Free-to-air TV stations get leg up

Federal government announces permanent 50% cut to TV licence fees

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The federal government has today permanently reduced TV licence fees by 50%, which is estimated to save the TV networks around $100 million a year.

Communications Minister Stephen Conroy announced the move today along with a new press standards model and the introduction of a public interest test for nationally significant mergers between media players.

A parliamentary committee will also investigate the so-called reach rules, with a view to abolishing them. Current rules prohibit a metropolitan television broadcaster from taking over a regional group and extending its “reach” beyond 75% of the population.

Changes to the media regulations have been previously proposed way back in December last year, although media commentators had expected the reach rule to be scrapped.

Tensions have been running high in the free-to-air sector with speculation rife that Ten Network Holdings’ (ASX: TEN) regional affiliate Southern Cross Media (ASX: SXL) was seeking a tie-up with Nine Entertainment.

Seven West Media (ASX: SWM) which owns the Seven Network, has come under fire from Nine after first supporting the abolition of the reach rule, but has since changed its mind to prevent Southern Cross joining Nine on the couch. WIN Corp, Nine’s regional affiliate is reported to be unhappy with mooted rule changes, because it is trying to renegotiate its affiliation deal with Nine, which expired in June 2012. Seven owns 11% of its own affiliate, Prime Media Group (ASX: PRT).

As part of the 50% reduction in licence fees, networks will be required to broadcast an additional 1,490 hours of Australian content by 2015. TV producers and the actors’ union have slammed that idea, suggesting that there is no incentive to commission new programming, and the networks could show repeats of any Australian show, such as Blue Heelers, Prisoner or The Sullivans if they wanted.

Foolish takeaway

Expect more media machinations in the weeks ahead, as the government puts the proposed changes to parliament within in the next two weeks.

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