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AWG Submission to the Inquiry on Australian Content on Broadcast, Radio and Streaming Services 1 WHO WE ARE The Australian Writers' Guild (AWG) is the professional association for Australian screen and stage writers principally in film, television, theatre, radio and digital media. On behalf of its members, the AWG seeks to protect and promote the rights of writers, advance their creative rights and promote the Australian cultural voice in all its diversity. The AWG has fought for over 50 years to improve professional standards, conditions and remuneration within the industry. It has been instrumental in protecting and supporting Australian and children's content, including the introduction of quotas on commercial television in the 1960s and 1970s, and being pivotal to the introduction of the New Eligible Drama Expenditure for subscription television in the late 1990s. INTRODUCTION The AWG appreciates the Environment and Communications References Committee’s interest in the Australian film and television industry and welcomes the opportunity to contribute and offer assistance where possible to this inquiry. For the purpose of this submission, we will focus on the matters where we consider our contribution may be most valuable to the Committee. We will limit this submission to the specific areas of our expertise and avoid duplicating issues already addressed by other industry organisations. Our submission will argue that the government should, through policy intervention, promote and defend Australian culture by supporting Australian screen content. We submit that the current regulatory framework is fit for purpose, but that it must be updated to be platform-neutral and to create parity between the commercial broadcasters and online content providers, both foreign and domestic. We support these claims through two key arguments. First, there is a cultural imperative to tell Australian stories. The reality is that Australia will never be competing on a level playing field commercially with the international English language content market which is dominated by the United States. However, we can regulate and legislate to ensure that Australian stories continue to be a part of the conversation. We must continue to tell stories about who we are to each other. These stories allow us to define our culture and the country we live in. As put by Hector Crawford, having more Australian content on our screens would ‘make a vital contribution to the development of a specifically Australian consciousness and sense of national identity’. 1 This is central to the purpose of public policy in our industry. Second, we submit that broadcasters economically benefit from the current regulatory framework and that they, in return for the commercial benefits they enjoy, should commit to producing local scripted drama and children’s content, thereby giving back to Australian audiences. The claim that advertising revenue is low as a result of restrictions imposed on this demographic and timeslot can be supported but, when taken as a whole, represents an economically insignificant loss of revenue because of the timeslots and the number of hours it affects. This is far outweighed by the advertising benefits gained by the significant number of hours and 1 Given, Jock, Did the Networks Kill Homicide?, Inside Story, 2 July 2014.
Transcript of AWG Submission to the Inquiry on Australian Content › awgau › word...Scripted drama forms part...
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WHOWEARE
TheAustralianWriters'Guild(AWG)istheprofessionalassociationforAustralianscreenandstagewriters
principallyinfilm,television,theatre,radioanddigitalmedia.Onbehalfofitsmembers,theAWGseeksto
protectandpromotetherightsofwriters,advancetheircreativerightsandpromotetheAustralian
culturalvoiceinallitsdiversity.TheAWGhasfoughtforover50yearstoimproveprofessionalstandards,
conditionsandremunerationwithintheindustry.Ithasbeeninstrumentalinprotectingandsupporting
Australianandchildren'scontent,includingtheintroductionofquotasoncommercialtelevisioninthe1960s
and1970s,andbeingpivotaltotheintroductionoftheNewEligibleDramaExpenditureforsubscriptiontelevisioninthelate1990s.
INTRODUCTION
TheAWGappreciatestheEnvironmentandCommunicationsReferencesCommittee’sinterestintheAustralian
filmandtelevisionindustryandwelcomestheopportunitytocontributeandofferassistancewherepossibleto
thisinquiry.Forthepurposeofthissubmission,wewillfocusonthematterswhereweconsiderour
contributionmaybemostvaluabletotheCommittee.Wewilllimitthissubmissiontothespecificareasofour
expertiseandavoidduplicatingissuesalreadyaddressedbyotherindustryorganisations.
Oursubmissionwillarguethatthegovernmentshould,throughpolicyintervention,promoteanddefend
AustralianculturebysupportingAustralianscreencontent.Wesubmitthatthecurrentregulatoryframeworkis
fitforpurpose,butthatitmustbeupdatedtobeplatform-neutralandtocreateparitybetweenthecommercial
broadcastersandonlinecontentproviders,bothforeignanddomestic.Wesupporttheseclaimsthroughtwo
keyarguments.
