Crikey understands the government is very close to allowing SBS to change the way it calculates its allowable minutes per hour of advertising.

Currently SBS is allowed to air advertising for five minutes every hour. Wholly commercial stations are allowed 13 minutes of advertising (not including network promos) per hour in prime time, which is averaged out from 6pm to midnight. In his review of the efficiency of Australia’s two public broadcasters, now-ABC board director Peter Lewis recommended that SBS be allowed to average out its two-hours daily allowable advertising over the whole day. This would allow SBS to load up advertising in times of high viewership, while lowering the number of ads shown in times when there are few viewers. The proposal favoured would cap advertising at 10 minutes per hour, and is unlikely to touch on the number of advertising “blocks” SBS is allowed to air, meaning it could air several shorter advertising breaks, or one or two larger breaks, if it chose to.

Crikey understands the legislation on this has not yet been drafted, and would need to go to the Expenditure Review Committee before it can be approved. But the idea has garnered considerable support from both the SBS board and the federal government. Any decision is likely to be tied to the funding cuts being finalised by the government’s committee, to be released perhaps as early as next month. The SBS charter would need to be changed to allow the ad calculations to be done differently.

SBS will face a choice as to whether to keep the extra funding from these ads or pass the extra revenue back to the government. Ultimately it makes little difference, as the anticipated revenue would be taken out of SBS’s government funding package if it decides to keep it.

A spokesman for Communications Minister Malcolm Turnbull declined to comment on specifics. “The government is continuing to work closely with the national broadcasters and is aware of a range of proposals for efficiency savings,” he said.

The proposal, rumoured for some time, has drawn opposition from both commercial TV operators and staff and viewer groups. Two weeks ago, Fairfax’s Matthew Knott reported that the ad-averaging proposal had infuriated the commercial TV sector. Speaking to Crikey this morning, Free TV CEO Julie Flynn said that if there’s a shortfall in SBS funding, the government shouldn’t look to the private sector to make up that shortfall. “There’s a finite advertising pie. This proposal means there’ll just be more people trying to divide the pie. We don’t think there’s a lot of extra money floating around.”

“Increased advertising is not a substitute for a proper level of funding. Chasing advertising dollars can come at the cost of SBS’ charter obligations.”

In August, community group Save our SBS wrote about the proposed change in August in an editorial on the group’s website. Yesterday, Save our SBS president Steve Aujard said the group was very much opposed to a significant increase in advertising on the network. “We’d see it as yet another nail in the coffin of SBS,” he said. “We don’t believe it’s possible to have many commercials and abide by their charter. The more you enable commercials, the more SBS will face an incentive to tinker with their programming to boost their ratings.”

The comments were echoed by the Community and Public Sector Union, which represents many SBS workers. President Michael Tull said the change would only benefit the government, and not SBS. “Increased advertising is not a substitute for a proper level of funding. Chasing advertising dollars can come at the cost of SBS’ charter obligations.”

Despite concerns from the commercial TV sector, some have questioned how much extra revenue SBS’s current programming choices could squeeze out of its advertising, as on the vast majority of nights it is the fifth-rating network, behind the three commercial broadcasters and the ABC. Its sporting broadcasts, particularly of cycling and soccer, do pull in significant numbers of viewers, so presumably the proposal would most benefit the station’s ability to monetise the high-profile sporting events it airs.

The 2012-13 SBS annual report (the most recent one available) shows in that year SBS made $58 million from advertising and sponsorship. Its total government funding at that point was $222 million. In the May budget, SBS had $8 million taken out of its budget, then referred to as a “down payment on further efficiencies”. More budget cuts are expected in coming weeks.

SBS introduced advertising in 1991, but originally it was only allowed between programs. Advertising within programs, facilitated by ad breaks, is considered more valuable by advertisers, and was introduced to SBS in 2006.

Peter Fray

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