‘They Totally Misunderstand Aussie Viewing Public’ – Seven, Nine And Paramount 10 Slam Proposed Anti-Siphoning And Prominence Reforms

Australia’s three largest commercial free-to-air broadcasters are disappointed that proposed anti-siphoning rules will not extend to their BVOD services and that new prominence legislation on Smart TVs will not be applied retrospectively.

Thai week a senate committee released a series of recommendations to the Communications Legislation Amendment (Prominence and Anti-siphoning) Bill 2023 that will shape sports available on free-to-air television as well as ensuring local BVOD apps have greater prominence on Smart TV homepages.

The anti-siphoning scheme – which prevents subscription TV from acquiring the rights to events on the list until a FTA broadcaster has had a chance to acquire them – could soon be expanded to include SVODs such as Kayo, Optus Sports, Netflix and Amazon Prime, BVODs including 9Now and 7 Plus and digital platforms such as YouTube.

The number of events on the list has also been expanded from 1,900 to 2,500, although more than 500 of these are part of the summer Paralympic Games. Women’s sports have also been added, including finals for the AFLW, NRLW, and the NRLW State of Origin series.

Although an expanded list will be viewed as good news by FTA leaders, the two largest commercial players are disappointed that their BVODs are not protected by the anti-siphoning scheme, which technically allows sports bodies to split and separately sell FTA and digital TV rights to anti-siphoning events.  

Seven West Media managing director and CEO James Warburton said the committee’s recommendations “totally misunderstand the needs of the Australian viewing public in 2024 and beyond”.

He added: “The recommendations are doing the Australian viewing public a disservice.

“The Senate committee has released a report that does not see merit in ensuring free sport for all Australians, particularly those who don’t have an aerial.

“As the minister considers the report, Seven strongly urges the Government to ensure that the anti-siphoning scheme includes the free digital simulcast of the broadcast stream and that Australians see the benefits of the Prominence Framework sooner.”

During the committee hearings, Warburton pointed out that nearly half of Aussie households do not have “an aerial in the back of their television” and that the rules needed to reflect the flight to digital viewing. He added that sports streaming had “increased 495 per cent across the board in terms of the BVOD market”, with the Matildas World Cup run an example of large numbers viewing sport on BVODs.

Nine CEO Mike Sneesby described senate committee review as “disappointing” and that it “does not satisfactorily address BVOD services in the anti-siphoning framework nor existing televisions in the prominence framework which are both essential to ensure the Australian public’s continued access to local news, sport and entertainment services offered by the free-to-air broadcasters, on their digital televisions.”

Network 10 president Beverley McGarvey added: “Live stream and BVOD viewing will very soon be the most popular way Australians watch their favourite sports, so leaving BVOD platforms out of changes to the anti-siphoning rules, doesn’t reflect contemporary audience needs.”

Are anti-siphoning rules anti-competitive?

The extension of anti-siphoning rules to online platforms pleases few in the industry. 

The subscription TV broadcaster Foxtel – a heavy backer of Australian sports including cricket, the AFL and NRL – has long argued that anti-siphoning rules stifles competition, does not consider the changing viewing habits of Australians are rapidly shifting towards streaming and on-demand viewing, and that protecting rights to a handful of broadcasters would prevent others with deeper pockets from investing in sport.

Foxtel also pointed out that the bill doesn’t prevent commercial TV networks who acquire broadcast and streaming rights to transfer the streaming rights to SVODs that they are affiliated with.

The Coalition of Major Professional and Participation Sports (COMPPS), which represents sports administrators including the NRL and Netball Australia, have warned that proposed anti-siphoning rules could have a severe impact on sport’s ability to generate revenue from media rights.

Foxtel, Netflix and others have pushed for ‘free-to-all’ model that opens up the sports rights markets to all participants but compels them to show ‘events of national significance’ for free on their platforms.

‘Gatekeepers of content’ pulled into line

The legislation on prominence framework requires smart TV manufacturers to ensure TV apps for the ABC, SBS, Seven, Nine and Ten are automatically installed on new TV sets and feature prominently on the primary user interface.

During the hearing, the ABC explained that “67 per cent of Australian households had a smart TV, and that smart TVs and other connected-TV devices have become the dominant way in which Australians access video-on-demand (VOD) services.

“In the context of evolving consumption trends, the ABC argued that global smart TV manufacturers have become ‘gatekeepers’ of content,” the ABC added.

SBS has felt the brunt of the power dynamic between content producers and TV manufacturers, citing an example in which a “major TV manufacturer” said that unless SBS agreed to a 15 per cent share of the revenue it generates from being on its TVs, the SBS On Demand app would be removed from the app launcher on the TV homepage – a threat that it carried out.

In another example from August 2023, “we received notification from another platform operator, that unless SBS agreed to pay them 30 per cent of the revenue we derived from being on their platform, they would exclude us entirely. That platform operator has a market capitalisation of over US$1.7 trillion ($2.6 trillion). 

“It is frankly scandalous that these massive global tech firms can unilaterally insert themselves as gatekeepers between Australians and their free Australian content, trusted news and information, services that have been intentionally developed and underpinned by decades of public policy.”

Prominence for new tv sets 

The senate committee has recommended that the prominence framework applies within a 12-month timeframe.

The recommendations only apply to new smart TV sets, not televisions that are currently in use, which has ruffled the feathers of commercial TV broadcasters.

“Delaying prominence rules for a year and limiting it to just new devices, means only those who can afford a new TV will be able to easily access local free-to-air broadcasters,” argued Network 10’s McGarvey.

“The majority of Australians with existing devices, will be denied the same access to free TV that’s vital to connecting our communities, keeping us safe in emergencies, reflecting our unique identity and giving everyone a front row seat to iconic sporting and cultural events.”

Warburton added: “We appreciate the report reducing the introduction of the Prominence Framework from 18 to 12 months, however, for it to be effective over the coming years it needs to apply to TV screens already in the home.”

Meanwhile, Foxtel and SBS struck a more diplomatic tone, agreeing that the committee “has rightly highlighted the vital role that our free-to-air broadcasters play in informing and entertaining Australia’s diverse communities and that they need to remain prominent on devices and Smart TVs being sold in Australia”.

“We agree with the committee’s finding that the lead time for implementing the bill is overly generous, in favour of the device manufacturers, and that this timeframe can and should be shortened. We believe that overall, this legislation is an important step to preserving free and ready access to Australian culture on our screens,” a spokesperson said.

A Foxtel spokesperson said: “We are pleased to see that the Committee has continued to recognise the importance of putting consumers first and ensuring search and app placement on smart TVs – whether free or paid – reflect consumer preferences.”