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Free to Air networks at odds over re-transmission fees with Foxtel

"Why should our customers pay for something the rest of Australia gets for free?" asks Foxtel.

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The thorny issue of retransmission fees, which has Free to Air networks asking Foxtel to pay them for rebroadcasting their content, has landed back on the agenda in recent weeks.

It’s an argument that has dragged on in the industry for years.

But while Free to Air bosses have spoken out in favour of retransmission fees being paid to them, Foxtel believes subscribers should not be footing the bill.

At the recent Screen Forever Conference, Seven West Media CEO Tim Worner said, “I don’t want to pick fights, but I believe the most profitable media company in the country has been built -at least to some extent- on the shoulders of really good quality Free to Air TV.

“I know that the underlying copyright holders do get paid but I think it’s not very much. I think it’s a pittance.

“I just think we’re worth more.”

But Foxtel CEO Richard Freudenstein disagrees.

“Why should our customers pay for something the rest of Australia gets for free? What we are doing by retransmitting the Free to Air networks is allowing them to continue to get advertising revenue from our customers. That’s their business model,” he said at the same event.

“The stuff we do for Free to Air Networks by putting them on the front page of our Programme Guide is a real benefit to them. It helps them get advertising revenue. We pay the underlying copyright owners a fee for the re-transmission. I just don’t think we should be paying the Free to Airs.

“This comes from the US which is a very different market. In the US cable is 90% penetration, it’s a very different market and there is a whole historical reason why it’s (done that way).”

There is also the question surrounding FTA broadcasters paying a fee to be rebroadcast by Optus satellite onto the Foxtel platform. Foxtel satellite viewers in some cities remain frustrated that not all FTA networks appear on the platform.

The Lewis Report recently recommended, “The ABC and SBS could achieve a significant saving if they no longer bought satellite capacity to provide their services on Foxtel.”

At the Senate estimates hearing this week ABC Managing Director called on News Corporation, a recent critic of the broadcaster’s spending, to have Foxtel foot the bill.

“I would point out that News Corporation – that in effect has 50 per cent ownership of Foxtel and provides strong management there – around the world has argued that broadcasters like the ABC should be paid to have our services delivered on pay TV providers,” he said.

“That’s because they’re providing content there. Here, where they manage a pay TV service, there is a cost the ABC has to pay to be up on Foxtel. It strikes me that there’s an inconsistency there. Of course we would welcome not having to pay that money but there are costs involved.

“If Foxtel is unwilling to meet that cost itself and Foxtel cuts the ABC off Foxtel distribution to homes, it makes it that much harder for our audiences to find our services.”

Amended

23 Responses

  1. I live in Canberra and had Foxtel from 1995 to 2008 delivered by satellite (no cable in Canberra). The only FTA stations rebroadcast were ABC and SBS. I was extremely frustrated by this when WIN started blocking Bert’s Family Feud and showed The Brady Bunch and KAK’s show was blocked in order to show Susie Elelman. I wanted to see Channel Nine, not WIN. I was told that the stations couldn’t be rebroadcast here because of local advertising and the presence of WIN, Prime and Southern Cross. Frustratingly just across the border in Queanbeyan, Austar subscribers had all the FTA channels from Sydney retransmitted.

  2. Just to clarify the current situation with FTA on Foxtel:

    * Customers who subscribe to Foxtel Cable, Austar Cable or Austar Satellite with MyStar get access to all local digital FTA channels.
    * Customers on Foxtel Satellite and Austar Satellite without a MyStar get access to a local ABC1, a semi-local SBS ONE, and national AEDST versions of ABC2, ABC3, ABC News 24 and SBS 2, no matter where in the country they live. Customers in Sydney, Melbourne and Brisbane also get 7, 7TWO, Nine, GO!, Ten and Eleven. Everyone else gets no commercial services at all.

    In my opinion, the best way to solve this issue is the MyStar solution. The new iQ3 better have a digital FTA tuner, or this fight between FTA and Foxtel will just go on forever.

  3. lol @Pertinax

    You clearly don’t know a great deal about digital transmission coverage. It’s not even close to being as good you apparently believe it to be.

  4. @thepumpboy – that has nothing to do with it.

    I like the idea of the mystar solution – then no need to worry about retransmission but imagine the box incorporating FTA tuners would cost Foxtel more.

