As the Federal Government continues to debate a significant shakeup to how the Australian Television Industry is regulated, Foxtel has made its case for a more level playing field.
Speaking at Senate estimates in Canberra on Monday, Foxtel Group CEO Patrick Delany has made the case for reducing the subscription TV drama content quota from the current level of 10% to 5%.
Foxtel currently spends around $24 million per year on Australian drama content, but the pay-tv broadcaster believes it should now be allowed greater flexibility with its content funding.
Foxtel is seeking to invest less in local drama while increasing spending in genres such as lifestyle and reality content which it believes would provide a better return for its investment.
Foxtel is now competing against a range of international streaming services, including Netflix, Amazon Prime and Disney+, which currently have no obligation to produce Australian content. Many of these services are also implementing offshore loopholes to reduce their local tax payments.
Patrick Delany’s full opening statement to Senate estimates is published below.
I want to thank the Committee for the opportunity to appear today and provide the Foxtel Group’s perspective on the reforms set out in the Bill.
My comments also reflect the views of ASTRA, of which I am the current chair.
The Bill contemplates two significant changes for our sector.
- First, a reduction in the new eligible drama obligation from 10% to 5%, and
- Second, the relocation of the subscription television captioning rules from the Broadcasting Services Act into a disallowable Ministerial instrument.
By way of background, the Foxtel Group is one of Australia’s most dynamic media companies. We directly employ around 2,000 people. And for every person we employ, a further three people are employed in the media industry.
We deliver local television and streaming services to almost four million active subscribers in regional and metropolitan areas of Australia.
Our services include the Foxtel set-top and its streaming sister, Foxtel Now. We also have two fast-growing streaming services, Kayo Sports and BINGE, which now account for nearly half of our customers.
Our business model is very different to free-to-air television. We are a discretionary service that our subscribers’ must value enough to pay for.
We also one of a handful of local players competing with global streaming giants in a very crowded marketplace.
Our customers expect choice in movies, drama, lifestyle, documentaries, and news from Australia and around the world.
We deliver our services through cable, satellite, and the internet. We do not use public resources, for example, the spectrum used by free-to-air television.
While this is a very dynamic industry, some things remain constant.
The Foxtel Group is a committed local champion for Australian stories and voices in all genres – drama, lifestyle, factual, sports and news.
Our Australian drama productions are renowned and include Wentworth, Love my Way, Deadline Gallipoli, Secret City, A Place to Call Home and more recently, The End and The Upright.
Our investment in Australian stories and voices in other genres reflects the tastes and interests of our customers. Like drama, those investments also create valuable Australian jobs in the creative industries.
For example, Selling Houses Australia, Gogglebox Australia, Grand Designs Australia, Love it or List it, Coast Australia, and The Real Housewives of Melbourne.
In fact, over the past five years, Foxtel has spent 30% more on Australian factual, lifestyle and entertainment programming than programming that qualifies as eligible drama.
We understand the concerns that have been expressed in submissions to this Committee about the importance of the local creative industry.
However, we do not believe that the current 10% obligation, an obligation that applies only to Foxtel, is the right way of addressing that concern.
Our industry in Australia has been significantly impacted by competition from unregulated global streaming services such as Netflix, Amazon Prime and Disney+.
Given the massive shifts in the competitive landscape, we do not believe the current regulatory environment for Foxtel is sustainable. That is not good for any Australian who believes in the importance of local media companies.
We believe regulation needs to be modernized to establish new settings that allow competitive local champions to succeed.
Our record in both regulated and non-regulated content speaks for itself.
However, we believe there are better ways to achieve public policy aims that directly support Australia’s creative sector. For example, the Government has recently released draft legislation to change to the Producer Offset scheme to assist the production industry.
The proposed 5% drama obligation does not mean that Australian audiences will see fewer Australian stories and voices represented on our screens.
It simply provides us with the commercial flexibility to invest in genres and formats that respond to viewers tastes. So, for us, this is a significant and overdue reform.
Finally, in relation to captioning, the change proposed does not affect Foxtel’s investment in supporting our hearing-impaired customers, and I refer Committee members to our submission.