Stand by for another Macquarie Bank gouge, this time in community TV.

This story in the Australian’s Media section today on the funding problems confronting community TV missed the finessing the Macquarie Bank-backed Broadcast Australia is engaging in at the moment.

BA, which is part of the Macquarie Communications Infrastructure Group, was set up to takeover the transmission masts and other broadcast points for ABC TV and Radio and SBS TV and radio. It has since expanded into other areas of broadcast and overseas, most notably into Britain. BA is the local arm and what it’s planning for the community sector is a doozy.

It all revolves around the new digital channels, A and B, which are due to be auctioned off later this year. They were the centrepiece of the changes to media policy last year, the so-called benefits of a policy which freed up ownership and control and will allow more concentration of ownership.

Channel A will be used for free-to-air datacasting, narrowcasting and community television that can be received on a standard digital television receiver. Channel B can be used for a wider range of services including mobile television. Neither channel can used to provide a commercial broadcasting service or pay TV service which can be received by a domestic digital TV receiver.

Channel B will attract the higher bids, Channel A, well, just one bidder is likely because it is all to do with the broadcast and transmission facilities.

There are just two organisations that have the broadcast points across the country (masts) and the antenna with the capacity to be expanded to handle channel A (and B for that matter).

They are Broadcast Australia and a company called TXA, one third owned by Seven, Nine and Ten and which owns and operates the FTA Network’s masts and antenna (although not all. BA has a valuable UHF antenna on the TXA mast at Artarmon in Sydney that is used to broadcast Seven and Ten and some FM radio stations).

TXA, being a network TV organisation, either isn’t interested or the owners are not interested because they can’t spare the money or have other priorities. The Macquarie Bank backed BA is set to be the only bidder and has been lobbying the Communications Department and Minister Senator Helen Coonan.

According to Community TV sources in Perth and Melbourne, BA will pay between $40 to at most $50 million for Channel A. With no other bidders, there’s going to be no competitive tension in the auction. BA is doing its hardest to try and limit the involvement of community TV on Channel A.

Community TV (five broadcasters in Sydney, Melbourne, Brisbane, Adelaide and Perth) currently broadcast an analogue signal but will have to convert to digital (because the analogue system is being turned off).

The Federal Government has paid or is paying for community radio, the ABC and SBS to upgrade to digital TV or radio and have also met the costs of simulcasting the digital and analogue signals until the analogue is turned off around 2012 or beyond.

A back bench committee chaired by Jackie Kelly earlier this year recommended the government pay $6 million to help community TV convert to digital, but that would not cover the cost of the simulcasting. Not unless community TV was a ‘must carry’ on Channel A and that was stipulated in the licence.

Now BA is resisting any move to get it to play a roll. According to the Australian Media section story, “BA managing director Graeme Barclay warned that imposing a must-carry provision on Channel A would cut the purchase price of the licence.

“It uses up capacity that can’t generate any revenue,” he said. “It would affect the viability of what was already a difficult business case.”

Community TV sources say BA and Barclay want more than $25 million to cover the cost of community TV in the simulcast phase. he is also resisting carrying them after that and allocating sufficient bandwidth to allow them to offer a digital signal comparable to what the FTA Networks will be broadcasting.”

Community TV sources say BA and Barclay want more than $25 million to cover the cost of community TV in the simulcast phase.

BA will be paying $40 to $50 million at most for the 10 year licence, or around $4 to $5 million a year.

It wants community TV, which can’t afford it to pay more than half that for the simulcast alone, to pay for the broadcasting after that.

The Federal Communications Minister and her department are ignoring that until after the election because they want to be able to boast they have gained a moderate sum for the auction of Channel A.

They also know that after the election the government will have to pay the Macquarie Bank-backed Broadcast Australia the $25 million and more that it wants for the simulcast costs for community TV on Channel A, and money for the continuing broadcasting after that.

The way the numbers go, Broadcast Australia could end up getting its auction bid cost covered by the Federal Government completely and then be able to charge for the other broadcasts on Channel A and make a motza.

The alternative for the Government is to direct BA to treat Community TV as a ‘must carry’. That would mean BA would have to charge other customers higher amounts (and will any of those be Macquarie entities or ‘mates?’) to compensate.
But BA and Barclay (who boasts at TV industry forums of ‘sweating the assets’) don’t want that, they want open slather with the Federal Government paying the cost of Community TV’s involvement and making Channel A a risk free deal. In true Macquarie Bank style.