Govt overhauls quotas from 2021

  • Drama, Documentary, Children’s quotas replaced by 55% overall local content
  • A limit on how many docos can be used to meet requirement
  • 65 episode cap for funding eligibility is axed
  • No quotas on Streaming but they must advise their spend on local content
  • Producer offset 30% for all film and television
  • $33m funding boost to Screen Australia. $20m to Aust. Children’s TV Foundation
  • Foxtel drama content spend drops from 10% of revenue to 5%

There will be wins and losses on all sides in the Federal Government’s radical overhaul of local content requirements, which dispenses Drama, Documentary and Children’s Television sub-quotas. The government is injecting $53 million into the development and production of local film and television as part of the 2020-21 Federal Budget.

Update: There will still be a requirement to produce Drama but on a more simplified system which awards points based on budget.

But while some are welcoming the changes, others are already alarmed, especially in the area of Children’s Television.

Local Content

From 2021 networks will simplify quotas to allow commercial networks to meet their current 55% local content requirement -but there will be a cap on the number of hours of documentary content that can be counted towards meeting the requirement. The particular mix chosen will be a matter for each broadcaster based on its business strategy and judgement of audience appeal. Commercial broadcasters will continue to be required to provide 55 per cent overall Australian content on their primary channels between 6:00 am and midnight, and to provide 1,460 hours of Australian content per year on their multi-channels. The points scheme underpinning the sub-quotas will give more points to higher-budget productions, creating a stronger incentive to commission bigger budget drama which is more likely to be sold globally rather than only be seen in Australia.

How will the modified content quota work in practice?

The modified content quota will require each broadcaster to reach 250 points of Australian genre content in a calendar year which can be met by broadcasting commissioned Australian drama and documentaries, including children’s drama and documentaries, and acquired Australian films. Each hour of content will receive different points depending on its hourly production budget (see Table 1).

Table 1

Genre Points per hour
Commissioned documentary 1
Commissioned children’s content (non-drama) 1.5
Commissioned drama (<$450,000 production budget per hour) 1.5
Commissioned drama ($450,000 – $700,000 production budget per hour) 4
Conditioned drama ($700,000 – $1 million production budget per hour) 5
Commissioned drama ($1 million to $1.4 million production budget per hour) 6
Commissioned drama (>$1.4 million production budget per hour) 7
Acquired Australian film (licence fee less than $50,000) 1
Acquired Australian film (licence fee more than $50,000) 2

This will mean that a broadcaster can meet their annual quota of 250 points with any combination of genres. However, a maximum of 50 points will be able to be acquitted on commissioned documentaries. To qualify as commissioned content, the broadcaster will need to have made a financial contribution to the production budget before the production has been completed.

In-house productions will be treated equivalently to commissioned programming for the purposes of the new quota. To qualify for the new quota, Australian films will need to have been produced in the last two years and to have not been televised before in the relevant commercial television licence area.

65 episodes

A series will no longer be ineligible for funding once it reaches 65 episodes. Currently under the Producer Offset a series is only able to claim the rebate for qualifying Australian production expenditure incurred up to 65 commercial hours. This change will also assist producers to invest in longer-running series knowing that the Producer Offset support will be available for as long as the series is in production. This change will also apply to children’s content.

Producer Offset

Producers currently receive a refund of part of their production budget through rebates. The television incentive rate is being increased from 20 to 30% but the same Film incentive rate drops from 40 to 30%.

Streaming

There will be no immediate impacts on streaming video services, although the Government will be asking the larger providers to report to the Australian Communications and Media Authority on their investment in Australian content, commencing from 1 January 2021. Work will continue under that process, including examining whether to introduce an Australian content spend obligation on streaming video on demand services above a minimum size threshold in the Australian market.

Screen Australia / Australian Children’s Television Foundation

Screen Australia will receive a total boost of $33 million. $30 million will be provided over two years from 2021-22 to support Australian film and television drama, children’s and documentary productions, and another $3 million over three years from 2020-21 to support the Screen Writing and Script Development Fund. The Government is providing funding of $20 million over two years, to the Australian Children’s Television Foundation (ACTF), in 2021-22 and 2022-23.

Subscription TV

The Government will legislate to reduce the obligations on subscription broadcasters by reducing the requirement for new drama programming from 10% to 5%

Minister for Communications, Cyber Safety and the Arts, Paul Fletcher MP statement:

“The Government is providing $30 million in funding to Screen Australia over two years to support the production of Australian drama, documentary and children’s film and television content.

