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Advertising during SBS programs

(Question No. 1493)

Senator Ludlam: To ask the Minister for Broadband, Communications and the Digital Economy-
(1) What steps is the Minister taking to end the practice of Special Broadcasting Service (SBS) television (TV) interrupting programs for advertisements in line with statements made by the then Opposition spokesperson for Communications and Information Technology that ‘Labor has opposed and continues to oppose the decision by SBS to introduce in-program advertising'.
(2) Has SBS had any discussions with the Minister or his office regarding the dropping of advertisements that interrupt programs; if so: (a) when were the meetings; (b) was any agreement or understanding reached; and (c) what does SBS expect as a result.
(3) Given that in February 2008 the Minister supplied estimates from SBS that between $29.3 million and $39.7 million would be required to maintain operations for 2008 if the network were to stop interruption of programs for advertisements, can the Minister verify these estimates as accurate now that accounting for 2008 is available.
(4) Can a list be provided of all programs that SBS TV interrupted for advertisements in 2008 where the program being interrupted was not produced for interruption for commercial breaks, such as British Broadcasting Corporation (BBC) programs and cinema release movies.
(5) What advertising rates were/are charged by SBS for packages of advertising air time on SBS TV depending on time of day, type of program interrupted and other relevant factors for the following years: (a) 2008; and
(b) 2009.
(6) In 2008 did SBS offer a lower rate for advertisements that were run in the break between programs as opposed to those run within programs.
(7) In implementing the September 2006 Guidelines for the Placement of Breaks in SBS Television Programs and the SBS Codes of Practice 2006 and given that section 45 of the Special Broadcasting Services Act 1991 specifies that only ‘natural' breaks are allowed, how does SBS distinguish between the ‘natural' breaks in programs and those that must be forced into programs that were not produced to cater for advertising breaks.
(8) What percentage of the total advertisements run on SBS TV in 2008, not including station or program promotions, were commercials without a charge to the advertiser.
(9) Has SBS revenue from advertising decreased or is it expected to, as a result of the current economic down turn; if so, by how much.
(10) Does SBS receive approximately 80 per cent of income from the sale of air time due to an advertising agency taking a commission of approximately 20 per cent.
(11) Is it true that SBS raised approximately $10 million from interrupting programs for advertisements in 2007 and that the motoring program Top Gear cost SBS approximately $11 million; if not, what are the correct figures.
(12) What functions of SBS are currently outsourced.
(13) Does SBS have plans to fully automate or outsource its presentation department that is responsible for the timing and switching of programs and commercials to air; if so: (a) what are these plans and timelines involved;
and (b) will there be any loss of jobs or redundancies from SBS as a result.
(14) Who or what will determine where commercial breaks are to be positioned, that is, will it be a computer, the program producer or someone else.
(15) (a) When are the monies borrowed by SBS from the Government due to be repaid; and (b) what commercial terms and rates of interest is SBS required to adhere to.
(16) (a) What proportion of programming on SBS TV was in a language other than English during the period defined as prime time by the Australian Communications and Media Authority (6 pm to 10.30 pm) in April 2009; and (b) how do the proportion of these languages compare to the proportion of languages actually spoken in Australian homes.
(17) Is the Government satisfied that SBS TV is fulfilling its obligation to ‘inform, educate and entertain Australians in their preferred languages' properly, as required by the SBS charter under the Special Broadcasting Service Act 1991.

ANSWER

Senator Conroy-The answer to the honourable senator's question is as follows:

(1) In its report "Strengthening our National Broadcasters" released on 12 May 2009, the Government stated that: ‘Along with the free-to-air commercial broadcasters, SBS's advertising revenue is likely to be affected over the short term as a result of the global financial downturn.' (In its Portfolio Budget Statements, SBS is forecasting $68.3 million in revenues from advertising and other sources in 2008-09.)

‘A new restriction on in-program advertising would substantially reduce the amount of funding available to SBS to support the provision of high quality and diverse programming. In the current economic climate and considering the competing claims on a limited Federal Budget, it is not proposed to require the SBS to change its current approach to adverting at this time.'

