A sporting chance for all in anti-siphoning laws
The Australian
March 28, 2015 12:00AM
Darren Davidson
Business Media Writer
Sydney
If further proof were needed that Australia’s biggest sports have become the preserve of autocrats, it came on November 25, 2010. On that day, proud Collingwood fan Stephen Conroy announced a shake-up of sports that ensured more live action would be shown on free-to-air TV digital channels.
The then communications minister, like the current communications minister, had complete control over which sports were shown on your TV through the antiquated anti-siphoning laws that quarantine the nation’s most significant sports for free-to-air TV.
Picture Conroy in his black-and-white striped guernsey, hunched over a list of more than 1000 sports events and individual matches with a pen circling Friday night Collingwood blockbusters.
Announcing that Friday night AFL matches would remain on free to air, Conroy quipped he would “not accept any quibbling that Collingwood is involved”.
While sport is supposed to be separate from politics, the absurd scene conjured up by Conroy in his jokey aside showed that for him the anti-siphoning list was personal.
“The minister’s influence is all powerful,” one sporting administrator tells Inquirer. “There’s no formula as to why a sport is on the list or why it is off it. It’s entirely up to him.”
Conroy complicated the process by decreeing that there were two levels of sacrosanct sports and that they must be broadcast in two tiers: A and B. Free-to-air channels that do not wish to interrupt their scheduling to show a protected sport can park second-tier events on a digital channel with some delays permitted, while list A sports must be shown live and in full.
Conroy’s cultural influence was even more significant than his beloved Melbourne footy team. He added Australia’s Twenty20 cricket matches to the tier A schedule, plus FIFA World Cup qualifiers.
The minister also decided that some games must be held at certain times, insisting that popular AFL matches be scheduled for Friday and Saturday nights, Anzac Day and the Queen’s Birthday.
This unfettered power is now concentrated in the hands of Conroy’s successor and Sydney Swans supporter Malcolm Turnbull, the Communications Minister, who has shown great reluctance to unwind the anti-siphoning list after unveiling his media reforms.
He has pointed out that the Senate would never pass legislation that undermines the principle that all Australians should be able to see major sporting events on free-to-air TV.
Turnbull has proposed three media reforms, acknowledging the internet has introduced additional diversity and avenues of competition that render rules introduced in the pre-internet Keating-era as out of step with modern media consumption habits.
With Netflix this week joining a growing crop of overseas tech giants such as Google and Facebook on local shores, the removal of the population reach rule and cross-media ownership laws makes good sense. But does it make sense to leave the anti-siphoning rules untouched?
Chief executive of subscription TV provider Foxtel Richard Freudenstein tells Inquirer, “We’re not advocating a dismantling of the anti-siphoning list, we’re advocating that more events be taken off the list to allow for a free market for sports rights.”
While Freudenstein is all too aware that anti-siphoning forces Foxtel to pay a tax to one or more of the free-to-air networks for secondary access to programming, the pay-TV boss is not a lone voice of dissent. All the major codes have joined him in calling for the number of sporting events that have to be shown on free-to-air TV to be sharply reduced.
They would keep major events such as the AFL and NRL finals and the Melbourne Cup on free-to-air TV, but they want the government to sharply reduce both local and overseas events reserved for free-to-air TV including those hoarded by the networks.
Major sports, including the AFL and NRL, soccer and netball, rugby union, tennis and cricket, want the ability to sell broadcast rights to a wider range of buyers.
As not-for-profit bodies, the rights are their main source of funding. Any lost value is a loss to ultimate stakeholders whether it’s the players, clubs at a grassroots level, and local communities.
In a statement sent to Inquirer, a spokesman for the AFL said: “We have been engaged in ongoing discussions with the federal government for a number of years in relation to anti-siphoning, most recently via a collective position from the sports’ governing bodies in relation to what we propose as reasonable amendments to the anti-siphoning list.”
