Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015

Bills Digest no. 95 2014–15

PDF version  [798KB]

WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Dr Rhonda Jolly
Social Policy Section 
7 May 2015 

 

Contents

The Bills Digest at a glance
Purpose of the Bill
Structure of the Bill
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Appendix : SBS Charter

 

Date introduced:  25 March 2015
House:  House of Representatives
Portfolio:  Communications
Commencement:  Sections 1 to 3 on the day the Act receives Royal Assent; Schedules 1 to 3 on the day after the Act receives Royal Assent; Schedule 4 on the 28th day after the Act receives Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website.

The Bills Digest at a glance

Purpose of the Bill

  • The Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015 (the Bill) amends the Special Broadcasting Service Act 1991 (the SBS Act) to allow the Special Broadcasting Service (SBS):
    • to increase its potential revenue base by permitting it to employ more flexibility in the scheduling of advertisements
    • to earn additional revenue through the use of product placement endorsements in its commissioned programming.
  • The Bill also makes some minor technical changes to the SBS Act and the Australian Broadcasting Corporation Act 1983 to provide consistency with the Broadcasting Services Act 1992 and to repeal redundant provisions in both those Acts.

Background

  • The SBS Act, which established SBS television as a corporation, sanctioned the introduction of advertisements or sponsorship announcements. Until 2006, advertisements were only allowed during periods before programs commenced, after programs had ended or during what was labelled ‘natural program breaks'. The time limit for these advertisements and sponsorship announcements was five minutes per hour; it did not include station promotional material.
  • Since 2006, however, the term ‘natural program breaks’ has been interpreted by SBS management also to encompass breaks which are deigned to occur within scheduled programming.
  • SBS is permitted to broadcast 120 minutes of advertising and sponsorship announcements within a 24 hour period.

Key issues

  • The Government argues that the changes in this Bill are twofold; they will make SBS less dependent on Government funding, while at the same time they will assist the broadcaster to secure for itself a sustainable, independent future. SBS supports the proposed changes, maintaining that they will allow it to continue to provide services at current levels, despite cuts to funding imposed through government efficiency dividends.
  • Commercial broadcasters claim allowing these changes to the SBS advertising regime will reduce their advertising revenues by effectively transforming SBS into a fourth commercial broadcaster. This will mean that four networks will share the dwindling sources of revenue available to traditional broadcasters as a result of the rise of new forms of media.
  • Public broadcaster advocates who object to advertising on SBS and the Australian Broadcasting Corporation (ABC) argue that the proposed changes will make it difficult for SBS to function effectively within the conditions of its Charter, which requires it to contribute to, and promote the diversity of Australian society. Moreover, as a result of the proposed changes, the broadcaster will be more inclined to place the needs of advertisers before the needs of viewers. Thus, programming will be assessed on its ability to raise revenue, not on its potential to deliver on Charter obligations.

Purpose of the Bill

This Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015 (the Bill) amends the Special Broadcasting Service Act 1991 to allow SBS potentially to increase its revenue base by permitting it to employ more flexibility in its scheduling of advertising and sponsorship announcements.[1] Under the new arrangements SBS will be able to air more advertising and sponsorship announcements in prime time viewing periods, provided it concomitantly reduces the amount of advertising and sponsorship shown at other times throughout a 24 hour period.

The Bill also clarifies that SBS is allowed to earn additional revenue through the use of product placement endorsements in its commissioned programming.

The Bill makes some minor changes to the SBS Act and the Australian Broadcasting Corporation Act 1983 (ABC Act) to provide consistency with the Broadcasting Services Act 1992 (BSA) and to repeal redundant provisions in both those Acts.[2]

Structure of the Bill

This Bill consists of four schedules:

  • Schedule 1: details the new flexibility arrangements for SBS to allow it to increase the time allocated to broadcast sponsorship announcements from five minutes per hour to ten minutes per hour in certain time periods as it chooses. However, the total amount of advertising and sponsorship announcement must not exceed the current allowance of 120 minutes in each 24 hour period
  • Schedule 2: authorises SBS to broadcast programs that include product placement and requires the broadcaster to develop guidelines with regard to product placement
  • Schedule 3: amends the SBS Act and the ABC Act to repeal certain definitions and inserts a new definition of broadcasting service in the SBS Act with the intention of ensuring consistency with the BSA and
  • Schedule 4: repeals legislation which, according to the Explanatory Memorandum, the Government considers ‘is spent or otherwise unnecessary’.[3]

Background

SBS was established on 1 January 1978 as an independent statutory authority to administer ethnic broadcasting in Australia. At the time this consisted of two radio stations, 2EA Sydney and 3EA Melbourne. In 1980, multicultural broadcasting was enhanced through the introduction of SBS television.[4]

Initially, SBS television was funded solely through ‘such moneys as [were] appropriated by the Parliament for the purposes of the Service’.[5] However, after SBS gained the television rights to the World Football Cup in 1990 it took advantage of the increase in audience this event attracted and supplemented its funding by seeking commercial sponsorship for the occasion. The success of this commercial undertaking led SBS to lobby the Federal Government for permission for advertising to be associated with all SBS programs, with the exception of news and current affairs programs.

