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Budget submission: additional funding for SBS of $90 million per annum

Australia's second national broadcaster is at a crossroads. The 2012-15 triennial funding round provides an opportunity to reset the course of SBS and cement its position as one of Australia's most important cultural assets.

Australia's relative success as a multicultural society is owed in part to institutions such as SBS which tell the stories of our cultural diversity and reflect a uniquely Australian experience back to those who have made a home here. SBS performs a crucial service in blunting the pressures of marginalisation or ghettoisation which are the flipside of cultural diversity, as well as providing a fresh global outlook for those weary of the vapid offerings of commercial television.

Considering it operates on less than a quarter of the budget of the ABC, SBS provides an extraordinary service of which we can all be proud. However, the troubled history of its hybrid funding model has reached a dangerous new stage. Public funding shortfalls have led to the systematic creeping commercialisation of the station, until in 2007 the station moved - arguably in contradiction of its Act, in spirit if not in letter - to full in-programme advertising.

It is well understood that this disjunct between the needs of advertisers and the needs of the audience has degraded the viewing experience of the station, but as long as advertising revenues continued to rise, successive Governments could get away with the structural under-funding of the station.

Competitive pressures have now sharpened with the introduction of digital multi-channels, cannibalising advertising revenues and bidding up the price of appealing content. Since FY 09-10, advertising revenue growth rates have stagnated and are predicted to fall steeply into decline as highly profitable commercial broadcasters with thousands of hours of airtime to fill hoover up all available content and heavily dilute the value of advertising.

Ironically, the arrival of the commercial multi-channels was smoothed with a surprisingly generous public subsidy to the tune of $250m in waived licence fees for two years.
The Australian Greens believe it is essential in the next funding triennium to reverse the tide of commercialisation, before declining advertising revenues and rising viewer discontent force a crisis on the broadcaster. In addition, to thrive in an increasingly crowded and converging media market, SBS requires an injection of funds above and beyond that sufficient to end in-program advertising.

Analysis of answers requested at successive budget estimates sessions reveal that additional public funding of $45 million per year would be required to achieve this (see answer to Question 60 from Budget Estimates Hearings May 2011). This estimate is difficult to verify and does not necessarily model the increased ‘scarcity value' of more restricted advertising timeslots at the top and tail of programs.

Withdrawing advertising could be achieved in a phased manner across the triennium, allowing the station in the short term to use the funding increase to address urgent priorities including first-run Australian content, expanded online services and an expanded slate of Indigenous content. In addition to retiring advertising content as a hedge against falling revenues, this submission proposes an additional $45 million per year for these and other priorities as set by the station, a total increase of $270 million across the triennium.

To meet this increase, a number of funding options could be considered, including:

  • Funds saved from the switch-off of analogue transmission equipment
  • Revenues raised from the forthcoming auction of public spectrum (the ‘digital dividend')
  • A fraction of revenues raised from commercial broadcaster licence fees
  • A larger portion of Government TV advertising spending

In any event, whatever additional funding the Government chooses to appropriate for SBS, we believe it is essential that a substantial fraction of the additional funding be used to retire as much in-program advertising as possible.

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