Parliament did not intend in-program breaks

When the SBS was established as a corporation under the SBS Act in 1991, the Parliament granted SBS the right to broadcast advertisements before and after programs, and in “natural program breaks”. Although the Act did not define that phrase, the Hansard of the day clearly shows the Parliament intended that “natural program breaks” meant “half time in a soccer match”. No other definition was given.

On this basis, advice was provided to the SBS that it was not allowed to place ads in programs except sport. Ads only appeared between programs – except for sport – and everyone was happy.

But 15 years later, with insufficient public funds and wanting to expand its local TV content, SBS obtained a different legal opinion and in late 2006 began disrupting all TV programs for commercial breaks. That was a fundamental departure from its past practice of screening advertisements between programs only.

At the time, Senator Conroy described the change as being: “inconsistent with the intent of the limits that the legislation attempted to set” and not in accordance with the people who were involved in the drafting of the SBS Act 1991.

The 1991 Hansard reveals that the intent and understanding of the Parliament was that advertisements would “top and tail programs” only, except during the “natural break” of a sporting event.

1991 intent of Parliament on advertising limitations of the SBS Act

• definition of natural program breaks . . .  half-time in a soccer match . . . in effect what will happen is that advertising will top and tail programs (Mr Smith Liberal).
• let us not try to get the advertising revenue that will make the SBS another commercial channel. If we do, again, that will change its character, and I do not think that is really what we are about (Mr Sinclair National).
• advertisement–at the beginning and the end of the sponsored program. In that way the viewers were not disturbed and were not constantly interrupted, as is the case on some of the commercial television programs (Mr Lee Labor).

The current practice by SBS of placing ads in all TV programs has never been tested in the Courts. If it were, an opinion is SBS might be found to have acted not in accordance with the intent of the 1991 Parliament. Not only would SBS then be required to retire all in-program ad breaks except for those in soccer, but members of the SBS Board may individually be found wanting. Not a pleasant scenario. When a section in an Act of Parliament fails to define a phrase, e.g., natural program breaks, the Courts give considerable weight to the intent of the Parliament in determining the meaning of the section in question. The intent of the Parliament is paramount in determining if an action is in breach of an Act. Little weight is given to an argument that an Act failed to provide a definition – ‘so we made one up’.

There is no doubt that SBS ought to be funded significantly more from the public purse than has been the case to date. This is a separate issue from the rights and wrongs of in-program advertising.

The legally untested action to pursue in-program advertising caused SBS to juggle between two masters – advertisers and audience. Advertisers replaced the audience as the client of SBS. This resulted in thousands of viewers protesting to both SBS and government. The decision to disrupt programs questioned the unique and “special” nature of the SBS and all in the name of commissioning more local content; an honourable objective. Ironically, unlike other Networks, there is no legal requirement on SBS to produce any quota of Australian content.

The financial incentive to position ads in-program on SBS-TV is also questionable.

Post 2010, SBS suffered due to the revenue growth from television advertising being negative.

If the negative rate of growth from advertising continues with the same decline as is current, by 2015, it will be minus 37% (excluding the transient, temporary spike caused every 4 years during the very high rating FIFA World Cup broadcasts).

Not only is the rate of growth from ad revenue declining, five years after the change that saw all programs disrupted for advertisements, revenue from ads (in 2010-11) was on a par with the final year of when programs were not interrupted for ad breaks (2005-06).

Although SBS may have ignored the intent of the Parliament in placing ads in-program, it makes no financial sense for SBS television to continue with this flawed policy.

References

The Special Broadcasting Service Act 1991. http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/0/2F8013F942CC76E5CA2571FD0020CC29/$file/SpecBroadService91WD02.pdf

STANDING COMMITTEE ON ENVIRONMENT, COMMUNICATIONS, INFORMATION TECHNOLOGY AND THE ARTS 30/10/2006 COMMUNICATIONS, INFORMATION TECHNOLOGY AND THE ARTS PORTFOLIO Special Broadcasting Service Corporation (committees/estimate/9768/0002) http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:%22committees/estimate/9768/0002%22

SBS GUIDELINES FOR THE PLACEMENT OF BREAKS IN SBS TELEVISION PROGRAMS SEPTEMBER 2006 http://media.sbs.com.au/home/upload_media/site_20_rand_1995575143_sbs_advertising_guidelines_2006.pdf