    I think 7mate/GEM/ONE would overall benefit from being on Foxtel as well – even if not in HD

  5. Is there no end to the hypocrisy that spews forth from Freudenstein’s mouth? Foxtel has a monopoly on premium international content and refuses to adjust their business model so there are other options for consumers, but then is quite happy not to pay for content and blame the FTA business model. Argh!

  6. Why are these two fighting over the most trivial things? They should be working together in order to curve the streaming juggernaut. They’ll spend so long competing and arguing that they’ll end up just getting knocked out by the competition.

  7. Let me see if this is correct….

    Pay TV which you have to pay more to watch HD channels and pay more to get a sports package and pay more to get a movies package and pay more to get the latest movies and pay more to get a kids package and pay per view events which also runs advertising is complaining about paying?

    Go figure.

  8. I pay for the full package with HD channels on Foxtel satellite but don’t get OneHD, 7mate (HD), GEM (HD) or SBS OneHD, but do get ABC24 (HD). I was told the issue is shared rights with OneHD (F1 rights cant rebraodcast), 7Mate (V8Supercars rebroadcast on Speed HD), GEM (NRL rebroadcats on Fox Sport HD) and SBSOneHD (A-league on Fox Sport HD). ABC24 has no issues.

  9. Matt F – the other question, who actually watches ads anymore – particularly on Foxtel when you can record in advance or pause and zap through them?
    This remains the huge elephant in the room for the advertising and TV industries.

  10. how about bringing all the free to air channels to all subscribers in Adelaide if you have Austar you can get local free to air channels but if you have foxtel you can’t.

  11. Why can’t the IQ boxes have a similar setup to the Mystar where you plug the aerial in the back and it has an inbuilt tuner?
    No fees would have to be paid then and you get the same thing.

  12. Why are we paying for anything in HD anyway? Just about all production is done in HD. With all the content produced in HD, why are the FTA Networks not letting the public enjoy their primary channel product in HD, instead of some random program on GEM, 7MATE on ONE???

  13. It’s up to the FTAs to allow Foxtel retransmit their signals. It’s to Foxtel whether they want to retransmit the FTA channels on their own network and to pay the copyright fees for doing so.

    Any fee either to the FTAs for their channel to be transmitted or to Foxtel for access to their network are freely negotiated between the two parties.

    In Australia almost every house has aerial access to at least digital SD FTA channels so Foxtel is in a position charge the FTAs for access to their network at IQs.

    In the US cable was started as a means of providing access to national network affiliates without need a transmitter and aerial. Important in small towns, hilly areas, apartments and built up areas to the point where 90% of households have basic cable to get FTA. Basic cable couldn’t exist without carrying the FTA channels so the FTAs are in a position to demand…

  14. Here in perth where we don’t get FTA channels via Foxtel so I believe its the FTA channels missing out as so many people I know only have foxtel now and they don’t watch any FTV programmes as a result. I would believe it would benefit them to have foxtel to board cast them

  15. I don’t often agree with Freudenstein but he’s right about this. Worner’s making an ambit claim. He won’t pull Seven off Foxtel if they don’t pay, because it’s worth money to have Foxtel’s subscribers see Seven’s ads. It would be a different matter if Foxtel transmitted FTA programming but inserted their own ads.

    This matter has already been settled by market forces and no attempt by Seven or Nine to destabilise the status quo every twelve months with rhetoric is going to change anything.

  16. Between trying to not pay for retransmission (which probably nets them a fair chuck of viewing from the 2.2 million households that Foxtel counts) and their massive reduction in licensing fees from the Government, it seems like the Free To Airs want everything for free…

    @ Matt F – The ads on Foxtel have been a sticking point for as long as I can remember. It’s true that they started off with little or no advertising, but it seems naive in this day and age to think that a platform as big as Foxtel would not incorporate advertising. The amount and type of advertising should definitely be up for debate, but the fact that they shouldn’t have it at all seems like a pipe dream as this point.

  17. I think it is more in free to airs interestbecause their IQ is such a good recorder. I can’t get one, 7mate or gem in sydney on foxtel even though have hd package but don’t have another recorder so this just means rarely watch these channels

  18. The last and part of this article is completely incorrect, subscribers do not pay extra for the FTA HD content through Foxtel. I am a Foxtel subscriber and I don’t subscribe to the HD package. I receive the FTA HD channels included (just not the Foxtel-ony HD channels).

    Regarding the above issue – seems to me that if Foxtel agreed to foot the bill for the Optus satellite that might fix things.

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