The SBS Act, which established SBS television as a corporation, sanctioned the introduction of 'advertisements or sponsorship announcements'. Advertisements, however, were to be only those 'that [ran] during periods before programs commence, after programs end or during natural program breaks'.[6] It has been argued that Brian Johns, Managing Director of SBS when the SBS Act was passed, was the principal force behind the advocacy for advertising on the broadcaster. The Managing Director’s reasoning was said to be that limited advertising (of five minutes per hour) would provide the broadcaster with supplementary funding which could then be used to assist it to fulfil its charter obligations by producing local content.[7]

SBS advertising policy remained unchanged until June 2006, when:

... the SBS Board reinterpreted the concept of natural program breaks and approved the inclusion of in‑programming advertising across the SBS schedule. SBS managing director at the time, Shaun Brown, defended this broader interpretation of natural program breaks using a similar argument to that which Brian Johns had used—the SBS Charter requires the broadcaster to produce Australian content, and funding needed to be found to meet this charter obligation.[8]

The introduction of in-program advertising, particularly in news services, drew considerable criticism from SBS audiences. SBS historian Ien Ang comments:

This was seen as the worst example of commercialisation, tainting the news and its special role within public service broadcasting. By introducing a commercial element into the news, public trust and public interest were seen as threatened. Critics argued that the news was now vulnerable to ratings pressures and its editorial independence was in danger.[9]

Almost 30 per cent of SBS funding averaged over recent years now comes from advertising.[10] It has been claimed elsewhere that this situation is the result of the failure of both Labor and Coalition Governments to fund Australia’s public broadcasters adequately.[11] Regardless of the reason, however, it appears as Brian Johns, Shaun Brown and others, such as SBS board member, Melbourne multiculturalist Hass Dellal have stated, that advertising has become fundamental for SBS survival.[12] Given the outcomes of the 2014–15 Budget, which imposed a one per cent efficiency levy on the ABC and SBS, and the reports of the National Commission of Audit and the Lewis Inquiry into the efficiency of the ABC and SBS, which have expressed the view that both public broadcasters could, and should, rely less on government support, this situation is unlikely to change in the near future.[13]

Indeed, the Lewis Report specifically suggested that there was scope for SBS to increase its revenue under a more flexible advertising regime as proposed in this Bill. Lewis presented a number options, such as increasing advertising time during sporting events, introducing branded content and sponsorship in particular program genres as well as increasing advertising during peak viewing times.[14]

Committee consideration

Senate Environment and Communications Legislation Committee

The Bill has been referred to the Senate Environment and Communications Legislation Committee for inquiry and report by 8 May 2015. Details of the inquiry are at the inquiry webpage.[15]

Parliamentary Joint Committee on Human Rights

At the time of writing, this Bill had not been considered by the Parliamentary Joint Committee on Human Rights.

Policy position of non-government parties/independents

The Australian Greens are vehemently opposed to in-program advertising on SBS. In 2008, 2009, and again in October 2010, the party introduced legislation to prohibit the practice, with the intention, according to Greens Senator Scott Ludlam, of putting the onus back on government to support the broadcaster.[16] In relation to this Bill, Senator Ludlam has given no indication that the Greens’ position has changed.

In Senate Estimates questioning on 25 February 2015, Senator Ludlam noted also that he was ’extremely sceptical’ that any legislation to increase advertising would be passed by the Senate.[17] In addition, the Senator has been reported in the press as saying that the Government was attempting to ‘blackmail’ the Senate into supporting the advertising changes—a reference to the efficiency funding cuts which could be potentially offset by increased advertising revenue.[18] In an interview with the online newsletter Crikey Senator Ludlam remarked that he was:

... concerned about the remarkably divergent estimates about the amount of money the proposal would actually raise (the commercial TV lobbies say it would be $200 million over five years, but SBS says it expects around half that). [The Greens] won't be in a position to announce our final voting intention until we know who's right and who's wrong about the estimates, and secondly, till we know what'll happen if, as is looking likely, the bill fails—we want to know whether the government is going to go ahead and cut SBS' finances anyway...[19]

The concerns of other Senators and Members appear to be focussed on the misconception that this Bill will increase the amount of time allocated to advertising on SBS. This is not the case, as the number of minutes SBS is allowed to allocate to advertising and sponsorship announcements will not change under the proposals in this Bill from the current 120 minutes allowed per 24 hour period. There may, however, be more advertising shown in peak viewing periods. As a result, Senator Ricky Muir for example has expressed concern about the impact ‘an increase’ in advertising will have on SBS and its ability to comply with its Charter obligations. The Member for Fairfax, Clive Palmer has also commented that an increase in advertising will change the nature of SBS.[20]

While in opposition before 2007 Labor criticised the introduction of in-program advertising on SBS, but during its term in government between 2007 and 2013, it did little to reverse the situation. Indeed, in response to a series of questions from the Save Our SBS organisation prior to the 2010 election it made clear that its intention was not to disallow in-program advertising ‘as it would substantially reduce the amount of funding available to SBS to support the provision of high quality and diverse programming’.[21] In November 2014, however, Labor indicated that it was opposed to budget cuts to SBS and the ABC.[22]

