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1998-99
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
SENATE
BROADCASTING
SERVICES AMENDMENT BILL (No. 3) 1999
EXPLANATORY
MEMORANDUM
(Circulated by authority of the Minister for
Communications, Information
Technology and the Arts, Senator the Hon Richard
Alston)
THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE OF
REPRESENTATIVES TO THE BILL AS INTRODUCED
ISBN: 0642 426740
BROADCASTING SERVICES AMENDMENT BILL (No. 3)
1999
OUTLINE
The Broadcasting Services Amendment Bill (No. 3) 1999 (the Bill) makes
amendments to the Broadcasting Services Act 1992 (BSA), the
Radiocommunications Act 1992 (RA) and a minor amendment to the
Administrative Decisions (Judicial Review) Act 1977 (AD(JR) Act).
The purposes of the amendments to the BSA are to:
• impose licence conditions on subscription television broadcasting licensees in relation to expenditure on drama programs on subscription TV drama services (Schedule 1); and
• limit the scope of international obligations applicable to the Australian Broadcasting Authority (ABA) (Schedule 2).
Schedule 1
The proposed amendments to the BSA in Schedule 1 of the Bill follow a
review by the Minister for Communications, Information Technology and the Arts
of Australian content on subscription television, including the operation of the
current licence condition under section 102, conducted under subsection 215(2)
of the BSA. Subsection 215(2) of the BSA has since been repealed. The licence
condition in section 102 of the BSA requires a subscription television
broadcasting licensee who provides a service predominantly devoted to drama
programs to ensure that at least 10% of its program expenditure in relation to
the service for each year be spent on new Australian drama programs.
The
review of Australian content on subscription television concluded that the
effectiveness and enforceability of this licence condition needed to be
improved. It became clear that since the commencement of subscription
television in Australia in 1995, for the majority of subscription television
services, including drama services, it was channel providers and not licensees
who make most of the expenditure on programs. Channel providers package
programs as ‘channels’ for sale to subscription TV providers. The
ABA has taken the view that they are distinct and separate entities from
subscription television broadcasting licensees. Licensees who provide
subscription TV drama services which have been supplied to them by a channel
provider, have a nil amount of program expenditure when that expenditure is
calculated in accordance with the licence condition in section 102.
The
proposed amendments to the BSA in Schedule 1 of the Bill repeal section 102 of
the BSA and propose a new set of licence conditions which require 10% of the
total program expenditure on subscription TV drama services to be on new
eligible drama programs. The emphasis on subscription television broadcasting
licensees bearing the responsibility for ensuring that the licence conditions
are fulfilled remains in the proposed new conditions. However, the application
of the proposed new conditions depend upon who actually provides the channels
for the particular subscription television service.
The recognition of
the role of channel providers in the majority of subscription television
services is reflected in proposed provisions requiring channel providers to
report to the ABA and allowing a channel provider’s expenditure on new
eligible drama programs for a particular service to be counted for the purposes
of meeting the licensee’s licence condition. In addition, in certain
circumstances, the amendments introduce a new licence condition applying to an
extra period of time in which a licensee can ‘make up’, or arrange
to have made up, any shortfall in expenditure by its channel provider or
pass-through provider, during the year to which the principal condition
related.
Specific provision is made for services where a licensee is
supplied with a channel by a pass-through provider (effectively a channel
provider based overseas), where a licensee is not supplied with a channel by a
channel provider or pass-through provider, and where a licensee is provided with
a package of programs by a part-channel provider or a part-pass-through
provider. Subject to a special rule for the first year of operation of the new
rules, where the licensee is its own supplier of programming, program
expenditure is considered to be within the licensee’s control and no extra
time is granted for meeting the proposed new licence condition. Where the
licensee has limited control over expenditure, the rules will enable the
licensee to ensure that a shortfall in expenditure in one year is made up in the
next year.
Part 1 of Schedule 1 of the Bill proposes to amend the BSA to
insert a new Division 2A into Part 7. Part 7 of the BSA deals with subscription
television broadcasting services. In summary:
Subdivision A of the new
Division contains introductory provisions, including a simplified outline of the
Division, relevant definitions, and provisions concerning
expenditure;
Subdivisions B – G impose licence conditions concerning
new eligible drama program expenditure on licensees in relation to various
possible arrangements for the supply of channels or packages of
programs;
Subdivision H imposes reporting requirements on both licensees and
channel providers;
Subdivision I requires the ABA, having received the
reports under Subdivision H, to issue a compliance certificate to licensees
which specifies whether expenditure on new eligible drama has fallen short of
the 10% requirement in relation to the service;
Subdivision J includes
miscellaneous provisions which, amongst other things, include provision for
review of the operation of this Division after 3 years; and
Subdivision K
contains a number of special transitional rules for the financial year
1999-2000.
In relation to the licence conditions in Subdivisions B-G of
the Bill, the emphasis is on expenditure in relation to new eligible drama
programs, not televising of new eligible drama programs. Although it is
expected that subscription television operators would generally televise
programming for which they have incurred expenditure, there is no legislative
requirement that the new eligible drama programs on which expenditure is
incurred must be televised in order for that expenditure to be able to be
nominated for the purpose of the licence conditions. For example, expenditure
could be taken into account although incurred on an Australian feature film
which is intended to have a cinema release.
Part 2 of Schedule 1 of the
Bill contains a number of proposed amendments to the BSA that commence on 1 July
2000. Some of these proposed amendments are consequential upon the introduction
of proposed new Division 2A of Part 7. In particular, an amendment to section
143 of the BSA made by item 13 ensures that a licensee whose licence is
suspended or cancelled as a result of a breach of a licence condition set out in
proposed new Division 2A of Part 7 cannot continue to provide that same or a
similar service under the authority of another licence held by it or a related
company.
Other proposed amendments in Part 2 of Schedule 1 of the Bill
repeal provisions of the BSA and the special transitional rules contained in the
Bill that will no longer apply after the end of the financial year beginning 1
July 1999.
Part 3 of Schedule 1 of the Bill contains amendments
commencing on 1 July 2001. These amendments repeal the remaining special
transitional rules.
Schedule 2
Schedule 2 of the Bill limits the scope of international obligations
applicable to the ABA. The ABA will be required to perform its functions in a
manner consistent with Australia’s obligations under the Protocol on Trade
in Services to the Australia New Zealand Closer Economic Relations Trade
Agreement.
FINANCIAL IMPACT STATEMENT
Each subscription television broadcasting licensee that provides a service
devoted predominantly to drama programs will be required to ensure that at least
10 per cent of the program expenditure in relation to that service is spent on
new eligible drama programs. This will impose an additional financial
obligation on those services that are not complying with the licence condition
in section 102 of the BSA by currently spending less than 10 per cent on new
eligible drama programs. As the licence condition in section 102 has been part
of the Act since 1992 - some three years before subscription broadcasting
services commenced in Australia - subscription television operators have had
full knowledge of there being a 10 per cent expenditure requirement prior to
entering into the market to provide subscription TV drama services.
Compliance should not impose significant additional paper burden costs
on the industry, as most channel providers and licensees are already providing
compliance information to the ABA. Similarly, the new enforcement measures
should not involve significant additional administrative costs for the ABA.
The proposed amendment to paragraph 160(d) of the BSA will have no financial cost implications nor impose any additional administrative burden for commercial free-to-air broadcasters beyond the existing impact of their current obligations to comply with the ABA’s Australian Content Standard. It will not impose any additional restrictions on their capacity to purchase foreign programming.
Two Regulation Impact Statements were prepared as part of the
Government’s consideration of the matters dealt with in Schedule 1 and
Schedule 2 of the Bill.
REGULATION IMPACT STATEMENT NO. 1
This first Regulation Impact Statement deals with the outcomes of the Review
of Australian content on subscription television broadcasting services, and was
prepared in March 1998 as part of the Government’s consideration of the
outcomes of the Review.
A. PROBLEM
IDENTIFICATION
Background
A key object of the
Broadcasting Services Act 1992 (BSA) is to promote the role of
broadcasting services in developing and reflecting a sense of Australian
identity, character and cultural diversity (s.3(e)). To give effect to this
object, the BSA in s.102 places a licence condition on subscription television
broadcasting (pay TV) licences which requires that for each year of operation,
at least 10% of the licensee’s program expenditure is spent on new
Australian drama programs (s.102). The inclusion in the BSA of the s102 program
expenditure requirement reflected a perception that, in the absence of this form
of regulatory intervention, the pay TV sector would be unlikely to support the
cultural objectives of the Act, given the particular structure and economics of
this sector of the broadcasting industry (described below).
Nature of
the problem
2. The BSA provides, in s.215(2), for a review of the
operation of the s.102 licence condition by the Minister for Communications, the
Information Economy and the Arts by 1 July 1997 (the Review), including into the
feasibility of increasing to 20% the level of expenditure required under the
condition. The purpose of the Review was to revisit the condition to determine
its continuing appropriateness at a time when the industry should have been well
established.
3. This Regulation Impact Statement addresses the means by
which the Australian content requirement under the BSA may be met, following
recommendations by the Review that pay TV operators should continue to meet
Australian content obligations. The Review took place against a background of
industry non-compliance with the s102 requirement. The Review found that total
spending by pay TV operators on new Australian drama in the period ending June
1996 was $1.74 million, representing an aggregate spend of 7% rather than 10%.
The Australian Broadcasting Authority (ABA) recently reported that, on the basis
of returns from the majority of relevant parties, the equivalent figure for
1996-97 had fallen to 3.4%. This reflects the fact that, as currently worded,
the licence condition applies only to program expenditure by pay TV licensees,
whereas, in practice, expenditure is made by ‘channel providers’ -
that is organisations, based in Australia or overseas, that acquire, commission
and produce programs, and on sell them as a package or ‘channel’ to
the pay TV broadcaster/licensee for distribution. As these entities are outside
the scope of the legislation, the ABA cannot require them to meet the 10%
requirement, or to provide details of expenditure.
4. The ABA has
developed guidelines for expenditure by the channel providers on new Australian
drama. However compliance currently depends entirely on industry
co-operation.
B. POLICY OBJECTIVE
5. The BSA expresses a
clear objective with regard to the Australian content obligations of pay TV
licensees. As stated above, the broad objective underpinning s.102 is set out
in the object in s.3(e) of the BSA, which is to promote the role of broadcasting
services in developing and reflecting a sense of Australian identity, character
and cultural diversity. The s.102 condition also has an industry support
objective, which recognises that the achievement of the cultural objective
relies in large measure on the development of the local drama production
industry. Drama programming is seen as having a key role in shaping the sense
of “Australian identity, character and cultural diversity”. However
it is also the most expensive form of programming and therefore the most
vulnerable to import replacement. The importance to Australian cultural policy
of drama and a healthy drama production industry, is manifest in the
Government’s financial support of the film and television industry and
through the Australian Content Standard for commercial television (also
established as a licence condition), as well as the licence condition for pay TV
in s.102, which applies only to predominantly drama services.
6. The
objective of the Review was to consider the continuing appropriateness of an
Australian content obligation on pay TV services, including whether the
expenditure model contained in s.102 is the most appropriate vehicle for
achieving the cultural and industry support objectives of the BSA, and, if so,
to determine the appropriate level of the requirement. In the event that a
continuing obligation on the pay TV sector was found to be necessary, a further
objective of the Review was to determine how such regulation could be made
effective and enforceable.
7. The Minister was assisted in his review by
the findings of an inquiry by the Australian Broadcasting Authority and by a
related study by the Bureau of Transport and Communications Economics. Their
reports are available to the public.
C. IDENTIFICATION OF
OPTIONS
8. As part of the Review, consideration was given to the
feasibility of alternative Australian content requirements and mechanisms for
encouraging expenditure on Australian produced programs. These
included:
a) industry self -regulation (including through a code of
practice);
b) transmission quotas, such as contained in the Australian
Content Standard for commercial free-to-air television licensees;
c) a
modified, enforceable expenditure requirement - this is distinct from the
existing expenditure requirement.
9. In addition consideration was given
to widening the scope of the BSA to allow a broader range of programs to count
towards the Australian content requirement for pay TV.
D. IMPACT
ANALYSIS
10. Self regulation, based on industry codes of practice and supported by ABA
oversight and sanctions in the BSA, operate in the free-to-air and pay TV
industries for most program standards matters. A self-regulation regime would
be less interventionist relative to the mandated requirement for commercial
broadcasting and hence would also be consistent with the general approach
adopted in the legislation of regulating in proportion to the relative influence
that particular broadcasting services have in shaping community
views.
11. However, for both the free-to-air and pay TV sectors,
Parliament decided to make compliance with Australian content requirements a
condition of licence, having regard to the significant deterrents to program
expenditure in this area given the significantly higher program costs for
Australian programs and the commercial incentive to substitute cheaper foreign
product, in the absence of a mandated requirement. These pressures are even
stronger in the case of pay TV relative to commercial free to air television,
given the lower budgets in the industry, reduced advertising opportunities, the
greater number of programming hours to be filled, and the ready availability of
lower cost imported product. The ABA’s report noted that commercial
television currently spends $504 million on Australian programs for
approximately 3000 hours annually, and that pay TV would have to fill
approximately fifteen times the amount of hours. Total drama programming
(Australian and foreign) for a commercial network would cost more than $200
million. By contrast, program budgets for non-movie drama channels is
approximately $6-8 million (ABA Report, p.131).
Option (b)
Transmission quotas - such as required by
the Australian
content standard for commercial television
12. An alternative
approach would be to extend to the pay TV sector the approach to Australian
content regulation which is applied to the free to air commercial television
sector. Under that regime, licensees are required to comply with the Australian
Content Standard for commercial television. There are two main mechanisms in
the Standard: an Australian transmission quota setting the annual overall
minimum level of Australian programming at 55% of programming between 6:00 am
and 12:00 midnight; and first release subquotas for minimum amounts of
Australian drama, Australian children’s programs and Australian
documentary programs.
