Crikey

For much of the past year, Labor Senator Stephen Conroy made it clear he didn’t like the new policy at SBS of putting advertisements into TV programs. As opposition spokesman on the media he was a terrier on the subject, especially at Senate Estimates hearings in Canberra where he bombarded SBS CEO Shaun Brown and other executives with questions and barbed comments.

Senator Conroy went to great lengths to attack the policy, wondering if SBS has the legal right to do this in terms of the SBS Charter, and suggesting the policy might change if there was a change of Government. Well there has been a change. Senator Conroy is now the minister responsible for SBS. But with all the power suddenly in his hands, he seems to have found himself lodged between a rock and a hard place.

SBS got the legal advice. A report on that legal advice has been sent to Senator Conroy’s office, a point he acknowledged in Senate Estimates this week.

SENATOR CONROY: I am currently considering the advice that I received. I only received it relatively recently. I am considering it.

SENATOR BIRMINGHAM: It has not yet satisfied you?

SENATOR CONROY: I am considering it.

SENATOR BIRMINGHAM: You have expressed previously strong views that intra-program advertising may not comply with the SBS charter. Do you still hold those views?

SENATOR CONROY: I am considering the advice I have received from the SBS board.

It’s no wonder the Minister is suddenly circumspect given what Mr Brown had to say in the same hearing:

I can say that the board received that legal advice and the management received that legal advice and the outcome is currently on air and the parties are all happy with that.

But there’s a further, much greater problem. If the Senator sticks to his guns and directs SBS to drop the in-program ads (the so-called “ad islands”) SBS could be the loser, dropping millions of dollars a year.

According to Mr Brown, SBS has been receiving more and more money for its ads, and the amount has risen since the new policy was adopted:

SHAUN BROWN: In 2005-06, TV gross revenue was $33.1 million. In 2006-07, the last financial year, it was $38.6 million and this year it is budgeted to be $46 million.

SHAUN BROWN: In 2005-06 the increase over the previous year was 13.3 per cent. The following year the increase was 16.6 per cent and the budget for this year, if delivered, will produce an increase of 19.2 per cent.

SBS gets around $189 million a year from the Federal Government under the current “triennium” funding arrangements (The ABC is funded in the same way). SBS says the extra revenue funded by the ad islands is being directed to more Australian production, a point acknowledged by Senator Conroy.

So to eliminate the ad islands would cost money. The question is how much?

Mr Brown told the Committee:

It is fair to say that, the year when we made $5.5 million extra, a substantial slice of that would be due to the fact that we began introducing intra-program breaks. But it is hard to strip out what exactly is due to that particular action, what is due to the fact that SBS television’s audiences have grown 20 per cent in the last five years or what is due to the advertising market in recent times being pretty buoyant. outcomes now. What I am saying is that the forecast for our revenue outcome this year is in line with a projected increase of $10 million from this initiative over a base of two years ago remember, because last year we introduced it partly, so we got some of the $10 million in year one.”

So if Senator Conroy was to be consistent, he would have to find between $5.5 million and more than $10 million a year extra (and rising, like the ad revenue is rising) for SBS in the new funding arrangements from next year.

SBS’s viewing levels haven’t changed since the ad islands were introduced, but the quality of Australian programs has. That’s an inconvenient truth for Senator Conroy.