Senator Bob Day from Family First, and Senator David Leyonhjelm, from the Liberal Democratic Party, have indicated that they are likely to support the changes in this Bill.[23] Senator Leyonhjelm has declared that he would be happy if SBS so decreased its dependence on taxpayers that it no longer required any government funding to operate. A spokesperson for Senator Day has stated that the Senator believes commercialisation of SBS has made it ‘a far more efficient operation than the ABC’.[24]

Despite there being some support among cross bench ranks, as the cartoonist for one media outlet observes (see the cartoon in Figure 1 below), it is likely that the Bill will not be supported by most non-government Senators and Members:

Figure 1: cross bencher reaction to SBS advertising proposals

Figure 1: cross bencher reaction to SBS advertising proposals 

Source: Cartoon by Golding in M Knott, ‘Ads up: is the antenna wrong on SBS changes?The Sunday Age, 1 February 2015, p. 2, accessed 20 April 2015.

Position of major interest groups

Opposition to changes

Immediately following the introduction of this Bill, Free TV Australia urged the Senate to block the legislation. Free TV Chairman Harold Mitchell claimed the advertising proposals would, in effect, ‘create a new commercial broadcasting licence by stealth’ as SBS would be able to schedule the same amount of prime time advertising as commercial broadcasters and it would target the same advertisers.[25] The Free TV Chairman contested claims by the Government and SBS that the broadcaster would only earn an additional $28.5 million over four years from the changes proposed in this Bill, arguing that there was ‘no transparency’ for this figure.[26] He claimed in fact that an independent analysis ‘demonstrated that SBS will have the potential to earn an additional $148 million in advertising revenue over four years’.[27]

Free TV’s press release maintained a position the lobby group had taken previously, as did its submissions to a consultation on the Regulation Impact Statement (RIS) for this Bill and the current Senate inquiry into the Bill. The Free TV RIS submission declared:

Commercial broadcasters should not be required to subsidise funding cuts to a government-funded broadcaster. Free TV members pay extremely high licence fees on top of Australian corporate taxes. Unlike SBS they are also subject to increasingly onerous Australian content obligations.[28]

Indeed, according to Free TV, if this Bill is passed, there will be an ‘inevitable’ loss of revenue for commercial broadcasters, particularly in regional areas, and this will mean that Australian content production will suffer and this will result in industry job losses. Free TV’s argument is that while commercial broadcasters are required to satisfy ‘heavy’ Australian content obligations which resulted in their spending over $1.54 billion on Australian content in 2013–14, Australian programming comprises only ten per cent of the SBS broadcasting schedule. According to Free TV, this will not alter as a result of increased commercial revenue gains.

It could be argued in response to these claims, that this argument is not relevant to proposals that are principally intended to offset revenue losses from the Government’s efficiency dividends, rather than provide a new, additional source of income. In addition, given that the Charter obligations of SBS are to provide services which satisfy the needs of a multicultural society (see Appendix A for more detail), it would be impossible for SBS to attempt to satisfy this requirement by producing in-house content unless it was provided with a phenomenal increase in its revenue and staffing bases. Therefore, its recourse to foreign programming as a major source of programming could be considered both practical and justifiable.

Free TV questions the assertion made in the RIS on this Bill that ‘it is not certain that any increase in SBS advertising spend will draw away revenue that would otherwise have gone to other commercial free-to-air broadcasters’.[29] It argues that there is a finite amount of advertising money available and that SBS and commercial broadcasters target the same advertisers for that finite resource.[30]

In addition, Free TV disputed the RIS claim that the ten minute hourly cap is ‘well below the hourly limits imposed on the commercial broadcasters’.[31] It argued that because advertising under the SBS Act does not include program promotions SBS could choose to broadcast four minutes of program promotions per hour and still have 84 minutes of ‘non-program matter’ available to sell as advertising space in prime time. Commercial free-to-air television, on the other hand, because its 15 minutes limit on non-program content includes promotion, could be in a situation where it is permitted only the broadcast of 78 minutes of ‘non-program matter’.[32]

Free TV was similarly adamant that SBS should not be allowed to use product placement to supplement its revenue—for the same reasons it opposed changes to the advertising regime on the broadcaster.[33]

The Free TV remarks supplemented comments made previously by representatives of the major free-to-air commercial networks. Network Ten Chief Executive, Hamish McLennan, for example, asserted in late 2014 that commercial businesses would be made to ‘foot the bill for the public broadcasters’ ongoing inefficiencies’ if legislation of the type proposed in this Bill was passed.[34] At the same time, Chief Executive of Nine Entertainment, David Gyngell, called for a reduction in licence fees to compensate commercial broadcasters if SBS prime time advertising increased, a demand with which his colleagues agreed. Tim Worner, Seven West Media Chief Executive, objected to commercial broadcasters being asked effectively ‘to put our hands in our pockets’ to fund public broadcasters[35]

In its submission to the current Senate inquiry, Foxtel remarks that while there has been considerable debate about the effect changes to SBS advertising requirements will have on free-to-air broadcasters, there has been little consideration of the impact they will have on advertising revenues for subscription television. While Foxtel acknowledges that its primary source of income is subscriptions, it notes that nevertheless, a sizeable proportion of its income comes from advertising. And, according to Foxtel, this will be affected if SBS is given permission to introduce more advertising in prime time and to include product placement in such areas as sport and food programming, both of which represent important niche programming areas for subscription television.[36]

