Convergence Review: expenditure hurdle to replace content quotas

15 December, 2011 by Sam Dallas

A scheme which would see Australian content remain on our screens while eliminating content quotas has been put on the table.

Under the medium-to-long-term proposal, outlined in the Convergence Review interim report, Australian content providers – or “content service enterprises” – will need to dedicate a percentage of expenditure to local content. This would be similar to the minimum expenditure model that currently applies to subscription television.


However the report states that a minimum expenditure obligation might be too impractical for some content business models or enterprises that have no production "capability or expertise" in screen content investment. If this is the case, the committee said they would instead contribute to a converged content production fund.

The fund, which would support the production of local, community and regional content including drama, children and documentaries, could potentially be supported by government funding and government spectrum fees paid by the free-to-air (FTA) broadcasters, according to the 27-page report.

If it goes ahead, this will see the end of Australian content quotas – currently 55 per cent between 6am and midnight for FTA licensees excluding ABC and SBS. However the government says quotas on the primary commercial channels should continue in the short-to-medium-term.

The interim report, released today (Thursday) after the Glen Boreham-led committee received more than 250 industry submissions, says it will provide “a more consistent and adaptable measure than obligations based on content quotas”.

The Media, Entertainment and Arts Alliance welcomed the proposal, however said it was “critical” that the percentages be set at a point that ensured higher levels of local content.

“Given the low number of hours that a 10 per cent drama expenditure requirement has produced in the subscription television environment – 4.4 per cent of programming according to Screen Australia – it is crucial that the percentage be set at a level significantly higher than this,” outgoing Actors Equity director Simon Whipp said in a statement.

“Research needs to be undertaken to ensure that an appropriate level is found.”

Another recommendation put forward by the committee is to increase the Producer Offset from 20 per cent to 40 per cent for “premium” television.

Whipp says the Alliance strongly believes that the 40 per cent rebate should be available to all producers – not just particular sections of the industry.

The Australian Writers’ Guild also stated it supports the increase although there are still problems with feature film funding.

“The Producer Offset is an incentive delivered as a tax rebate, and this means that Australians are denied the transparency and information they need to judge which projects qualify for the offset and whether they provide quality to viewers,” acting executive director Angela Keefe said in a statement.

“Without the safeguard of public feedback, how do we know the offset is meeting the expectation of quality Australian content?

“All incentives and investments must be judged on the outcomes – both in quantity and quality – for Australian viewers.”

Other recommendations include abolishing content licences, and imposing content quotas on the public broadcasters. Under the proposal, ABC1 would have a 55 per cent content quota, while SBS would need to target half (27.5 per cent).

Additional measures to increase levels of local content include introducing a 20 per cent tax offset for "interactive" content such as webisodes and smartphone apps.

“The popularity and economic importance of interactive entertainment…is growing,” the report says. “Given the creativity and economic contribution made by the interactive production industry, this content should be supported by existing direct and indirect schemes.”

Australian subscription television body ASTRA also outlined its support for the interim report. “The release of the Convergence Review draft report is the first step in a process to reform overly-prescriptive and unnecessary regulation of the media and communications sector," chief executive Petra Buchanan said in a statement.

"Many aspects of the Convergence Review paper make sense, and some we will be pushing for an alternate view on, in representing the interests of the subscription TV industry.”

UPDATE: The Screen Producers Association of Australia has also backed the new report and will make a formal response to the Convergence Review committee in the new year.

“The interim report recognises that a platform-neutral approach to content obligations is key to sustaining Australian content in a converged media landscape," SPAA's executive director Geoff Brown said in a statement late Friday. 

"The framework of the report indicates that the Convergence Review will embrace a long-term vision for the protection and promotion of Australian content across all platforms.“

The Convergence Review committee will receive submissions on the interim report at until February 10, 2012.

To view the report with all the recommendations, click here.