13. Transmission quotas, as distinct from
expenditure requirements, have the obvious advantage that expenditure on
Australian programming is guaranteed to translate into viewing opportunities for
the Australian public, thereby directly promoting “the role of
broadcasting in developing a sense of Australian, identity, character and
cultural diversity” (objective 3(e) in the BSA). This model is also
favoured by the commercial television industry which argues generally for
greater regulatory parity between the two broadcasting
sectors.
14. However, transmission quotas are inherently ill-adapted to
the structures of pay TV outlines above. Nor are they suited to the way in
which viewers actually consume subscription services. The concept of
“prime time” as it operates on free-to-air television does not
translate to the pay TV environment. Pay TV channels often program in blocks
throughout a day and some channels have a relatively high degree of repetition
over a short period of time.
15. From a practical perspective, the ABA
found that applying to pay TV the same or similar, Australian content
requirements as apply to commercial television would involve significant
implementation and monitoring problems in a multichannel environment. In
particular, the Authority pointed to the lack of flexibility and difficulty in
obtaining sufficient amounts of suitable material for the niche program formats
of most pay TV channels.
16. The ABA Report considered a possible
adaptation of the free to air model for pay TV which involved setting an
hours-based quota for particular program types, eg drama or documentary
programs, etc that applied to individual channel providers. Such a quota would
ensure that channel providers broadcast a certain amount of new Australian drama
or documentaries each year. This amount would need to be set at a level that
recognised the capacity of the industry, and at the same time ensured that
significant amounts of money were spent to provide new production opportunities.
The ABA concluded that the setting of such quotas would be complex and would
not have some of the benefits of an expenditure requirement. For example, it
would not allow for any natural increase in programs broadcast over time as the
budgets for programming increase. (As explained below, the automatic increase
in expenditure over time is an important side benefit of the expenditure model,
which derives from the particular characteristics of programming agreements
between the pay TV movie channels and the Hollywood studios).
17. The existing unmodified expenditure model was originally chosen because
it was seen as well-suited to the structure and economics of the pay TV
industry. The main advantage, particularly relative to a uniform transmission
quota, is that it can be readily-adapted to the particular size and
characteristics of the individual channels, from high spending movie channels
through to low budget niche channels, which can each contribute the prescribed
amount in proportion to their outlays.
18. However, experience has shown
that there is an internal incoherence in the provision, since it refers only to
licensees’ expenditure. In practice, it is channel providers who
actually make expenditure on programs, then sell them packaged as channels for
retailing and distribution. Thus the condition in s.102, as currently
expressed, cannot deliver the objective of the regulation. Hence the existing
expenditure model needs to be modified to reflect these working arrangements and
make the provision effective and enforceable.
19. A modified expenditure
requirement which addresses the deficiencies in the existing expenditure
requirement would have a positive impact on the Australian production industry,
even if the quota is maintained at the existing 10% level (see below).
Expenditure on new Australian drama by predominantly drama channels in 1996-97
was $2.2 million. Had expenditure occurred at the intended 10% level, the
amount should have been $6 million. To the extent that meeting the existing
prescribed level can be shown to be within the capability of the industry, it is
also likely to have positive benefits to subscribers who will gain access to
Australian programs that would not otherwise be produced without facing any
increases in subscription fees which the industry might otherwise seek to pass
on if a higher expenditure level were to be imposed. This would also encourage
production of Australian programs, benefiting the Australian television
production industry.
20. The Bureau of Transport and Communications Economics (BTCE) analysed the
likely contribution to drama production through the licence condition at the 10%
and 20% levels of expenditure, and at intermediate levels of 12% and 15%. The
BTCE found that, at the existing 10% level, expenditure on Australian
programming would grow significantly, to around $28 million in 2000-01, and up
to $46 million in 2004-05, of which the movie channels would contribute $40
million. (The movie channels make payments to the Hollywood studios on a
cost-per-subscriber basis, with minimum numbers of subscribers guaranteed,
whereas the non-movie channels pay a much lower, set fee for the cost of
programs which is not linked to subscriber levels. Hence, in the case of movie
channels, there is an inbuilt mechanism for program expenditure to increase with
the growth in their subscriber levels.) The BTCE found that a 12.5% expenditure
requirement should generate up to $58 million by 2004-05, of which the movie
channels would contribute around $50 million. An increase in the requirement to
20% should generate expenditure of up to $102 million by 2004-05 for all drama
channels, of which the movie channels would contribute $90
million.
21. The BTCE found that 10% level should allow the movie
channels to achieve profitability by 2001-02 (ie sufficient profit to recover
all losses to that date), where subscriber numbers grow very strongly and
program costs are at the lower range. For non-movie channels, where the channel
attracts at least one half of all pay TV subscribers, profitability should be
achieved by 2001-02. At 12.5%, provided there is a strong increase in
subscriber numbers and a reduction in programming costs (both significant
variables), movie channels should be able to achieve profitability by 2001-02.
However, profitability levels would be lower than those estimated for the 10%
level. For the non-movie channels, increases in the requirement to 12.5% would
not significantly affect the timing of profitability, as it is the number of
subscribers (not the relatively fixed program costs), which is the key
determinant for profitability for these channels. At the 20% level, there could
be problems for the movie channels in virtually all scenarios analysed.
Profitability could not be achieved by 2001-02. Rather, the ongoing viability of
the new movie channels, which are critical to the success of pay TV services,
would be adversely affected. For the non-movie channels, increases in the
requirement to 20% would not significantly affect the timing of
profitability.
22. Drawing on the BTCE’s findings, the ABA
concluded that the Australian content expenditure obligation should remain at
10% of total expenditure. The pay TV industry claims that any increase beyond
10% will make their services unviable. Industry figures indicate that pay TV has
approximately 760,000 subscribers and a penetration rate of only 11.2% of
households. The industry has not grown at the rate expected when the 10%
expenditure requirement was imposed and increasing the requirement at this early
stage of the industry’s development would act as a disincentive to
establish new predominantly drama channels, and adversely affect the achievement
of profitability by the pay TV industry. (Commercial broadcasters were not
required to meet comparable local content requirements until they were well
established). Furthermore, a 10% expenditure requirement, when made
enforceable, should translate into a significant expansion in Australian film
and television production in future years, particularly as a result of the
escalating nature of program expenditure by the movie channels as their
subscriber levels increase. Retaining the existing 10% level would reduce the
risk to subscribers of increases in subscription fees, that may otherwise follow
from an increase in the 10% expenditure level.
23. The proposed modified
expenditure model will take into account the program expenditure made in respect
of each predominantly drama channel, irrespective of which particular party
makes it. It will achieve a balance between recognising the critical role
played by entities other than licensees in making expenditure on Australian
programming, while maintaining the obligation on the licensee, consistent with
the broad legislative framework of the BSA. The licensee will be retained as
the point of regulation. However, the BSA will recognise channel providers,
from whom the ABA will be empowered to obtain compliance information about
program expenditure. It is envisaged that, in most cases, the licensee or a
related party acting on the licensee’s behalf, will contract with the
channel provider to make the necessary expenditure. Where the necessary
expenditure is not made, the ABA will look to the licensee to remedy the breach.
Industry will be consulted in finalising these new enforcement arrangements. The
modified expenditure regime represents a continuing application of the current
BSA requirements, but removes the deficiencies in the existing expenditure
model.
24. The review considered whether the present scope of the regulation was
appropriate, in particular whether the definition of eligible programs could be
extended and whether the local content regulation could be applied more
generally to program categories beyond designated drama channels.
25. The ABA recommended that the definition of eligible expenditure be
broadened from “new Australian drama” to “new Australian
programs”. The types of programming that would fall within an expanded
definition would include, as well as drama, sketch and standup comedy, scripted
interstitials (filler segments such as film reviews), magazine and variety
programs, documentaries, quiz shows, and infotainment/lifestyle programs. The
ABA observed that a broadening of the definition of eligible programs from
‘new Australian drama’ to 'new Australian programs' should provide
many more hours of programming, encouraging increased Australian content on
non-movie channels. The ABA believes broadening the definition would give
channel providers greater flexibility to create and develop new Australian
programs that are appropriate for their niche channel
formats.
26. However, the film production industry opposes a widening of
the definition of eligible programs. Drama is recognised as having a key role
in shaping the sense of “identity, character and cultural
diversity”, as demonstrated by the fact that only drama channels are
subject to an Australian content obligation. If the definition of eligible
expenditure is broadened, there is a risk that some predominantly drama channels
may fulfil their Australian content requirement without making any expenditure
on new Australian drama, which is the most expensive form of programming,
instead opting for a greater volume of cheaper, less culturally significant,
Australian programming. This would serve to undermine the object of s.102 of
the BSA.
27. Currently the licence condition is imposed only in relation to
predominantly drama channels. A number of submitters, including the commercial
broadcasting industry and the Production Industry Group (representing the
independent film production industry and several Government film agencies),
argued that the requirement should be extended to other channel types. Various
submitters argued that an Australian content obligation should also apply to
channels for documentary and scripted learning, sport, arts, music etc, with
documentary channels in particular the subject of a considerable number of
submissions.
28. The importance of the documentary genre in cultural
terms has been acknowledged through its inclusion in the Australian Content
Standard for commercial television (which requires 10 hours of first run
documentaries per broadcaster per year), and the genre is supported by the
Government through investment by the Australian Film Finance Corporation and
production by Film Australia. The ABA proposed monitoring the Australian content
performance of documentary channels rather than imposing content regulation at
this time.
E. CONSULTATION
29. The Review has involved
extensive public and industry consultations. In conducting their investigations
the ABA and BTCE consulted widely with the pay TV industry, including pay TV
broadcasters and channel providers, representatives of the commercial television
industry and the production industry, and relevant government agencies. The
Department conducted a further round of consultations on the basis of the ABA
and BTCE reports prior to providing advice to the Minister. An industry
consultation phase is proposed to ensure that the revised legislative provisions
are practicable.
30. The views of the various industry sectors are
summarised as follows. The preferred option of the pay TV industry (licensees,
broadcasters and channel providers) is that there be no mandated requirement.
The Australian Subscription Television and Radio Association (ASTRA) supports
further examination of self regulation, industry codes of practice and industry
development plans. However, in the absence of self regulation, ASTRA would
accept a mandated 10% expenditure requirement, provided it was confined to
‘predominantly drama channels’, and that eligible expenditure be
broadened to “new Australian programs”, but strongly opposes any
increase in the level of the requirement. The commercial television industry
calls for a greater degree of parity between Australian content requirements on
pay TV and commercial television, and supports transmission quota requirements
similar to that which apply to the commercial television sector. The Production
Industry Group (representing the Australian film production industry and
associated Government funding agencies) submits that the current requirement
should be enhanced and strengthened to ensure that it continues to meet its
policy objectives. The Production Industry Group supports an increase in the
expenditure requirement and that eligible expenditure should only be permitted
in relation to ‘new Australian drama’, and also supports an
extension of the requirement to other pay TV services, notably documentary
channels.
F. CONCLUSION AND RECOMMENDED OPTION
31. The
preferred option is Option (c), retention of the expenditure model as a licence
condition in the BSA. This option operates in conjunction with the following
interrelated elements:
(a) the introduction of amendments to the BSA to make
the licence condition effective and enforceable, including recognition of the
role of channel providers;
(b) continuation of the current scope of the
requirement ie that it should apply only to predominantly drama services and
require expenditure on new Australian drama programs;
(c) retention of the
current expenditure level at 10% for each year of operation.
32. This
option provides scope and flexibility for individual channels to meet the
requirement in a way which reflects their available budgets and perceived
subscriber needs, and also allows for an increased commitment to Australian
content as their viability increases. The option introduces certainty without
imposing new regulatory burdens on the industry. It does not raise the level
nor widen the scope of regulation, and is consistent with the scheme of
regulation under the BSA.
33. Option (a), self-regulation, is not
acceptable as it has already been demonstrated to result in non compliance and
would not result in the cultural and industry support objectives of s.102 of the
BSA being met. Option (b) is not feasible as a transmission quota can not be
adapted to the structure and economics of the pay TV industry. A transmission
quota could also discourage the establishment of new drama channels and could
therefore also off set any potential benefits to viewers resulting from the
guaranteed screening of Australian programs through a transmission
requirement.
34. Option (c), the expenditure requirement, as amended to
recognise the role of channel providers while retaining responsibility for
compliance with the licensee, is the recommended option. The expenditure model
provides scope and flexibility for individual channels to meet the requirement
in a way which reflects their available budgets and perceived subscriber needs,
and also allows for an increased commitment to Australian content as their
viability increases. Transferring responsibility to the channel providers
through licensing or other schemes would introduce additional layers of
regulation and administrative burdens on the industry and be inconsistent with
the scheme of regulation under the BSA which is centred on
licensees.
35. Maintaining the current requirement at 10% takes into
account the financial capacity of the pay TV industry to meet its obligations
with regard to Australian programming at this stage of its development, and the
significant contribution that a 10% requirement under the modified expenditure
model, will make to the Australian drama production industry and to the cultural
benefit of Australian audiences.
36. It is also proposed to maintain the
existing scope of the Australian content regulation. In order to ensure the
presence of Australian drama on drama channels, it is necessary and appropriate
that the existing 10% expenditure requirement should continue to apply only to
“new Australian drama”, the programming genre which is most
vulnerable to substitution by cheap foreign product.
37. Similarly, it is
not proposed to extend local content requirements to other channel types.
Applying local content regulations too freely across a broad range of services
has no clear policy rationale and, in practice, may act as a disincentive in the
establishment of new channels at this critical stage in the industry’s
development. Rather, as recommended by the ABA, the content performance of
documentary channels should be monitored with a view to possible extension of
the regulation to this genre at a later date.
38. Option (c) is the
culmination of an extensive consultation and review process which has taken into
account the views of all stakeholders, and best balances the interests of these
stakeholders.
G. IMPLEMENTATION AND REVIEW
39. The
Government will introduce amendments to the BSA to improve the effectiveness and
enforceability of the licence condition. There will be consultation with the
industry and the ABA on the form of the amendments. The procedures for the
introduction of legislation include the preparation of explanatory
material.