SBS supporters have been opposed to in-program advertising on the broadcaster for some time. Before the 2012–13 Budget for example, the Save Our SBS group encouraged people to send messages urging the Government to increase funding for the broadcaster and to instigate the removal of ‘disruptive’ commercial breaks. Over nine thousand people responded to the Save Our SBS plea.[37] In response to the current proposals, film critic Margaret Pomeranz and journalist Quentin Dempster, in conjunction with Save Our SBS and GetUp, have launched another plea for public support through a petition to implore the Government to preserve SBS’s ‘integrity’.[38]

Save Our SBS President, Steve Aujard, has stated that if passed, the proposed changes will make SBS look ‘no different from commercial TV’.[39] In response to the RIS, Save Our SBS argued that the changes will force the broadcaster:

... to concentrate on programs that aggregate audiences and demographics to enhance advertising revenues. The Charter requires that SBS broadcast programs in the preferred languages; contrary to this, the dominance of English language-only programs on SBS ONE in television primetime (compared to the period before SBS commenced in‑program advertising), indicates that commercial bias is already occurring. Extending this through product placement and ad averaging (actually a doubling of primetime advertising) will destroy SBS's raison d'être.[40]

Save Our SBS agrees with the commercial television argument that the changes proposed in the Bill will result in SBS being able to air 14 minutes of advertising (and promotion) in prime time and reinforces the argument by pointing out that its ‘spot checks’, conducted since 2009, consistently show that SBS ONE already airs its currently allowed advertising allocation plus four minutes of promos per hour from 6pm to 12 midnight.[41]

An important argument made by Save Our SBS and alluded to by some parliamentarians in their comments on this Bill is that increased dependence on advertising may to lead to SBS becoming ‘more populist’. Save Our SBS cites internal studies undertaken in 2008 and 2013 in support of its contention. These studies ‘strongly suggest that SBS will be less efficient in Charter delivery if it were to double primetime advertising’. It believes the reason that this will be so is that in-program advertising makes advertisers the clients of SBS with the sole purpose of on-selling audiences to advertisers. The SBS viewer becomes a product to be on-sold. In Save Our SBS’s view, when advertising was between programs only, the viewer was more clearly the client.[42]

It is interesting that the Lewis efficiency review also made this point:

... there will be a greater pressure on SBS management to consider the trade-off of delivering on commercial expectations, against delivering those functions described in the SBS Charter.[43]

It is equally interesting that Peter Lewis did not attempt to consider how the broadcaster could attempt to balance what must be acknowledged are critical tensions for a public broadcaster increasingly tasked with funding revenues while delivering to a diverse audience.

Findings from the Save Our SBS 2013 study are shown in Figure 2 below. They indicate that of the 2,044 study participants, 72 per cent considered SBS less faithful to its Charter since the introduction of in-program advertising and 94.5 per cent wanted the broadcaster to devise a plan to remove all advertising from within programs:

Figure 2: adherence to SBS Charter as result of in-program advertising

Figure 2: adherence to SBS Charter as result of in-program advertising  

Source: Save our SBS, A study of 2044 viewers of SBS television on advertising, Charter, relevance and other matters: a submission to the SBS Community Advisory Committee and the SBS Board, July 2013, pp. 12 and 20, accessed 22 April 2015.

In the view of the lobby group GetUp, the proposed changes in this Bill will have ‘a detrimental impact on the integrity’ of SBS, placing the needs of advertisers before the needs of viewers as programming is assessed on its ability ‘to raise revenue’. GetUp also cites the findings of the Save Our SBS studies into in-programming advertising and concurs with the assessment that it has made it increasingly difficult for SBS to meet its Charter obligations as a result. GetUp assesses the changes in this legislation as a means through which the Government will justify further reductions to the SBS budget.[44]

In favour of changes

The SBS submission to the current Senate inquiry disputes that changes to its advertising regime will interfere with its Charter obligations.[45] According to this submission, since 1991 SBS has had to manage how it deals with the situation of being a public broadcaster with commercial activities. Hence, it has in place policies and practices which deal with this situation and hence, it is well-positioned to deal with increased flexibility in advertising and sponsorship, while maintaining the integrity of its Charter. SBS insists that additional revenue will not only assist the organisation to maintain investment in multicultural and multilingual Australian programs and services, but it will also help to secure the future sustainability of the organisation—without compromising service levels.[46]

SBS is adamant that if the advertising changes in this Bill are not accepted, given that its ability to make efficiency changes has been exhausted, the broadcaster will be forced to make immediate cuts to programs and services.[47]

The Federation of Ethnic Communities’ Councils of Australia (FECCA) supports the proposals in this Bill. The FECCA argues its support is premised on its assessment of the current financial state of SBS under which advertising changes are the means through which SBS can make some recompense for lost government funding support. FECCA notes that it has ‘repeatedly expressed its disappointment’ over funding reductions to the broadcaster and it is concerned that these cuts may result in ‘SBS losing its core multicultural focus, providing a major impediment to enabling the exchange of important information and promoting the diversity of our society’.[48]

