Commercial networks will ‘fund SBS budget cuts’, as Free TV warns of quality erosion

TenNetwork Ten and Free TV have attacked the government decision to double the hourly amount of advertising SBS can sell, claiming the move has created a “fourth free-to-air network” that will damage the quality of Australian TV production.

Ten chief executive Hamish McLennan branded the move “very concerning” while Free TV chairman Harold Mitchell reiterated claims that $200m worth of advertising revenue will vanish to SBS over five years. Communications Minister Malcolm Turnbull had earlier suggested the figure was nearer $28.5m.

Free TV logoThe criticism came after Turbull announced budget cuts to both SBS and ABC and tasked SBS with raising additional revenue through advertising. To achieve that the maximum five minutes of advertising per hour will be raised to 10 minutes.

SBS managing director Michael Ebeid predicted raising the cap will bring in between $20m and $30m additional revenue over five years.

While the daily limit of advertising will remain at 120 minutes, SBS will have greater flexibility in selling more inventory during prime time programs.

McLennan said the budget cuts have effectively been funded by commercial broadcasters who will see advertising revenue vanish to the public broadcaster.

“Today’s announcement that commercial broadcasters will be funding SBS budget cuts is very concerning and a damaging move by a government that says it is pro-business. The government is clearly creating a fourth free-to-air network by stealth,” he said.

“All media companies, including Ten Network, have made painful and difficult cuts over a number of years in response to major structural change and a soft advertising market.

“But this government is clearly unwilling to tackle the difficult decisions when it comes to the ABC and SBS, instead making  commercial businesses and their shareholders foot the bill for the public broadcasters’ ongoing inefficiencies.”

He said this “bad decision” had been “dumped on the industry and viewers” without any transparency or consultation.

“The government needs to be held accountable and needs to explain itself to viewers, the shareholders who own the free-to-air television networks, Australian television production companies and the tens of thousands of people who will be hurt by this decision,” McLennan said.

“Commercial broadcasters pay 4.5 per cent of their gross revenue in licence fees, as well as corporate taxes. Unlike SBS or ABC, we have increasingly heavy Australian content obligations. Meeting those obligations will only get tougher thanks to the government’s decision today.”

Free TV warned that doubling the SBS prime time advertising limit will have a “direct impact on the continued production of quality Australian content”.

The move will come at the expense of free-to-air broadcasters with Mitchell claiming regional areas in particular will be “hit hard”.

“We are already operating in a challenging environment where broadcasters are competing against new services that are unregulated, pay little or no Australian taxes, and invest virtually nothing in local content production,” Mitchell said.

“Any further erosion of our revenue base will inevitably impact on broadcasters’ ability to continue their record investment in quality Australian content.”

He added:  “There is a finite advertising pie and any increase in SBS revenues will come directly from commercial broadcasters who will in effect be subsidising a government funded broadcaster.

“This makes no sense. Why take money out of companies that not only employ over 15,000 people, but who are also the major investors in Australian content?”

Free TV said in a statement that commercial free-to-air broadcasters invested a record $1.54b on free Australian content in 2013/14, up 11.6 per cent from $1.38b in 2012/2013.

Steve Jones


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