Just under a month ago the Ten Network announced that, early next year, the new digital channel Eleven will be launched in a joint venture between Ten and US studio CBS. The channel will be aimed at the “distinctly youthful” market, which on closer inspection turns out to be the 13-29 demographic.

Ten programming staple The Simpsons and long-running soap Neighbours will move to Eleven. The network deservedly won plaudits for replacing them with additional news programming.

The fate of Neighbours however, is about more than just the decline of what pretty much counts these days as an institution on Australian TV. Neighbours is crucial to Ten fulfilling its local drama obligations under the Australian content standard. The standard lays down a requirement for Australian content, and sub-quotas for Australian drama, documentary and children’s programs.

Under a points system based on production cost and hours, the commercial television networks have to show at least 250 points a year worth of drama, and 860 points over three years.

Neighbours accounted for, depending on whom in the industry you ask, between 40% and 65% of Ten’s points, and Ten has not got above 270 points in the last two years. In the absence of a replacement Australian drama in Ten’s schedule, its removal to Eleven would seemingly stop Ten from meeting its content standard requirements. There is considerable disquiet in the production sector about Ten’s move.

But Neighbours will still be broadcast, won’t it, albeit on a digital channel? What’s the problem?

Content requirements — like children’s programming and captioning, as well as local drama — on digital channels is a vexed issue. After analog switch-off, there’s no longer a “main channel”, just several multichannels. Under current legislation, the existing content requirements will automatically apply to every channel after analog switch-off, a requirement that even the local production industry believes is too onerous on the broadcasters.

So late last year, the government called for submissions on what to do about content requirements after switch-off. Included in one of the options for discussion was the idea of aggregating content across digital channels i.e. the children’s programming quota could be met on one channel and the drama quota on another. That was vigorously opposed by the Screen Producers’ Association, but Free TV Australia seized on the idea: “Such an approach would provide much needed flexibility whilst maintaining the amount and quality of Australian content available to free to air audiences.”

Well, “maintain” from one perspective, but if considered from the point of view of proportion of all content, it would significantly reduce the level of required content.

The government’s response, in June, was to hive the whole issue off to a review that has to be done before the end of 2012. It only committed to addressing the problem that, because switchover is occurring in regional areas first, regional broadcasters would have been required to meet the current content requirements across all their multichannels before the metropolitan broadcasters from whom they source most of their programming. Legislation will need to be rushed through Parliament soon to address that problem, given analog switch-off has already started.

But without a replacement Australian drama, Ten appears to have pre-empted the whole issue. Unless you assume the ‘aggregation’ approach will be adopted as part of the content standard, Ten’s shift of Neighbours means it won’t meet its local drama obligations.

Ten insists that it will meet its obligations. “We know what the requirements are and we will meet them,” Ten’s head of corporate communications, Jeannette McLoughlin told Crikey yesterday. “We always will.” She would not go into detail about how the network would meet the content standard requirements. She also declined to respond to the industry rumour that Neighbours producer Fremantlemedia had taken a large fee cut as part of the shift to Eleven.

If true, that may affect the number of points Ten is able to claim for Neighbours no matter where it is broadcast.

One industry figure suggested Ten might seek to rely on a novel interpretation of “commercial television broadcasting licensee”, to obtain a de facto aggregation position — that all content it broadcast, no matter on which channel, would count toward the Content Standard because it was provided by the same licensee, an approach that contradicts the current content standard.

Alternatively, Ten might be counting on the government to adopt aggregation. The free-to-air networks have had a good winning streak with this government, securing a licence fee rebate (ostensibly for Australian drama) that will cost far more than the mooted $200m Treasury costed it at, and getting amendments to the industry code of practice approved that gifted the free-to-airs hundreds of millions of dollars of extra advertising revenue.

ACMA, which assesses compliance with the content standard, told Crikey:

“Commercial television broadcasting licensees are required to comply with content standards, such as the Australian Content Standard, on their core channel during the simulcast period. This includes the requirement to comply with Australian drama sub-quota requirements. As a consequence, Neighbours would earn no points under the Australian Content Standard for its broadcast on a digital multi-channel.”

Communications Minister Stephen Conroy’s office told Crikey:

“A further review of the application of content and captioning rules to digital television channels will be conducted before 31 December 2012 to allow the Government sufficient time to implement any legislation before the switchover to digital television is completed nationally and provide the broadcasting industry with sufficient notice of the intended regulatory settings.”