Save Our SBS has claimed that FECCA’s support of advertising changes is the result of its receiving sponsorship from SBS. In response, FECCA has countered that despite receiving some funding for a 2013 conference its recommendations have been influenced solely by its analysis of the proposed amendments.[49]

A further view

In an interview with the online journal Crikey, Max Baxter, Chief Executive of advertising agency Universal McCann (UM) Australia, regarded the reaction to this Bill from the commercial television broadcasters as ‘extreme’. Baxter did not believe more advertising dollars for SBS would significantly detract from commercial revenues.[50] Paul Brooks, national head of partnerships and investments at the Carat media company, also considered any impact from added SBS revenue would be negligible and that figures quoted by the commercial networks were ‘inflammatory’. Brooks also cast doubt on the SBS estimation of potential revenue,considering it to be too high.[51]

Steve Allen of Fusion Strategy advertising agency agrees with these assessments noting that one significant reason SBS is unlikely to affect the fortunes of the commercial networks is because of its small audience

share—around five per cent of the metropolitan audience.[52] Allen made a number of other relevant points. Allen believes, for example, that ‘the rise of [I]internet advertising through YouTube and the like, and the movement to advertisers self‑publishing, are far greater threats to commercial [television] fortunes’ than advertising on SBS. In Allen’s view, which accords with findings from the Save Our SBS research, SBS is ‘hamstrung’ when it comes to introducing more advertising, for if it adds too many commercial breaks, it is vulnerable to viewer backlash.[53]

At the same time, Allen acknowledges that there are plenty of advertisers interested in targeting the linguistically and culturally diverse audience of SBS as well as what he labels the broadcaster’s wealthy, niche audience. Max Baxter agrees. He concludes:

SBS plays a niche role within the broader media mix for advertisers ...The type of advertiser who is spending big dollars on Seven, Nine or Ten isn’t the type who’ll lift their dollars and drop them into SBS. The demographics are just so different. But you can use SBS as a specialist supplement to your core programming strategies. You don’t buy a commercial network or SBS — you buy them together.[54]

Financial implications

It is anticipated in the Explanatory Memorandum to the Bill that the changes to advertising requirements for SBS will deliver an increase in advertising revenue of $28.5 million over four years from 2015–16.[55] This calculation is based on SBS estimations with reference also to a table included in a Ministerial press release (see Figure 3 below) and further comments in the Explanatory Memorandum which draw conclusions from audience share statistics for SBS to conclude that the broadcaster could earn up to five per cent of television airtime revenue per annum.[56]

As noted earlier in this Digest, free-to-air television broadcasters dispute SBS and the Minister’s calculations of the potential financial benefits of this legislation for the public broadcaster. They cite independent analysis in support of their claims that SBS has the potential to earn nearly five times more than has been estimated.[57]

Figure 3: SBS and free-to-air commercial television advertising revenues since 2006-07

Financial Year SBS All Commercial FTA networks
2006-07 41.7 million 3.6 billion
2007-08 50.2 million 3.8 billion
2008-09 56.9 million 3.5 billion
2009-10 World Cup 77.6 million 3.7 billion
2010-11 57.2 million 4 billion
2011-12 51.9 million 3.8 billion
2012-13 58 million 3.8 billion
2013-14 World Cup 73.4 million 3.9 billion

Source: M Turnbull (Minister for Communications), Facts about SBS advertising, media release, 24 March 2015, accessed 16 April 2015.

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible as it does not engage any applicable rights or freedoms.[58]

Key issues and provisions

This Bill consists of four Schedules. The following provides details of the major changes in the Schedules. The Explanatory Memorandum provides explanation of all proposed changes.

Schedule 1: advertising flexibility

Item 1 of Schedule 1 deals with the most controversial of the changes proposed in Bill. This item repeals paragraph 45(2)(b) of the SBS Act and inserts a new paragraph which varies existing requirements for advertising and sponsorship announcements on SBS.[59]

Under the current SBS Act SBS is allowed to broadcast no more than five minutes of advertising and sponsorship announcements per hour over a 24 hour period—that is, 120 minutes each day. Proposed paragraph 45(2)(b) will allow the broadcaster to include up to ten minutes of broadcasting per hour in times it may choose, up to a limit of 120 minutes per 24 hour period.

As noted previously in this Digest, the Government argues that this will provide the broadcaster with more flexibility to determine the times it will broadcast advertising and sponsorship announcements. While this amendment will potentially increase advertising revenue, it will not increase the overall amount of advertising allowed on the broadcaster.

The proposed change has been extensively criticised. Commercial broadcasters see it as effectively transforming SBS into a fourth commercial broadcaster, thereby reducing their perspective client pool. Supporters of public broadcasting are equally concerned about the commercialisation of SBS. Their concerns, however, are that allowing more advertising will compromise the principles behind public service broadcasting—principles of media that is financed by the public, for the public, free from political interference and pressure from commercial forces. Moreover, that in the case of SBS, further commercialisation will undermine multicultural broadcasting and make it increasingly difficult for SBS to fulfil its charter obligations.

