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Focus: Major implications of new anti-siphoning list

3 December 2010

In brief: Proposed changes to the anti-siphoning regime are intensely political and have received widespread media coverage. Partner Ian McGill (view CV) , Lawyer Victoria Wark and Law Graduate Maryann Muggleston discuss the proposed changes and the implications for broadcasters, rights-holders and 'new' media platforms if the new regime is implemented.

• Background
• The anti-siphoning regime
• Changes
• Implications
• Future steps

Background

The New List follows a review of the current anti-siphoning provisions in the Broadcasting Services Act 1992 (Cth) (the BSA), which commenced in 2009. As part of that review, the Federal Government issued the Sport on Television – Review of the anti-siphoning scheme discussion paper and received more than 330 submissions from stakeholders, including rights-owners, subscription broadcasters, free-to-air broadcasters, new media providers and the viewing public. The review included the effectiveness of the current anti-siphoning regime, the content of the current list and the coverage of sports on new media platforms. In response to the submissions, the Federal Government released Sport on Television – A review of the anti-siphoning scheme in the contemporary digital environment on 25 November 2010.

The anti-siphoning regime

The current anti-siphoning regime took effect in 1994, around the time subscription television was introduced to the Australian market. The Explanatory Memorandum to the BSA stated that the aim of the regime was to curtail the 'siphoning' of events of 'national importance and cultural significance' by subscription television broadcasting licensees and give free-to-air television broadcasters priority to acquire the broadcasting rights to such events.¹

Under the BSA, the Minister for Broadband, Communications and the Digital Economy (the Minister) has the power to specify events that the Minister considers should be televised to the general public for 'free'. Together, the events form the 'anti-siphoning list' (the List). The List is set out in Schedule 2 to the Broadcasting Services (Events Notice No 1) 2004 and is due to expire on 31 December 2010. Under the current regime, events are automatically 'de-listed' 12 weeks before they commence, unless the Minister intervenes. Since its inception, the List has only included sporting events.

The anti-siphoning regime under the BSA operates by way of licence condition. First, subscription television licensees are subject to a licence condition that they cannot acquire the right to televise an event on the List unless a national broadcaster or a commercial television broadcasting licensee with a television broadcasting service covering a total of more than 50 per cent of the Australian population, has acquired the right to televise the event.

Second, commercial television broadcasting licensees are subject to a licence condition that they cannot premiere events on the List on their multi-channel commercial television broadcasting services. Currently, events on the List can only be broadcast on the licensee's multi-channels in limited circumstances, including where the licensee has previously televised, or will simultaneously televise, the event on the licensee's core television broadcasting service.

The current regime does not, however, require free-to-air broadcasters to purchase broadcasting rights for the events on the List, nor does it require free-to-air broadcasters to broadcast events live or in full. The current regime permits free-to-air broadcasters to on-sell their rights to third parties, including subscription television licensees.²

The current regime applies only to television and digital television broadcasters and does not apply to the coverage of sport on any other media platforms, for example streaming online.

Changes

The New List

The new anti-siphoning list revokes and remakes the List. The New List will apply to broadcasting rights acquired between 1 January 2011 and 31 December 2015.

The additions to the New List are: Twenty20 cricket matches involving Australia played in Australia, Twenty20 World Cup cricket matches involving Australia and the Twenty20 World Cup final and FIFA World Cup qualifying matches involving the Socceroos.

Events that have been removed include: British Open Golf, pre-finals ICC 50 Over World Cup matches not involving Australia, pre-finals Rugby Union World Cup matches not involving Australia, Rugby Union test matches involving Australia played outside of Australia, New Zealand, South Africa and not as part of the 'spring tour', finals matches from the French Open and pre-finals men's and women's matches from Wimbledon.

The New List also proposes to remove four of eight AFL games per premiership round and five of eight NRL games per premiership round from the current List. This change will allow subscription television broadcasters to bid directly for these broadcast rights and brings the New List in line with current telecasting arrangements where up to four AFL and NRL games of each premiership round are onsold to subscription television broadcasters.

However, the New List makes it explicit that no AFL or NRL games will be removed from the New List until a mechanism that protects the quality of the matches remaining on free-to-air television has been agreed.³

The new anti-siphoning regime

Some of the announced changes⁴ will necessitate amendments to the BSA. Under the new anti-siphoning regime, the New List will be divided into two tiers: tier A will comprise 'nationally iconic events' (that is, events including the Melbourne Cup, AFL Grand Final, NRL Grand final) and tier B will comprise 'regionally iconic and nationally significant events'. Free-to-air broadcasters must first show tier A events on a designated main channel and are permitted to premiere tier B events on digital multi-channels.

