Released on 15 April 2020, the Australian Government’s Options Paper calls for public comment on the future of content quotas imposed on traditional broadcasters, whether similar quotas should be applied to streaming services and to what extent the Federal Offsets (such as the Producer Offset, Location Offset, PDV Offset and the Location Incentive) and other media production incentives should change to become more platform-neutral.
Co-authored by the Australian Communications and Media Authority (ACMA) and Screen Australia, the Options Paper was released simultaneously with the Government’s announcement outlining a raft of measures to provide relief for Australian media during COVID-19. See our commentary on the relief measures outlined in that release here.
The Options Paper includes a range of statistics and research on the state of the industry, why it matters, and what forms of support the Federal Government has been providing in the past 10 years, in light of the changing media landscape in Australia and globally.
Industry bodies and other interested stakeholders need to lodge their submissions on the Options Paper by 12 June 2020. Given the current crisis facing the production industry, this will be a crucial time for the sector to advocate for the future of screen regulation in Australia.
The current status
Licensed (free-to-air (FTA)) broadcasters in Australia are required to comply with particular requirements as to how much Australian content they broadcast, in accordance with the Broadcasting Services (Australian Content) Standard 2016. Overall, FTA broadcasters must broadcast a total of 5,074 hours (between 6:00am and midnight) of Australian content per year, being:
a minimum of 55% Australian content on their primary channel (9.9 hours per day); and
1,460 additional hours across their secondary channels.
FTA Broadcasters must also meet the following minimum sub-quotas each year:
At least 250 ‘points’ of first-release Australian drama (with the points system being based on a ‘format factor’, e.g. Australian telemovie/mini-series or self-contained drama of less than 90 minutes duration is worth 4 points per hour, and a drama series or serial produced at the rate of one hour or less per week is worth 2.5 points per hour);
20 hours of first-release Australian documentary;
260 hours of Children’s (C) programming (including 130 hours of first-release; 8 hours of repeat programs; and 25 hours of first-release Australian children’s drama); and
130 hours of preschool (P) programming.
Content quotas were put in place to recognise that, without government intervention, the commercial argument for making local content would not stack up. The paper recognises that “an Australian network can generally import a high quality program [from overseas] for $100,000 to 300,000 per hour, while commissioning an equivalent Australian program may cost a broadcaster anywhere from $500,000 to more than $1 million per hour”. A 2011 study recognised that, were it not for the content quota system, there would be a significant decrease on Australian content expenditure.
The four options that are proposed in the paper, and are now open to public comment, are as follows:
1. Status Quo - existing regulations would remain unchanged
FTA broadcasting quotas and Federal offsets and incentives would not change.
The New Eligible Drama Expenditure (NEDE) Scheme (which requires subscription broadcasting licensees and channel providers to spend at least 10% of total program expenditure for each drama channel on new Australian drama programs) would remain in place.
Streaming subscription services would continue to have no content obligations or quotas.
2. Minimal Change – fine-tuning and modernising existing arrangements
Give FTA Broadcasters greater flexibility around quota requirements, such as removing the current distinction between primary and non-primary channels.
Revise the minimum amounts of Australian drama, documentary and children’s programming required, including the removal of quota requirements for preschool (P) programs. A possible approach to countering this change is to enable commercial FTA broadcasters to contribute to an Australian Children’s Content Fund in lieu of broadcasting children’s content.
The NEDE scheme could be revised to allow broadcasters to flexibly acquit their obligation across platforms.
Subscription streaming platforms to publicly set voluntary content investment and promotion undertakings with ACMA with respect to Australian content, and to be subject to reporting requirements.
Amend the percentage rate of the Producer Offset incentive to become the same for one-off feature films and children’s content distributed on any platform. Location Offset would be re-focussed onto international footloose productions (much like the handful of State-based footloose funding initiatives). Other offset rates would remain unchanged.
