Budget 2016: Cuts don’t go far enough, say Seven and Ten

Seven West Media chief Tim Worner has warned jobs are at risk despite the cut to licence fees.

Seven West Media chief Tim Worner has warned jobs in the Australian television production sector are at risk.

A 25 per cut to licence fees doesn’t go far enough, according to the chief executives of the Seven and Ten networks.

Seven West Media chief Tim Worner has warned jobs in the Australian television production sector are at risk.

“Television licence fees are outdated and not sustainable. The small cut in this budget is not nearly what the industry needs to compete and innovate in a fundamentally changing media environment,” Mr Worner said.

With fees falling to 3.375 per cent of gross revenue, from 4.5 per cent, according to measures announced in the Federal Budget, Mr Worner said Australian broadcasters still paid higher fees than their peers in other markets.

“We are disappointed that the Government has not recognised this. It seems that commercial television broadcasters will continue to struggle under the burden of the highest licence fees in the world for the next few years and that the spectrum we use to provide our services is also under threat,” he said.

“This will have a negative impact on our ability to generate jobs and growth in the Australian production sector. The time for us to invest in the changes we need to make to transform our businesses for the future is now.”

Ten boss Paul Anderson said that while “any reduction is positive”, the cut still left fees “wildly out of step with fees paid in any comparable jurisdiction”

“This single reduction does not recognise the urgency of the challenges that this industry faces and the government has not indicated a clear path forward to a truly sustainable fee,” Mr Anderson said.

“The commercial free-to-air television networks are by far the largest contributor to domestic content production in Australia and underpin the entire production sector. Together, we spend more than $1.5 billion a year on Australian content.”

However, the pay-TV industry has hit out at cuts for Seven, Nine and Ten, saying taxpayers will “foot an unconditional handout” of approximately $150 million.

The Australian Subscription Television and Radio Association said the move amounted to “corporate welfare” and another “privilege” granted after the government left the anti-siphoning regulation untouched.

The rule ringfences sports media rights for the free-to-air networks, enabling them to strike deals before pay-TV operator Foxtel can bid.

The first licence fee reduction will apply to the 2015-16 financial year. The government has raised the possibility of another cut later this year.

Currently, fees are levied as a sliding percentage of revenue — at a top rate of 4.5 per cent for commercial television licensees who earn $100 million or more, and 3.25 per cent for commercial radio licensees who earn $11.5 million or more.

Deutsche Bank analyst Entcho Raykovski said Nine “stands to be the biggest beneficiary”, estimating the company will receive a 6 per cent boost to earnings before interest, taxes, depreciation and amortisation — and a 7 per cent rise in net profit after tax.

Foxtel is jointly owned by News Corp (publisher of The Australian) and Telstra.