First,thereisaculturalimperativetotellAustralianstories.TherealityisthatAustraliawillneverbe
competingonalevelplayingfieldcommerciallywiththeinternationalEnglishlanguagecontent
marketwhichisdominatedbytheUnitedStates.However,wecanregulateandlegislatetoensure
thatAustralianstoriescontinuetobeapartoftheconversation.Wemustcontinuetotellstories
aboutwhowearetoeachother.Thesestoriesallowustodefineourcultureandthecountrywelive
in.AsputbyHectorCrawford,havingmoreAustraliancontentonourscreenswould‘makeavital
contributiontothedevelopmentofaspecificallyAustralianconsciousnessandsenseofnational
identity’.1Thisiscentraltothepurposeofpublicpolicyinourindustry.
Second,wesubmitthatbroadcasterseconomicallybenefitfromthecurrentregulatoryframeworkandthat
they,inreturnforthecommercialbenefitstheyenjoy,shouldcommittoproducinglocalscripteddramaand
children’scontent,therebygivingbacktoAustralianaudiences.Theclaimthatadvertisingrevenueislowasa
resultofrestrictionsimposedonthisdemographicandtimeslotcanbesupportedbut,whentakenasawhole,
representsaneconomicallyinsignificantlossofrevenuebecauseofthetimeslotsandthenumberofhoursit
affects.Thisisfaroutweighedbytheadvertisingbenefitsgainedbythesignificantnumberofhoursand
1Given,Jock,DidtheNetworksKillHomicide?,InsideStory,2July2014.
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advertisingrevenueattachedtotheuseofthepublicspectrumforothercontent,inparticularsportcontent
supportedbyanti-siphoningmeasures.
Further,wewouldliketogoontherecordasstatingthatwhilewesupportthepropositionthat
Australianeedstobeinternationallycompetitivethroughtheproducerandlocationoffsets,weareof
thestrongviewthatthereneedstobeagreatercommercialgapbetweentheproduceroffsetand
thelocationoffset.SuchagapwouldincentivisethecreationofAustraliancontentandensuresthat
AustralianstoriescancontinuetobetoldbyAustralianwritersforglobalaudiences.Insummary,
duringyourinquiryintotheeconomicandculturalvalueofAustraliancontentonbroadcast,radioand
streamingservices,wewouldurgeyoutocommittothefollowing:
1. Preservingexistinglocalcontentquotasforscriptedtelevisionandsub-quotasoncommercial
broadcastersfornewscripteddramaandchildren’scontent;
2. Introducingregulationonsubscriptionvideoondemand(SVOD),onlineandtelecommunications
companiestoimposeobligationsonthemtoinvestintheproductionandshowcaseofnew
Australianscripteddramaandchildren’scontent;
3. Introducingataxonstreamingservicestiedtolocalcontentquotas;
4. Increasingtheproducer’soffsetfortelevisionfrom20%to40%andensuringitisclearlyand
transparentlydirectedtowarditsproperpurposeofsupportingAustralian-originatedscreen
stories;
5. EnsuringfundingoftheABCandSBSisatalevelthatenablesthemtoproperlysupportand
promotethecreationanddevelopmentofnewAustralianscripteddramaandchildren’scontent
inaccordancewiththeirrespectivecharters;and
6. IncorporatingquotasfortheABCandSBStoensureclarityandtransparencyinexpenditureon
scriptedcontent.
Australianscriptedscreencontentiseconomicallyvulnerableduetothedigitalisationandoperationofthe
marketfortheAustraliantelevisionindustry.Governmentinterventioninthescreenindustryshould
thereforebehighlytargetedtotheareaswherethemarketcannotprovidetheculturalobjectivesand
publicgoodthatgovernmentiscommittedto.Thereisincontrovertibleevidence,bothdomesticallyand
internationally,thatlocalscriptedcontentcannotsurviveoutsideHollywoodandBollywoodwithout
targetedgovernmentintervention.2TheAWGsincerelyhopesthatthereareinclinationsforpositive
changewithinthiscurrentgovernment,whereselective,targetedpolicyinterventioncanstrengthenand
protecttheeconomicandculturalvalueoftheAustraliantelevisionandfilmindustry.