3. Significant Reform – establishing a ‘platform neutral’ approach
Replace quota arrangements with the mandatory investment of a percentage of revenue (for all platforms, including streamers) into new Australian scripted programming (which will be assessed by ACMA and may vary for different platforms). This could be achieved by:
- content being made available on Australian services or an equivalent contribution to a new ‘Australian Production Fund’ to be administered by Screen Australia (to be allocated to drama, documentary and children’s programming); or
- alternatively, each service provider negotiating bespoke Australian content investment plans in line with expectations to be set by the ACMA to achieve outcomes in the public interest.
All platforms would be subject to principles-based promotion and discoverability requirements for Australian content.
ABC and SBS would be allocated specific funding for children’s programming, to keep it truly ‘free’.
Revise the Federal offsets to a single flat rate for all platforms, with modified thresholds and potential for a ‘cultural uplift’ (such as to provide additional support for children’s content). This proposal sounds, at first blush, to be inspired by/based on the New Zealand Screen Production Grant, which provides a higher rate of incentive for content which passes a ‘Significant Cultural Benefits’ test.
4. Complete ‘platform-neutral’ deregulation
Total platform-neutral deregulation with all content obligations removed for both FTA and subscription broadcasters and streaming services.
In relation to Federal incentives, Screen Australia direct funding would be removed and either:
- all offsets removed; or
- all Producer, Location and PDV Offsets to be set at a single rate across all platforms, targeting projects of scale which attract significant market investment by examining and reforming minimum spend thresholds.
Preliminary responses from the industry
It appears from current public commentary that the status quo (option 1) cannot continue in the long term if the industry is to adapt to the changing landscape of media consumption. Similarly, a complete deregulation (option 4) approach seems unlikely given the significant level of disruption it would cause to the Australian screen industry and the inevitable long-term detrimental cultural and economic impact. This was acknowledged by the Media Entertainment Arts Alliance (MEAA) in its press release, which stated that option 4 ‘should be ruled out’.
Jenny Buckland, CEO of the Australian Children’s Television Foundation (ACTF) has stated that options 2 and 3 are the only viable ones. Buckland acknowledged that the Options Paper responses must also take into account the ‘massive disruption of 2020 and how we get our production industry back’. This sentiment was echoed by MEAA CEO, Paul Murphy, emphasising that ‘one of the most significant pathways to resuming production and getting our creative workforce back in business will be strong, fit-for-purpose content regulations that apply to all platforms in a balanced manner.’
Similarly, Screen Producers Australia (SPA) expressed that options 1 and 4 were untenable. SPA went further to favour significant reform (option 3) over minimal change (option 2), citing concerns such as whether the voluntary local content investment undertakings for SVOD services would preclude formal regulation of those services (as advocated for by some members of the industry). SPA also queried the practical implementation of all the measures suggested (for instance, the nuances of moving from an hours-based funding model to one based on revenue, as suggested by option 3).
A component of option 3 is that an ‘Australian Production Fund’ be set up into which content service providers, including streamers, must contribute for the purposes of funding content creation. Separate to this, SPA has called for the Government to implement a $1 billion screen content fund to assist with the immediate crisis and the fallout of COVID-19. Furthermore, and contrary to the government’s COVID-19 relief package by temporarily removing broadcaster’s content quotas, SPA is calling for an immediate extension of the content obligation quotas to streaming services in order to ‘help share the load’.
Watch this space
It seems to us that the ‘levers’ which affect the viability, and sustainability, of a media industry in Australia have been identified. Exactly which will be pulled, which will be pushed and which will be decommissioned remains to be seen.
Given the extent to which further regulatory and industry developments in this space could affect our clients, Blueprint Law will continue to closely monitor the situation. We will update this page and our blog as further news on this topic develops.
That said, it is likely to be a long road ahead before the Government makes a final decision on the extent to which any of the Options will be applied, particularly given the length of time it has taken to get to this point, notwithstanding some views being expressed that the COVID-19 crisis might spark an accelerated implementation plan for regulatory reform. Certainly, the period for submission of responses to the Options Paper is only seven weeks, which might be seen as a statement of intent by the Government to move relatively quickly.
If you have any questions about how the Options Paper or broadcasting requirements may affect your business or your production plans, please do not hesitate to contact Ted Cawrey or Gary Rogers or your usual Blueprint Law contact.
The full Options Paper can be found here (Options Paper).