdue step in the reform process and we appreciate the time and consideration taken by the Minister to get us to this point.”

Ten boss Beverley McGarvey claimed the “reforms are a win for audiences, a win for networks and a win for the local production sector”.

“They promise fairness and flexibility, allowing us to continue to invest in the programs our audiences love while giving them the choice of the time and the place that they choose to watch them,” she said.

But the union, the Media Entertainment and Arts Alliance (MEAA), disagreed, arguing the changes will lead to more job losses in the screen industry, and only serve to benefit commercial TV companies and streaming giants. Audiences aren’t better off, it said, in contrast to Fair’s assertion.

MEAA’s Paul Murphy said the update will lead to more job losses

“How the government has missed the boat on regulating streaming services and requiring set levels of Australian content each year defies belief,” said MEAA’s CEO, Paul Murphy.

“This government seems intent on deregulation rather than creating a playing field that is level for all.

“Streaming services – yielding billions in income each year – will be celebrating that they have again avoided any content rules.

“The new flexibility provided to Australian commercial television networks will also lead to fewer productions across the board. Moving Foxtel and other subscription broadcast television broadcasters to 5% from 10% of program expenditure for each drama channel just reflects a government that is not serious about the provision of quality Australian content for our growing nation.”

The abolishment of specific children’s content quotas will likely “mean the demise of children’s content on commercial TV, leaving a cash-strapped ABC to pick up the slack,” Murphy continued.

This afternoon, MEAA and Screen Producers Australia, among other screen industry groups, are hosting a virtual event designed to issue a message directly to Prime Minister Scott Morrison. The groups want regulation restored, and content quotas applied to streaming services.

At the same time he revealed the new quota system, Minister Fletcher announced $30m in funding for Screen Australia as part of the 2020-21 federal budget, spread out over two years. The organisation will receive an additional $3m to set up a grants program aimed at nurturing Australian screenwriting and script development.

“We are also providing $20 million to the Australian Children’s Television Foundation over two years to boost the development, production and distribution of high-quality Australian children’s content,” Fletcher added.

The union argued free-to-air broadcasters will abandon children’s content, leaving the burden with the ABC

The producer offset, which allows producers to receive a partial tax refund for the money spent on production, will also be set at 30% for both domestic films and TV production. Previously, a different rate applied to each.

“The old approach of treating film and television differently no longer makes sense,” Fletcher said.

“Increasing the offset to 30% for television will mean additional funding for Australian television production – and in turn support higher production values and programs with a better prospect of being sold into the global content market, taking advantage of the opportunity created by the explosion of streaming video services like Netflix, Disney+, Stan and Amazon Prime.”

Warburton singled out the offset for praise.

“The increase to the producer offset tax incentive production for TV series in particular, is a great result for the whole sector, that will fuel strong investment and growth in a sector that has been hard hit by the impacts of COVID-19,” he said.

“We remain strongly committed to Australian content and welcome the changes to TV content quotas, which will provide greater flexibility to for us to invest more in those programs that audiences want, and to adjust to changing audience preferences. This is a big step in the right direction and also recognise the importance and value of series like Home and Away, the number one Australian drama which has been on air and produced locally for 33 years strong.”

MEAA’s Murphy, though, claimed that the government’s “‘additional’ funding for Screen Australia simply restores the organisation to pre-Abbott (2014) funding levels”.

“The harmonisation of the producer offset is welcome, but it has resulted in a cut of the feature film offset from 40% to 30%,” he added.

Fletcher noted the action is part of the government’s response to last year’s ACCC Digital Platforms Inquiry and Report, which involved a commitment to overhaul media regulation laws to ensure they applied neutrally to all platforms.

“The measures announced today are designed to do just that,” he said.

“They begin to rebalance our regulatory framework and provide Australians with the opportunity to access Australian content across a range of media, regardless of whether they want to watch free-to-air television, subscription television or streaming services.”

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