40. In view of the fledgling state of the industry and the
possibility of further rationalisation, including changes to existing
programming arrangements, a further review three years from the date of
introduction of the new measures arising out of this Review is proposed. This
will permit further consideration of the appropriate level of expenditure
following a period of an enforceable regime (including whether it is appropriate
to set separate targets for movie- and non -movie channels) and the feasibility
of extending the Australian content requirement to predominantly documentary
channels.
41. Section 158(n) of the BSA, which requires the ABA to
monitor, and report to the Minister for Communications, the Information Economy
and the Arts, on the operation of the Act, will provide the mechanism for the
ABA to regularly report to the Minister on the operation of the
provision.
42. Compliance should not impose significant additional paper burden costs on
the industry. It should involve no more than a continuation of the processes
currently operating under the voluntary ABA guidelines whereby most channel
providers are providing compliance information. Contractual arrangements
between licensees and other parties are part of normal business
practice.
REGULATION IMPACT STATEMENT NO. 2
This second Regulation Impact Statement deals with the Government’s
consideration of the implications of the Protocol on Trade in Services to the
Closer Economic Relations Agreement between Australia and New Zealand for
Australian content requirements on commercial and subscription television
licensees. It was prepared in March 1999 as part of the Government’s
consideration of this issue.
PROBLEM
IDENTIFICATION
Background
Through entering into a
binding international agreement, Australia has committed to the objectives of
the CER Protocol, which include the strengthening of the trans-Tasman trading
relationship by liberalising barriers to trade in services with New Zealand.
The CER Protocol contains a requirement to give national treatment to services
provided by nationals of both countries, which includes services provided in the
production of television programs for television.
2. On 28 April 1998,
the High Court of Australia allowed an appeal by Project Blue Sky Inc,
representing the New Zealand (NZ) film and television production industry, that
the Australian Content Standard (the standard) was inconsistent with the
Protocol on Trade in Services to the Closer Economic Relations Agreement (CER)
with NZ. This decision affected the standard for free-to-air television only.
However, the content quota for pay TV is also inconsistent with our obligation
under the CER.
3. This Regulation Impact Statement addresses the means
by which the Government can amend the Broadcasting Services Act 1992
(BSA) to make it consistent with our obligations under the CER, whilst retaining
the cultural policy objectives of the BSA, and provide greater regulatory
certainty to the ABA and to the industry by obviating the possibility of flow
ons to other trade agreements and treaties. It also addresses the implications
of allowing New Zealand programs to count towards the Australian content
requirement for pay TV.
Implications of the High Court decision for
the Australian Content Standard for free-to-air television
4. A key
object of the BSA is to promote the role of broadcasting services in developing
and reflecting a sense of Australian identity, character and cultural diversity
(s.3(e)). To give effect to this object, Section 122 of the Broadcasting
Services Act 1992 (BSA) requires the ABA to determine a program standard for
commercial television licensees relating to the Australian content of programs,
which operates as a transmission quota. Section 160(d) of the BSA requires the
ABA to perform its functions in a manner consistent with Australia’s
international obligations.
5. Following the High Court’s
decision the ABA released the new Australian Content Standard for commercial
television on 18 February 1999. The new standard, which meets our obligations
under CER, took effect from 1 March 1999. (A separate Regulation Impact
Statement has been prepared on this.)
6. There are still concerns that
section 160(d) of the BSA, left unamended, could result in possible flow on
effects to other treaties. Section 160(d) has recently been the subject of an
Inquiry by the Senate Environment, Recreation, Communications, Information
Technology and the Arts Legislation Committee. The Committee released its report
on 17 February 1999. The Committee’s recommendations focused on measures
to limit any potential for the High Court’s decision to undermine the
cultural objective of the standard or for it to flow on to other trade
agreements. The Government will be responding to the Committee’s report
after proper consideration of its recommendations.
Australian
content on pay TV
7. Subscription television (pay TV) operators are
subject to a requirement in s.102 of the Broadcasting Services Act (BSA)
that 10% of a drama channel’s program expenditure must be on new
Australian drama programs. The review of Australian content on pay TV,
conducted in 1997 by the Minister for Communications, Information Technology and
the Arts in accordance with s.215(2) of the BSA, found that the requirement in
s.102 of the BSA is unenforceable. In March 1998 the Government considered the
outcomes of the Ministerial review and decided to amend the BSA to make the
Australian content requirement for pay TV enforceable. A Regulation Impact
Statement was prepared for the Government’s consideration in making that
decision. In June 1998 the Government decided to defer the introduction of the
proposed legislative amendments until after it considered the outcome of the
ABA’s proposals for the free-to-air standard, so that the Government had
an opportunity to determine its approach to the pay TV requirement as part of
its response to the Project Blue Sky issue.
Nature of the
problem
Implications of the High Court decision for the
Australian Content Standard for free-to-air television
8. Whilst the
ABA has revised the Australian Content Standard so that it meets
Australia’s obligations under CER with New Zealand, section 160(d) still
poses a problem for the ABA as it is drafted broadly and contains a more onerous
obligation than many other similar provisions in other statutes. The High Court
recognised that not every obligation imposed by section 160(d) can be easily
identified and applied. Many international treaties are expressed in
indeterminate language and Australia is party to over 900 treaties. There is a
tension between Australia’s trade and cultural objectives resulting from
section 160(d), as recognised in the Senate Committee’s report. Australia
has close cultural as well as trade ties with New Zealand, but to allow other
countries to benefit from regulation that has a primarily cultural objective
would be unacceptable, especially as Australia’s approach in other trade
negotiations, such as the General Agreement on Trade and Services, has been to
exempt the audio-visual sector.
Australian content on pay
TV
9. The definition of ‘Australian drama program’ in the
BSA in relation to the Australian content requirement for pay TV does not give
national treatment to New Zealand television programs. The Office of
International Law has advised that though not unlawful, the pay TV requirement
is inconsistent with Australia’s obligations under the Services Protocol
to the Closer Economic Relations Agreement with New Zealand (the CER Protocol),
and therefore places Australia in breach of its international obligations. The
High Court’s judgment does not apply to the pay TV requirement as it is
contained in the BSA itself, unlike the free-to-air standard which is determined
by the ABA. Accordingly, if the Government wishes to make the Australian
content requirement for pay TV consistent with Australia’s CER
obligations, amendment to the definition of ‘Australian drama
program’ in the BSA will be
required.
OBJECTIVES
Implications of the High Court
decision for the Australian Content Standard for free-to-air
television
10. The objectives of the proposals outlined in this
Regulation Impact Statement can be defined as to:
(a) comply with
Australia’s international obligations under the Closer Economic Relations
Protocol (CER) on Trade in Services with New Zealand;
(b) (restrict the flow
on consequences to other international agreements and treaties;
(c) enable
the Government to continue to meet its cultural policy objectives;
and
(d) provide greater regulatory certainty to the Australian Broadcasting
Authority.
Australian content on pay TV
11. The BSA
expresses a clear objective with regard to the Australian content obligations of
pay TV licensees. The broad objective underpinning s.102 is set out in the
object in s.3(e) of the BSA, which is to promote the role of broadcasting
services in developing and reflecting a sense of Australian identity, character
and cultural diversity. The s.102 condition also has an industry support
objective, which recognises that the achievement of the cultural objective
relies in large measure on the development of the local drama production
industry.
12. The decision whether to make New Zealand programs
eligible for the pay TV requirement involves a consideration of competing
cultural policy and trade policy objectives. If expenditure by pay TV operators
pursuant to the pay TV requirement shifts from Australian programs to New
Zealand programs, the achievement of the policy objective for the pay TV
requirement will be diminished. However, if the pay TV requirement is not
amended to be consistent with Australia’s obligations under the CER
Protocol, Australia will be acting in breach of its international obligations
with broad international trade policy implications.
IDENTIFICATION
OF OPTIONS IN RELATION TO THE IMPLICATIONS OF THE HIGH COURT DECISION FOR THE
AUSTRALIAN CONTENT STANDARD FOR FREE-TO-AIR TELEVISION
13. The
following two options are considered to be available to the Government in
response to the High Court’s decision on Project Blue Sky v the
ABA.
(a) amend the Broadcasting Services Act so that the ABA is required
to perform its functions having regard to Australia’s obligations under
any convention of which the Minister has notified the ABA about in writing;
and
(b) amend section 160(d) of the Broadcasting Services Act to limit its
scope to the CER.
IMPACT ANALYSIS IN RELATION TO THE
IMPLICATIONS OF THE HIGH COURT DECISION FOR THE AUSTRALIAN CONTENT STANDARD FOR
FREE-TO-AIR TELEVISION
Option (a)
14. Option (a)
involves amending the BSA so that the ABA is required to perform its
functions having regard to Australia’s obligations under any convention of
which the Minister has notified the ABA about in writing. This was a
recommendation of the Senate Committee and mirrors section 580 of the
Telecommunications Act 1997.
15. Currently section 160(d) of the
BSA requires the ABA to perform its functions in a manner consistent with
Australia’s obligations under any convention to which Australia is a party
or any agreement between Australia and a foreign country. If 160(d) is retained
in its current form the ABA would continue to be obliged to take into account
international obligations in performing its functions, including international
obligations which may arise under future treaties dealing with broadcasting and
trade in broadcasting products or services. The benefit of Option (a) is that
it potentially provides a less onerous requirement on the ABA to carry out its
functions compared to the current requirement. Under this option, the ABA is
provided with direction by the Minister as to which treaties or agreements it
must have regard to. Whilst this option provides more direction for the ABA
than the current requirement, it does not provide the required certainty to the
industry. This has been identified as a major concern of the industry and
potential investors in the industry. It would also weaken our current
obligation to NZ as expressed in the BSA.
Option (b)
16. Option
(b) involves amending section 160(d) of the Broadcasting Services Act to
limit its scope to New Zealand. The benefit of option (b) is that it
accommodates CER, retaining the special position of New Zealand with a stronger
level of obligation than expressed in other domestic legislation while making it
clear that there are no flow ons to other treaties. This option also assists the
ABA in the exercise of its regulatory responsibilities.
17. The
Australian film and television industry would prefer to see section 160(d)
repealed. However the repeal of Section 160 (d) would only remove the
requirement under the BSA that the ABA act in a manner consistent with our
international obligations. It would not remove Australia’s obligations to
New Zealand under international law, and may undermine the benefits we get from
rules-based world trade.
18. Neither option will have financial cost
implications nor impose any additional administrative burden for commercial
free-to-air broadcasters beyond the existing impact of their current obligations
to comply with the ABA’s Australian Content Standard. It will not impose
any additional restrictions on their capacity to purchase foreign
programming.
19. By ensuring there is no flow on to other treaties from
the High Court’s decision, both options seek to ensure that Australian
television audiences continue to have access to Australian television programs.
There is currently strong audience demand for Australian series and serials and
a recent study of Australian content regulation found widespread support for the
current level of domestic programming on television and moderate support for an
increase in local content.
IDENTIFICATION OF OPTIONS IN RELATION TO
AUSTRALIAN CONTENT ON PAY TV
20. The previous Regulation Impact
Statement prepared to support the Government’s decision to make the pay TV
requirement enforceable addressed the appropriateness of non-regulatory measures
as an alternative to regulation. As the Government decided in March 1998 that
the pay TV requirement should be made enforceable through amending the BSA, it
is not appropriate for this Regulation Impact Statement to consider
self-regulatory measures as options.
21. In the absence of any
renegotiation of the CER Protocol, there are two options available to the
Government in relation to the CER implications for the Australian content
requirement for pay TV:
(a) continue the exclusion of New Zealand programs
from the Australian content requirement on pay TV.
(b) amend the BSA to make
the treatment of New Zealand programs in the pay TV requirement consistent with
the requirements of the CER Protocol.
IMPACT ANALYSIS IN RELATION TO
AUSTRALIAN CONTENT ON
PAY TV
22. Option (a) would result
in an ongoing breach of Australia’s international obligations to New
Zealand, at a time when the two nations are seeking to strengthen the CER
relationship, and is likely to be a source of ongoing tension in the bilateral
relationship. The New Zealand Government has submitted that it considers that
the pay TV requirement breaches the CER Protocol, and that any measure which
jeopardises the free trade principles of CER is regarded very seriously by New
Zealand.
23. Option (a) may also lead to further litigation by Project
Blue Sky against the ABA which administers the pay TV requirement, as Project
Blue Sky has argued that there are legal grounds on which New Zealand programs
should qualify. Although legal advice indicates that a challenge by Project
Blue Sky against the pay TV requirement is unlikely to be successful in an
Australian court, it acknowledges that Project Blue Sky has an arguable
position. Failure to amend the BSA could lead to another lengthy and costly
legal battle. If Australia is not to deliberately flout its international
obligations, the uncertainty can be removed only by allowing NZ programs access
to the Pay TV quota..
24. Conversely, the benefits of option (b) are that
it would ensure Australia’s obligations to New Zealand under the CER
Protocol in respect of local content requirements for television services are
fully met and remove any further room for challenge in Australian courts,
providing certainty for the pay TV and production industries.
25. Option
(a) is supported by the Australian production industry as it would ensure that
pay TV operators can only meet the pay TV requirement through expenditure on
Australian-produced television programs. The costs and benefits of making the
pay TV requirement enforceable were fully addressed in the previous Regulation
Impact Statement. This had reported the estimates of the then Bureau of
Transport and Communications Economics (BTCE) which found that, at the existing
10% level, expenditure on new Australian drama programming should grow
significantly, to around $28 million in 2000-01, and up to $46 million in
2004-05. The Australian production industry argues that if Option (b) is
adopted, some of this expenditure could be redirected to the New Zealand
production industry, resulting in the cost of lost production opportunities to
the Australian production industry.