It should be noted in relation to the comments by commercial free-to-air broadcasters, which posit that allowing more advertising revenue to flow to SBS will effectively result in its becoming a commercial network, that the proposed changes in this Bill are likely not to result in SBS receiving financial support anywhere near that which the commercial broadcasters currently enjoy from government. For example, these broadcasters have consistently complained about licence fees and lobbied for reductions. This lobbying has increased as the popularity of new online media offerings has threatened their traditional sources of revenue.[60] The previous Government responded to the broadcasters’ complaints by reducing licence fees by regulation by 33 per cent in 2010 and 50 per cent in 2011.[61] Legislation was passed in 2013 to make the 50 per cent reduction permanent.[62] In April 2015, one media report speculated that the current Government intends to accommodate the commercial broadcasters by delivering a further 75 per cent reduction to be realised in full by 2017, regardless of what happens with SBS advertising.[63]

Given the amount of revenue to government already forgone as a result of previous reductions, and the projected losses of further licence reductions for enterprises that are purely profit-generated, the trepidation expressed by the commercial free-to-air broadcasters appears somewhat overblown. It could be argued that this is especially so given that SBS is predicted to generate less than $30 million in additional revenue over four years. Reports are that the commercial free to air broadcasters currently benefit from licence rebates by at least $100 million collectively each year. Even if SBS were to achieve greater than anticipated financial gain annually, it is unlikely that it would reach this figure.[64] In addition, as one report comments, licence fee rebates are not the only benefits that commercial free-to-air broadcasters enjoy, they also gain from other government largesse. One example of this largesse can be seen in insistence of successive governments in retaining an anti-siphoning list, which prevents certain televised events as listed by the government, from being appropriated or ‘siphoned off’ by pay television operators so that only those that subscribe to a pay service are able to view those events.[65] It is claimed the benefits from such largesse in total amount to over $1 billion per year.[66]

Schedule 2: product placement

Item 1 of this Schedule proposes to define advertisement in the SBS Act for the purposes of distinguishing advertisements from product placement. The Schedule does not define product placement, but nonetheless, item 3 specifically authorises SBS to broadcast product placements and to include product placement on its digital services (item 8).

At the same time, items 4 to 6 increase the current obligation on the broadcaster to develop and publicise guidelines on the kinds of advertisements and sponsorship announcements ‘that it is prepared to broadcast’ also to address the kind of product placements it is prepared to include in the programs it broadcasts.

Allowing SBS to earn money from product placement in the programs it commissions is in direct contrast to the situation that currently exists in the United Kingdom. The British Broadcasting Corporation (BBC) does not allow product placement in programs produced in-house. The BBC guidelines state it:

... must not commission, produce or co-produce output for its licence fee funded services which contains product placement. All programmes made by the BBC, or an independent producer for broadcast on BBC licence fee funded services, must be free of product placement. [67]

The BBC can broadcast an acquired programme containing product placement if it receives no financial benefit from the placement, but it must not acquire a programme from a third party on the condition that the product placement within the programme will be broadcast. The BBC’s guidelines contain a number of other restrictions including those that result from the 2010 European Union Audio Visual Media Services Directive prohibiting product placement in news and children’s programs.[68]

Similarly, Australia’s principal public broadcaster generally prohibits product placement. The ABC states:

Product placement and other forms of embedded or surreptitious advertising are prohibited. In exceptional cases, the ABC may use content that already contains product placement provided:

    •   the ABC played no role in the commissioning or production of the content
    • the content has intrinsic editorial value
    • the product placement is not unduly frequent or unduly prominent and
    • the ABC’s editorial independence and integrity are not undermined.[69]

It could be argued that because SBS operates under a hybrid model that the above restrictions should not apply and that product placement is a less intrusive way for the broadcaster to supplement government funding than direct advertising. However, SBS purists are likely to take the view that advertising is advertising, whichever way it is packaged.

Schedule 3: technical amendments

Schedule 3 proposes: to make technical amendments to the Australian Broadcasting Corporation Act 1983 and the SBS Act to repeal the definitions of election, election period, Parliament and referendum (items 1 and 13).[70] These definitions are not used in the Acts. The Schedule also proposes in item 2 to amend the SBS Act so that broadcasting service has the same meaning as in the Broadcasting Services Act 1992 (BSA), which is:

... a service that delivers television programs or radio programs to persons having equipment appropriate for receiving that service, whether the delivery uses the radiofrequency spectrum, cable, optical fibre, satellite or any other means or a combination of those means, but does not include:

(a)     a service (including a teletext service) that provides no more than data, or no more than text (with or without associated still images); or

(b)     a service that makes programs available on demand on a point-to-point basis, including a dial-up service; or

(c)     a service, or a class of services, that the Minister determines, by notice in the Gazette, not to fall within this definition.[71]

Consequential amendments are to be made in other places in the SBS Act to reflect this change. The Explanatory memorandum provides more details on these sections.

Schedule 4: spent and redundant legislation

Schedule 4 (items 1 to 25) repeals a number of pieces of amending or repealing legislation in the Communication portfolio. These are listed in the Explanatory Memorandum on page 22.

The Schedule also repeals in full the Telstra (Transition to Full Private Ownership) Act 2005 and sections of the AUSSAT Repeal Act 1991, the Competition and Consumer Act 2010, the National Transmission Network Sale Act 1998 and the Telstra Corporation Act 1991 (items 26 to 33).

