Tuesday 18 October, Environment Communication and the Arts Committee
Senator LUDLAM: Thank you for your opening statement and for joining us this morning. Welcome to your first estimates round. I would like to pick up on some of the things that you raised, particularly the budget question and your advertising revenues. My understanding is your forward estimates show that revenues from advertising will fall-not simply that growth is stalling, but that it will decline.
Mr Ebeid : That is right, yes.
Senator LUDLAM: What is your plan or proposal to offset those declines?
Mr Ebeid : Our advertising revenues have seen a forecast decrease of about $16 million from this time last year when we were setting our budgets. 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. We have basically been going through looking for not only productivity improvements across the organisation but we have had to drop certain services. We have had to cut Australian drama. Recently we cut the Dusty program that was on our slate, which was worth several million dollars. That has meant that we now do not have any Australian drama left on our content slate, which is unfortunate. We have stopped several other initiatives as well as capital programs. A few language services as well have gone into recess as a result of those budget cuts.
Senator LUDLAM: You ran a pretty lean organisation already. Is it fair to say that you are now starting to chop into some of your core activities?
Mr Ebeid : Yes, I think that without a doubt that is fair to say. Shaun Brown, the previous managing director, and the management team have done a really good job in making sure that the organisation is run very lean and there is very little left to cut other than actually take programs and initiatives out.
Senator LUDLAM: So the next budget round, obviously, is really the crucial one. Obviously you have the core activities of the broadcaster. Do you have a view, if there is an increase on your base funding-and I put this to Shaun on a couple of occasions-of using some of that increased public funding to retire some of the in-program advertising?
Mr Ebeid : It would obviously depend on what the funding increase was. But, at the end of the day, whatever we get in our funding increase we would be standing still unless we had a material increase in our funding. I really cannot see us retiring our advertising revenues without a material increase in funding.
Senator LUDLAM: Is it too early to talk about what a 'material increase' would look like? At what point are you not standing still?
Mr Ebeid : Standing still would be about $50 million, because that is what we are doing in advertising revenues at the moment. The forecast has now dropped to about $45 million for this year. That would be the standing-still position.
Senator LUDLAM: Whereby you do not have to cut further services or anything along those lines?
Mr Ebeid : That is right.
Senator LUDLAM: No further attrition.
Mr Ebeid : But, if we were given that money, then obviously we would not be able to increase any services either, which is a key issue for us.
Senator LUDLAM: I just wanted to see, depending on the amount of funding that is granted and if there is any increase in a tight budget, whether you think it is a legitimate use of some of that funding to start withdrawing some of the commercialisation of the station.
Mr Ebeid : There probably could be a mix, again depending on the level of funding. I would be more inclined to want to increase services to our audiences at the moment. The issue with advertising is that we have not really seen a drop-off in our audiences. In fact, when advertising revenue started we actually had an increase in our audience numbers. Audiences now really understand that our advertising revenues do contribute to getting better programming. There are a lot of other services that we would like to be able to offer our audiences than necessarily just cutting advertising, which, I might remind you, is limited to only five minutes an hour compared to the commercial networks where it could be up to 15 minutes.
Senator LUDLAM: Do you still exercise any quality control on the ads, apart from your legal obligations?
Mr Ebeid : We do have absolute quality control around the production of the ads themselves and we do stop any ads that would have any conflicting points to our charter or our editorial independence. Otherwise, if they are legal and they pass the self-regulatory test of the advertising industry, then we let them go through.
Senator LUDLAM: There used to be some quality control and now we have anything-Harvey Norman screaming at us at random intervals. The station used to exercise quality control. When did that drop?
Mr Ebeid : I am not sure I could tell you that. I think we have always had the same quality controls on our ads. You have probably just seen an increase in some different advertisers.
Mr Meagher : I am certainly not aware of any policy change in relation to that. There has been a discretion. There are certain products. For example, we will not advertise the 1800 sex lines and various things like that. In terms of retail advertisers and the like, I do not think we have ever explicitly said that we would or would not take particular people. It is more a case of what the market throws up.
Senator LUDLAM: That is interesting. That is not what I was aware of.
Mr Meagher : I can double-check whether there was a policy prior to my time, but that was five years ago.
Senator LUDLAM: Maybe I was just wearing some rose tinted glasses. Is SBS participating in the convergence review discussion? Is a paper in preparation or something that you have submitted?
Mr Ebeid : Yes, we are preparing our submission as part of the convergence review. We have already had a conversation with some of the members of the convergence review. That was just before my time. I think the previous managing director and Bruce had conversations.
Senator LUDLAM: Part of your mandate is about enhancing social cohesion. In this day and age, I think there is growing tension. We are seeing more migrants from more countries and different countries than people are used to. The political rhetoric around asylum seekers is, in some sense, being calculated to expand or enhance hostility, so your role becomes more important. Can you tell us what in particular you are doing to address that kind of political raising of the temperature around multiculturalism?
Mr Ebeid : We do that through our programs. Go Back To Where You Came Fromand Immigration Nation are two good examples of where we did some surveys of audiences after the programs. The surveys told us that those programs garnered a lot of discussion in the community and got people to think differently about the issue. The programs put up different perspectives for people to make up their own mind about issues and really understand perspectives that they may not have otherwise known. I think those examples also helped the issue of social cohesion and for people to understand the plight of some of the refugees.
Senator LUDLAM: I would like to congratulate you on both of those programs. I will ask just one more question. I understand there is potential in the offing for some kind of either amalgamation or joining of forces with NITV.
Mr Ebeid : Yes.
Senator LUDLAM: What are you able to tell us about those negotiations, if they are afoot?
Mr Ebeid : A few months ago, the minister had requested that SBS and NITV discuss the possibility of SBS starting a free-to-air Indigenous network. Those discussions are continuing. We have been having very fruitful discussions with the NITV management team and board. I am very hopeful that we might be able to put together a proposal to the minister to consider later this year, but we will be taking something to our board very shortly on those discussions.
Senator LUDLAM: Will there be an additional budget component to that? You are fairly stretched with the resources you have at the moment, without taking on more obligations, I would have thought.
Mr Ebeid : Yes. My understanding is that the NITV budget at the moment is $15 million and that those funds would be transferred to SBS to start that service. We are looking at whether $15 million would be enough to put together a quality Indigenous service, based on our public broadcasting standards, and we are going back to the minister with various pros and cons of that budget.
Senator LUDLAM: Around other Indigenous broadcasters-one that comes to mind is IRCA, the Indigenous Remote Communications Association that runs out of Central Australia-are you including other broadcasters, whether it be IRCA or perhaps Goolarri in the north-west of WA, so as not to replicate the perception at least that an ITV is very south-east focused?
Mr Ebeid : Those sorts of discussions will, I think, happen further down the track. I think it is a little early for us to start including some of those other organisations and bodies, but our intent is that we will garner support from different parts of the Indigenous communities. I think those names you mentioned are on our list to speak to at a later point, yes.
Senator LUDLAM: I wish you well with your budget submission.