26. It is difficult to predict the
extent to which pay TV operators might shift their expenditure to New Zealand
productions if option (b) is adopted. The pay TV requirement is an expenditure
quota. Although New Zealand programming is likely to be cheaper than Australian
programming, the cost to the broadcaster of meeting an expenditure quota is not
reduced if it shifts its expenditure to New Zealand programming. The only
advantage to the pay TV broadcaster is that a greater number of cheaper programs
could be purchased with the 10% requirement. Thus, while there would be no
additional cost to the pay TV broadcaster if option (b) is adopted, option (b)
may be perceived as providing a benefit to the pay TV industry, in that pay TV
operators would have a greater range of programs (ie from either country) on
which to spend their expenditure quota monies.
27. Neither option is
likely to have financial cost implications for pay TV subscribers as the cost of
the obligation to the pay TV broadcaster will remain broadly the same, and
therefore there are no additional costs or savings to be passed onto
subscribers. Although option (b) may result in fewer Australian productions
for pay TV subscribers to watch, pay TV operators are likely to be responsive to
subscriber demand, and may be more likely to apply quota obligation monies
towards Australian productions than New Zealand productions if their subscribers
indicate a preference for Australian programs.
28. Neither option will
affect the role of the regulatory authority responsible for administering the
pay TV requirement, the ABA. The ABA will continue to monitor and oversee
compliance by Australian pay TV channels, which will be required to submit
annual returns showing their expenditure on programs which they wish to have
counted towards meeting the requirement. Whether or not this includes
expenditure on New Zealand programs will not impose greater administrative
burdens on the ABA, or the pay TV operators
themselves.
CONSULTATION
Implications of the High
Court decision for the Australian Content Standard for free-to-air
television
29. The Department of Communications, Information
Technology and the Arts undertook consultation with the Australia film
production industry. In addition to face to face meetings with representatives
of the film industry, the Department also considered the views of the Australian
film and television production industry, broadcasters, the Federation of
Australian Commercial Television Stations, the New Zealand Government, the New
Zealand film and television production industry, and the broader community
expressed in submissions to the Senate Environment, Recreation, Communications,
Information Technology and the Arts Legislation Committee’s inquiry into
the Australian Content Standard for television and Paragraph 160(d) of the
Broadcasting Services Act 1992. The majority of the submissions from the
Australian film and television production industry recommended repealing section
160(d) of the Broadcasting Services Act.
30. The Department also
consulted closely with the Department of Foreign Affairs and Trade, the Attorney
General’s Department and the Australian Broadcasting Authority on the
development of the options.
31. The Attorney General’s Department
advised that if paragraph 160 (d) of the BSA were to be repealed, the ABA would
no longer be bound, as a matter of domestic law, to take international
obligations into account in carrying out its functions. As a result the
broadcasting standard which was found to have been unlawfully made in the
Project Blue Sky case would not be unlawful if made again. However, adherence
to such a standard would continue to place Australia in breach of its
obligations to New Zealand under the CER Trade in Services Protocol. The
Attorney General’s Department proposed the course of action set out in
option (b) to the Senate Committee.
32. The Australian Broadcasting
Authority noted that repealing 160(d) of the BSA was raised in submissions to
them as part of their review of the Australian Content Standard and that this is
a matter for Parliament to consider, rather than the ABA. The ABA did however,
also note that an alternative approach for Parliament would be to limit the
application of 160(d) to treaty obligations with New
Zealand.
Australian content on Pay TV
33. The main
affected parties are Australian pay TV operators, the Australian television
production industry and the New Zealand Government and the NZ television
production industry. The Department has consulted with representatives of the
Australian pay TV industry and the Australian production industry through
meetings with peak industry organisations.
34. The views of the various
industry sectors are summarised as follows. The Australian Subscription
Television and Radio Association (ASTRA) supports option (b) on the grounds that
it would achieve consistency in the treatment of New Zealand programs between
free-to-air television and pay TV, particularly in an era of convergence where
some programs are jointly financed by the two television sectors. The Screen
Producers Association of Australia (SPAA), representing the Australian film and
television production industry, and associated Government funding agencies,
support option (a), submit that consistency in the treatment of New Zealand
programs across the television sectors is not necessary, and argue that the
cultural objective underpinning s.102 of the BSA should be given primacy over
trade policy considerations. Both the New Zealand Government and Project Blue
Sky (representing the New Zealand production industry) strongly support option
(b). Both parties submitted to the Ministerial review conducted in 1997 that
they consider the pay TV requirement must be amended to admit New Zealand
programs as the present exclusion of them from the pay TV requirement is in
breach of the CER Protocol.
CONCLUSION AND RECOMMENDED
OPTIONS
Implications of the High Court decision for the
Australian Content Standard for free-to-air television
35. The
preferred option is Option (b), that section 160(d) of the Broadcasting Services
Act (1992) be amended to limit its scope to CER . This option enables Australia
to meet its obligations under the CER Protocol, provides greater regulatory
certainty to the Australian Broadcasting Authority and enables the Australian
Content Standard to achieve the Government’s cultural objectives for the
Australian film and television production industry.
Australian
content on Pay TV
36. In view of the intractable problems associated
with an ongoing breach of the CER Protocol, the only option available to resolve
this breach of Australia’s international obligations is Option (b). This
option will also remove the threat of a legal challenge against the pay TV
requirement by Project Blue Sky. If it were possible to renegotiate the CER
Protocol to exclude audiovisual services from its scope, option (a) would be
preferable, as this option would preserve the integrity of the cultural
objective underpinning s.102 of the BSA. However, the Department of Foreign
Affairs and Trade (DFAT) advises that a renegotiation of the CER Protocol is not
possible. On balance, having regard to the views of DFAT and the
Attorney-General’s Department, the risk of a possible shift in some pay TV
expenditure from Australian to New Zealand programs is outweighed by the
potential damage resulting from a continuing breach of the CER Protocol, both to
Australia’s relationship with New Zealand in particular, and more broadly
to Australia’s standing as a nation which acts consistently with its
international obligations.
37. In order to accord equal treatment to both
countries’ services, the same test that is used to determine an Australian
program will apply to determine a New Zealand program, for the purpose of
determining eligible expenditure for the pay TV quota. It is proposed to follow
the same approach as is applied in the revised Australian content standard,
which has received the support of the New Zealand Government and industry. That
is, the same creative elements test will apply to determine eligible programs,
and Australian official co-productions will also
qualify.
IMPLEMENTATION AND REVIEW
Implications
of the High Court decision for the Australian Content Standard for free-to-air
television
38. The Government will introduce an amendment to section
160(d) of the Broadcasting Services Act to limit its scope to the Closer
Economic Relations Protocol between Australia and New Zealand.
39. The
ABA will closely monitor and review the revised Australian Content Standard
after the first two years of operation to assess how well the standard is
achieving its cultural purpose.
Australian Content on Pay
TV
40. The Government announced in April 1998 that it will introduce
amendments to the BSA to make the pay TV requirement enforceable. This Bill
will provide a legislative vehicle to effect amendments to the definition of
‘Australian drama program’ which make the definition consistent with
the terms of the CER Protocol, similar to the approach adopted by the revised
ACS. There will be consultation with the industry and the ABA on the form of
the amendments. The procedures for the introduction of legislation will include
the preparation of explanatory material.
41. As part of the
Government’s April 1998 announcement to make the pay TV requirement
enforceable, the Government announced that a review of the operation of the pay
TV requirement would take place three years from the enactment of the amending
legislation. This Ministerial review will provide an opportunity to consider
the extent to which expenditure on New Zealand programs has occurred, and any
implications for the cultural objective underpinning the
requirement.
42. In addition, the ABA will be required to assess
compliance with the pay TV requirement on an annual basis, and it would be
appropriate for the ABA to monitor the extent to which expenditure is being made
on New Zealand programs as part of its ongoing administration of the pay TV
requirement. Section 158(n) of the BSA, which requires the ABA to monitor and
report on the operation of the Act to the Minister for Communications,
Information Technology and the Arts, will provide the mechanism for the ABA to
regularly report to the Minister on the operation of the provision.
Clause 1 provides for the Act to be cited as the Broadcasting Services
Amendment Act (No.3) 1999.
Subclause 2(1) provides for the majority of the Act to commence on the
day on which it receives the Royal Assent.
Subclause 2(2) provides for
Part 2 of Schedule 1 to commence on 1 July 2000.
Subclause 2(3) provides
for Part 3 of Schedule 1 to commence on 1 July 2001.
Clause 3 provides that each Act that is specified in a Schedule is amended as set out in applicable items in the Schedule.
SCHEDULE 1 – ELIGIBLE DRAMA EXPENDITURE ON
SUBSCRIPTION TELEVISION BROADCASTING
Broadcasting Services Act 1992
Item 1 –
Proposed amendment of section 102 of the Broadcasting Services Act 1992
to repeal section 102
This item repeals section 102 of the BSA which
contains the subscription television Australian drama content expenditure
licence condition that was the subject of a review by the Minister under
subsection 215(2) of the BSA.
Item 2 – Proposed new Division 2A
of Part 7 of the Broadcasting Services Act 1992
This item
inserts into Part 7 of the BSA a proposed new Division 2A entitled
“Eligible drama expenditure”.
Subdivision A - Introduction
Proposed new section 103A of the Broadcasting Services Act 1992
- Simplified outline
Proposed section 103A gives a simplified outline
of proposed new Division 2A of Part 7.
Proposed new section 103B of
the Broadcasting Services Act 1992 - Definitions
The terms
used in proposed new Division 2A of Part 7 are defined in proposed new section
103B.
The term Australian Content Standard is defined in
proposed new section 103B because the term eligible drama program
is defined by reference to the Australian Content Standard, a Standard made by
the ABA under paragraph 122(1)(a) of the BSA.
Channel is defined in proposed section 103B as a
continuous stream of programs. Program is defined in section 6 of
the BSA.
The definition of the term drama program is drawn
from the current definition of Australian drama program in the Australian
Content Standard. In order for a program to be a drama program,
it must have a fully scripted screenplay in which the dramatic elements of
character, theme and plot are developed to form a narrative structure. Any
program which is a fully scripted sketch comedy, animated drama, or dramatised
documentary would be a drama program for the purposes of proposed
new Division 2A. Any program that involves the incidental use of actors or is
advertising or sponsorship matter would not be a drama
program.
The term eligible drama program replaces
the term Australian drama program used in section 102 of
the BSA. Four types of drama program are eligible drama
programs. They are a drama program that is, within the meaning
of the Australian Content Standard, an Australian program; an Australian/New
Zealand program; a New Zealand program; or an Australian official co-production.
As a result of defining eligible drama programs by
reference to the Australian Content Standard, the eligible expenditure rules for
subscription television broadcasting will apply to the same programs that are
subject to the Australian content rules for commercial television.
In relation to the definition of eligible drama program, there
is a special rule for 1999-2000 that is set out in proposed new section 103ZK.
The term expenditure in relation to a program or
program material is defined to mean expenditure incurred in acquiring,
producing, making an investment in the program or program material, or
pre-production expenditure incurred in relation to a program or program
material. The term pre-production expenditure is
also defined in proposed new section 103B, and is the subject of a special rule
in proposed new section 103H. Nil expenditure has been included in the
definition of expenditure so that it is clear that nil
expenditure is to be regarded as expenditure for the purposes of the
calculations in proposed new Division 2A of Part 7 of the BSA.
The term incidental matter is defined to mean advertising
or sponsorship matter; or a program promotion; or an announcement; or a hosting;
or another interstitial program. A hosting is where a person introduces a
program such as a movie or a documentary, and interstitial programs are
miscellaneous 'filler' programs, for example, short films, film reviews and
‘vox pop’ interviews of members of the public in the street.
The term subscription TV drama service is defined to mean a
subscription television broadcasting service devoted predominantly to drama
programs. The definition therefore excludes subscription television
narrowcasting services from the operation of the eligible drama expenditure
rules for subscription television. The purpose of the definition is to ensure
that the eligible drama expenditure rules apply in respect of each subscription
television broadcasting service that devotes more that 50 per cent of its
programming schedule during a financial year to drama programs as
defined in proposed section 103B.
Proposed new section 103C of the
Broadcasting Services Act 1992 - Channel providers
Proposed
new section 103C defines the term channel provider. A channel
provider packages a channel; supplies a subscription television broadcasting
licensee with the channel; and carries on a business in Australia by means of a
principal office or of a branch, that involves the supply of the channel; where
the licensee televises the channel on the subscription TV drama service with or
without the addition of any incidental matter.
Channel
is defined in proposed new section 103B as a continuous stream of programs.
Program is defined in section 6 of the BSA.
The
reference to incidental matter is included in proposed new section 103C to
ensure that it is clear that if a licensee inserts incidental matter (such as
advertisements) into a channel supplied by a channel provider, the channel is
still considered to be supplied by the channel provider. The term
incidental matter is defined in proposed new section 103B.
Some examples of current channel providers are Showtime, Nickelodeon,
The Disney Channel and UKTV.
Proposed new section 103D of the
Broadcasting Services Act 1992 – Part-channel providers
Proposed new section 103D defines the term part-channel
provider. A part-channel provider assembles a package of programs;
supplies a subscription television broadcasting licensee with the package; and
carries on a business in Australia by means of a principal office or of a
branch, that involves the supply of the package; where: the package consists
predominantly of drama programs; and the package constitutes a significant
proportion of the program material that is televised by the licensee on the
subscription TV drama service; and there is neither a channel provider, nor a
pass-through provider in relation to the subscription TV drama service.
Program is defined in section 6 of the BSA. Program
material is defined in proposed new section 103B.
An example of a
part-channel provider is an Australian company that assembles a package of
children’s drama programs for supply to the licensee of a subscription TV
drama service, where the children’s drama programs are broadcast during
daytime viewing hours. An example of a second part-channel provider in relation
to the subscription TV drama service is an Australian company that assembles a
package of movies for the evening timeslots on the same service.
Proposed section 103E defines the term pass-through
provider. Like a channel provider, a pass-through provider
packages a channel and supplies a subscription television broadcasting
licensee with the channel, where the licensee televises the channel with or
without the addition of any incidental matter. However, unlike a channel
provider, a pass-through provider does not carry on a business in Australia, by
means of a principal office or of a branch, that involves the supply of the
channel. A pass-through provider is effectively a channel provider not based in
Australia.