CURRENTSTATEANDOPERATIONOFMARKETFORAUSTRALIANTELEVISION
Wesubmitthattheeconomicstateofthecommercialbroadcastersisnotasprecariousasitissometimes
madeouttobe.Thebroadcasterscananddocreatecontentthatisfinanciallyviable:realitytelevision
programs,newsandlightentertainmentprogramsarelucrativeandarenotsubjecttothesameeconomic
2Grant,Peter,StoriesUnderStress:TheChallengeforIndigenousTelevisionDramainEnglish-LanguageBroadcastMarkets,December2008:
http://www.mccarthy.ca/pubs/IAWG_DRAMA_REPORT_FINAL.pdf.
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vulnerabilitiesasscripteddramaandchildren’scontent.Additionally,therearewaysofcommercialising
publicspectrumaccessbeyondincreasingaudienceshare.ShowslikeTheBlockandMasterChefAustraliapresentbroadcasterswiththeopportunitytobenefitfromadvertisingspace,throughin-showproduct
placementsandtie-ins.Ingeneral,theseprograms:
• areconsiderablycheapertomakethanscriptedshows;
• canbesoldinternationallyforretransmissionortointernationalnetworkswhomaywishto
remaketheformatfortheirownmarket;
• achieveampleadvertisingrevenuefromextensiveproductplacementandtie-ins;and
• arevaluablemarketingplatformswhichareusedforbrandmarketingforthenetworkandits
otherproducts.
Existingregulationalsoeconomicallybenefitsthecommercialbroadcasters.Thecurrentanti-siphoning
schemewasintroducedtoensureAustralianpeoplehaveaccesstomajorsportingevents,suchasthe
OlympicsandtheAFLandNRLgrandfinals.Italsomeansfree-to-airbroadcastersenjoyagovernment
protectionwhichgivesthemanadvantageoverFoxtel,SVOD,onlineortelecommunicationscompetitors
whenitcomestomajorsportingevents.Inatimeofdecliningadvertisingrevenue,theseeventsattract
immenseaudiencenumbersandarethereforeextremelyattractivetoadvertiserswhopaythe
commercialnetworkslargesumsofmoneyforadvertisingduringthesebroadcasts.Thebroadcastingof
sportingeventsisnotanareathatneedsgovernmentinterventionbecausethemarketisself-sustaining.
Weknow,fromlocalandinternationaldata,thatifthepolicyrequirementtomakescripteddramaand
children’scontentisremoved,leavingonlycommercialdecision-making,evidenceshowsthatlocal
scriptedcontentwillrapidlydisappear.3Thereisabsolutelynodoubtthatcommercialbroadcasterswill
stopproducingnewscripteddramaandchildren’sprograms.Inthefiveyearsto2016,commercial
broadcasters’expenditureondramaandchildren’sprogrammingremainedstagnantordecreased,while
investmentinnews,sportandlightentertainmentprogrammingincreased.4
In2003,theUnitedKingdomGovernmentdowngradedchildren’scontentfromTier2toTier3inresponse
toPublicServiceBroadcasters(PSB)complaintsthatitwasnolongereconomicallyviablegiventhelow
advertisingrevenueitgenerated,afterwhichPSBthereforenolongerhadtomeettheirquantitative
targetsforchildren’sprogramming.From2003to2013,thisresultedina93%reductioninchildren’s
contentontelevision.5
ThisisanexampleofthedramaticandrapidimpactofthesofteningofTVcontentquotaobligationsfor
culturallyvaluablecontentinfailedmarkets.Itdemonstratesthatwhenbroadcastersarenotrequiredto
providecertaintypesofcontent,theywon’t,evenwhenthatcontentisseenasculturallysignificantandin
3Grant,Peter,StoriesUnderStress:TheChallengeforIndigenousTelevisionDramainEnglish-LanguageBroadcastMarkets,December2008:
http://www.mccarthy.ca/pubs/IAWG_DRAMA_REPORT_FINAL.pdf.4ACMA,BroadcastingFinancialResults2009-2010to2014-2015:https://www.acma.gov.au/theACMA/Library/Industry-
library/Broadcasting/broadcasting-financial-results-report.5Pett,William,SaveKidsContentAnnouncesCampaignLaunchinParliament,24June2016:savekidscontentorg.uk/news/save-kids-content-announces-campaign-launch-in-parliament.
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thepublicinterest,whilealsoattractingexcellentlocalratings.Afteralong,noisyandhard-fought
campaignbySaveKids’ContentUK,changehasoccurred,andtheUnitedKingdomisnowutilising
taxpayermoneytoseektoreinstatechildren’scontenttoformerlevels.Thisstrategywouldbe
significantlyriskierinAustralia,giventhattheAustralia–UnitedStatesFreeTradeAgreementpreventsus
fromwindingbackanyrelaxationofregulation.