“Screen Australia will also receive an additional $3 million over three years to establish a competitive grants program to cultivate quality Australian screenwriting and script development.

“We are also providing $20 million to the Australian Children’s Television Foundation over two years to boost the development, production and distribution of high-quality Australian children’s content.

“The old approach of treating film and television differently no longer makes sense. Increasing the offset to 30 per cent for television will mean additional funding for Australian television production – and in turn support higher production values and programs with a better prospect of being sold into the global content market, taking advantage of the opportunity created by the explosion of streaming video services like Netflix, Disney+, Stan and Amazon Prime.

“The Government very much appreciates the strong engagement we received during our consultations this year.

“The views of stakeholders and interested parties were very clear – we need to continue our support for the production of Australian content, but we also need to remove unsustainable obligations on industry and tailor our interventions to match the new and diverse ways Australian content is being produced and consumed.

“The measures announced today are designed to do just that. They begin to rebalance our regulatory framework and provide Australians with the opportunity to access Australian content across a range of media, regardless of whether they want to watch free-to-air television, subscription television or streaming services.”

Free TV Australia statement:

Free TV Australia today welcomed the Government’s announcement to update the Australian content rules that apply to commercial television broadcasters.

Free TV CEO Bridget Fair said, “Free TV broadcasters remain committed to making and broadcasting Australian content for a simple, powerful reason: Australians want to watch Australian programs. These reforms will deliver greater flexibility to respond to what our audiences demand.

“Today’s announcement is a huge positive for the Australian film and television production sector.  The Government has combined a more flexible quota system with strong incentives for production of quality Australian programs in a way that should stimulate a broad range of Australian stories.

“The old quota system was collapsing under its own weight.  There has long been a need for the onerous and outdated framework, in place since the 1980’s, to be updated.   We commend Minister Fletcher for recognising the need to ensure the sustainability of the sector. The Government has carefully considered this issue and the Minister’s decision has simplified and modernised the quota framework while supporting Australian production with strong incentives and direct funding.

“By ensuring broadcasters are incentivised to make the programs that are most relevant to their audiences rather than slavishly meeting sub quota obligations, these reforms will assist to maintain the health and sustainability not only of commercial television broadcasters, but of the entire content production ecosystem.

The real winners in this reform package are TV audiences, who will continue to enjoy the Australian programs they love”, Ms Fair said.

Screen Producers Australia statement:

The announcement today of various measures concerning the regulation of Australian and children’s content is predicted to reduce the amount of content being produced by at least fifty percent and remove thousands of jobs from the sector as well as opportunities for audiences across the world to engage with Australian stories.

“With the local screen industry already reeling from the impacts of COVID-19 and the freezing of contracting caused by the suspension of quotas since April, the announcement today is an unfortunate backward step and we predict will result in the demise of many Australian businesses and livelihoods,” said SPA CEO Matthew Deaner.

“Deregulation of legacy platforms without a transition plan into regulation of new platforms creates a disjointed and incomplete policy response that tinkers around the edges, appears to have been driven by old-world thinking and has scant regard to the future of Australian screen content. A once in a generation chance to reset the foundations for Australian stories for future generations and bring regulation into the 21st century has been presented to the Government in a unified way by the screen industry and the response presented today falls short and needs rethinking,” said Deaner.

“The effective abolition of children’s content quotas, the watering down of drama and documentary requirements and the halving of requirements for subscription TV doesn’t meet the Government’s articulated desire for forward-thinking policy-making. Instead, it presents as the adoption of the deregulation wish-list of legacy broadcasters and their owners and the international streaming companies,” said Deaner.

Measures today will allow broadcasters to meet an entire year’s content obligation across drama, children’s and documentary content through a single program such as Home and Away.*

Additional funding for Screen Australia and the Australian Children’s Television Foundation is welcome, however with no regulation to stimulate commissions, we are concerned as to the effectiveness of this as a measure to meet the needs of Australia’s child audiences as it doesn’t in its own right trigger production and could amount simply to development of projects with no pathway to audiences.

There is the clear potential for the proposals to shrink the Australian production industry to an unsustainable size, and to lose the critical mass in economic activity needed to ensure viable screen businesses and employment opportunities. No amount of incentives can protect a sector that starts to structurally become reliant on irregular and patchy commissioning.

A voluntary reporting requirement for streaming services represents the greatest lost opportunity, and leaves these incredibly popular and successful businesses free to reap rich benefits from the Australian market with no requirement to contribute back to Australian businesses, employment or culture. It will also see Australian audiences miss out on access to Australian content on the platforms which they are now using.