Instead, Turnbull’s reforms once again end up serving the narrow interests of the Seven, Nine and Ten networks, meaning it’s difficult to view the package as a genuine exercise in reform
By excluding some form of roll back — which could stop short of total abolition — of the anti-*siphoning regimen, the package fails to address the driving force behind the need for change: the disruptive impact of the internet.
Broadcasters are paying more than ever for exclusive rights because the immediacy of fixtures and fan loyalty ensure big live audiences. But as the escalating value of digital sports rights in the AFL, NRL and cricket makes clear, future negotiations for the rights to broadcast major Australian sports will feature new competitive tensions by virtue of technological developments.
Foxtel is already delivering live sport via internet TV, while over-the-top video providers like Google’s YouTube could join the fray.
Some observers believe internet service providers like Telstra may be better placed to compete for distribution rights because they have greater potential to *deliver high-definition IPTV (internet protocol television) services over the National Broadband Network.
Telstra has already made significant inroads into sports rights as part of a concerted push to secure exclusive content to attract new customers.
In 2013, the telco signed a sponsorship and digital rights agreement with the NRL worth more than $100 million, extending the six-year, $90m deal it signed in 2007. Under the existing AFL deal, Telstra has paid $153m for the code’s exclusive online and mobile rights which is seen as undervalued by many analysts.
While sports bodies have been hedging their bets to maintain profitable free-to-air and subscription TV partnerships, they have tested new forms of online delivery, opening up the possibility they could sell matches direct to fans via apps and other platforms.
The AFL and NRL are considering this scenario in a controversial move that would bypass the commercial networks.
But observers have pointed out the value of sports rights lies in the allocation of access and the level of exclusivity provided to the broadcasters. If the sports bypass the networks, they jeopardise the value of their rights, and lose the promotional platform a network offers to build profile.
In the US, analysts have estimated that Disney-owned sports programming giant ESPN would become vastly more expensive for sports fans under a direct-to-consumer model, as much as about $30 a month if it were unbundled from the pay-TV package and sold separately. This would be five times the $6 a month that ESPN now costs as part of the subscription bundles sold by cable operators. In short, it becomes a pure profit-loss equation.
Although the sports bodies rightly fear any move from guaranteed scarcity to digital plenitude risks diminishing their value, they are still seeking out new formats and distribution channels.
Cricket Australia is something of a trailblazer with its approach to selling the sport as a product, continuing a tradition that began with the introduction of World Series Cricket by Kerry Packer’s Channel Nine in the 1970s.
In its most recent rights deal with Nine and Network Ten, Cricket Australia developed a mobile app, showing the growing flexibility of multi-screen options.
Cricket Australia general manager of marketing, media and communications Ben Amarfio told The Weekend Australian the app had achieved 1.8 million installations since launch.
But this is just the start of the evolution for CA. In January, the sport struck a deal with technology giant Apple to become the first Australian sport on the Apple TV platform. The move could be a precursor to selling subscriptions in future broadcast rights deals.
“We are no different to the leading global sports; we want to be where our fans are,” Amarfio says. “Smart TVs have exploded over the past five years and we needed to be on that platform and access the over one million households that have Apple TV. “
The inexorable rise of the internet is pushing the lucrative sports rights economy towards a tipping point, opening up new avenues between sports and fans.
Which makes the government’s support for a regulation that forces sports to broadcast on free-to-air TV anti-competitive in spirit, and quite possibly illegal in practice as sports demand greater control over their intellectual property rights
By demanding sports are ring-fenced on free-to-air TV, the policy effectively misappropriates the IP rights owned by the sports bodies and their stake holders.
It is worth reflecting that the US tried to introduce anti-siphoning in the 1970s, but the laws were found to be unconstitutional and were kicked into touch.
With consumers demanding innovation, the government’s refusal to countenance reform in this area opens up the tantalising possibility of a High Court legal challenge in the future.
