23 March 2005
Key Points:
The Ashes and the anti-siphoning rules
On 28 February 2005, SBS acquired the free-to-air broadcast rights to the upcoming Ashes test cricket series. The following day, Seven secured the free-to-air rights for the one day series part of the tour which, like the test series, is listed on the anti-siphoning list. Fox Sports already holds the Australian pay TV rights for the competitions. Competing claims regarding the manner in which these rights were dealt with under the anti-siphoning regime were recently aired in a Senate Committee inquiry into the Broadcasting Services Amendment (Anti-Siphoning) Bill 2004, highlighting the manner in which the rules might potentially be manipulated.
The anti-siphoning rules provide that a subscription TV licence holder will not acquire the right to televise a listed event on subscription TV unless a free-to-air broadcaster - ABC, SBS or a commercial TV network - has the right to televise the match (subject to automatic de-listing mechanisms if rights to televise the match are not taken up by a free-to-air broadcaster). Free TV Australia (which represents Seven, Nine and Ten) has argued that there is a loophole in the regime which allows pay TV channel providers which are related to licensed subscription TV broadcasters (as opposed to the licensee itself) to acquire TV rights before those rights have been offered to free to air TV, so that the free to air broadcasters are left to acquire less commercially viable rights. The counter-argument, put forward by the pay TV industry, is that this is not a loophole because it was never the intention of the regime to provide free to air broadcasters with exclusive access to the broadcasting rights to a listed event.
On 7 March 2005 the Senate Committee recommended that, while the issue was outside the scope of its inquiry, the Minister should consider examining the "loophole" and whether it may circumvent the intent of the anti-siphoning scheme. The Senate Committee did recommend that the Broadcasting Services Amendment (Anti-Siphoning) Bill 2004, which extends the automatic de-listing period from six weeks to 12 weeks, be passed without amendment.
Foxtel releases personal digital recorders
On 21 February 2005, Foxtel released its personal digital recorder ("PDR") which can be used to record programs from its Foxtel Digital service. A PDR records TV programs on an internal hard drive instead of a video tape or other removable media. One of the key features of many PDRs is the use of electronic program guides ("EPG"), similar to that offered as part of the Foxtel Digital Service, which makes programming the device for recording considerably easier than programming a regular analogue video recorder. In increasing the ease of programming the device for recording, and thus of time-shifting programming, there is a concern that such devices could ultimately make the notion of prime time redundant as regular scheduled viewing habits will not be required. Certain PDRs also have advanced commercial skipping features - features that the commercial networks are concerned may have an impact upon their advertising revenues.
PDRs have raised a number of important copyright issues. Primarily, copyright subsists in TV program guides, which raises the question as to whether the use of such guides in an EPG by suppliers of PDRs constitutes copyright infringement. In addition, some models of PDRs have the potential to send and exchange recorded programs with other users over a broadband network. This activity breaches the Copyright Act 1968 (Cth), which prohibits the distribution of a copy of a film or sound recording (section 111(3)).
Broadcast decoding devices
Article 17.7 of the Australia-US Free Trade Agreement requires the Government to criminalise the manufacture and unauthorised use of broadcast decoding devices and provide for civil remedies for any party injured by activities relating to the use of such devices. A broadcast decoding device is an apparatus used to gain unauthorised access to encrypted program-carrying signals. As part of the implementation of Article 17.7 of the FTA, the Copyright Act was amended with effect from 1 January 2005. As a result of the amendments, section 135AS of Part VAA now criminalises the commercial use of encoded broadcasts which are accessed via a broadcasting decoding device without the authorisation of the broadcaster. However, while generally giving effect to Article 17.7, the provisions in Part VAA still do not criminalise the non-commercial use of such devices (as appears to be contemplated by Article 17.7).
Effect of accounting standards on the media industry
The International Financial Reporting Standards ("IFRS"), were introduced into Australia on 1 January 2005. The IFRS require intangible assets such as newspaper or magazine mastheads or TV and radio licences to be carried at cost or fair value. Intangible assets can only be re-valued when an "active market" exists. Any media company which recorded such assets at a higher value must reverse that book entry - which is likely to result in large non-cash write-downs. The Half-Year Financial Reports of the Seven Network and Nine Network confirmed that they expect write-downs of $480m and $423m respectively for their TV licences. It has also been reported that the Ten Group will have to write down $526 million for its TV licences. (Jane Schulze, "Media to feel IFRS cut the deepest", The Australian, 10/01/05, p. 29).
Murdoch and cross-media ownership in the UK
The recent release of freedom of information files in the UK indicate that News Corp petitioned vigorously to buy into Britain's free-to-air TV market. Chairman Rupert Murdoch is reported in the UK press as having received private assurances from UK Government ministers that he would be able to buy the UK commercial network Channel Five. The UK Government then proposed a bill containing what was described as the 'Murdoch clause' effectively relaxing the media ownership rules to allow newspaper owners to buy terrestrial TV channels. The bill became law in July 2003. (The Guardian, "UK gave Murdoch Special Treatment", Sydney Morning Herald, 05/01/05).
Microsoft's Internet Protocol TV
Microsoft's Internet Protocol Television ("IPTV") project appears to be gaining significant momentum. Essentially, IPTV is said to enable telecommunications and cable providers to offer to consumers, via the existing broadband structures used for high speed telecommunications services, a large number of channels, instant channel changing, interactive programming guides with integrated video and multiple picture-in-picture capability on standard TV sets, along with other advantages associated with Internet technologies such as targeted commercials and program recommendations based on usage. Microsoft has also said the technology will support HDTV, next-generation digital video recording and video-on-demand functionality. While still only an emerging technology, and despite questions being raised about the quality of the services currently being delivered to customers, IPTV software has already been taken up by a number of cable TV operators in the US. (Jay Green, "A rising star in the TV world", The Australian Financial Review, 01/02/05).
