The Australian Financial Review | Dominic White and Max Mason | 26 October 2015
Nine Entertainment Co this week will unveil plans to stream its three television channels live over the internet in a move that will increase calls by regional MPs and TV networks for the Turnbull government to abolish outdated media laws.
Fairfax Media understands the metropolitan free-to-air broadcaster, which has declined to comment, will announce the move on Wednesday at its Nine's "upfronts", where it will also reveal its new shows and sales strategy for 2016.
Rival Seven West Media began the live streaming trend, using the internet to sidestep the so-called "reach rule". The rule restricts commercial free-to-air television licensees from reaching more than 75 per cent of the population using their broadcast networks.
Seven's streaming app, which will be launched on Melbourne Cup Day, was more controversial than Nine's because Seven lobbied successfully against proposals to abolish the reach rule earlier this year, while Nine supported the idea.
However, the bosses of regional stations, which pay to rebroadcast the metro network's channels and own only limited content, said Nine's plans were further confirmation the reach rule should be scrapped as a matter of urgency.
Andrew Lancaster, chief executive of Nine's regional affiliate, WIN Corporation, said: "It makes no sense that regional broadcasters are constrained by the reach rule whilst metro broadcasters are free to stream their channels across regional Australia. The legislation needs to enter the same century as the technology."
John Hartigan, chairman of Seven's regional affiliate, Prime Media, added, of Nine's plans: "It's further proof of how outdated the media legislation is. I don't have any issues with Nine, as we are not their affiliate partner, but this shows our laws are stuck in horse and buggy days when the rest of the world is turbocharged."
Australian Competition and Consumer Commission chairman Rod Sims told Fairfax Media that relaxing the reach rule "might unlock stronger players who could compete with News Corporation" and "could actually add diversity in ownership of media".
"The rule is pretty clearly, I think, redundant in the sense that you can't own a television station that reaches more than 75 per cent, but you can stream to 100 per cent of Australia. Now Seven is streaming, that really shows the law is just being made redundant by technology," he said.
Mr Sims declined to comment on the regional networks' simultaneous push for the abolition of the so-called two out of three rule.
The rule stops any one group owning more than two of a newspaper, commercial TV licence or radio licence in a major market.
"The reach rule is the one that is most relevant here and the one that is most clearly redundant. Different people will have different views on two out of three and what that means for diversity, and we're not going there," he said.
Regional television networks are caught in a pincer movement as the high-speed national broadband networks rolls out, making it possible for metro networks to reach viewers direct in the regions, and as national brands cut their marketing spend in regional markets amid a difficult advertising market.
Prime warned last month advertising revenues dropped 6.9 per cent in the two months to August, and it expected a similar performance for September.
Nine is about to enter crunch talks with WIN over the amount the regional player pays to take its feed under the long-standing affiliate deal, which expires in December.
Last November, Nine chief executive David Gyngell threatened to stream Nine's channels over the top of WIN's broadcast network.
"In five years' time, we will just go around regional television and stream our content into those markets. We, ultimately, won't have a regional affiliate deal," he said after Nine's 2014 annual meeting.
WIN Corp's owner, Bermuda-based billionaire Bruce Gordon, added to the brinkmanship surrounding the affiliate deal talks last week, announcing he was becoming Nine's largest shareholder with a 14.95 per cent stake.
Nine and Seven's smaller rival, Ten Network Holdings, will face questions over live streaming plans at its full-year results on Monday.
Last week, News Corp's pay television venture, Foxtel, received regulatory approval to take a 15 per cent stake in Ten.
Fairfax Media and Nine have joined the regional networks in supporting the abolition of the reach and the two out of three rules.
View the article on The Australian Financial Review.