Figures released last week revealed that three million Australians now stream television over the Internet. Many find themselves hooked by gripping dramas like Game of Thrones and Walking Dead with production budgets in excess of $100 million.
The arrival of these new services is providing Australians with even more viewing choices and increasing competition in the media sector – both desirable outcomes.
Federal parliament’s decision in the early 1990s to finally lift the moratorium on subscription television provides an example of the dividends that flow from greater competition. Unfortunately, the lifting of the moratorium came with a level of regulation of subscription TV exceeding any other country in the world. Despite these restrictions, twenty years since that change, the subscription television industry has surpassed the wildest expectations of those modest reformers.
Our members in this industry have expanded viewing choices by providing Australians with more than 100 new channels, delivered countless technology firsts, and strengthened the television production sector by investing billions and creating thousands of new jobs. The industry’s output is now so highly valued that one in three Australians, or 2.5 million households, choose to subscribe.
The next wave of innovation brought by Internet streaming platforms promises to invigorate the subscription TV market even more. New entrants are attracting the world’s best actors, directors and producers, and delivering new investment to the small screen – creating a new ‘golden age’ of television.
Australia stands to win from this jobs and investment boom. If the local media sector is to reap its rightful share, Australia must reform and deregulate its broadcasting sector. We must relax the regulatory straight-jacket to create scale economics and lower costs, putting our media companies on a more competitive footing with their relatively less regulated foreign peers.
Amongst all the calls for reform, the loudest voices belong to those calling for an end to restrictions on media ownership and audience reach. While such changes make intuitive sense and are one element of total sectoral reform, in isolation they will not be enough and even risk entrenching the problem of distortions.
For Australia to unlock the full economic potential of reform, the government must also tackle other frankly more significant distortions that skew investment away from new technology and new business models. Market forces cannot be invoked to support some changes but not extend to other reforms. This includes addressing policies that shelter free-to-air incumbents from the discipline of competition, gifts of broadcasting spectrum made without regard to market principles, and arbitrary taxpayer-funded rebates on broadcasting licence fees.
But perhaps the most egregious distortion is the arcane anti-siphoning scheme that rigs competition for sports broadcasting rights. While a scheme of some kind may be politically inevitable, at 1300 events, the Australian scheme is unprecedented worldwide in scale, even extending as far as sports that are played overseas which may not even feature any Australian competitors.
Moreover, the scheme is so dated that it fails to ban newer technology platforms from exclusively scooping up valuable broadcast rights and billing Australians to watch. Overseas media companies are already beginning to buy broadcast rights to key sports with a view to charging Australians to watch. To date these are not on the anti siphoning list, but there is nothing to stop them acquiring rights to sports that are supposed to be protected by the scheme. In this sense, even a measure intended to protect consumers fails to reflect the reality of today’s technological realities.
All of these policies – the shelters, the gifts, the fixes – distort and hamper the sector just as surely as do mere restrictions on media ownership and audience reach. This is why reform must be conducted on a holistic, not a piecemeal basis. Cherry-picking reform never works. It denies our economy the benefits of total sectoral reform. It creates new distortions of its own. As a matter of political practicality it never gets completed because support dwindles as interests are progressively bought off.
Thanks to technology Australia stands on the brink of a global revolution in the way content is commissioned and distributed, promising benefits to viewers and the economy in equal measure. For us to reap all the available dividends, Australia must embark on holistic media reform that sweeps away in a single package all the policy relics that confine viewer choice, stunt investment and jobs, and deny our nation its rightful share of the global media market.
Tony Shepherd is chairman of the Australian Subscription Television and Radio Association (ASTRA). This op-ed appeared in the Australian Financial Review on 23 November 2015.