“As soon as the policy spotlight is off streaming services, there will be no incentive for them to commission in this market. Given the regulation outlined in other territories including across Europe and North America, Australia urgently needs a timeframe for transitioning streaming platforms into a regulated environment and without this, in the long run, we will become a backwater for investment,” Deaner said.

“We are also extremely concerned by the reduction in Producer Offset for feature film from 40% to 30%. The 40% offset for film had proven to be extremely successful and an integral part of financing for local features. We are not aware of any calls from any quarters for this vital financing lifeline to be reduced and the cut could mean the end of the line for so many great Australian feature films,” Deaner said.

All of these impacts were laid out in detail for the Government throughout its recent consultation process and the warning bell was rung many times by the industry. The Government has chosen not to liaise directly with industry on these specific measures announced today, which does not align with best practice policy-making.

Other critical issues raised during the consultation process and in the Government’s discussion paper which have not been addressed at all in this response include:

The inequality of bargaining relationships between commissioning platforms and content makers (an issue raised as part of the ACCC’s Digital Platforms Inquiry)
The loophole that allows New Zealand content to count as Australian
The need for a new pathway for children’s content
The need for minimum requirements and adequate funding for the national broadcasters
The need to harmonise regulation across legacy and new platforms
The need to reconsider and reform co-production arrangements and provide enhanced opportunities for export.

SPA will seek opportunities to highlight and mitigate the negative effects of these measures in the weeks and months ahead and look for opportunities to continue to prosecute the case for a sustainable forward thinking framework for our industry.

* Seven spokesperson responds, “In order for H&A to cover our whole content obligations, we’d have to meet some rather preposterous standards: either make 165 hours a year of H&A. We make 115 hours a year at the moment and that is already incredibly challenging. Or increase its budget to over $50 million a year.”

Media Entertainment & Arts Alliance statement:

The failure of the federal government to introduce local content rules for streaming video services will hasten more screen industry job losses in the wake of COVID-19, says the union for performers and crew.

The Media, Entertainment & Arts Alliance warns that today’s announcement by Communications Minister Paul Fletcher will worsen the crisis in the screen industry and reflects both a lack of comprehension about the sector and a lack of compassion for the tens of thousands of workers who will now operate under rules that dilute how much content is produced for Australian audiences each year.

The only winners will be commercial television owners and global streaming video services like Netflix and Amazon Prime, while the losers will be audiences who want to watch Australian stories on their screens and the 30,000 people who work in the local industry.

“How the Government has missed the boat on regulating streaming services and requiring set levels of Australian content each year defies belief,” said MEAA Chief Executive Paul Murphy. “This government seems intent on deregulation rather than creating a playing field that is level for all.

“Streaming services – yielding billions in income each year – will be celebrating that they have again avoided any content rules.

“The new flexibility provided to Australian commercial television networks will also lead to fewer productions across the board. Moving Foxtel and other subscription broadcast television broadcasters to 5% from 10% of program expenditure for each drama channel just reflects a government that is not serious about the provision of quality Australian content for our growing nation.

“The maintenance of the 55% Australian content rule is a statement of business as usual, as it already allows television broadcasters to count reality, sports, news and current affairs towards quota achievement, but is accompanied by weakened sub-quotas. It is likely to mean the demise of children’s content on commercial TV, leaving a cash-strapped ABC to pick up the slack.

“Even the ‘additional’ funding for Screen Australia simply restores the organisation to pre-Abbott (2014) funding levels.

“The harmonisation of the producer offset is welcome, but it has resulted in a cut of the feature film offset from 40% to 30%.”

Nine Network statement:

“Nine welcomes this important step in the vital reform needed for our local production sector. It will not only provide a much needed boost to local content production but enable us to better compete in the global content industry.  We will work with the Government to finalise some of the details, but overall this is an important and much needed overdue step in the reform process and we appreciate the time and consideration taken by the Minister to get us to this point,” said Hugh Marks, CEO of Nine.

Seven Network statement:

Seven West Media (ASX: SWM) today welcomed the Morrison Government’s announcement of modernised Australian content quotas for commercial broadcasters and enhanced incentives to support Australian content production.

James Warburton, SWM Managing Director and Chief Executive Officer, said: “We welcome today’s announcement by the Government regarding new funding in the Budget to deliver Australian Screen Content.

“The increase to the Producer Offset tax incentive production for TV series in particular, is a great result for the whole sector, that will fuel strong investment and growth in a sector that has been hard hit by the impacts of COVID-19.

