Following the release of new independent research, Free TV Australia has renewed its call for broadcasters to be fairly compensated for the resale of their services by competitors.
The report, Delivering for Television Viewers: Retransmission Consent and the US Market for Video Content, by NERA Economic Consulting and written by Jeffrey A. Eisenach, PhD, finds the US scheme has contributed significantly to the overall health of the US broadcasting industry and
has played a significant role in creating the current “golden age of US television”.
The report was jointly commissioned by Free TV Australia in partnership with ITV in the UK and German commercial broadcasters.
Free TV Chairman Harold Mitchell AC said: “The great news from this research is that fairly compensating broadcasters for the use of their services by pay TV operators such as Foxtel delivers more quality content to viewers with little or no impact on the price of pay TV.”
The NERA report finds that retransmission consent:
• has led to higher levels of investment in content, better quality content, and greater diversity of content;
• has allowed broadcasters to compete more effectively with pay TV networks for high quality programming, including widely viewed sporting events;
• has resulted in a significant increase in spending on news and other public interest programming;
• accounts for less than 3% of pay TV’s revenues and has little or no impact on pay TV prices; and,
• is good economics that generates benefits for the entire digital video ecosystem.
Significantly, the report observes that the retransmission consent scheme in the US has seen consumers reap the benefits of competition and innovation in the video marketplace, including through the upgrade of facilities, improved quality of signals as a result of investment in digital
multi-casting, and an increase in the quantity and quality of programming.
An out-dated legal exception designed to assist remote Australian communities to access free-to-air television has been used by pay TV businesses to build lucrative and now well established services that compete with free-to-air.
Foxtel recorded revenues of US$2.9 billion and EBITDA of US$903 million in the 2013/14 financial year, and 54% of prime time viewing in Pay TV homes is on free-to-air channels. “The report demonstrates the urgent need for reform,” Mr Mitchell continued.
“Australian commercial free-to-air broadcasters have made record investments in extremely expensive Australian content, but their ability to continue doing so in the future is at risk.
“Allowing broadcasters to be compensated for their signals will provide massive benefits to the viewing public.”