As the Explanatory Memorandum notes, the Telstra (Transition to Full Private Ownership) Act 2005 and the various sections it is proposed to repeal under this Bill are ‘spent or otherwise unnecessary’.[72]

It is unlikely that there will be any objections to the repeal of the Act or sections cited with the possible exception that some consumers may question whether the repeal of section 152ELB of the Competition and Consumer Act, reduces the ability of the public to comment on the making of procedural rules under that legislation.[73] The Explanatory Memorandum explains the current situation and the repeal provision in detail.[74]

Appendix: SBS Charter

(1)   The principal function of SBS is to provide multilingual and multicultural radio, television and digital media services that inform, educate and entertain all Australians and, in doing so, reflect Australia's multicultural society.

(2)   SBS, in performing its principal function, must:

(a)   contribute to meeting the communications needs of Australia's multicultural society, including ethnic, Aboriginal and Torres Strait Islander communities; and

(b)   increase awareness of the contribution of a diversity of cultures to the continuing development of Australian society; and

(c)    promote understanding and acceptance of the cultural, linguistic and ethnic diversity of the Australian people; and

(d)   contribute to the retention and continuing development of language and other cultural skills; and

(e)   as far as practicable, inform, educate and entertain Australians in their preferred languages; and

(f)    make use of Australia's diverse creative resources; and

(g)   contribute to the overall diversity of Australian television and radio services, particularly taking into account the contribution of the Australian Broadcasting Corporation and the community broadcasting sector; and

(h)   contribute to extending the range of Australian television and radio services, and reflect the changing nature of Australian society, by presenting many points of view and using innovative forms of expression.[75]

 

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.




[1].         Special Broadcasting Service Act 1991, accessed 5 May 2015.

[2].         Australian Broadcasting Corporation Act 1983 and Broadcasting Services Act 1992, accessed 5 May 2015.

[3].         Explanatory Memorandum, Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015, p. 22, accessed 5 May 2015.

[4].         Enabling legislation was the Broadcasting and Television Amendment Act 1977, accessed 16 April 2015.

[5].         Section 79Z of the Broadcasting and Television Amendment Act 1977.

[6].         Special Broadcasting Service Act 1991 (SBS Act) section 45, accessed 16 April 2015.

[7].         I Ang, G Hawkins and L Dabboussy, The SBS story: the challenge of cultural diversity, University of New South Wales Press, Sydney, 2008, p. 250.

[8].         R Jolly, The ABC: an overview (updated), Research paper series 2014–15, Parliamentary Library, Canberra, 2014, p. 47, accessed 16 April 2015 Cites Ang et al, pp. 250–51.

[9].         Ang et al, op. cit. p. 204.

[10].      Figure deduced from analysis of recent SBS Annual Reports.

[11].      Jolly, op. cit., p. 48.

[12].      Ibid., cites F Farouque, ‘In defence of SBS’, smh.com.au, 5 August 2010, accessed 17 April 2015.

[13].      Australian Government, ‘Part 2: expense measures’, Budget measures: budget paper no. 2: 2014–15, p. 66; National Commission of Audit (NCoA), Towards responsible government: phase one, February 2014, pp. 193–95 and Department of Communications, ABC and SBS efficiency study: draft report, (Lewis report) April 2014, accessed 17 April 2015.

[14].      Lewis, ABC and SBS efficiency study, op. cit., p. 85.

[15].      Senate Environment and Communications Legislation Committee, Inquiry into the Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015 [Provisions], The Senate, 2015, accessed 7 May 2015.

[16].      S Ludlam, ‘Second reading speech: Special Broadcasting Service Amendment (Prohibition of Disruptive Advertising) Bill 2009’, Senate, Debates, 7 September 2009, p. 5737, accessed 7 May 2015.

[17].      S Ludlam, Environment and Communications Legislation Committee, Official committee Hansard, 25 February 2015, p. 61, accessed 7 May 2015.

[18].      M Knott, ‘Bid to double SBS ads comes under fire’, The Sun Herald, 1 February 2015, p. 10, accessed 20 April 2015.

[19].      M Robin, ‘SBS ad averaging bill likely to be stymied in the Senate’, Crikey, 11 March 2015, accessed 20 April 2015.

[20].      M Knott, ‘Bid to double SBS ads comes under fire, op. cit.

[21].      Save Our SBS, ‘Labor SBS policy for the 2010 federal elections', accessed 20 April 2015.

[22].      ‘Take a stand for “our” ABC, implores Shorten’, The Advertiser (Adelaide), 24 November 2015, p. 12, accessed 23 April 2015.

[23].      M Robin, ‘SBS ad averaging bill likely to be stymied in the Senate’, Crikey, 11 March 2015, accessed 28­­ April 2015.

[24].      M Robin, ‘SBS ad averaging bill’, op. cit.

[25].      Free TV Australia, SBS Legislation creates 4th commercial TV licence by stealth, media release, 24 March 2015, accessed 14 April 2015.

[26].      Ibid.

[27].      Ibid.

[28].      Free TV Australia, Submission to Department of Communications [inquiry into], SBS Advertising Flexibility—Regulation Impact Statement, 10 March 2015 (RIS submission), p. 2, accessed 20 April 2015.

[29].      Regulation Impact Statement in Explanatory Memorandum, op. cit., p. 9.