“We remain strongly committed to Australian content and welcome the changes to TV content quotas, which will provide greater flexibility to for us to invest more in those programs that audiences want, and to adjust to changing audience preferences. This is a big step in the right direction and also recognise the importance and value of series like Home and Away, the number one Australian drama which has been on air and produced locally for 33 years strong.

“We look forward to working with the Government on the implementation.”

ViacomCBS ANZ statement:

ViacomCBS Australia & New Zealand Chief Content Officer & EVP Beverley McGarvey said: “Today’s announcements are a significant step forward for broadcasters, content providers, producers and, most importantly, Australian audiences in ensuring a sustainable and enduring local production industry.

“The reforms are a win for audiences, a win for networks and a win for the local production sector.

“They promise fairness and flexibility, allowing us to continue to invest in the programs our audiences love while giving them the choice of the time and the place that they choose to watch them.

“They also properly recognise the significant contributions that children’s content and long-running dramas make to the local production industry in the form of jobs and talent, rewarding our ongoing investment in popular Australian dramas such as Neighbours, while also incentivising our involvement in larger-scale productions such as The Secrets She Keeps and Five Bedrooms.

“Similarly, they properly reward our significant and growing investment in children’s television and encourage rolling investments in documentaries such as Todd Sampson’s BodyHack or Lindy Chamberlain: The True Story.

“At ViacomCBS, we’re proud of our commitment to the local production sector. Our content is watched by 20 million Australians every month across our brands on Free to Air, Pay TV and streaming platforms.

“We can’t wait to reveal the exciting pipeline of local content coming to your screens in 2021 at our upcoming Upfronts event and look forward to working with the Government on continuing to build a successful local production industry.”

Foxtel statement:

Patrick Delany, CEO, Foxtel Group said, “The package of measures announced by the Federal Government to support local production is a good outcome for Australia, which will see more home-grown stories on our screens.

“Foxtel looks forward to the opportunity to work closely with Screen Australia to kick-start new productions and employment in the creative sector, which have been severely impacted by COVID-19 restrictions. We also look forward to featuring the results of work between our channel partners and the Children’s Television Foundation on Foxtel.

“The Government’s package represents a starting point for Foxtel’s future investment in award-winning Australian drama and entertainment. They provide us with flexibility as we plan new productions, and importantly they recognise television is now producing world-class drama that is much-loved in Australia and sought after internationally.”

Fremantle statement:

“Fremantle welcomes the new reforms outlined by Minister Fletcher today. The increase in production offset to 30% for Television, the removal of the 65 episode cap coupled with a direct funding increase to Screen Australia and the ACTF is a welcome boost to domestic Television in Australia. Fremantle is also pleased to see that the Minister has maintained a quota system, focused on Australian Drama that will continue to support Australian stories whilst giving some flexibility for Broadcasters,” said CEO Chris Oliver-Taylor.

Australian Writers’ Guild statement:

In 2019, the Morrison Government embarked on an extensive review of the Australian screen sector under the promise of long-overdue industry reform. Communications, Cyber Safety and Arts Minister Paul Fletcher today announced new local content quota rules for commercial free-to-air broadcasters and shocked the screen sector with a failure to regulate streaming giants such as Netflix, Amazon Prime, YouTube and Stan. This proposal does not provide an adequate framework for continued sector growth, let alone one that is future-proof and platform neutral.

Since the beginning of the pandemic, the Australian Government has focussed on ‘job creation’, but by capitulating to the commercial broadcasters and the streaming platforms, it is jeopardising tens of thousands of jobs, threatening small businesses and reducing children’s content on our screens.

While still having to produce 55 per cent local content, broadcasters (Seven West Media, Network Ten and Nine Entertainment Co) have been granted freedom in determining what kind of shows they commission to satisfy their obligations, rather than adhering to a prescribed amount of Australian drama, children’s content and documentaries.

Kids’ content is likely to be the first casualty because of this decision, which will have a lasting and irrevocable impact on our culture. Although the government will boost ACTF’s support package by $20m to compensate for this announcement, it is unclear if they will increase funding to the ABC and SBS, who will be left with the critical responsibility of programming local content for future generations of Australian children. Our stories say something about us. They define who we are. Our children deserve them.

In 2003, the UK removed its children’s content quotas on commercial networks. Within two years, spending on children’s TV had reduced by more than 90%, forcing their government in 2017 to reintroduce the power to set quotas. Australia’s free trade agreement with the US will prevent us from reinstating children’s content obligations once removed.

