I move: "That the Bill be now read a Second Time."
This debate provides an opportunity for the House to consider the additional measures set out in the Bill which are designed to ensure the continued television coverage of events of major importance to the people of Ireland. Deputies will have the opportunity to express their views on these issues and I am very interested in hearing those views.
Irish television viewers have traditionally enjoyed access to major events, both sporting and otherwise, on free television services. In the past, given the demands on the radio frequency spectrum for broadcasting purposes, the number of broadcasters has been necessarily restricted. In the past ten years, however, the emergence of digital broadcasting services, operated on an almost entirely commercial basis, has changed the broadcasting map considerably. We have seen the emergence of dedicated sports channels which often acquire exclusive broadcasting rights to major sports events and this exclusivity has proved to be a key driver in the uptake of their services. It is undeniable that these channels have provided increased choice to interested fans who can afford to pay the price for such services. The potential of digital broadcasting to vastly increase the capacity for the provision of broadcasting channels has caused revolutionary change. Commercial services have discovered the importance of sport to their schedules. Indeed, the market for any kind of programming with popular appeal is becoming more and more intense leading, in turn, to increased costs in acquiring broadcasting rights. There is clear evidence of coverage of sports events migrating to pay television services on an exclusive basis.
EU Directive 89/552/EEC, as amended – the Television Without Frontiers Directive – recognised that member states should have the right to take measures to ensure that events that are regarded by that member state as "events of major importance to society" should continue to be available on free television services. The directive rules that it is open to each individual member state to decide whether it wishes to designate events as events of major importance to society. A cornerstone of the directive is that it requires each member state to take measures to protect the interests of other member states which have decided to designate events.
The Broadcasting (Major Events Television Coverage) Act 1999 incorporated into Irish law the provisions of Article 3a of the Television Without Frontiers Directive. The Act provides that the Minister for Communications, Marine and Natural Resources, may designate certain events as events of major importance to society for which the right of a qualifying broadcaster to provide coverage on free television services should be provided in the public interest.
Before making such an order, the 1999 Act requires the Minister to first consult with event organisers, broadcasters within the State and members of the public. The Act sets out the procedure which the Minister is obliged to follow in relation to the designation of events. Specifically, the Minister is required to consult with the Minister for Arts, Sports and Tourism; consult with event organisers and broadcasters; publish a proposed list of events; invite comments on the proposed list from members of the public; and lay a draft of the order designating events before both Houses of the Oireachtas for approval. The Minister is also required to have regard to the extent to which the event has a special general reson ance and a generally recognised distinct cultural importance for the people of Ireland.
Following the enactment of the Broadcasting (Major Events Television Coverage) Act 1999, a process of consultation was initiated in December 1999 when sports event organisers and broadcasters were circulated with a copy of the 1999 Act and asked for comments in relation to the designation of events. Arising from that process it became clear that the designation of sports events was a complex matter and that the main sporting organisations were opposed to their events being designated.
Shortly after my appointment as Minister for Communications, Marine and Natural Resources, the Football Association of Ireland announced that it had sold the live exclusive rights to broadcast Republic of Ireland home European Championship and World Cup qualifying matches to the British Sky Broadcasting Group. I immediately ordered that the consultation process should be recommenced. In July last I received Government approval to publish a draft list of events that I proposed to designate as events of major importance, which should, in the public interest, continue to be available on free television services.
Immediately following the Government decision I met with representatives of the FAI, the Irish Rugby Football Union and the Gaelic Athletic Association to inform them of the decision to proceed with the designation process. My officials held further meetings with these organisations and also held meetings with representatives of the International Rugby Board and the Association of Irish Racecourses.
A notice with details of the proposed list and inviting written comments from members of the public was published in four national newspapers on 19 July 2002. Members of the public had until 16 August to submit comments. At the same time my Department wrote to sports events organisers and broadcasters to formally seek their views on the proposed list. In order to further enhance the consultation process, an on-line forum was established on my Department's website and I hosted and addressed a public meeting which was held in Dublin Castle on 26 August 2002. That meeting was also addressed by RTE and the Irish Sports Council. The IRFU, the FAI and the GAA were invited to make presentations at the meeting but they declined the invitation to attend. I had further meetings with the FAI, the IRFU, the GAA and the Irish Sports Council on 28 August 2002. Having concluded the consultation process, I then proceeded to finalise the list.
As required, I also sought the opinion of the EU Contact Committee established under Article 3a of the Television Without Frontiers Directive. That committee considered the measures proposed to be taken by Ireland at its meeting on 31 January and gave the opinion that it had no objection to the measures proposed.
A draft of the Broadcasting (Major Events Television Coverage) Act 1999 (Designation of Major Events) Order 2003, was laid before both Houses of the Oireachtas on 28 February 2003. A resolution approving the draft order was passed by this House on 6 March and in Seanad Éireann on 12 March 2003. I signed the order designating events under the Broadcasting (Major Events Television Coverage) Act 1999 on 13 March 2003. A copy of the order is available in the Oireachtas Library.