Channel is defined in proposed section 103B as a continuous
stream or programs. Program is defined in section 6 of the
BSA.
The reference to incidental matter is included in proposed new
section 103E to ensure that it is clear that if a licensee inserts incidental
matter (such as advertisements) into a channel supplied by a channel provider,
the channel is still considered to be supplied by the channel provider.
The term incidental matter is also defined in proposed
new section 103B.
The proposed new rules in Division 2A of Part 7
distinguish between channel providers and pass-through providers because it is
not feasible for the ABA to obtain program expenditure information from
pass-through providers, who do not have a principal office or a branch in
Australia.
Some examples of current pass-through providers are TNT, The
Cartoon Network and Hallmark.
Proposed new section 103F of the
Broadcasting Services Act 1992 – Part-pass-through
providers
Proposed new section 103F defines the term part-pass-through
provider. A part-pass-through provider assembles a package of programs;
supplies a subscription television broadcasting licensee with the package; and
does not carry on a business in Australia by means of a principal office or of a
branch, that involves the supply of the package; where: the package consists
predominantly of drama programs; the package constitutes a significant
proportion of the program material that is televised by the licensee on the
subscription TV drama service; and there is neither a channel provider, nor a
pass-through provider in relation to the subscription TV drama service.
Program in defined in section 6 of the BSA. Program
material is defined in proposed new section 103B.
An example of a
part-pass-through provider is company based in the United States that assembles
a package of movies for supply to the licensee of a subscription TV drama
service, where the movies are broadcast on weekends. An example of a second
part-pass-through provider in relation to the subscription TV drama service is a
company based in the United Kingdom that assembles a package of BBC drama
programs for broadcast on weekdays on the same service.
Proposed new
section 103G of the Broadcasting Services Act 1992 - Supply of channel or
package
Proposed new section 103G makes clear that it is not
necessary for the supply of a channel or package of programs to be direct for it
to be a supply of a channel or package of programs for the purposes of proposed
new Division 2A of Part 7. The supply of the channel or package of programs can
also take place through one or more interposed persons. As a result of
subsection 22(1) of the Acts Interpretation Act 1901 (AIA), the
term “persons” in this context includes both individuals and bodies
corporate.
For example, if a channel provider supplies a channel to a
subscription television broadcasting licensee and the licensee supplies that
channel to a second licensee, the channel provider would be taken to have
supplied the channel to the second licensee. That is, the first subscription
television broadcasting licensee is an “interposed person”, not a
channel provider.
Proposed new section 103H of the Broadcasting
Services Act 1992 – Pre-production expenditure not to be counted
unless principal photography has commenced
Proposed new section 103H provides that pre-production expenditure is not to
be counted for the purposes of the eligible expenditure rules unless principal
photography has commenced. The purpose of proposed new section 103H is to
determine whether pre-production expenditure is counted at all for the purposes
of the rules. If principal photography has commenced, and pre-production
expenditure may be counted for the purposes of the eligible expenditure rules,
proposed new subsection 103J(2) sets out when the expenditure is
incurred.
For example, screenplay development costs fall within the
definition of
pre-production expenditure in proposed new
section 103B. If a licensee paid for the screenplay development costs for a
new eligible drama program, and principal photography of the program never
commenced, that pre-production expenditure would not be counted for the purposes
of the eligible expenditure rules.
Proposed new section 103J of the Broadcasting Services Act 1992 -
Cash-based accounting – when expenditure is incurred
Proposed new section 103J sets out when expenditure is incurred for the
purposes of Division 2A of Part 7. This proposed new section includes a general
rule in relation to an item of expenditure other than an item of pre-production
expenditure and a special rule for an item of pre-production expenditure.
Proposed new subsection 103J(1) provides that an item of expenditure
other than an item of pre-production expenditure is incurred only when actual
expenditure is made. For example, assuming that in the first year of operation
of the proposed new rules, a payment is made by a channel provider to a
production company on 30 June 2000 for the supply of program material for a
subscription TV drama service, this would be expenditure which is counted for
the purposes of the calculation of the channel provider’s new eligible
drama expenditure for the financial year ending on 30 June 2000.
However, a commitment in a contract between a channel provider and a production
company made on 30 June 2000 for the company to produce a program for the
channel provider for $100,000, would be included in the calculation when the
$100,000 is actually paid by the channel provider to the production company, if
the whole amount is paid at the same time. If the channel provider pays the
production company in two instalments of $50,000, each $50,000 of expenditure is
incurred when each instalment is paid to the production company.
Similarly, assuming that in the first year of operation of the proposed
new rules, a payment is made by a licensee to a pass-through provider on 30 June
2000 for the supply of a channel for a subscription TV drama service, this would
be expenditure which is counted for the purposes of the calculation of the
licensee’s new eligible drama expenditure for the financial year
ending on 30 June 2000. However, a commitment in a contract between a licensee
and a pass-through provider made on 30 June 2000 for the pass-through provider
to provide a channel to the licensee for $1,200,000, would be included in the
calculation when the $1,200,000 is actually paid by the licensee to the
pass-through provider, if the whole amount is paid at the same time. If the
licensee pays the pass-through provider in twelve instalments of $100,000, each
$100,000 of expenditure is incurred when each instalment is paid to the
pass-through provider.
Proposed new subsection 103J(2) provides that, for an item of
pre-production expenditure, expenditure is incurred at whichever is the later
of:
(a) the time when the expenditure is paid; or
(b) when principal
photography commences.
Subject to any contractual arrangements that make
pre-production expenditure payments due at a time after the commencement of
principal photography, as principal photography is the beginning of the
production process, an item of pre-production expenditure would generally be
paid before the commencement of principal photography. However, if the item of
pre-production expenditure was paid before the commencement of principal
photography, as a result of proposed new subsection 103J(2), the expenditure
will be incurred at the commencement of principal photography.
For example, if a licensee paid for the screenplay development costs for an
eligible drama program in the first year of the operation of the rules, and
principal photography of that program commenced in the second year of operation
of the rules, that expenditure on screenplay development costs will be incurred
in the second year.
This rule is intended to limit the opportunities to
avoid the operation of the rules by manufacturing expenditure on projects never
likely to proceed.
Proposed new section 103K of the Broadcasting Services Act 1992 -
When expenditure incurred on a new eligible drama program
Proposed
new subsection 103K(1) provides that, for the purposes of Division 2A of Part 7
of the BSA, an eligible drama program is only new if a whole or a
substantial part of the program has not been televised in Australia or New
Zealand at any time before the expenditure is incurred.
Proposed
subsection 103K(2), which provides that for the purposes of subsection 103K(1),
it is to be assumed that the definition of broadcasting service
extended to matters and things in New Zealand, is necessary because the
BSA does not apply outside Australia.
As a result of proposed new
section 103K, expenditure incurred in relation to an eligible drama program that
has already been shown on television in Australia or New Zealand at the time the
expenditure is incurred will not be expenditure which may be counted for the
purposes of the eligible expenditure rules. This is the case whether the
program has been televised on a commercial, community, subscription or national
broadcasting service or a narrowcasting service in Australia or New
Zealand.
Proposed new section 103K does not prevent expenditure on
episodes of a second series of drama programs from counting towards the eligible
expenditure requirements if episodes of the first series have already been
televised in Australia or New Zealand.
Proposed new section 103L of
the Broadcasting Services Act 1992 - ABA may make determinations about
what constitutes program expenditure
This proposed new section gives
the ABA power to make written determinations setting out general rules about
what expenditure is, and what expenditure is not, taken to be expenditure
incurred in acquiring, investing in or producing program material or new
eligible drama programs, for the purposes of the Division (proposed new
subsections 103L(1)-(4)). This power has been provided to the ABA to ensure
that if necessary, the ABA may clarify what is relevant expenditure.
An
example of a determination that the ABA could make under proposed new subsection
103L(3) would be a determination that salaries and on-costs of staff directly
involved in the production of a program is taken to be expenditure incurred on a
new eligible drama program. An example of a determination that the ABA could
make under proposed new subsection 103L(4) would be a determination that
expenditure on marketing expenses is taken not to be expenditure on a new
eligible drama program.
Proposed new subsection 103L(6) provides that a
determination under this section is to be an instrument of a legislative
character. An instrument of a legislative character is an instrument that sets
out rules that are of general application. The examples of determinations that
the ABA could make given above are examples of determinations of a legislative
character.
An example of a determination that is not of a legislative
character, and therefore could not be made by the ABA under proposed new section
103L, would be a determination that particular expenditure on a specific
eligible drama program is expenditure incurred on an eligible drama
program.
A determination under this proposed new section is a
disallowable instrument for the purposes of section 46A of the Acts
Interpretation Act 1901 (subsection (7)).
Proposed new section
103M of the Broadcasting Services Act 1992 - Expenditure to be nominated
only once in meeting licence conditions
Proposed new section 103M is
designed to prevent double counting of expenditure in relation to the same
subscription TV drama service between different provisions of Division 2A of
Part 7. To prevent double counting within provisions, the relevant provisions
include special rules which are identified in the discussion of those
provisions.
Proposed new subsection 103M(1) is intended to prevent a
channel provider which has nominated certain expenditure in relation to a
particular service in a particular year for the purpose of the licensee’s
new eligible drama expenditure from also nominating that same expenditure for
the purpose of the application of any other provision in the Division
(subparagraph (1)(c)). So, for example, a channel provider may not count
expenditure nominated as make-up expenditure in relation to a financial year
under section 103P towards its principal expenditure obligation for the next
financial year under section 103N.
The provision also prevents the
channel provider which, under section 103N, has nominated expenditure on new
eligible drama programs for one service, from counting any of this expenditure
towards any other service’s new eligible drama expenditure where the two
services are provided by the same licensee (see proposed new paragraph
103M(1)(d)), or where the two services are supplied by different licensees (see
proposed new paragraph 103M(1)(e)).
Proposed new subsection 103M(2)
provides an exception to the general rule in proposed new paragraph 103M(1)(e).
The exception allows a channel provider who supplies a channel which is the same
or substantially similar to the channel provided to the first licensee to a
second licensee, to count the expenditure incurred in relation to both
subscription TV drama services. This will have the effect of allowing
expenditure by the channel provider on new eligible drama programs to be counted
towards the new eligible drama expenditure of all the licensees to which the
channel is provided. This exception acknowledges the practice in the
subscription television broadcasting industry of different subscription
television broadcasting licensees being supplied with the same or substantially
similar channels by channel providers.
Proposed new subsection 103M(3) is
intended to prevent a licensee which has nominated certain expenditure in
relation to a particular service in a particular year for the purpose of the new
eligible drama program expenditure licence condition (proposed new sections 103R
or 103T) also nominating that same expenditure for the purpose of the
application of any other provision in the Division (paragraph 103M(3)(c)). If,
for example, a licensee nominates some or all of its expenditure on new eligible
drama programs under section 103R, it could not also nominate this same
expenditure as its make-up expenditure under section 103P in respect of an
expenditure shortfall by its channel provider in the previous financial
year.
The provision is also intended to prevent a licensee counting any
of its expenditure on new eligible drama programs in respect of one of the
services provided by it towards its new eligible drama program expenditure for
any other service provided by it (paragraph 103M(3)(d)).
Subdivision B – Channel provider supplies channel
Proposed Subdivision B imposes licence conditions on a licensee who
provides a subscription TV drama service and is supplied with a channel by a
channel provider. These licence conditions are the general licence condition
and make-up expenditure licence conditions. There are two make-up expenditure
licence conditions: one which applies where a channel is supplied exclusively to
one licensee, the other which applies where a channel is supplied to multiple
licensees.
Proposed new section 103N of the Broadcasting Services
Act 1992 – 10% minimum eligible drama expenditure - channel provider
supplies channel
The general licence condition in proposed new
subsection 103N(1) requires expenditure by the channel provider on new eligible
drama programs in relation to the subscription TV drama service for each
financial year to equal or exceed 10% of the total program expenditure by the
channel provider in relation to the channel.
This licence condition
refers to expenditure by the channel provider because, where a licensee is
supplied with a channel by a channel provider, the licensee is supplied with a
complete channel. As a result, the scope for the licensee to vary programs in
the channel, and therefore increase the amount of eligible drama expenditure, is
likely to be either non-existent or very limited. Consequently, it is the
channel provider’s expenditure on new eligible drama programs that will
determine whether the licensee complies with the licence
condition.
Proposed subsection 103N(2) provides definitions of terms used
in subsection (1). Channel provider’s new eligible drama
expenditure, in relation to the subscription TV drama service, means so
much of the total expenditure incurred by the channel provider during the
financial year on new eligible drama programs as the channel provider nominates
for the purposes of the licence condition in subsection (1).
Channel provider’s total program expenditure, in
relation to the channel, means the total expenditure incurred by the channel
provider during the financial year on the program material that is included, or
is available to be included, in the channel. Reference is made to program
material that is ‘available to be included’ in the channel to take
account of industry practice whereby, in some situations, a channel provider may
acquire rights to a package of programs from a program supplier, not all of
which it actually includes in its programming schedule for its channel. For
example, if a channel provider paid $10 million to a Hollywood movie studio for
the rights to 100 movies, and it then packaged 90 of these movies into a channel
and supplied this channel to a licensee, the channel provider’s
total program expenditure must include the whole $10 million, and
not some lesser amount which takes account of the fact that not all of the 100
movies were packaged into the channel. Similarly, if a channel provider
incurred expenditure on a program that it does not include in its program
schedule until a subsequent financial year, the expenditure incurred on that
program would comprise part of total program expenditure in the
year in which the expenditure was incurred, not the subsequent year in which it
is televised.
In summary, the intention of the reference to program
material that is ‘available to be included’ is to ensure that all
expenditure incurred on programs by a channel provider in relation to the
channel forms part of total program expenditure in the year in
which the expenditure is incurred, irrespective of whether, or when, each
individual program on which expenditure has been incurred is subsequently
included in the channel.