Forover40years,Australiancontentquotashaveensuredthatculturallysignificantcontent,suchas
scripteddramaandchildren’stelevision,hasbeenavailableforthebenefitofallAustralians.Apartfrom
creatingjobsandrevenue,suchiconicshowshavepromotedAustralianidentityandcultureathomeand
ontheinternationalstage.WeneedtolearnfromthemistakesoftheUKandnotrepeatthem.Value
cannotalwaysbemeasuredindollars.
THEVALUEANDIMPORTANCEOFLOCALCONTENTREQUIREMENTSFORTELEVISION
Asoutlinedabove,aderegulatedmediamarketwillfailtodeliverthescreencontentthatisculturally
valuable–scripteddramaandchildren’scontent.Thesetypesofcontentshouldbeprotectedbythe
AustralianGovernmentaspartofthegovernmentmandatetoactascustodiansofAustralianculture,for
andonbehalfofAustraliansofallages,nowandintothefuture.
SCRIPTEDDRAMA
ScripteddramaformspartofthefabricofAustraliancultureandsharedexperiencelikenootherformof
televisioncan.Theabilitytocreatecharacters,places,mise-en-scèneanddialoguefromanAustralian
perspectiveandsensibilityisextremelypowerful.Australianaudienceswelcomethesecharactersinto
theirlivesnightafternightandtheyformpartofaculturalcanonthatbothreflectsandshapesourcultural
identity.
WithaveragebudgetsofAUD$1.1millionperhour,scripteddramaisthemostexpensiveaudio-visual
contenttoproduce.It’salsotruethatcommercialbroadcastersinAustraliacanacquireahigh-quality
dramaseriesfromtheUnitedStateswithaproductionbudgetofUS$6millionperepisode,higher
productionvalues,marketinghypeandcriticalacclaimforasmallfractionofwhatitcoststomakeone
episodeoflocalAustralianscripteddrama.Asstatedearlier,Australiancommercialbroadcasterscanalso
makeanepisodeofarealityorlightentertainmentprogramforlessthanhalfthecostofmakingone
episodeoflocalAustralianscripteddrama.Withnogovernmentobligationtomakescripteddrama,the
commercialbroadcasterswillserveonlytheircommercialinterestandshareholders.Itwouldbea
justifiablecommercialdecisiontofocusonthetypesoflow-risk,cheaper-to-makecontentthatismost
likelytoreturnoninvestmentattheexpenseofscripteddrama.
CHILDREN’SCONTENT
UndertheUnitedNations’ConventionontheRightsoftheChild,childrenhavearighttoaccessinformationofsocial,culturalandlinguisticbenefitviamassmedia.
6Australianchildrenhavearighttosee
6UNGeneralAssembly,ConventionontheRightsoftheChild,Article18.
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themselvesreflectedonAustralianscreensandtheAustralianGovernmenthasaresponsibilitytoensure
thatwehavestoriesandacultureofourowntopassontofuturegenerations.Withoutgovernment
intervention,thescreensofAustralianchildren,aswellastheirheartsandminds,willinsteadbefilledwith
foreigncontentandaccents,andthevaluablecultural,socialandeducationalrolethatqualitylocally
producedchildren’scontentplaysinoursocietywillbelostforever.Anydreamsofacareerinthe
televisionandfilmindustrywillbecrushedastheopportunitytolearncraftfromthegrounduponlocal
productionswillalsobelost,alongwithnewgenerationsofwriters,directors,actors,producers,
cinematographers,soundandpostdesigners.
Itisevidentthatcommercialbroadcastersarealreadydoingthebareminimumwhenitcomesto
children’scontent.Lookingatthefive-yearaveragefrom2012to2016,Channel7andNetwork10are
onlyjustmeetingexistingquotasforchildren’scontent,andNetworkNineisactuallyfailingtomeetits
obligationsforfirst-releaseAustralianchildren’sprograms.Australiancommercialnetworksaremaking
justonehourinexcessofthe130hoursrequiredforallAustralianpreschoolprograms.7Thisequatesto
eachofthecommercialbroadcastersmakingapproximately2.5hoursoffirst-releaseAustralianchildren’s
contentperweek.Thecommercialbroadcastersmadetheirintentionsonchildren’scontentclearwhen
theysuccessfullylobbiedthegovernmenttobeallowedtousesecondarychannelstobroadcastAustralian
children’scontentinordertocreatetheself-fulfillingprophecythatAustralianchildrenwerenotwatching
it,sotheyshouldn’tbeforcedtomakeitanymore.
