Dying free-to-air still says jump, and politicians ask how high

The long, long tradition of free-to-air television companies dictating media policy in Australia at the expense of competitors and consumers continues apace, with the federal government agreeing to expand the anti-competitive, analogue-era anti-siphoning list to target streaming services as well as subscription television. It will also further expand the list, after adding women’s soccer earlier this year,

The anti-siphoning list was introduced in the 1990s after Australia’s long ban on pay television — at the demand of the free-to-air broadcasters — was finally ended, with pay TV providers prohibited from purchasing rights to selected sporting events until the free-to-airs had rejected them.

By confining the market in sporting rights to the free-to-airs, the anti-siphoning list significantly devalued the potential returns to sports rights holders, even when free-to-airs had no interest in broadcasting listed events — the Nine Network became famous for preferring to screen old Clint Eastwood movies rather than listed live sporting events on Saturday nights. Attempts over the years to reform the anti-siphoning scheme, under pressure from News Corp, repeatedly foundered on the opposition of the free-to-airs, whose disfavour is arguably more feared in Canberra than that of the Murdochs.

The list also punishes the success of sports in elevating their profile: the addition of the Matildas earlier this year means a smaller financial return to soccer rights holders despite their success in making the national women’s soccer team one of Australia’s most popular sporting brands.

Communications Minister Michelle Rowland is portraying the expansion as an updating of the anti-siphoning laws to acknowledge the dominance of streaming services in viewer habits. In fact it’s the opposite — the imposition of outdated laws from the analogue TV era to reinforce the position of incumbents unable to prevent consumers from shifting to better offerings.

The true nature of the proposed changes is reflected in the fact that free-to-airs will not be prohibited from buying sports rights and “broadcasting” those events on their subscription streaming services — making a mockery of the idea that the anti-siphoning list is about keeping events available to all Australians.

The changes will be only the latest in a long line of tweaks to media policy to help the free-to-airs, including reductions in licence fees in recent years that have given hundreds of millions of taxpayer dollars to broadcasters. But none of it has helped to stop the steady decline in the value of the networks.

Of the listed networks, Seven West Media is the largest — and the most financially strained. Its shares have fallen 37% this year while the ASX is up 1%. At yesterday’s closing price of 25 cents, it had a market value of just $388.4 million. But Seven also had gross debt of $306 million at the end of September and cash of $57 million. It has just spent $50.1 million buying a stake in radio network owner ARN (at $1.10 a share, now 92 cents each, a paper loss of 18 cents a share) which means gross debt is now $356 million.

That $32 million gap between market value and debt is all the value the market now ascribes to Seven’s TV licences, its WA newspapers and whatever other assets it holds. In other words, Seven has virtually no value so far as the sharemarket is concerned, even though it has more than $1.5 billion in assets, of which $714 million are intangibles that investors place no value on whatsoever. A fall in Seven’s share price back to its 2023 low of 22 cents would wipe out that $32 million gap and show the company to be entirely worthless.

Seven is the network that stood behind alleged war criminal Ben Roberts-Smith and his attempt to sue other media outlets for defamation. We now know it continues to pay for the luxury accommodation of Bruce Lehrmann, who is also suing another media outlet. Its journalistic reputation now has about as much value as it share price.

Yet Labor is happy to continue to prop it and the other members of the free-to-air oligopoly up like it’s 2003 rather than 2023.

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