Note that under proposed new section 103N, it is
open for a channel provider which provides more than one channel to more than
one licensee who provides a subscription TV drama service, to pool monies
expended on new eligible drama programs provided to those licensees and, for the
purpose of calculating the new eligible drama expenditure, to attribute that
expenditure to those subscription TV drama services in such proportions as it
sees fit. If the channel provider chooses to do this, it must not contravene
the double counting rules in proposed new section 103M.
As a result of
proposed new section 103G, a channel provider’s total program expenditure
may include expenditure where the channel provider supplies a channel through an
interposed person.
Proposed new subsection 103N(3) provides that
Division 3 of Part 10 of the BSA does not apply to the condition in proposed new
subsection 103N(1). This is because if there is a breach of the licence
condition because the amount of the channel provider’s new eligible drama
expenditure falls short of 10% of the channel provider’s total
expenditure, the shortfall may be made-up in the following year under either
proposed new section 103P or 103Q. Breach of the licence conditions in
proposed new sections 103P and 103Q are subject to Division 3 of Part
10.
Proposed new section 103P of the Broadcasting Services Act 1992
– Shortfall of eligible drama expenditure - channel provider supplies
channel exclusively to licensee
Proposed new subsection 103P(1)
provides that section 103P applies if a channel provider supplies only one
licensee with a particular channel; and the channel provider’s new
eligible drama expenditure in relation to the subscription TV drama service for
a particular financial year is less than 10% of the channel provider’s
total program expenditure in relation to the channel supplied to the licensee
for that financial year (ie there is a shortfall amount).
The use of the
term “first licensee” in subsection 103P(1) is a drafting device
used because there is more than one licensee mentioned in the section. It
allows identification of the licensee to which the section has application when
mentioned again later in the section.
A licence condition is imposed by
proposed subsection 103P(2) so that for the next financial year, the amount that
expenditure fell short of the 10% requirement must be made up in one of three
specified ways:
(a) by the channel provider under paragraph 103P(2)(a) (the
channel provider’s make-up expenditure equals the shortfall amount);
or
(b) by the licensee under paragraph 103P(2)(b) (the licensee’s
make-up expenditure equals the shortfall amount); or
(c) by the channel
provider and the licensee together under paragraph 103P(2)(c) (the sum of their
respective amounts of make-up expenditure equals the shortfall
amount).
The licensee or the channel provider, or both, can nominate a
part or the whole of their respective amounts of total new eligible drama
expenditure as being their expenditure for the purpose of making up the
shortfall amount. The proportions in which each party bears the responsibility
for making up the shortfall amount (as specified in the compliance certificate)
is not dealt with in the legislation and is therefore a matter for the parties
to arrange between themselves.
Proposed subsection 103P(3) defines terms
used in subsection (2). The definition of first licensee’s make-up
expenditure contains an element to remove the possibility of double
counting. The effect of this is that the licensee’s make-up expenditure
may only be direct expenditure on new eligible drama programs by the licensee,
and may not be expenditure on programs included, or available to be included, in
the channel supplied to the licensee by the channel provider. This would be
expenditure that the channel provider could nominate for the purposes of the
definition of channel provider’s make-up
expenditure.
For example, if a licensee acquires the rights to
televise a new eligible drama program for the purposes of the make-up rules,
that expenditure may count as licensee’s make-up expenditure. However, if
the channel provider acquires the rights to televise a new eligible drama
program, the licensee may not count this expenditure as licensee’s make-up
expenditure because this is expenditure that may be counted by the channel
provider as channel provider’s make-up expenditure.
Proposed new
section 103Q of the Broadcasting Services Act 1992 – Shortfall of
eligible drama expenditure - channel provider supplies channel to multiple
licensees
Proposed new subsection 103Q(1) provides that section 103Q
applies if a channel provider supplies more than one licensee with the same or a
substantially similar channel and the channel provider’s new eligible
drama expenditure is less than 10% of the channel provider’s total program
expenditure (ie there is a shortfall amount).
The use of the term
“first licensee” in subsection 103Q(1) is a drafting device used
because there is more than one licensee mentioned in the section. It allows
identification of the licensee to which the section has application when
mentioned again later in the section. The section has application to any
licensee to which subsection (1) would apply.
A licence condition is
imposed by proposed subsection 103Q(2) so that, for the next financial year, the
amount that expenditure fell short of the 10% requirement must be made up in one
of the specified ways:
(a) by the channel provider under paragraph
103Q(2)(a) (the channel provider’s make-up expenditure equals the
shortfall amount); or
(b) by the licensee under paragraph 103Q(2)(b) (the
licensee’s make-up expenditure equals the licensee’s subscriber
percentage of the shortfall amount); or
(c) if the channel provider’s
make-up expenditure is less than the shortfall amount – the first
licensee’s make-up expenditure is equal to the first licensee’s
subscriber percentage of the difference between the shortfall amount and the
channel provider’s make-up expenditure (paragraph 103Q(2)(c)).
A
formula for the calculation of a licensee’s subscriber percentage and
definitions of relevant terms are set out in proposed new subsection 103Q(3).
The total number of monthly subscribers to the licensee’s service at the
end of the financial year in which there was a shortfall is to be worked out as
a percentage of the sum of the total number of monthly subscribers to the
licensee’s service and the additional licensees’ services at the end
of that shortfall year. Note that if a person subscribed to more than one
service, that person would be counted as a subscriber to each of those services
(that is, the person would be counted more than once in the total number of
subscribers to all the relevant services).
The subscriber
percentage in respect of each licensee for each subscription TV drama
service will be calculated by the ABA, not by licensees themselves. In order to
do the necessary calculations, the ABA will draw on subscriber numbers for the
subscription TV drama service supplied in the annual returns lodged by each
licensee pursuant to proposed section 103ZA. Where multiple licensees are
supplied with the same channel, each licensee will be notified of its
subscriber percentage in the compliance certificate provided by
the ABA.
The definition of first licensee’s make-up
expenditure contains an element to remove the possibility of double
counting. The effect of this is that the licensee’s make-up expenditure
may only be direct expenditure on new eligible drama programs by the licensee,
and may not be expenditure on programs included, or available to be included, in
the channel supplied to the licensee by the channel provider. This would be
expenditure that the channel provider could nominate for the purposes of the
definition of channel provider’s make-up expenditure.
For example,
if a licensee acquires the rights to televise a new eligible drama program for
the purposes of the make-up rules, that expenditure may count as
licensee’s make-up expenditure. However, if the channel provider acquires
the rights to televise a new eligible drama program, the licensee may not count
this expenditure as licensee’s make-up expenditure because this is
expenditure that may be counted by the channel provider as channel
provider’s make-up expenditure.
Proposed Subdivision C imposes licence conditions on a licensee who
provides a subscription TV drama service and is supplied with a channel by a
pass-through provider. These licence conditions are the general licence
condition and the make-up expenditure licence condition.
Proposed new section 103R of the Broadcasting Services Act 1992 –
Pass-through provider supplies a channel
Proposed new subsection
103R(1) provides that if a licensee provides a subscription TV drama service;
and there is a pass-through provider in relation to the service because a
pass-through provider supplies a channel; it is a condition of the licence that,
for each financial year of operation, the licensee’s new eligible drama
expenditure equals or exceeds 10% of the licensee’s total program
expenditure in relation to the channel.
The licence condition in proposed new section 103R refers to expenditure
by the licensee because a pass-through provider is not based in Australia, and
as a result, it is not feasible to enforce on a pass-through provider the
obligation to make an annual return of expenditure to the ABA.
Proposed subsection 103R(2) provides definitions of terms used in
subsection (1).
Licensee’s new eligible drama
expenditure, in relation to the subscription TV drama service, means the
sum of:
(a) so much of the total expenditure incurred by the licensee during
the financial year on new eligible drama programs as the licensee nominates for
the purpose of meeting the licence condition in subsection (1); and
(b) so
much of the total expenditure incurred by the pass-through provider during the
financial year on new eligible drama as the licensee nominates for the purpose
of meeting the licence condition in subsection
(1).
Licensee’s total program expenditure, in
relation to the channel, means the total expenditure incurred by the licensee
during the financial year in respect of the supply by the pass-through provider,
of the channel.
In relation to nominations by a licensee under paragraph
(a) of the definition of licensee’s new eligible drama
expenditure, as a matter of practice, it is expected that a licensee
would nominate make-up expenditure under paragraph (a) that the licensee
incurred directly. An example of expenditure that a licensee would incur
directly would be expenditure incurred making an investment in a new eligible
drama program.
Proposed new subsection 103R(3) is a provision intended
to deal with possible double counting which arises under section 103R because a
licensee could potentially nominate expenditure under both paragraphs (a) and
(b) of the definition of licensee’s new eligible drama
expenditure in subsection 103R(2). The effect of
subsection 103R(3) is that, if a pass-through provider incurred
expenditure on a new eligible drama program, and the licensee nominated that
expenditure as make-up expenditure under paragraph (a) of the definition of
licensee’s new eligible drama expenditure, the licensee may
not also nominate that expenditure as expenditure incurred by the pass-through
provider for the purposes of paragraph (b) of that definition.
Proposed
new subsection 103R(4) provides that Division 3 of Part 10 of the BSA does not
apply to the condition in proposed new subsection 103R(1). This is because if
there is a breach of the licence condition because the amount of the
licensee’s new eligible drama expenditure falls short of 10% of the
licensee’s total expenditure, the shortfall may be made-up in the
following year under proposed new section 103S. Breach of the licence
condition in proposed new section 103S is subject to Division 3 of Part 10 of
the BSA.
Proposed new section 103S of the Broadcasting Services Act
1992 – Shortfall of eligible drama expenditure – pass-through
provider supplies channel
Proposed new subsection 103S(1) provides
that section 103S applies if a licensee provides a subscription TV drama
service; and a person is a pass-through provider in relation to the service
because the person supplies a channel; and the licensee’s new eligible
drama expenditure for a particular financial year is less than 10% of the
licensee’s total program expenditure for that year (ie there is a
shortfall amount).
A licence condition is imposed by proposed subsection
103S(2) so that new eligible drama expenditure that falls short of the 10%
expenditure requirement is to be made up by the licensee in the following year.
In making up this expenditure, the licensee may nominate expenditure on new
eligible drama by the pass-through provider.
Proposed new
subsection 103S(3) defines licensee’s make up expenditure
for section 103S as the sum of:
(a) so much of the total expenditure
incurred by the licensee during the make-up year on new eligible drama programs
as the licensee nominates; and
(b) so much of the total expenditure incurred
by the pass-through provider during the make-up year on new eligible drama
programs as the licensee nominates.
In relation to nominations by a
licensee under paragraph (a) of the definition of licensee’s make-up
expenditure, as a matter of practice, it is expected that a licensee
would nominate make-up expenditure under paragraph (a) that the licensee
incurred directly. An example of expenditure that a licensee would incur
directly would be expenditure incurred making an investment in a new eligible
drama program.
For example if a pass-through provider acquired rights to televise a new
eligible drama program, the licensee who is required to make-up expenditure due
to a shortfall could either:
(a) nominate that expenditure as expenditure
incurred by the licensee; or
(b) nominate the expenditure as expenditure
incurred by the pass-through provider.
Proposed new Subdivision D imposes a licence condition where a
subscription television broadcasting licensee supplies all program material on
the subscription TV drama service. Subject to the special transitional rule in
Subdivision K for the financial year beginning 1 July 1999, there is no make-up
licence condition where a licensee supplies all program material. This is
because where the licensee supplies all the program material on the service, it
has control over the proportion of the total program expenditure expended on new
eligible drama programs.
Proposed new section 103T of the
Broadcasting Services Act 1992 – 10% minimum eligible drama
expenditure - licensee supplies all program material
Proposed
new subsection 103T(1) provides that, if a licensee itself supplies all the
program material on a subscription TV drama service, it is a condition of the
licence that, for each financial year of operation, the licensee’s new
eligible drama expenditure equals or exceeds 10% of the licensee’s total
program expenditure in relation to the channel.
Proposed new subsection
103T(2) defines terms used in subsection 103T(1). Licensee’s new
eligible drama expenditure, in relation to the subscription TV drama
service, means so much of the total expenditure incurred by the licensee during
the financial year on new eligible drama programs as the licensee nominates for
the purpose of meeting the licence condition in subsection
(1).
Licensee’s total program expenditure, in
relation to the subscription TV drama service, means the total expenditure
incurred by the licensee during the financial year on program material that is
for televising, or available for televising, by the licensee on the subscription
TV drama service.
In summary, the intention of the reference to program
material that is ‘available to be included’ is to ensure that all
expenditure incurred on programs by a licensee in relation to the service forms
part of total program expenditure in the year in which the
expenditure is incurred, irrespective of whether, or when, each individual
program on which expenditure has been incurred is subsequently televised on the
service.
Proposed new Subdivision E imposes licence conditions on a licensee who
provides a subscription TV drama service and is supplied with a package of
programs by a part-channel provider. These licence conditions are the general
licence condition and make-up expenditure licence conditions. There are two
make-up expenditure licence conditions: one which applies where a package of
programs is supplied exclusively to one licensee, the other which applies where
a package of programs is supplied to multiple licensees.
Proposed new subsection 103U(1) provides that if a licensee provides a
subscription TV drama service; and there is a part-channel provider in relation
to the service because a part-channel provider supplies a package of programs;
it is a condition of the licence that, for each financial year of operation, the
part-channel provider’s eligible drama expenditure equals or exceeds 10%
of the part-channel provider’s total program expenditure in relation to
the package of programs.
Consistent with the licence condition in
proposed new subsection 103N(2), the licence condition in proposed new section
103U refers to expenditure by the part-channel provider because, where a
licensee is supplied with a package of programs by a part-channel provider, the
licensee is generally supplied with a complete package by the part-channel
provider.
Proposed subsection 103U(2) provides definitions of terms used
in subsection (1).