In accordance with Article 3a of the Television Without Frontiers Directive, the designation order will only have legal force following the publication in theOfficial Journal of the European Communities of a notice of the measures which Ireland has taken. The Commission has indicated that a notice will be published shortly.
It was clear to me from the consultation process that there was a strong case for amending the 1999 Act. Throughout the designation process I have tried to adhere to the principle of being proportionate. While acting to protect the public interest, I also had to take account of the interests of event organisers and of broadcasters. I believe that the list of events to be designated reflects a balanced and proportionate approach.
The amending legislation also follows this principle and provides for an arbitration process for event organisers and qualifying broadcasters in relation to the terms for broadcasting rights to a designated event; a fast-track mechanism through the High Court to fix terms for broadcasting rights where the date of an event is close at hand; and a mechanism to deal with circumstances where a qualifying broadcaster has not acquired broadcasting rights to a designated event, but a non-qualifying broadcaster has.
The question of arbitration arose a number of times during the consultation process. Some of the sports organisations argued that competition in the domestic market for Irish television sports rights is limited by the number of qualifying broadcasters in the State.
The Act provides that a broadcaster can be deemed to be a qualifying broadcaster if it provides coverage to over 90% of the population of the State on a free television service. I am working on the assumption that both RTE and TV3 are qualifying broadcasters. Notwithstanding that there are two qualifying broadcasters in the State, sports event organisers argue that RTE remains the only real potential purchaser of television rights. They also argue that until now they had been able to use the possibility of a sale of rights to a non-qualifying broadcaster as leverage for securing a reasonable price from RTE and as a means of securing coverage for their domestic games. Some of the sports organisations expressed the view that designation could negatively impact on their negotiating power with a qualifying broadcaster. They argued this on the basis that non-qualifying broadcasters are less likely to be interested in purchasing the rights to their events if those events are designated as events of major importance that should continue to be available on free television services. Accordingly, sports events organisers argue that they will, in effect, be forced to deal only with RTE and that designation will weaken their position in future negotiations with RTE. This would, in turn, reduce the level of funding available for the development of their sports.
Several sports organisations, in referring to the provisions of the Broadcasting (Major Events Television Coverage) Act 1999 point to the fact that it does not provide for arbitration between an event organiser and a qualifying broadcaster. During the public consultation process a number of the sports organisations put forward the idea of an arbitration mechanism to determine a fair price for a listed event. I have seriously considered their concerns.
Given the limitations of the Irish market and my wish to be proportionate in relation to the extent of State intervention in the market, I decided the Broadcasting (Major Events Television Coverage) Act 1999 should be amended to provide for an arbitration process between event organisers and a qualifying broadcaster to determine a fair market price. Section 5 provides for a non-binding arbitration mechanism. The next important matter for which the Bill provides is a fast-track mechanism through the High Court to fix terms for broadcasting rights, where the date of the event is close at hand.
Section 4 provides this mechanism. This is an important provision if the over-riding objective of ensuring that the designated events continue to be available to be carried on free television services is to be achieved. Section 4 also deals with circumstances where a qualifying broadcaster has not acquired broadcasting rights to a designated event, but a non-qualifying broadcaster has. This provision provides for circumstances where a contract with a non-qualifying broadcaster is already in place at the time of designation and also provides for future contracts. The Bill also sets out the criteria which the High Court must have regard to in determining reasonable market rates. In addition, the Bill provides that the Minister may, in the public interest, require an event organiser to provide the Minister with a copy of any agreement entered into by the event organiser with a broadcaster.
The Bill's provisions are designed to strengthen the existing statutory provisions contained in the principal Act for the purpose of ensuring that a substantial proportion of the Irish population are not deprived of the opportunity of continuing to watch designated events on free television services.
Section 1 is the interpretation section and contains the definitions used throughout the Bill. Section 2 provides that the Bill applies to all events designated under the principal Act and to any contracts in relation to those events entered into after 13 November 1999, which was the date on which the principal Act was enacted. Section 3, for the purposes of clarification, amends the definition of "the Minister" as defined in the 1999 Act to read the "Minister for Communications, Marine and Natural Resources".
Section 4 provides for a fast-track mechanism for determining terms for broadcasting rights in circumstances where no deal is in place with a qualifying broadcaster and the date of an event is drawing near. It provides that the High Court may fix the terms upon which the event organiser must give rights to a qualifying broadcaster.
Section 4(1) provides that where an event organiser has not, within 28 days of the event taking place, entered into a contract with a qualifying broadcaster, then a qualifying broadcaster may request the High Court to direct the event organiser to give it rights to the event. Section 4(2) allows for the possibility that the High Court may not have sufficient time to make a final decision in relation to the terms upon which rights are to be given. This subsection provides that the High Court may direct that rights be given to a qualifying broadcaster even though the terms, including price, have not yet been fixed. It is important that the High Court be given this flexibility. If faced with a very short period to make a decision, the court might not have sufficient time to make an informed decision as to what would constitute "reasonable market rates." This should not stop the court from taking steps to protect the public interest by determining that a qualifying broadcaster may secure rights to the event. Section 4(3) establishes the principle that an event organiser can decide that an event is not to be televised.
