Thursday 31 August 2017

A Policy A Day: America's Cup Broadcasting

In the lead-up to the election, we are examining a policy a day. We're exploring a variety of policy areas, explaining the background and analysing some of the policy options, with a mixture of technocracy and values-based approaches. Inevitably, some opinion will make its way in and we make no apology for that - after all, we're voters too. A list of all the articles is available hereEnjoy!

Today's post is written anonymously.

While no parties have the America’s Cup Broadcasting at the forefront of their policies, this is hardly surprising given more pressing issues including transport, housing, health, social welfare, the environment and the economy are the big ticket winners. New Zealand First has its ‘Broadcasting and ICT’ policy where they propose a restructure of TVNZ and Radio New Zealand (see Andrew’s analysis of this during the last election). New Zealand First pledges to “ensure Games of National Significance will be broadcast live and free-to-air” – more on this below. So why is America’s Cup Broadcasting important when it hasn’t been addressed by the parties?

The America’s Cup isn’t exactly an election-friendly topic. However, the America’s Cup will be hosted in New Zealand, it will be a big event and will require significant financial investment, even if Grant Dalton can work his magic (again) and drum up funds from private investors. While it’s not being talked about in the lead up to the election, whoever is in government will definitely be making decisions about the America’s Cup post-election. It’ll become a hot political topic again when Emirates Team New Zealand (ETNZ) announce the protocol for the 36th America’s Cup. ETNZ will no doubt be looking to secure support and funding from the Government (and most likely Local Government) to stage their defence, so there will be very robust discussions about the Government’s involvement/investment in the campaign.

While we are currently awaiting the release of the protocol to obtain further details of what the 36th America’s Cup will look like, some things are certain, one of which is the broadcasting of the event. What is uncertain though is whether every New Zealander will be able to watch ETNZ’s defence live and free-to-air.

Broadcasting Rights
The broadcasting of the America’s Cup was a hot topic during the Bermuda campaign. Sky Television (Sky TV) successfully bid for the broadcasting rights and its subscribers enjoyed exclusive live coverage of the event. However, once ETNZ won the Louis Vuitton challenger series and secured the right to challenge Oracle for the Cup, Duncan Garner campaigned for the America’s Cup to be shown live, free-to-air, to all New Zealanders. Garner argued that the taxpayer has contributed to ETNZ’s campaign, so it’s only right that the taxpayer can watch the boys pedalling their hearts out 14,000 km away.

‘We Don’t Care’
This is where the controversy lies. In the lead-up to Bermuda, Grant Dalton and ETNZ were rubbished. It’s a rich man’s sport. New Zealanders don’t care. You broke our hearts back in San Francisco 2013, so we’re done. But we’re suckers. Once we saw our golden boys Pete and Blair flying across the Great Sounds of Bermuda, they got us – hook, line and sinker. And just as ETNZ tacked and gybed their way back into every race, we too were back in the campaign, pulling on our red socks and waking at 5am. Why?

NZ’s sporting culture
We love our sport. It’s ingrained in our culture. We mourn an All Blacks’ loss. Our Olympians are (symbolically) anointed as New Zealand royalty. The Lisa Carringtons. The Richie McCaws. And despite already becoming our latest superstars following their success in Rio, Pete and Blair solidified their place in New Zealand sporting history.

We were the underdogs up against Oracle with money bursting from their seams. We had a young, inexperienced team. And after the heartbreak of San Francisco, we were vulnerable. But ETNZ was sticking it to the Man, it was more than holding its own, and despite the lack of support in the lead-up to the racing itself, New Zealanders were again inspired when little old New Zealand at the bottom of the word, with all the cards stacked against them, came out on top.

However, despite pulling at the heartstrings of Sky TV (and giving them the opportunity to show some public goodwill), the best Sky TV did was provide delayed coverage on their free-to-air Prime channel.   

Securing Broadcasting Rights
Now that ETNZ has won the America’s Cup and New Zealanders have somewhat bought into ETNZ’s campaign to host the next event, where to from here? The Government were quick to invest $5 million in ETNZ following the big win, in order to secure key team members and ensure as much intellectual property as possible remained in New Zealand and with ETNZ. But will the Government secure the broadcasting rights to ensure that when ETNZ defends the America’s Cup, New Zealanders will be able to watch the events live and free-to-air?