[30].      The Free TV submission cites Nielson Adex data which reports that 85 per cent of advertisers on SBS also advertise on commercial free-to-air television and PricewaterhouseCoopers analysis from Australian Entertainment and Media Outlook 2014-2018 findings that growth in free-to-air television advertising revenues has ‘remained flat since 2008’, and has a Compound Annual Growth Rate (CAGR) forecast of just 1.4 per cent over the next five years, Free TV RIS submission, op. cit., p. 7, Note references for the sources cited are not provided, but are included in the Free TV, Submission to Senate Environment and Communications Committee, Inquiry into Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015, 13 April 2015, accessed 22 April 2015.

[31].      Regulation Impact Statement in Explanatory Memorandum, op. cit., p. 6.

[32].      Free TV RIS submission, op. cit., p. 8.

[33].      Ibid., p. 10.

[34].      D Davidson, ‘If SBS ads double, we should get our licence fees back: Gyngell’, The Australian, 20 November 2014, p. 3, accessed 22 April 2015.

[35].      Ibid.

[36].      Foxtel, Submission to Senate Environment and Communications Committee, Inquiry into Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015, 13 April 2015, accessed 22 April 2015.

[37].      ‘Why SBS received a funding increase, Save Our SBS website, 8 May 2012, accessed April 20 1015.

[38].      Petition on GetUp! Communityrun website, accessed 22 April 2015.

[39].      Save Our SBS, Government wants to fully commercialise SBS with new law, media release, 24 March, 2015, accessed 22 April 2015.

[40].      Save Our SBS, Commercialising SBS by stealth: a response to the SBS Advertising Flexibility Regulation Impact Statement, submission to the Department of Communications, 15 March 2015, p. 6, accessed 20 April 2015.

[41].      Ibid., p. 7.

[42].      Ibid., p. 5.

[43].      Lewis report, op. cit., p. 85.

[44].      GetUp! Submission to Senate Environment and Communications Committee, Inquiry into Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015, 14 April 2015, accessed 22 April 2015.

[45].      SBS, Submission to Senate Environment and Communications Committee, Inquiry into Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015, 13 April 2015, accessed 22 April 2015.

[46].      Ibid.

[47].      Ibid.

[48].      Federation of Ethnic Communities’ Councils of Australia (FECCA), Submission to Senate Environment and Communications Committee, Inquiry into Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015, 13 April 2015, accessed 22 April 2015.

[49].      M Robin, ‘SBS brings out the big guns as questions raised about multicultural group's support, Crikey, 23 April 2015, accessed 23 April 2015.

[50].      M Robin, ‘A fourth network by stealth? Media buyers shrug off SBS’ threat to commercials’, Crikey, 20 November 2014, accessed 22 April 2015.

[51].      Ibid.

[52].      Ibid.

[53].      Ibid.

[54].      Ibid.

[55].      Explanatory Memorandum, op. cit., p. 3.

[56].      Ibid., p. 5.

[57].      Free TV, SBS Legislation creates 4th commercial TV licence by stealth, op. cit.

[58].      The Statement of Compatibility with Human Rights can be found at page 15 of the Explanatory Memorandum to the Bill.

[59].      Special Broadcasting Service Act 1991, accessed 5 May 2015.

 

[60].      See, for example, a diagram which provides a comparative analysis in F Papandrea, State of the newspaper industry in Australia, University of Canberra, 2013, p. 9, accessed 7 May 2015.

[61].      Television Licence Fees Amendment Regulations 2010 (No. 1), accessed 7 May 2015.

[62].      Television Licence Fees Amendment Act 2013, accessed 23 April 2015.

[63].      D Davidson, ‘PM ducks fight with networks’, The Australian, 17 April 2015, p. 4, accessed 22 April 2015.

[64].      K Quinn, ‘TV producers, actors slam licence fee cuts for commercial free-to-air networks’, The Sydney Morning Herald (online edition), 3 November 2012, accessed 23 April 2015.

[65].      For more detail on the anti-siphoning scheme see R Jolly, Sport on television: to siphon or not to siphon?, Research paper, 14, 2009–10, Parliamentary Library, Canberra, 2010, accessed 7 May 2014.

[66].      B Keane and G Dyer ‘Television: the land where the age of entitlement never ends’, Crikey, 12 February 2014, accessed 23 April 2015.

[67].      Ofcom, The Ofcom broadcasting code, 2013, section 9 and BBC, Editorial guidelines, BBC Licence Fee Funded Television Services and Product Placement, 2011, accessed 23 April 2015.

[68].      European Union, Directive 2010/13/EU of the European Parliament and of the Council, 10 March 2010, section 92, accessed 23 April 2015.

[69].      ABC, Editorial policies: principles and standards, 2011, accessed 23 April 2015.

[70].      Australian Broadcasting Corporation Act 1983, accessed 5 May 2015.

[71].      Subsection 6(1), Broadcasting Services Act 1992, accessed 17 April 2015.

[72].      Explanatory Memorandum, op. cit., p. 22.

[73].      Competition and Consumer Act 2010, accessed 6 May 2015.

[74].      Explanatory Memorandum, op. cit., p. 23.

[75].      Section 6 of the Special Broadcasting Services Act 1991, accessed 20 April 2015.

 

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