You can call it a “tight budgetary situation”, or you can call it a crisis. Either way, the rumble is that SBS is in real trouble, and is wearing a path to the door of Communications Minister Stephen Conroy in preparation for next year’s triennial funding submission.

Many believe that it is not so much a funding submission, as an application for a bailout.

SBS CEO Michael Ebeid acknowledged in Senate estimates earlier this week that SBS does not have any Australian drama on its slate at present, following the dropping of the planned drama Dusty, due to a drop in advertising revenue. And he said that SBS would need an extra $50 million to be “standing still” and avoiding further decline and cuts.

All of which should make this appearance by Ebeid and other SBS executives, speaking on “SBS Future Vision” in a few weeks particularly interesting. The blurb declares the public broadcaster to be “at a crossroads”. Indeed.

Those who opposed the “mixed model” of public broadcasting in which the service is funded through taking ads, and through the public purse, are gleefully proclaiming that it has failed. In truth, it works when advertising is strong. But in the present weak market SBS has suffered, and in the last triennial funding arrangements, the government showed no inclination to bail them out. SBS warned at the time that the funding outcome was not enough for its needs.

Since then, SBS has suffered from the loss of Top Gear, its top-rating program, to Channel Nine at the end of 2009. The program’s loss was reputed in the industry to have cost $4 million foregone advertising revenue.

Meanwhile, the increasing numbers of commercial  television multichannels has doubled the amount of advertising real estate and cut the revenue SBS can earn, while raising the costs of buying overseas programs.

At Senate estimates earlier this week, Ebeid described advertising revenue as a “double edged sword” — language that would not have been used by his predecessor, Shaun Brown, who was the architect of the mixed model.

In the corporate plan, income from advertising and sponsorship was projected to be $86.6 million in 2010-2011. In answers to questions in Senate estimates last November, then boss Shaun Brown admitted that this had fallen to $84.6 million. And at Senate estimates this week, Ebeid said that the organisation’s advertising revenue had declined about $16 million since this time last year.

“The organisation has worked really hard to find about $12 million of savings to offset that $16 million drop, but there is still a gap there that we are unable to find,” he said. The result had been cuts to Australian drama, including the planned new Australian drama Dusty.

A spokesperson for SBS, asked whether the broadcaster was after a bailout, said: “SBS has made no secret of its tight budgetary situation and has had many discussions with government about our funding needs in terms of both adequacy and future services.” My understanding is that this is an understatement.

Meanwhile, there are discussions afoot about SBS merging with National Indigenous Television, with Ebeid predicting that a proposal would go to the minister later this year. If it went ahead, the NITV’s $15 million budget would be transferred to the SBS, he said.

SBS has screened some first-class dramas and documentaries in recent times, with Go Back to Where You Came From one of the highest profile. The crisis means that there won’t be much, if any, more commissioned unless the government comes to the rescue.

Will the government smile on public broadcasters this time around? The ABC obviously doesn’t think so.

The idea of Auntie putting off its triennial funding round until the following year is still kicking around. The ABC management is using the Convergence Review and its implications as a cover for making its pitch in what will, they hope, be a more favourable budgetary situation in 2013.

The ABC would be content to continue for another year on its current funding, appropriately indexed. But the word is that SBS cannot afford to wait. It needs government intervention in the next budget, or even sooner.

The Convergence Review reports early next year, before the budget, and is likely to have things to say about relaxing or eliminating Australian content quotas for the commercial broadcasters. If so, this will cast the role of the public broadcasters in a more favourable light, at least when it comes to the pitch for more Australian drama, children’s content and documentary funding.

Since the surprise mid-year announcement of Michael Ebeid as the new boss of the broadcaster, there have been several high-profile executive departures from SBS, leading to commentators using sinking-ship metaphors.

One question likely to be on some minds is whether now is the time for the SBS and the ABC to merge. But nobody is pushing for it. The ABC might have liked the idea a while ago, but would hardly want the weight of expectation and responsibility without more money from government. Nor would it want the vagaries and implications of the mixed model.

So what will Conroy do? And will the ABC also be forced to make its pitch in 2012? The answer to these questions will have big implications for the future of public broadcasting in Australia.

Peter Fray

Fetch your first 12 weeks for $12

Here at Crikey, we saw a mighty surge in subscribers throughout 2020. Your support has been nothing short of amazing — we couldn’t have got through this year like no other without you, our readers.

If you haven’t joined us yet, fetch your first 12 weeks for $12 and start 2021 with the journalism you need to navigate whatever lies ahead.

Peter Fray
Editor-in-chief of Crikey

JOIN NOW