(2) It is not appropriate that SBS disclose the substance of private meetings with the Minister.

(3) SBS estimates that its advertising revenue for the 2008 calendar year would have been $23.4 million if there had been no in-program advertising breaks. SBS's advertising revenue was approximately $29.2 million higher than that figure.

(4) No. Standard industry practice is that programs distributed for broadcast beyond their original market are delivered to the purchaser unbroken. This allows each purchaser to adapt the program to its broadcasting requirements, whether they are commercial or non-commercial television broadcasters Films made for theatrical release are screened in cinemas without commercial breaks. However the broadcast rights will be negotiated based on the requirements of the purchaser. In the case of a commercial television broadcaster, for example, the licence will provide for the film to be broadcast with commercial breaks. SBS's policy in respect of films that are longer than 60 minutes is that they will be broadcast with only two breaks.
Some television programs are produced for broadcast on a channel that does not broadcast advertisements, for example the BBC in the UK. However such programs will be broadcast with commercial breaks when they are sold to other broadcasters or even, in the BBC's case, broadcast by the BBC in a different market. For example the BBC's commercial arm, BBC Worldwide, broadcasts BBC programs with commercial breaks on its overseas channels, such as UKTV on subscription television in Australia. In other cases, television programs are produced for original broadcast on a commercial television channel. Such programs are also usually sold to other broadcasters without breaks, but in some cases acquired programs are delivered with pre-existing breaks inserted (for example in the form of a fade to black). SBS's Guidelines for the Placement of Breaks in SBS Television Programs (the Guidelines) state that pre-existing breaks that comply with the Guidelines will be considered to be natural breaks. This means that SBS must consider whether the pre-existing breaks comply with the Guidelines, and this is done on a case-by-case basis. For content commissioned by SBS for broadcast on SBS TV, SBS strongly recommends that all producers insert the breaks into the programs during post-production, in consultation with the executive producer and taking into account the relevant sections of the Guidelines. This allows producers to maintain the maximum level of control over their programs. If the producer also has to deliver a distribution version of the program to SBS, the producer is required to create another version of the program without breaks.

(5) Advertising rates are based on projected programming, audience and demand. A different rate applies for each half hour slot across each of the seven days of each week in the ratecard period. The ratecard periods range from two to eight weeks long, and the rates are for 30 second spots. Individual transaction details are commercial-in-confidence. See 2008 Rate Card (Attachment A - avilable [sic] from the Senate Table Office) and 2009 Rate Card (Attachment B - avilable [sic] from the Senate Table Office).

(6) No. All spots are charged at the same rate.

(7) Section 45 of the Special Broadcasting Services Act, 1991 (SBS Act) provides that SBS may broadcast advertisements and sponsorship announcements before or after programs and during natural breaks and that run in total for not more than five minutes in any hour of broadcasting. Sub-section 45(4) of the SBS Act states that the SBS Board may develop guidelines on other matters such as the placement of advertisements and sponsorship announcements. The SBS Guidelines for the Placement of Breaks in SBS Television Programs (Guidelines) set out the principles and policies SBS uses to guide the placement of breaks in SBS television programs. The Guidelines set out the following matters for consideration when determining natural breaks:

1.1 Natural breaks in drama and comedy
A break may be taken when:
(i) there is an obvious and dramatically significant lapse of time in the action, or
(ii) there is a change of scene, with a significant break in the continuity of action.

1.2 Natural breaks in documentaries and information programs
A break may be taken when:
(i) there is a change of topic, or
(ii) there is a change of method or treatment, or
(iii) recorded inserts occurring in live programs, or
(iv) new participants in a discussion program are introduced.

1.3 Natural breaks in entertainment programs
A break may be taken at the end of an act or at the end of a sequence.

1.4 Natural breaks in programs with prizes
A break may be taken when one competitor leaves the scene and before a new competitor is introduced. Where there is no change of competitor, a break may occur at the end of one complete round of questions.

1.5 Natural breaks in music programs
A break may normally be taken at the end of a musical composition, a set, or between the acts of an extended musical work. Breaks may not be taken between segments of a series of pieces usually heard as a continuous performance.