The provisions of section 4 will not apply where an event organiser has decided not to sell broadcasting rights and has informed me of its decision before a qualifying broadcaster makes an application to the High Court under subsection (1). While there was a time in the past where event organisers might have decided not to have their events televised to ensure good attendance, it is difficult to envisage circumstances where this would apply in relation to the events to be designated. Section 4(4) provides that the High Court may appoint an arbitrator to assist the court with the computation of reasonable market rates. This provision is designed to be of assistance to the High Court in making a determination as to reasonable market rates for the acquisition of broadcasting rights to a designated event. Section 4(5) provides that the High Court may give procedural directions to the arbitrator, including the fixing of the period in which the arbitrator must issue the award. This provision is designed to be of assistance to the High Court in making a determination as to reasonable market rates for the acquisition of broadcasting rights to a designated event.
Section 4(6) provides that a qualifying broadcaster may withdraw its application to the High Court under subsection (1) after reasonable market rates have been set, but before the court makes its final order and in circumstances where the court has indicated that it will determine reasonable market rates after the event has taken place. In these circumstances the High Court may award costs as it considers appropriate and may have regard to the intention of the broadcaster making the application. The purpose of designating an event is to prevent an event which has been traditionally available on free television services from migrating to pay-per-view or subscription services on an exclusive basis only. This is achieved by ensuring that qualifying broadcasters have an opportunity to provide coverage of an event subject to the payment of reasonable market rates to the event organiser. The decision to pay the asking price for an event was, and will continue to be, the prerogative of the broadcaster. If the qualifying broadcaster decides not to pay the price fixed by the High Court, then the event organiser is free to sell broadcasting rights to any broadcaster.
Section 4(7) provides that the High Court may, from time to time, issue such directions in relation to arbitration under this section as it considers just and proper. This provision is designed to be of assistance to the High Court in making a determination as to reasonable market rates for the acquisition of broadcasting rights to a designated event.
Section 4(8) addresses the possibility of more than one qualifying broadcaster applying to the High Court for access to a designated event. As long as the event is made available to a qualifying broadcaster the event organiser should be free to choose to which qualifying broadcaster it sells rights. Section 4(9) recognises the fact that an event organiser may be a party to an existing contract with a non-qualifying broadcaster. This provision would apply in the case of the existing contract between the FAI and Sky and would also apply to any future case where an event organiser has a contract with a non-qualifying broadcaster. It provides that where the High Court is considering an application made under subsection (1), and where there is an existing contract with a non-qualifying broadcaster, that the court shall decide to whom and in what proportion moneys in respect of reasonable market rates should be paid.
Section 4(10) provides that the High Court may adjust, as it considers appropriate, the terms of an existing contract between an event organiser and a non-qualifying broadcaster. Section 4(11) provides that the High Court may when considering an application under subsection (1) make any interim or interlocutory order as it considers appropriate.
Section 5 of the Bill provides for a voluntary and non-binding arbitration mechanism to assist event organisers and qualifying broadcasters to agree terms for broadcasting rights to designated events. This section of the Bill provides a framework for the two parties to agree terms where negotiations have failed to result in an agreement. Section 5(1) affirms that the arbitration process provided for in section 5 relates to circumstances where an event organiser is willing to sell broadcasting rights to a designated event to a qualifying broadcaster and where terms have not been agreed.
Section 5(2) provides that either party may request the other to agree to the appointment of an arbitrator for the purposes of fixing reasonable market rates. Where the parties are unable to agree on the appointment of an arbitrator, this subsection provides that I may appoint an arbitrator within 21 days of being notified.
Section 5(3) provides that the Arbitration Acts 1954 to 1998 apply to an arbitration under this section. Section 5(4) provides that the arbitrator shall issue an award in writing which shall be a provisional award. The arbitrator shall notify the parties of the award. Section 5(5) sets out the steps to be taken by an event organiser and a qualifying broadcaster if they are to agree a contract on the basis of the terms of an arbitrator's award.
Section 6 provides the criteria to which the High Court or an arbitrator must have regard when determining reasonable market rates under sections 4 or 5 of the Bill or under section 5 of the principal Act. Section 7 provides that the Minister can require an event organiser to provide him or her with a copy of any agreement it has entered into with any broadcaster in respect of a designated event, where he or she considers it in the public interest to do so. Section 8 is procedural and sets out how the directions and notifications required under the Bill may be served while section 9 provides for the Short Title.
Both the FAI and the IRFU wrote to me recently suggesting a number of amendments. My officials have met them to consider the issues raised. These are under consideration and I am open to amending the Bill if it is considered to be justifiable and necessary. I will deal with this matter further on Committee Stage.