Part-channel provider’s new eligible drama
expenditure, in relation to the subscription TV drama service, means so
much of the total expenditure incurred by the part-channel provider during the
financial year on new eligible drama programs as the part-channel provider
nominates for the purpose of the application of subsection
(1).
Part-channel provider’s total program
expenditure, in relation to the package of programs, means the total
expenditure incurred by the part-channel provider during the financial year on
the program material that is included, or available to be included, in the
package of programs.
In summary, the intention of the reference to
program material that is ‘available to be included’ is to ensure
that all expenditure incurred on programs by a part-channel provider in relation
to the package of programs forms part of total program expenditure
in the year in which the expenditure is incurred, irrespective of whether, or
when, each individual program on which expenditure has been incurred is
subsequently included in the package of programs.
As a result of proposed
new section 103G, a part-channel provider’s total program expenditure may
include expenditure where the part-channel provider supplies a package of
programs through an interposed person.
Proposed new subsection 103U(3)
provides that Division 3 of Part 10 of the BSA does not apply to the condition
in proposed new subsection 103U(1). This is because if there is a breach of the
licence condition because the amount of the part-channel provider’s new
eligible drama expenditure falls short of 10% of the part-channel
provider’s total expenditure, the shortfall may be made-up in the
following year under either proposed new section 103V or 103W. Breach of the
licence conditions in proposed new sections 103V and 103W are subject to
Division 3 of Part 10.
Proposed new section 103V of the
Broadcasting Services Act 1992 – Shortfall of eligible drama
expenditure – part-channel provider supplies a package of programs
exclusively to licensee
Proposed new subsection 103V(1) provides that
section 103V applies if there is a part-channel provider in relation to a
subscription TV drama service; and the part-channel provider does not supply the
same or a substantially similar package of programs to another licensee on
another subscription TV drama service; and the part-channel provider’s new
eligible drama expenditure in relation to the first subscription drama service
for a particular financial year is less than 10% of the part-channel
provider’s total program expenditure in relation to the package of
programs for that year (ie there is a shortfall amount).
The use of the
term “first licensee” in subsection 103V(1) is a drafting device
used because there is more than one licensee mentioned in the section. It
allows identification of the licensee to which the section has application when
mentioned again later in the section.
A licence condition is imposed by
proposed subsection 103V(2) so that, for the next financial year, the amount
that expenditure fell short of the 10% requirement must be made up in one of
three specified ways:
(a) by the part-channel provider under paragraph
103V(2)(a) (its make-up expenditure equals the shortfall amount);
(b) by the
licensee under paragraph 103V(2)(b) (its make-up expenditure equals the
shortfall amount); or
(c) by the part-channel provider and the licensee
together under paragraph 103V(2)(c) (the sum of their respective amounts of
make-up expenditure equals the shortfall amount).
The licensee or the
part-channel provider, or both, can nominate a part or the whole of their
respective amounts of total new eligible drama expenditure as being their
expenditure for the purpose of making up the shortfall amount. The proportions
in which each party bears the responsibility for making up the shortfall amount
(as specified in the compliance certificate) is not dealt with in the
legislation and is therefore a matter for the parties to arrange between
themselves.
Proposed subsection 103V(3) defines terms used in subsection
(2). The definition of first licensee’s make-up expenditure
contains an element to remove the possibility of double counting. The
effect of this is that the licensee’s make-up expenditure may only be
direct expenditure on new eligible drama programs by the licensee, and may not
be expenditure on programs included, or available to be included, in the package
or programs supplied to the licensee by the part-channel provider. This would
be expenditure that the part-channel provider could nominate for the purposes of
the definition of part-channel provider’s make-up
expenditure.
For example, if a licensee acquires the rights to
televise a new eligible drama program for the purposes of the make-up rules,
that expenditure may count as licensee’s make-up expenditure. However, if
the part-channel provider acquires the rights to televise a new eligible drama
program, the licensee may not count this expenditure as licensee’s make-up
expenditure because this is expenditure that may be counted by the part-channel
provider as part-channel provider’s make-up
expenditure.
Proposed new section 103W of the Broadcasting Services
Act 1992 – Shortfall of eligible drama expenditure –
part-channel provider supplies channel to multiple licensees
Proposed
new subsection 103W(1) provides that section 103W applies if a part-channel
provider supplies more than one licensee with a particular package of programs;
and the part-channel provider’s new eligible drama expenditure for a
particular financial year is less than 10% of the part-channel provider’s
total program expenditure in relation to the package of programs provided to the
first licensee for that financial year (ie there is a shortfall
amount).
The use of the term “first licensee” in subsection
103W(1) is a drafting device used because there is more than one licensee
mentioned in the section. It allows identification of the licensee to which the
section has application when mentioned again later in the section. The section
has application to any licensee to which subsection (1) would
apply.
Proposed new subsection 103W(2) provides that it is a condition of
the licence that, for the make-up year, the shortfall amount is made up in one
of the specified ways:
(a) the part-channel provider’s make-up
expenditure is equal to the shortfall amount; or
(b) the first
licensee’s make-up expenditure is equal to the shortfall amount;
or
(c) if the part-channel provider’s make-up expenditure is less than
the shortfall amount – the first licensee’s make-up expenditure is
equal to the first licensee’s subscriber percentage of the difference
between the shortfall amount and the part-channel provider’s make-up
expenditure.
As a result, the licensee is only liable to make-up a percentage
of the amount not made up by the part-channel provider.
A formula for the
calculation of a licensee’s subscriber percentage and definitions of
relevant terms are set out in proposed new subsection 103W(3). The total number
of monthly subscribers to the licensee’s service at the end of the
financial year in which there was a shortfall is to be worked out as a
percentage of the sum of the total number of monthly subscribers to the
licensee’s service and the additional licensees’ services at the end
of that shortfall year. Note that if a person subscribed to more than one
service, that person would be counted as a subscriber to each of those services
(that is, the person would be counted more than once in the total number of
subscribers to all the relevant services).
The subscriber
percentage in respect of each licensee for each subscription TV drama
service will be calculated by the ABA, not by licensees themselves. In order to
do the necessary calculations, the ABA will draw on subscriber numbers for the
subscription TV drama service supplied in the annual returns lodged by each
licensee pursuant to proposed section 103ZA. Where relevant, licensees will be
notified of their subscriber percentage in the compliance
certificate provided by the ABA.
Proposed subsection 103W(3) defines
terms used in subsection (2). The definition of first licensee’s
make-up expenditure contains an element to remove the possibility of
double counting. The effect of this is that the licensee’s make-up
expenditure may only be direct expenditure on new eligible drama programs by the
licensee, and may not be expenditure on programs included, or available to be
included, in the package of programs supplied to the licensee by the
part-channel provider. This would be expenditure that the part-channel provider
could nominate for the purposes of the definition of part-channel
provider’s make-up expenditure.
For example, if a licensee
acquires the rights to televise a new eligible drama program for the purposes of
the make-up rules, that expenditure may count as a licensee’s make-up
expenditure. However, if the part-channel provider acquires the rights to
televise a new eligible drama program, the licensee may not count this
expenditure as licensee’s make-up expenditure because this is expenditure
that may be counted by the part-channel provider as part-channel
provider’s make-up expenditure.
Proposed new Subdivision F imposes licence conditions on a licensee who provides a subscription TV drama service and is supplied with a package of programs by a part-pass-through provider. These licence conditions are the general licence condition and the make-up expenditure licence condition.
Proposed new subsection 103X(1) provides that if a licensee provides a
subscription TV drama service; and there is a part-pass-through provider in
relation to the service because a part-pass-through provider supplies a package
of programs; it is a condition of the licence that, for each financial year of
operation, the licensee’s eligible drama expenditure equals or exceeds 10%
of the licensee’s total program expenditure in relation to the package of
programs.
Proposed subsection 103X(2) provides definitions of terms used
in subsection (1).
Licensee’s new eligible drama
expenditure, in relation to the subscription TV drama service, means the
sum of:
(a) so much of the total expenditure incurred by the licensee during
the financial year on new eligible drama programs as the licensee nominates for
the purpose of meeting the licence condition in subsection (1); and
(b) so
much of the total expenditure incurred by the part-pass-through provider during
the financial year on new eligible drama as the licensee nominates for the
purpose of meeting the licence condition in subsection
(1).
Licensee’s total program expenditure, in
relation to the package of programs, means the total expenditure incurred by the
licensee during the financial year in respect of the supply by the
part-pass-through provider, of the package of programs.
In relation to
nominations by a licensee under paragraph (a) of the definition of
licensee’s new eligible drama expenditure, as a matter of practice,
it is expected that a licensee would nominate make-up expenditure under
paragraph (a) that the licensee incurred directly. An example of expenditure
that a licensee would incur directly would be expenditure incurred making an
investment in a new eligible drama program.
Proposed new subsection
103X(3) is a provision intended to deal with possible double-counting which
arises under section 103X. Proposed new subsection 103X(3) provides that, if
the licensee nominates the whole or part of particular expenditure under
paragraph (a) of the definition of licensee’s new eligible drama
expenditure in subsection 103X(2); and that expenditure is
attributable to a new eligible drama program on which expenditure was incurred
by the part-pass-through provider; that new eligible drama program is to be
disregarded in determining the expenditure that may be nominated by the licensee
under paragraph (b) of that definition.
Proposed new subsection 103X(4)
provides that Division 3 of Part 10 of the BSA does not apply to the condition
in proposed new subsection 103X(1). This is because if there is a breach of the
licence condition because the amount of the licensee’s new eligible drama
expenditure falls short of 10% of the licensee’s total expenditure, the
shortfall may be made-up in the following year under proposed new section 103Y.
Breach of the licence condition in proposed new section 103Y is subject to
Division 3 of Part 10 of the BSA.
Proposed new section 103Y of the
Broadcasting Services Act 1992 – Shortfall of eligible drama
expenditure – part-pass-through provider supplies package of programs
Proposed new subsection 103Y(1) provides that section 103Y applies
if a licensee provides a subscription TV drama service; and a person is a
part-pass-through provider in relation to the service because the person
supplies a package of programs; and the licensee’s new eligible drama
expenditure for a particular financial year is less than 10% of the
licensee’s total program expenditure in relation to the package of
programs for that year (ie there is a shortfall amount).
A licence
condition is imposed by proposed new subsection 103Y(2) on the licence so that
for the next financial year, the licensee’s make-up expenditure must be
equal to the shortfall amount.
Proposed new subsection 103Y(3) defines
licensee’s make up expenditure for section 103Y as the sum
of:
(a) so much of the total expenditure incurred by the licensee during the
make-up year on new eligible drama programs as the licensee nominates;
and
(b) so much of the total expenditure incurred by the part-pass-through
provider during the make-up year on new eligible drama programs as the licensee
nominates.
In relation to nominations by a licensee under paragraph (a)
of the definition of licensee’s make-up expenditure, as a
matter of practice, it is expected that a licensee would nominate make-up
expenditure under paragraph (a) that the licensee incurred directly. An example
of expenditure that a licensee would incur directly would be expenditure
incurred making an investment in a new eligible drama program.
Proposed new Subdivision G imposes a licence condition where a subscription
television broadcasting licensee supplies part of the program material on the
subscription TV drama service, and the remainder of the program material is
supplied by a part-channel provider or a part-pass-through provider. Subject to
the special transitional make-up licence condition in Subdivision K for the
financial year beginning 1 July 1999, there is no make-up licence condition
where a licensee supplies part of the program material. This is because the
licensee has control over the proportion of the total program expenditure
expended on new eligible drama in relation to that part of the program material
that is not supplied by a part-channel provider or part-pass-through
provider.
Proposed new section 103Z of the Broadcasting Services
Act 1992 – 10% minimum eligible drama expenditure - licensee
supplies part of program material
Proposed new subsection
103Z(1) provides that, if a licensee itself supplies part of the program
material on a subscription TV drama service, and some of the program material is
supplied by a part-channel provider or a part-pass-through provider, it is a
condition of the licence that, for each financial year of operation, the
licensee’s new eligible drama expenditure in relation to the subscription
TV drama service equals or exceeds 10% of the licensee’s total program
expenditure in relation to the service.
Proposed new subsection 103Z(2)
defines terms for the purposes of the licence condition in subsection (1).
Licensee’s new eligible drama expenditure, in relation to
the subscription TV drama service, means so much of the total expenditure
incurred by the licensee during the financial year on new eligible drama
programs not included in a package of programs supplied by a part-channel
provider or part-pass-through provider as the licensee nominates for the purpose
of the licence condition in subsection (1). That is, the licensee’s
expenditure on new eligible drama programs in the program material it supplies
for the subscription TV drama service.
Licensee’s total
program expenditure, in relation to the subscription TV drama service,
means the total expenditure incurred by the licensee during the financial year
on program material that is not included in the package of program material
supplied by a part-channel provider or part-pass-through provider and that is
for televising, or available for televising, by the licensee on the subscription
TV drama service.
Proposed new section 103ZA of the Broadcasting Services Act 1992
– Licensee to lodge annual return
Proposed new section
103ZA requires a licensee who provides one or more subscription TV drama
services to lodge a return with the ABA within 60 days after the end of the
financial year. The return must be in a form approved by the ABA, and contain
such information as the form requires in relation to the application of Division
2A of Part 7 in connection with the licensee’s service. It must also be
accompanied by a certificate by a registered auditor, also in a form approved by
the ABA, stating that in the auditor's opinion the return is correct.
Registered auditor is defined in proposed new section
103B.
It is an offence for a licensee to intentionally contravene the
requirement to provide an annual return (subsection 103ZA(2)). It
should be noted that, by virtue of subsection 4K(2) of the Crimes Act
1914, a licensee would be guilty of an offence in respect of each day during
which any contravention continues. Section 213 of the BSA provides that the
maximum penalty for each day that the offence continues is 10% of the
maximum penalty for the principal offence.