ASSESSMENTOFTHECURRENTSYSTEMOFSUPPORTFORSCREENCONTENTANDSUGGESTIONSFOR
REFORM
LOCALCONTENTQUOTAS
TheabilityandopportunitytotellAustralianstories,fromourownperspectiveandinourownvoice,
wastheresultofanationallysignificantpubliccampaign:the‘TV:MakeItAustralian’campaignofthe
1960sand1970swhenAustralianshowsrepresentedjust1%ofcontentshownontelevision.The
battlewaswonandlocalcontentquotaswereintroduced.
Therequirementforinterventionandprotectionofcontentisanecessaryrealityformostcountries,
especiallythoseinEnglishlanguageterritorieswhohavetocompetewiththebehemoththatisthe
UnitedStates,acountrywherethehugesizeofthemarketcansustaincontentwithhighbudgetsand
produceasuperiorqualityproductinthesamelanguagewespeak.Localcontentprovidersare
unabletocompetewhenthiscontentisexportedtoAustraliafor,effectively,azero-marginalcost.
Ordinarilythistypeofmarketdistortionwouldbepreventedbyanti-dumpingregulations,however,
asaudio-visualcontentisclassifiedasa‘service’ratherthana‘good’forthepurposesofCustomsAct
1901,8theregulationcannotapply,andmarketfailureresults.Thisistheeconomicreality
underpinningtheneedforpolicyinterventionforaudiovisualcontent.
7ACMA,AustralianContentComplianceResults2012-2016. 8CustomsAct1901(Cth),s4.
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Sincetheintroductionofquotas,commercialtelevisionbroadcastershaveprovidedspaceonour
screensforsuccessful,high-quality,scriptedAustralianprograms,suchasNumber96,Prisoner,ACountryPractice,Neighbours,HomeandAway,AcropolisNow,BlueHeelers,RoundtheTwist,TheSecretLifeofUs,SeaChangeandOffspring,thathaveconnectedwithAustralianandinternationalaudiences.
TheBroadcastingServicesAct1992requiressubscriptiontelevisionlicenseeswhoareregisteredundertheCorporationsActandbroadcastdramachannels,anddramachannelpackageproviders,to
investatleast10%oftheirtotalprogramexpenditureonnewAustraliandrama.9Expenditureonnew
Australiandramaprogramshasincreasedyearonyearsince2012/2013,10andthequalifyingcontent
thatsubscriptiontelevisioninvestedinoverthisperiodincludesprojectsthatwerecommercially
successfulinAustraliaandininternationalmarketssuchasMadMax:FuryRoad,TopoftheLake,TheKetteringIncident,Wentworth,MakoMermaids,DeadlineGallipoli,RedDogandBranNueDae.Subscriptiontelevisionprovidersthereforehaveaclearcommercialmotivationtomakethiscontent
atthistime,butitisimportanttorememberthatthisobligationwasonlyintroducedaftersuccessful
lobbyingbytheAWGbecausetheywerenotmakingitotherwise.Putsimply,thereisacommercial
reality:whenthecontentceasestomakemoney,theywillstopmakingitifnotrequiredtodoso.
Existingquotasoncommercialbroadcasterstoproducenewscripteddramaandchildren’scontent
andtheexpenditurerequirementforsubscriptiontelevisionlicenseesmustbepreserved.Thereisno
doubtthattheAustralianpublicsupportstheseexistingpoliciesasbothpolicyoptionsandinits
viewinghabits.ScreenAustralia’s2016ScreenCurrencyReport(‘theReport’)foundthatAustraliansexpressedapreferenceforAustraliancontentoverforeignscreencontent.Itwasfoundthateven
amongthemostavidonlineviewers(whosubscribetostreamingserviceslikeNetflixandStan),
Australiancontentwasfavoured.Thishasbeenatrendformanyyearsnow,notwithstandingthe
increasedpresenceofproviderswithhugeselectionsofAmerican,Britishandotherinternational
contentavailable.Withaudiencesmakingthischoice,itbecomesclearthatAustraliansplacean
extremelyhighvalueonAustraliancontent.Australianshaveanappetiteforseeingshowscreatedin
AustraliawhichreflecttheirexperienceoflivinginAustraliaandwhatitmeanstobeAustralian.Ifwe
continuetofeedthishunger,theindustrywillnotonlysurvivebutitwillthrive.
