Network bosses argue against TV manufacturers ‘clipping their ticket’

The bosses of Australia’s major free-to-air networks and public broadcasters say laws ensuring free-to-air apps are easily available on smart televisions are essential to push back against the unfair influence of international TV manufacturers.

At a Senate hearing on Friday, SBS boss James Taylor and ABC managing director David Anderson accused international TV manufacturing giants of effectively holding the broadcasters to ransom. Taylor said SBS was warned by one company it would remove or hide the SBS On Demand app if it did not agree to a 15 per cent revenue share and placement fee.

SBS managing director James Taylor (left) and ABC managing director David Anderson at Friday’s Senate hearing.Credit: SMH

“When SBS refused to pay, the manufacturer carried through on their threat, making it much harder for audiences to find the SBS On Demand app,” Taylor told the hearing in Canberra.

Anderson said the ABC had also been asked to pay for access, and the bosses of Australia’s free-to-air networks backed up this claim.

He said television manufacturers such as Samsung and Sony were the gatekeepers of access to content for Australians, with the ability to remove and restore access on their devices.

Media executives appeared in front of the hearing into legislation that would mandate app placement on new internet-connected televisions. Executives from the public broadcasters, alongside Nine (owner of this masthead), Seven and Ten support the legislation, and argued they could not compete with the financial power of the likes of Netflix and Disney+, and needed to have their apps placed prominently on smart TVs.

Outgoing Seven chief executive James Warburton said the changes were necessary as viewing habits changed, with about 50 per cent of TV viewing expected to be digital by 2027, up from 20 per cent currently.

“We can’t compete with the global players … You get blown out of the water,” he said.

“Everyone wants a clip of the ticket, a clip of the revenue between 10 and 20 per cent to actually be on the service. We’re just asking for a fair crack,” Warburton said.

Beverley McGarvey, the local executive of Paramount, which owns Network 10, said it took her “45 minutes to find the 10Play app” on a new LG television, saying Australians should not have to search to find free services.

From left: Nine’s Mike Sneesby, Ten’s Beverley McGarvey, FreeTV chair Greg Hywood and Seven’s James Warburton.Credit: Alex Ellinghausen

“If you don’t want us, fine. Flick us to the back. But the consumer should know that we are available and free,” McGarvey said.

Nine Entertainment boss Mike Sneesby said: “These deals being done offshore between big tech companies and big streaming companies are effectively just taking away those spots. Not even if we wanted to pay a price could we get them, and we’ve seen that as competition has grown … those global deals have just pushed Australian content off the front screen and we have no control.”

Representatives from Netflix, appearing for the first time in Canberra, said the company supported most of the new scheme but argued preference should not be extended to the networks in search. It also said the legislation should not mandate the positioning of tiles or apps on television home screens.

Ben Cox, director of business development in the region for Netflix, said the company had invested more than $1 billion on new Australian and Australian-related titles in the past four years – including more than $500 million on new programming for children and young adults – leading to the employment of “thousands of local cast and crew”.

The proposed legislation – which also includes updates to anti-siphoning rules that protect Australians’ access to view major sporting events for free – is part of a Labor government election pledge to protect local content.

Its opponents, which include Foxtel and major television manufacturers such as Samsung, argue discoverability isn’t an issue for Australians, and that the government should not be interfering with viewers’ freedom of choice.

Australian networks are pursuing digital-first strategies as audiences switch from traditional television to viewing through apps such as ABC iview, 9Now and SBS on Demand, alongside paid apps such as Netflix, Stan and Binge. In 2022, BBC boss Tim Davie went so far as to say the British broadcaster would switch off traditional television and radio transmissions within a decade.

But the online shift means the networks must compete in an increasingly crowded environment – not only against each other, but also against global companies with more capacity to pay for preferential app placement.

At the same time, commercial free-to-air advertising is in freefall, with revenue down 10 per cent in 2023.

Streamers are also facing problems of their own. After years of growth, subscriber figures have plateaued, prompting sustained price rises and advertising tiers to ensure long-term viability.

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