Proposed new section 103ZB
of the Broadcasting Services Act 1992 – Channel provider and
part-channel provider to lodge annual return
Proposed new subsection
103ZB(1) places the same obligation on a channel provider and part-channel
provider to lodge an annual return for a particular financial year as proposed
new section 103ZA(1) places on licensees. It is an offence for a channel
provider to intentionally contravene the requirement in subsection (1) (proposed
new subsection 103ZB(2)). It should be noted that, by virtue of subsection
4K(2) of the Crimes Act 1914, a channel provider will be guilty of an
offence in respect of each day during which any contravention continues.
Section 213 of the BSA provides that the maximum penalty for each day that the
offence continues is 10% of the maximum penalty for the principal
offence.
The ABA is required, under proposed new subsection 103ZB(3), to
inform the relevant licensee in writing if its channel provider or part-channel
provider fails to provide a return as required by proposed new subsection
103ZB(1).
Proposed new section 103ZC of the Broadcasting Services
Act 1992 – ABA may inquire into the correctness of an annual
return
This provision gives the ABA power to make inquiries in order
to determine whether a return lodged by a licensee or channel provider under
this Subdivision contains correct information.
Proposed new section
103ZD of the Broadcasting Services Act 1992 – Nominations to be
attached to annual returns
This provision requires a licensee,
channel provider, and part-channel provider, when lodging an annual return, to
also provide with that return its nominations under any provision of the
Division.
Proposed new Subdivision I includes provisions dealing with compliance
certificates - certificates that the ABA is required to issue to licensees,
channel providers and part-channel providers, which state whether new eligible
drama expenditure requirements have been met by persons other than licensees, or
whether there is a shortfall that needs to be made up the following year.
Proposed new section 103ZE of the Broadcasting Services Act 1992
– ABA to issue compliance certificate
Proposed new
subsection 103ZE(1) provides that, where a channel provider supplies a channel
to a subscription television broadcasting licensee who provides a subscription
TV drama service for a particular financial year, the ABA is required to give
the licensee a written certificate specifying whether there is a shortfall by
the channel provider in expenditure on new eligible drama programs for the
particular financial year, and, if so, the shortfall amount. The ABA is also
required to give the channel provider a copy of the certificate.
Proposed
new subsection 103ZE(2) provides that, where a pass-through provider supplies a
channel to a subscription television broadcasting licensee who provides a
subscription TV drama service for a particular financial year, the ABA is
required to give the licensee a written certificate specifying whether there is
a shortfall by the licensee in expenditure on new eligible drama programs for
the particular financial year, and, if so, the shortfall amount.
Proposed new subsection 103ZE(3) mirrors proposed new subsection
103ZE(1) and applies where a part-channel provider supplies a package of
programs to a licensee who provides a subscription TV drama
service.
Proposed new subsection 103ZE(4) mirrors proposed new subsection
103ZE(2) and applies where a part-pass-through provider supplies a package of
programs to a licensee who provides a subscription TV drama
service.
Proposed new section 103ZF of the Broadcasting Services
Act 1992 – Compliance certificate to be prima
evidence
Proposed new section 103ZF provides that a compliance
certificate is prima facie evidence of the matters in the certificate. As a
result, it will be a matter for the licensee to whom the certificate relates
bring evidence to rebut this prima facie evidence in any court proceedings
arising under the Act.
Proposed new section 103ZG of the Broadcasting Services Act 1992
–- Anti-avoidance - transactions between persons not at arm’s
length
Proposed new section 103ZG applies where a person has incurred
expenditure in a transaction where the parties to the transaction are not at
arm’s length, and the amount of the expenditure is either greater or less
than is reasonable. The ABA is given the power to make a determination that a
particular amount of expenditure that a licensee or channel provider has counted
for the purposes of the application of the Division should be replaced with an
amount that would have been reasonable if the parties to the transaction had
been dealing with each other at arm’s length.
Proposed new
section 103ZH of the Broadcasting Services Act 1992 – Expenditure
to be expressed in Australian currency
Proposed new section 103ZH
requires expenditure to be expressed in Australian currency at the rate agreed
in connection with the transaction concerned or in other cases, at a rate equal
to the exchange rate applicable at the time when the expenditure was
incurred.
Proposed new section 103ZJ of the Broadcasting Services
Act 1992 - Review before 31 March 2003
Proposed new section 103ZJ
makes provision for the Minister to cause to be conducted, before 31 March 2003,
a review relating to Australian and New Zealand content on subscription
television broadcasting services. The report of the review must be tabled in
each House of Parliament within 15 sitting days of its completion.
Proposed new section 103ZK of the Broadcasting Services Act 1992
–- Extended meaning of eligible drama
program
Proposed new section 103ZK provides a special rule in
relation to expenditure incurred in the financial year beginning 1 July 1999.
The effect of the rule is that a drama program that satisfies the definition of
Australian drama program in section 6 of the BSA will be taken to
be an eligible drama program for the purposes of calculating
whether a licensee meets the licence conditions in proposed new Division 2A of
Part 7.
Proposed new section 103ZL of the Broadcasting Services
Act 1992 –- Licensee supplies program material during 1999-2000
– enforcement of licence conditions
Proposed new section 103ZL provides that the enforcement regime in Division 3
of Part 10 of the BSA does not apply to the licence condition in subsection
103T(1) or 103Z(1) in the financial year that begins on 1 July 1999. These are
the licence conditions that apply to a licensee who supplies all or part of the
program material on a subscription TV drama service.
Proposed new section
103ZL is consequential upon the special make-up licence conditions set out in
proposed new section 103ZM and 103ZN. Proposed new sections 103ZM and 103ZN
allow a licensee who supplies all or part of the program material on its
subscription TV drama service to make-up an expenditure shortfall for the
financial year beginning 1 July 1999 in the financial year beginning 1 July
2000.
Proposed new section 103ZM of the Broadcasting Services Act 1992
–- Licensee supplies all program material during 1999-2000 –
shortfall to be made up during 2000-2001
Proposed new section 103ZM provides that if a licensee provides a subscription TV drama service, and supplies all the program material on the service, and the licensee’s expenditure on new eligible drama in relation the service is less than 10% of the licensee’s total expenditure in relation to the service for the financial year beginning 1 July 1999, it is a condition of the licence that the licensee make-up that expenditure shortfall in the financial year beginning 1 July 2000.
Proposed new section 103ZN of the Broadcasting Services Act 1992
–- Licensee supplies part of program material during 1999-2000 –
shortfall to be made up during 2000-2001
Proposed new section 103ZN applies where a licensee provides a subscription
TV drama service in relation to which it supplies only part of the program
material, and the licensee’s expenditure for the financial year beginning
1 July 1999 on new eligible drama in relation that program material that it
supplies is less than 10% of the licensee’s total expenditure on that
program material that it supplies. It is a condition of the licence that the
licensee make-up that expenditure shortfall in the financial year beginning 1
July 2000.
Item 3 – Proposed amendment of section 208 of the Broadcasting
Services Act 1992
This item amends section 208 of the BSA so
that the offence of making a false or misleading statement applies to statements
in an annual return given to the ABA by a licensee, channel provider or
part-channel provider under proposed new sections 103ZA or 103ZB.
Item 4 – Proposed amendment of subclause 18(2) of Schedule 3 of the Broadcasting Services Act 1992
This item amends subclause 18(2) of Schedule 3 of the BSA to
include the ABA’s power to make determinations under proposed new section
103L in the list of powers in subclause 18(2) that the ABA may not delegate.
Item 5 – Transitional – section 102 of the Broadcasting
Services Act 1992
This item provides that, despite the repeal of the licence condition in section 102 on Royal Assent, section 102 continues to apply in relation to any financial year earlier than the financial year beginning 1 July 1999.
Part 2 – Amendments commencing on 1 July 2000
Item 6 - Proposed amendment of subsection 6(1) of the
Broadcasting Services Act 1992 (definition of Australian
drama program)
This item repeals the definition of Australian drama program
in subsection 6(1) of the BSA. The definition is replaced by the definition
of eligible drama program in proposed new section
103B.
Broadcasting Services Act 1992 (definition of drama program)
This item repeals the definition of drama program in
subsection 6(1) of the BSA. The definition is replaced by a new definition of
drama program for proposed new Division 2A of Part 7. The new
definition is in proposed new section 103B.
Item 8 – Proposed
amendment of subsection 6(3) of the
Broadcasting Services Act
1992 to repeal subsection 6(3)
This item repeals
subsection 6(3) of the BSA. The repeal of subsection 6(3) is consequential upon
the inclusion in the Bill of the proposed definition of eligible drama
program.
Item 9 – Proposed amendment of the Broadcasting Services
Act 1992 to repeal the note at the end of the definition of eligible
drama program in section 103B
This item repeals a note referring to a special rule for the financial year
beginning
1 July 1999.
Item 10 – Proposed amendment of the Broadcasting Services Act
1992 to repeal the note at the end of section 103T
This item repeals a note referring to a special rule for the financial year
beginning
1 July 1999.
This item repeals a note referring to a special rule for the financial year
beginning
1 July 1999.
Item 12 – Proposed amendment of the Broadcasting Services Act
1992 to repeal sections 103ZK and 103ZL
This item repeals
sections 103ZK and 103ZL - special transitional rules for the financial year
beginning 1 July 1999.
Item 13 – Proposed amendment of
subsection 139(2) of the
Broadcasting Services Act 1992
This item amends subsection 139(2) of the BSA so that breach of the
proposed new licence conditions in sections 103P, 103Q, 103S, 103T, 103V, 103W,
103Y, 103Z, 103ZM and 103ZN are offences under subsection 139(2) with a maximum
penalty of 1000 penalty units.
Item 14 - Proposed amendment of
section 143 of the Broadcasting Services Act 1992
This item
amends section 143 of the BSA to add new subsections 143(1A) and (1B). Proposed
new subsection 143(1A) provides that if a subscription television broadcasting
licensee provides a subscription TV drama service, and the licence is suspended
because of a breach of a condition set out in Division 2A of Part 7, the ABA may
suspend one or more subscription television broadcasting licences held by the
licensee or a related body corporate of the licensee as the ABA considers
necessary to ensure that either the same, or a substantially similar, service is
not transmitted by the licensee or the related body corporate during the period
of suspension.
Proposed new subsection 143(1B) provides that if a
subscription television broadcasting licensee provides a subscription TV drama
service, and the licence is cancelled because of a breach of a condition set out
in Division 2A of Part 7, the ABA may cancel one or more subscription television
broadcasting licences held by the licensee or a related body corporate of the
licensee as the ABA considers necessary to ensure that either the same, or a
substantially similar, service is not transmitted by the licensee or the related
body corporate during the period of cancellation.
Proposed new
subsections 143(1A) and (1B) are intended to ensure that action against a
licensee for breach of a condition in Division 2A of Part 7 by the ABA, is not
undermined by the licensee, or a related body corporate of the licensee,
providing the same or a substantially similar service to that which has been
suspended or cancelled under a different licence.
Item 15 –
Proposed amendment of subsection 143(2) of the Broadcasting Services Act 1992
This item amends subsection 143(2) of the BSA so that subsection
143(2) applies to proposed action by the ABA to suspend or cancel a licence for
breach of the licence conditions in Division 2A of Part 7. Subsection 143(2) of
the BSA requires the ABA to give notice of its intention to suspend or cancel a
licence; and provide a reasonable opportunity to make representations to the ABA
in relation to the proposed action.
Item 16 – Proposed amendment
of section 143 of the Broadcasting Services Act 1992
This
item amends adds a new subsection 143(3) to the BSA which sets out that in
section 143, the term related body corporate has the same
meaning as in the Corporations Law.
Item 17 – Proposed amendment of section 204 of the Broadcasting
Services Act 1992 (table item dealing with declaration that a program is not
an Australian drama program)
This item amends section 204 of the BSA
(a table setting out decisions under the BSA that are reviewable by the
Administrative Appeals Tribunal and who may apply for review) to remove the
reference to subsection 6(3) declarations following the repeal of subsection
6(3) by item 8 of Schedule 1 to the Bill.
Item 18 – Proposed
amendment of section 204 of the Broadcasting Services Act 1992 (table
item dealing with suspension or cancellation of licence)
This item
amends section 204 of the BSA (a table setting out decisions under the BSA that
are reviewable by the Administrative Appeals Tribunal and who may apply for
review) to omit subsection 143(1) and replace it with section 143. This
proposed amendment is consequential upon the proposed amendment at item 14 of
the Bill.
Item 19 – Transitional – expenditure incurred
before 1 July 2000
Broadcasting Services Act 1992
This item repeals
Subdivision K, a transitional Subdivision that ceases to have any effect at the
end of the financial year that begins on 1 July 2000.
This item amends subsection 139(2) to remove sections 103ZM and 103ZN
from subsection 139(2). Proposed new sections 103ZM and 103ZN are transitional
licence conditions that only apply for the financial year beginning on 1 July
2000.
This transitional provision provides that, despite the amendments to the
BSA which commence on 1 July 2001, the BSA applies in relation to expenditure
incurred before the financial year beginning on 1 July 2001, as if the
amendments had not been made.
Broadcasting Services Act 1992
Item 1 –
Proposed amendment of subsection 6(1) of the Broadcasting Services Act 1992
– definition of CER Trade in Services
Protocol
Section 6 of the BSA contains definitions of key terms
used in that Act. This item adds a definition of CER Trade in Services
Protocol to section 6, and is consequential on the amendment made to
paragraph 160(d) by item 2.
Item 2 - Proposed amendment of paragraph
160(d) of the Broadcasting Services Act 1992
Paragraph 160(d)
of the BSA currently requires the ABA to perform its functions in a manner
consistent with Australia’s obligations under any convention to which
Australia is a party or any agreement between Australia and a foreign country.
This item amends paragraph 160(d) to restrict its scope to
Australia’s obligations under the Protocol on Trade in Services to the
Australia New Zealand Closer Economic Relations Trade Agreement (“the CER
Trade in Services Protocol”).
The general law will apply to the
ABA in the performance of its functions in relation to treaties other than the
CER Trade in Services Protocol.