Television New Zealand (TVNZ) has held broadcasting rights for the past 25 years but were outbid by Sky TV for the Bermuda campaign. As a keen sports follower and also as a passionate New Zealander, I noticed a considerable difference between San Francisco and Bermuda (apart from being on opposite sides of a win). With live, free-to-air coverage of San Francisco, the nation truly did come together. Hundreds descended on Queens Wharf before work each morning, and there was a real buzz across the country because the coverage was accessible. I would go so far as to say the feeling of ‘a galvanised nation’ helped with the grieving process post-San Francisco. With Bermuda, I felt part of the privileged few who were able to watch the events live on Sky TV. There simply wasn’t the same level of buy-in and support from the public for what was taking place in Bermuda.

But how can TVNZ secure broadcasting rights and ensure all New Zealanders are given accessible, live, free-to-air coverage when we come to host in 2021?

New Zealand First
Late last year, New Zealand First MP Clayton Mitchell had his member’s bill drawn from the ballot. The Broadcasting (Games of National Significance) Amendment Bill would ensure games of national significance such as All Blacks test, the majority of World Cup matches involving New Zealand, Olympic games and Commonwealth games, would be broadcast live and free-to-air. If this bill was passed into law, the America’s Cup would have most likely passed as “any sporting event funded by the Major Events Development Fund.” However, there was significant criticism of the Bill, and it failed to progress further.

The Bill reflected the anti-siphoning laws in Australia where free-to-air broadcasters are given first opportunity to purchase rights to a specified list of sporting events, reflecting the belief that there are games of national significance which should be broadcast to the public.

While anti-siphoning laws are ideal from the public’s perspective, recent amendments to anti-siphoning laws in Australia have highlighted the commercial realities of broadcast media in a highly competitive market. This is where the crux of the issue lies.

Sports Funding
A large part of revenue for sports teams and events is generated from broadcasting rights. There are varying reports that broadcasting rights generate between 40% to 50% of the revenue of our major sports. Sky TV says it paid sports team $120 million last year for broadcasting rights. If the Government is to provide live, free-to-air broadcasts of our major sports games, then it would also need to make up for the loss of revenue generated from the sale of broadcasting rights. If the Government isn’t able to account for these losses, it would be sports at the developmental grassroots level that ultimately lose out.

Commercial Realities
In a highly competitive media market and the rise of alternative viewing platforms, broadcasting rights are lucrative and important for sports teams and events, particularly in New Zealand. Anti-siphoning laws may be effective in Australia. However, New Zealand’s market is much smaller compared to that of Australia’s, and our sporting bodies rely on the considerable revenue generated from broadcasting rights.

TVNZ may struggle to compete with the deep pockets of Sky TV, but the America’s Cup will be significant on many levels and will warrant commitment from the Government. Not only will it create excitement levels last seen when New Zealand hosted the Rugby World Cup, but the economic benefits are too great for the Government not to give it proper consideration. Not only do New Zealand’s boat building, marine, technology, hospitality and tourism industries all stand to benefit from the event itself but also the vast knowledge, skill and intellectual property held here in New Zealand.

The government has helped out in the past – it shelled out about $3 million to ensure that the Rugby World Cup in 2011 could have some free-to-air matches (particularly the final) but Bill English said that it was “pretty special having it here”. That was justification for not chipping in for 2017, but maybe it’s an argument for doing so in 2021.

So should you be voting for New Zealand First on the basis of their broadcasting policy? Probably not. Anti-siphoning laws don’t appear to be well-suited to New Zealand’s sports and media markets. However, regardless of what our new Government looks like, the America’s Cup is too great an economic opportunity and sporting and national event for any Government not to commit its support to ETNZ.

Even if Sky TV again outbids TVNZ to become the broadcasting rights holder for the 36th America’s Cup, one would hope that Sky TV do the right thing by New Zealand and New Zealanders and provide live and free-to-air coverage as they did for the 2011 Rugby World Cup. After all, they need to show some public goodwill and win back some supporters. Given Sky TV’s declining revenue and subscriptions, it may be a very different media landscape come 2021.

Today’s contributor works as a junior solicitor in the media industry and has chosen to remain anonymous. The views expressed are their own. 

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