1.6 Natural breaks in news and current affairs programs
Breaks may be taken between separate reports in news bulletins and program segments in current affairs programs. A
program segment may be:
(i) discrete coverage of a particular topic or issue, or
(ii) a report from a particular source or location on an issue, or
(iii) defined by a particular method or treatment, or
(iv) a particular topic in an extended interview.

1.7 Natural breaks in sport
Breaks may be taken during periods where viewers do not miss any significant action of the particular sport being televised ether live or delayed. In sport events where regular pauses in play occur, breaks may be taken during those periods, for example at half time or between races, innings or overs etc. In coverage of long continuous events, breaks may be taken at points where the focus of coverage of the event shifts from one point to another, for example after a resumption of the current placings in a race and before refocusing on a particular section of the race. Breaks may also be taken before or after cut-away discussion or background film insert sequences.

1.8 Natural breaks in outside broadcasts other than sport
Breaks may be taken where the commentator finishes discussing one item in the program and moves to another.

1.9 Natural breaks in acquired programs
Pre-existing breaks that comply with these Guidelines in programs acquired from overseas suppliers and other sources will be considered to be natural breaks. Acquired programs which do not include pre-existing breaks may be assessed for natural breaks following the definitions in sections 1.1 to 1.8 of these Guidelines.

1.10 Natural breaks in relays of overseas broadcasts
Where SBS relays a live program feed from an overseas broadcaster, the break pattern of the originating broadcaster may be taken.

(8) None.

(9) SBS TV advertising revenue has decreased as a result of the current economic downturn. The forecast result of $53.8 million for 2008-09 is a decrease of $8 million against budget.

(10)Currently SBS receives 80 per cent of the income from the sale of airtime.
Ten per cent is the customary industry standard deducted by the agencies buying the commercial airtime.
The remainder relates to charges incurred by SBS in outsourcing its sales function. This will cease on June 30, 2009 when SBS brings that function in-house.

(11) It is estimated that SBS did derive approximately $10m in the first full year of operation from advertising revenue from the new advertising policy. While the cost of Top Gear is commercial-in-confidence, it was a tiny fraction of that amount.

(12) The following functions are currently outsourced:
Web hosting.
Advertising sales (to conclude June 30, 2009).
Production of Australian content on SBS Television other than news and current affairs and sport.
Transmission and distribution.
Internal audit.

(13) No.

(14) Staff in the SBS program preparation team, which includes subtitlers and program presentation staff, determine where commercial breaks are to be positioned based on SBS's Guidelines for the Placement of Breaks in SBS Television Programs. SBS has no intention of varying this process.

(15) (a) The monies are due to be repaid by June 2014. (b) The loan is a fully amortising loan. Repayments are to be made annually on the anniversary of the drawdown of the loan. The interest rate is fixed at the three year bond rate at the time that the loan was approved (4.291%).

(16) (a) SBS Codes of Practice require the yearly television schedule to achieve a balance between television programs in English and programs in languages other than English.
The balance is reported each year in the SBS Annual Report. The balance for the last three years is set out in the table below. SBS does not keep records on the basis of the commercial broadcasters' or ACMA's definition of prime time or prime viewing hours.

% of programs broadcast in LOTE
SBS TV Main Channel (24 hrs)
2005-06     2006-07     2007-08
LOTE            46%           49%           47%
English         49%           47%           48%
No dialogue    5%             4%             5%
Total            100%         100%         100%

(b) There are over 200 languages other than English spoken in Australia (Australian Bureau of Statistics Year Book Australia 2008), as well as more than 145 Australian Indigenous languages that are still spoken (AIATSIS & FATSiL, National Indigenous Languages Survey Report 2005,
http://www.minister.dcita.gov.au/kemp/media/media_releases/national_indigenous_languages_survey_report_2005).
In many cases programming in those languages is not available.

(17) The Government believes that SBS plays a vital role connecting communities and informing and educating Australians. The Government recognises the challenges presented by finite resources and spectrum and considers that SBS ably fulfils its Charter obligations. The Government's Report "Strengthening our National Broadcasters" demonstrated strong support for SBS existence and the importance of its role as a multicultural broadcaster. 

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