SBS’s controversial new system of screening advertisements within programs continues to pay off, with the public broadcaster expecting a very sharp rise in revenues in the 2008-09 year.
In a reply in Senate Estimates this week, SBS managing director Shaun Brown revealed that SBS was expecting gross airtime advertising revenue of “around $47 million”.
“Next year we would expect to be ahead of $60 million, and possibly as much as $65 million. I cannot be any more precise than that because the budget for the year has not yet been set and has not been approved by the board,” Mr Brown said in reply to a question.
That increase could range between 27% and 40%. The rise is off a very low base but the extra revenues flowing to SBS won’t be going to Seven, Ten and Nine in what is widely expected to be a much tougher year for commercial TV revenues.
“The decision to place ads in programs has had a positive effect in a number of areas. Obviously it has allowed us to charge a higher price for advertising, remembering the five minutes of advertising per hour is unchanged. More significantly, though, the model that previously existed where ads were chunked between programs meant that the only way we could persuade advertisers to place their ads on SBS was to offer them very significant discounts, and we have been able to substantially reduce that discounting. So we are getting a higher yield for the spots,” he told the Senate Committee.
“The other area is that we have had audience growth during this period and we are budgeting for further audience growth. While you cannot exactly connect all of these dots, the fact is that some of those programs that I have told you about are local programs. They are the beneficiary of commercial revenues, so being able to bring back successful programs is part of the story. And being able to promote programs to a larger audience in the middle of a show rather than at the end of a show is helpful as well.”
“Without commercial revenue, the rights to the World Cup in 2010 and 2014, which SBS has now secured exclusively, would not have been available. So I think commercial revenue has always played an important part, and in sport, in particular, it allows us to go into a territory that you can see the ABC cannot find any way of offsetting its costs through commercial revenue. So we maintain a fringe competitiveness in that market—not as substantial as the broadcasters who have 13 or 15 minutes of advertising per hour. We are not seeking that, but we are getting positive results from it. And, yes, all of the additional revenue goes into content on television.”
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