Pay TV’s Foxtel will no longer be required to invest 10 per cent in local content. Their requirement has been halved to a meagre 5 per cent.

Most alarmingly, on the point of regulation of streamers, Paul Fletcher is quoted in today’s SMH as saying, ‘It’s certainly not a case of ruling out a spend requirement on the streaming video services. We just think more work is required to look at that issue.’

The Australian Writers’ Guild questions why Paul Fletcher has not yet done the work.

AWG, under the banner of Make It Australian, has been campaigning for the regulation of streaming services for years. Refusing to regulate streamers and merely asking them to report how much they spend on Australian content is a weak move from the government, both economically and culturally. Liberal MP Trent Zimmerman reported in The Guardian last week that, ‘It’s time for streaming services, which are enjoying growing and significant revenues from Australians, to stump up and support our own screen sector. They are currently getting a free ride.’

11 million Aussies engaged with Netflix in 2018, with only 1.6% Australian content making up the programming. The EU’s Audiovisual Media Services Directive has extended existing production quotas to SVOD platforms to ensure that 30% of catalogue content is European. France is set to transpose this directive into law on 1 January 2021. With today’s announcement, the Australian Government is crippling its own screen sector by turning a blind eye to international best practice.

AWG acknowledges the government’s $3m investment in screenwriting and script development, but highlights that this is a drop in the ocean compared to what is required. Unless the right mechanisms are put in place by the government, these stories may never be made. They may never find a home.

Under the proposed framework, our screens will inevitably be overwhelmed by foreign content, increasing the risk that Australian stories, that celebrate our unique culture will be a thing of the past. The regulation of streaming services is the most significant and urgent issue that faces our industry. Rather than acting, the government wants to take more time to wait and see. By then it may be too late. The opportunity to secure Australian content is slipping away.

Fact Sheet: Modernising Australian content regulation

Q&A: Modernising Australian screen content settings

This post updates.

14 Comments:

  1. It looks like business as usual for the commercial TV channels, the lack of children’s entertainment is not new, it is what the TV execs wanted to be able to concentrate on making revenue earners like reality TV, for the government to force higher quotas of drama would mean some low rating content or soaps.
    Trying to impose more local content on streamers ignores the buying power of Netflix in a highly competitive international TV drama market.

  2. Look how long SPA’s statement reads. They are incapable of delivering a succinct, poignant message. Useless.

    Time for a change. Nothing but white noise.

  3. The networks love these new guidelines, and SPA and MEÀA hate them. That tells you all you need to know about who benefits.

    Jobs are disappearing at an alarming rate, and have done since Feb, but this government seems all too keen to keep screwing over the creators by giving handouts to FTA and bending to the will of the networks.

    Sad.

  4. The current quota system is from 2016 not 1980, and was weighted to favour TV and film with higher budgets (to stop cheap soap opera and sketch comedy being all that is produced), but thing have changed dramatically since Netflix started here. The 65 episode rule last applied to Rush S5, which wasn’t made as a result. Doctor, Doctor has made it to 40, Dr Blake Mysteries to 45 but most local dramas have 1 or maybe 2 series. If someone did make a popular, long running drama knocking it on the head while it was still going strong would be stupid. There is very little that is quality or popular being made under the commercial drama sub-quota.

    Commercial children’s TV makes no sense what so ever. Children watch too much video already and poor quality TV full of ads is bad for them. Parents use ABC2/3, iView, Cable channels, Netflix, and DVD to control what their kids watch, and…

  5. This means: “Drama, Documentary, Children’s quotas replaced by 55% overall local content”, so lots of news and reality will be used to meet local content!?!
    Where is the investment in Australian stories, Australian culture and Australian jobs?! This is a disgrace! Hasn’t the pandemic highlighted the need to share our stories and entertain!

  6. “Fremantle is also pleased to see that the Minister has maintained a quota system, focused on Australian Drama” – um, but it’s not. Isn’t the point that there is no longer a minimum drama spend, just an ‘incentive’ to produce higher budget programming (be it drama or otherwise) to qualify for higher points? By that logic there is really no incentive at all to make Australian drama – correct me if I’m wrong. Hopefully, by spending more $$$ on script development, this could – could – result in higher quality drama being made which might result in better ratings and therefore incentivise the commercial networks to make more, but it feels like a long shot.

  7. Although this is some good news, it’s sad to see many sub-quotas not reinstated. Quotas are supposed to drive up better Australian content, not to force commercial networks to screen giant blocks of reality and news.

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