However, under the proposed new provisions, free-to-air broadcasters will also be required to meet new 'coverage obligations' for events on the New List in respect of which they acquire the broadcasting rights. Tier A events must be shown live and in full, while tier B events must be shown within four hours and in full.

The new anti-siphoning regime also proposes the 'must offer rules'. Under this new regime, free-to-air broadcasters will be required to use the rights they acquire to listed events or offer such rights to other broadcasters before the event commences. The Federal Government has not revealed detail of how the 'must offer rules' will operate.

The new anti-siphoning regime also proposes to extend the period of time during which events on the anti-siphoning list are automatically removed, from 12 weeks to 26 weeks before the commencement of the event and to 52 weeks before the commencement of seasonal tournaments with complex fixtures systems, such as the AFL or NRL season.

Finally, under the proposed regime, new media organisations (specifically IPTV and 'other online service providers') will be prohibited from acquiring exclusive broadcasting rights to events listed on the New List.

Implications

Because anti-siphoning is designed to achieve social policy objectives, it is inherently and intensely political. Subject to the legislative detail becoming clearer, early indications are that the new arrangements will have Coalition support.

Under the Legislative Instruments Act 2003 (Cth), the New List will be capable of disallowance, if that motion for disallowance in made within 15 sitting days. A disallowed instrument ceases to have effect. Without Coalition support, any disallowance motion will not be successful.

Assuming the New List is not disallowed, the Government's amendments to the BSA pass and agreement is reached on a mechanism to protect the quality of AFL and NRL games on free-to-air television, the principal implications for industry participants are as follows:

For free-to-air television:

• the competitive benefit of the anti-siphoning scheme will continue until 2015;
• the ability to premiere tier B sporting events on their digital multi-channels;
• new coverage requirements: for tier A sporting events, live and in full and for tier B, in full to coverage to commence within four hours; and
• to prevent hoarding, a 'must offer' obligation in respect of rights acquired in respect of events on the New List, where the new coverage requirements cannot be met.

For subscription TV:

• continue to be prohibited from acquiring rights to events on the New List;
• the ability to deal directly with the NRL and AFL for five of eight matches per premiership round of the NRL and four of eight premiership matches per premiership round of the AFL; and
• the ability to deal directly with sporting organisations and rights owners for events now no longer included in the New List.

For new media providers:

• Uncertain at this stage, but there is the possibility of the BSA criminalising the acquisition by Internet service providers, online service providers or IPTV providers of exclusive rights to the events on the New List.
• There is therefore considerable uncertainty for this section of the industry about the regulatory model that will apply.

For sports rights owners:

• For rights owners of events no longer on the New List, there is now a free market for those events.
• The extension of the tier B events to the free-to-air broadcasters' multi-channels could potentially impact on rights-holder's abilities to achieve a fair market value for their rights because it entrenches the inherent competitive advantage of the free-to-air broadcasters under the anti-siphoning scheme.
• On the other hand, for some rights-holders, the proposed changes potentially mean greater reach and coverage of their sports, in particular, through the ability to broadcast games live on digital multi-channels and potentially greater revenue where subscription television licensees are able to bid directly for certain games each round.

Future steps

The New List will be registered on the federal register of legislative instruments and must be delivered to each House of Parliament when Parliament resumes in February 2011. Although valid from 1 January 2011, the New List is subject to disallowance by either House of Parliament within 15 sitting days of the Government delivering the New List to Parliament.

There is unlikely to be any substantive reaction from the Coalition, the Greens and the independents until the full implementing legislation is available in the new year.

Footnotes

1. The Parliament of the Commonwealth of Australia, House of Representatives, Broadcasting Services Bill 1992 – Explanatory Memorandum, clause 115.
2. In 2006, for example, the Seven Network and Network Ten acquired the broadcasting rights to all AFL games protected by the anti-siphoning regime for the period of 2007-2011, and subsequently negotiated with FOXTEL to sell broadcasting rights to four games the Seven Network and Network Ten would not broadcast.
3. The Australian Government, Department of Broadband, Communications and the Digital Economy, Future Anti-Siphoning List.
4. For further information, see Senator The Hon Stephen Conroy's media release, Anti-Siphoning Scheme – Fact Sheet.

For further information, please contact:

• Ian McGillPartner, Sydney
  Ph: +61 2 9230 4893
  Ian.McGill@allens.com.au
• Michael PattisonPartner, Melbourne
  Ph: +61 3 9613 8839
  Michael.Pattison@allens.com.au
• Tim GolderPartner, Melbourne
  Ph: +61 3 9613 8925
  Tim.Golder@allens.com.au