TheAWGsubmitsthatcontentregulationintheformofenforceablelocalcontentquotasforscripted
televisionisthecornerstonetopreservingqualityAustralianaudio-visualcontentonourscreens.
Withoutsuchregulationtoachievetargetedoutcomes,itislikelythatAustraliancontentwould
completelydisappearfromourscreensanderodeoneoftheimportantaspectsofourculture.
TheReportalsostatedthatallscreencontentunderAustraliancreativecontrolgeneratedAUD$2.6
billionrevenueand20,158full-timeequivalentjobs.Iflocalcontentquotasweretobereduced,the
spacetheseprogramsoccupyinthemarketwouldinevitablybefilledbycheaplypurchased
internationalcontentoroffshoreproductionsattractedbythelocationorPDVoffsetwhichmaybring
9BroadcastingServicesAct1992(Cth),Pt7,Div2A.10ACMA,NewEligibleDramaExpenditureSchemeResults,2015-16:https://www.acma.gov.au/Industry/Broadcast/Television/Australian-
content/new-eligible-drama-expenditure-scheme-results-i-acma.
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employmentforsomeactors,directors,extras,crewandpostproductionpersonnel,butwillnot
includemandatoryrequirementstoemployAustralianwritersorotherkeycreatives.Whilethismay
haveshort-termfinancialbenefitsforAustralia’scommercialtelevisionnetworks,longterm,this
woulddecimatetheAustralianfilmandtelevisionindustry,andhaveanegativeimpacton
employmentandGDP.Theproductionspurchasedfromoverseaswouldbemadebyforeignactors,
writers,producers,directorsanddistributors,takingemploymentawayfromtheirAustralian
counterpartsanddecreasingournation’sexposuretoitsowncultureonscreen.
PLATFORM-NEUTRALREGULATION
Inadditiontopreservingtheprotectionsofthecurrentsystem,weneedtomakethemfitforpurposein
thisnewageofdigitalcontent.Thecurrentsystemofquotaswasintroducedlongbeforetheadventof
streamingvideoondemandservices,suchasStan,NetflixandAmazonPrime,orvideo-sharingplatforms
suchasYouTube,andbeforetelecommunicationscompaniesbecamecontentprovidersalongsidethe
traditionalnetworksinaconvergentmedialandscape.
Australiancommercialnetworksmustcomplywithquotas,Foxtelmustcomplywithaminimum
expenditureonlocalcontent,governmentbroadcastersmustcreatelocalcontentundertheirrespective
charters,butthenewdigitalmarketentrantshaveasyetnoobligationtocontributetothelocalmarket.
TousejustoneexampleofNetflix,inJune2017,RoyMorganreportedthat7.091millionAustraliansaged
14andoverhadaccesstoNetflixinthethreemonthstoMarch2017.Thisisa29%increaseonthe
previousquarter.Anestimated2,714,000AustralianhomesarenowNetflixsubscribers.11Withthe
minimumsubscriptioninAustraliapricedatAUD$9.99permonth,NetflixrevenuefromtheAustralian
marketcouldbewellinexcessofAUD$325millionperannumfromsubscriptionsalone.But,despite
makingthesehugesumsofmoneyfromexploitingtheAustralianmarket,NetflixhasnostaffinAustralia,
withevenitstechnicalsupportrunremotelyfromtheUSA.AlthoughNetflixhaspreviouslyboughtsecond-
window,internationaldistributionrightsonAustraliantelevisionseriessuchasTheLegendofMonkey,GlitchandBeatBugs,itshouldnotbeforgottenthattheserightsarevaluableforNetflixinthemultiple
internationalterritoriestheycoverandhavethepotentialtomakethemevenmoremoneywhenthe
rightsareexploitedandcross-collateralised.Netflixhavealsorecentlyannouncedadirectcommissionfor
oneoriginalAustraliantelevisionseries,Tidelands,andhasbeenthemajorinvestorinanother,PineGap,sowhiletheyarenowspendingmoneyintheAustralianmarket,itisadropintheoceaninthecontextof
howmuchtheyaremakingfromsubscriptionsandstandtomakefromtheinternationalrightsof
Australiancontent.Itwasreportedthatin2017NetflixspentoverUSD$8billiononcontentalone,12sothe
AustralianGovernmentshouldbeaskinghowmuchofthatwillbespentinAustraliaandhowmuchcould
bespentifNetflixwereobligedtocommittonewAustralianproductioninthesamewayitscompetitors
are?
11RoyMorganSubscriptionVideoOnDemandEstimates,June2017:http://www.roymorgan.com/findings/7242-netflix-subscriptions-march-2017-
201706080957.12Ibid.
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ThemediaregulationframeworkinAustralianeedstobefairandequal.Butthewaytodothisisby
updatingourregulation,ratherthanracingtothebottomwithderegulation.Allcontentprovidersshould
beregulatedbytheAustralianGovernmenttoensurethattheyhaveanobligationtoproducenewlocal
Australianandchildren’scontentandgivebacktotheAustralianaudiencestheyareexploitingforhuge
profits.NewplayerslikeNetflixalsobenefitfromoligopolisticmarketconditionssotheAustralian
Governmentshouldensurethatthereisatrade-offandbenefittotheAustralianpeopleforthat.
WiththeirAudiovisualMediaServicesDirective,theEuropeanParliamenthasrecentlysetcontentquotas
forvideostreamingserviceslikeNetflixandAmazonPrime.Witharequirementthat30%oftheir
cataloguemustbeEuropeanCommission.13Memberstateswillalsobepermittedtoimposealevyonthe
streamers,thoughNetflixischallengingthisintheEuropeanGeneralCourt.
AustraliashouldlookcloselyatwhatEuropehasbeenabletoachieveandshouldintroduceanewlevyon
subscriptionvideoondemand(SVOD),onlineandtelecommunicationscompaniestoimposeanobligation
onthemtoproducenewAustralianscripteddramaandchildren’scontent.
PRODUCEROFFSETFORTELEVISION
Todate,theproduceroffsethasbeenextremelyeffectiveindrivinghigh-qualityscripteddrama
production.ThequalifyingrequirementthatkeycreativessuchaswritersmustbeAustralianensures
professionalopportunitiesforAustralianwritersandothercreatives.ItalsoguaranteesAustralian
audiencesongoingaccesstoseeingtheirculturerepresentedonscreenthroughtelevisioncontent.
Australianfeaturefilmsattractaproduceroffsetof40%,whichisdoublewhatisofferedtoqualifying
televisionproductions.Weunderstandthisdisparitywasoriginallyputinplaceasthebudgetsforfeature
filmswerecomparativelyhigherthantelevisionandtheirfinanceharderforproducerstoraise.Yet,with
thecurrentAustraliantelevisiondramabudgetssittingataroundAUD$1.1millionperhour,andwithmany
seriesconsistingof6to12episodesperseason,thebudgetsarenowcomparabletoandinmostcases
actuallyexceedthebudgetsforAustralianfeaturefilms.Itthereforemakessensefortheproduceroffset
fortelevisiontobebroughttoparitywiththeAustralianfeaturefilmincentive.
Australiaisalsofacingintensecompetitionfortelevisionproductionsfromregionalneighbourssuch
asNewZealandandMalaysia,whorespectivelyhavea40%and30%produceroffsetfortelevision.
ManylargeproductionsarenowchoosingtoshootinNewZealandinsteadofAustraliatotake
advantageofthelargeroffsetandthisiscostingAustraliansopportunitiesforemployment,skill
developmentandcostingtheAustralianeconomymoneyinlostrevenue.
ResearchbyPricewaterhouseCoopers(‘thePwCreport’)whichwascommissionedbytheproduction
andpay-TVindustriesestimatesthatoverAUD$100millionineconomicactivitywouldbecreatedif
13EuropeanCommission,AudiovisualMediaServicesDirective,May2017:http://www.roymorgan.com/findings/7242-netflix-
subscriptions-march-2017-201706080957.
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theproduceroffsetfortelevisionproductionwasdoubledandthatthecosttothefederal
governmentwouldonlybe‘amaximumof$15.5millioninforegonetaxrevenue’.ThePwCreportestimatesthat360newtelevisionproductionjobswouldbecreatedandsaidAustralia'sinternational
competitivenessintheglobalscreenproductionandfinanceindustrywouldbe‘significantly
enhanced’.
TheAWGagreeswiththepropositionthatAustralianeedstobeinternationallycompetitivethrough
theproducerandlocationoffsets.However,weareoftheviewthatthereneedstobeagreater
commercialgapbetweentheproduceroffsetandthelocationoffset.Anincreaseintheproducer
offsetoverthelocationoffsetincentivisesthecreationofAustraliancontentandensuresthat
AustralianstoriescancontinuetobetoldbyAustralianwritersforglobalaudiences.Thisiswhat
differentiatesindustryprotectionismfromsupportforAustraliancultureandstorieswithallthe
attendantsecond-tiereconomicandsocialbenefits.
Incontrast,productionstakingadvantageofthelocationoffsetdonothavetosatisfythe‘significant
Australiancontent’test.Thebeneficiariesofthelocationoffsetalsotendtobelarge,wealthy
transnationalproductioncompanieswhoprovidenothingmorethansporadicinvestmentinjobsand
skillsinreturnforlargepublicsubsidies,withoutanyobligationtocontributemorebroadly,whichis
thecasewiththeproduceroffset.
TheAWGrecommendsanincreaseintheproduceroffsetfortelevisionfrom20%to40%.
ABCANDSBS:QUOTASANDFUNDING
SBSandABChavecontinuedtomakeasignificantcontributiontotheAustralianculturalconversation,
ensuringAustralianaudienceshavetheopportunitytoseethemselvesreflectedonscreenandhavetheir
storiestold.However,toensureparity,theAWGsupportstheintroductionofthesamecontentquotas
thatapplytocommercialbroadcasters.Additionally,wesupportanincreaseinfundingtotheABCand
SBS.
IncomplyingwiththeirobligationtoprovideprogrammingwhichreflectsAustralia’smulticulturalsociety,
SBShasgivenAustralianaudiencesWilfred,EastWest101,HousosandDeepWater:allshowswhichcouldnothavebeenmadeanywhereelsebutinAustralia.
TheABC’scharterrequiresittobroadcastprogramsthat‘contributetoasenseofnationalidentityand
informandentertain,andreflecttheculturaldiversityof,theAustraliancommunity’whichhasgivenboth
AustralianandinternationalaudiencesuniquelyAustralianshowssuchasMotherandSon,KathandKim,SummerHeightsHigh,DanceAcademy,RedfernNow,TheSlap,PleaseLikeMe,RakeandCleverman.TheseshowshavenotonlybeensuccessfulinAustraliabuthavealsosoldandbeenenjoyedalloverthe
world.BoththeABCandSBSarereliantondirectfundingfromtheAustralianGovernment.Withoutany
funding,noneoftheseiconicAustralianshowswouldhavebeenpossible.Yetinspiteofthis,fundingto
theseorganisationsisbeingdrasticallyreducedeachyearwhichhasledtodecreasedinvestmentsinnew
AWGSubmissiontotheInquiryonAustralianContent
onBroadcast,RadioandStreamingServices
10
Australiancontent.ShouldthesebroadcastersbecometheonlysourceofqualityAustralianandchildren’s
content,thedemandforandvalueofsuchcontentwillbedrasticallyreduced.
Accordingly,theAWGrecommendsanincreaseindirectfundingtoABCandSBS,specificallyfornew
Australianscriptedcontent,expenditureandreportingrequirementsontheinvestmentintheseareas,
andtheincorporationofcontentquotasinrelationtotheirproductionofscriptedcontent.
CONCLUSION
WestronglyurgetheAustralianGovernmenttohavethecouragetostanduptothoseputtingcommerce
beforecultureandtotakethenecessarystepstoprovideprotectionfortheAustralianfilmandtelevision
industryandensurethatthoseprotectionsarefitforpurposeandplatformneutral.
Wemustalwaysrememberthatgovernmentinterventioninthescreenindustryisandshouldalwaysbe
motivatedbymorethanjusteconomics,marketandjobprotectionism.Itis,andshouldalwaysbe,driven
byaculturalimperativetotellAustralianstoriestoAustralianaudiences.
Withoutsmart,forward-thinkinggovernmentinterventionthatisrelevanttotheageinwhichwelive,we
risklivingunderalegislativeandpolicyframeworkthatisconstantlytrailingbehindtechnologyandisa
disincentivetocreate.Inaderegulatedenvironment,wewilllosenotonlyvaluablerevenue,jobsand
opportunitiesforgrowth,butalsoanimportantpartofournationalidentityandculture.Onceitisgone,it
willbelostforever.
Forfurtherinformationonthissubmissionortodiscusstheissuesfurther,pleasedonothesitateto
contactus.
Yourssincerely,
JacquelineElaine
GroupCEO
Contact:[email protected](02)80366006