SBS Corporate Plan 2010-13 http://media.sbs.com.au/home/upload_media/site_20_rand_1685307411_sbs_corporate_plan7.pdf

* SPECIAL BROADCASTING SERVICE BILL 1991 Second Reading’ House Hansard Parl No.36. 4 October 1991 – (references below)

* (chamber/hansardr/1991-10-14/0051) Page: 1842 Mr SMITH (Liberal) http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2F1991-10-14%2F0051%22

* (chamber/hansardr/1991-10-14/0061) Page: 1860 Mr SINCLAIR (National) http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2F1991-10-14%2F0061%22

* (chamber/hansardr/1991-10-14/0060) Page: 1857 Mr LEE (Labor) http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2F1991-10-14%2F0060%22

SPECIAL BROADCASTING SERVICE BILL 1991 14/10/1991 (chamber/hansardr/1991-10-14/0057) from http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2F1991-10-14%2F0057%22 (pg inj 1855) and 19 subsequent fragment URLs of Parl No 36 to end (pg inj 1875)

Question No 30, Hansard Ref: EC 66—67, answer (d) http://www.aph.gov.au/Senate/committee/ec_ctte/estimates/supp_1011/bcde/sbs.pdf

Environment and Communications Legislation Committee 18/10/2011 Estimates BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO Special Broadcasting Service Corporation:  M Ebeid, Managing Director, SBS page 6 (PDF page 10)“The forecast has now dropped to about $45 million for this year” http://parlinfo.aph.gov.au/parlInfo/download/committees/estimate/2b715df2-8420-43c6-8675-c8418d2c3ed9/toc_pdf/Environment%20and%20Communications%20Legislation%20Committee_2011_10_18_573_Official.pdf;fileType=application%2Fpdf#search=%22committees/estimate/2b715df2-8420-43c6-8675-c8418d2c3ed9/0002%22

SBS Annual Report(s), SBS, http://www.sbs.com.au/aboutus/corporate/view/id/111/h/Annual-Reports

SBS 2001 — 2002 Annual Report, Financial Statements, p 73, (Way Back Machine) http://web.archive.org/web/20030312011429/www.sbs.com.au/2002_annual_report/sbs_financials.pdf

2002 — 2003 Annual Report, Financial Statements, pg 97, Waybackmachine Internet Archive, http://web.archive.org/web/20040413170218/www.sbs.com.au/2003_annual_report/2003_Annual_Report_Financials.pdf

2003 — 2004 Annual Report, Financial Statements, pg 85, Waybackmachine Internet Archive, http://web.archive.org/web/20061231163944/www20.sbs.com.au/sbscorporate/media/documents/5633financials_appedix.pdf

2004 — 2005 Annual Report, Financial Statements, pg 93, Waybackmachine Internet Archive, http://web.archive.org/web/20060621075907/www20.sbs.com.au/sbscorporate/media/documents/193809_financials.pdf

SBS 2005 — 2006 Annual Report, Financial Statements Sec2:93 (Way Back Machine) http://replay.waybackmachine.org/20070607045758/http://www20.sbs.com.au/sbscorporate/media/documents/91508_financial_statements.pdf

SBS 2005 – 06 Annual Report Commercial Affairs Sec2:42 (Way Back Machine) http://web.archive.org/web/20061231081007/http://www20.sbs.com.au/sbscorporate/media/documents/652304_commercial_affairs.pdf

2006 — 2007 Annual Report, Financial Statements, pg 88, Waybackmachine Internet Archive, http://replay.waybackmachine.org/20080812155413/http://www20.sbs.com.au/sbscorporate/media/documents/174sbs_ar067_financial.pdf

2007 — 2008 Annual Report, Financial Statements, pg 96, http://media.sbs.com.au/sbscorporate/documents/6859sbs_annualreport_financialstatements.pdf

2008 — 2009 Annual Report, pg 97, http://media.sbs.com.au/sbscorporate/documents/7738sbs_annual_report_200809.pdf

2009 — 2010 Annual Report, pg 84, http://media.sbs.com.au/home/upload_media/

SBS 2010-11 Annual Report http://media.sbs.com.au/home/upload_media/site_20_rand_1237101070_sbs_annual_report_2010_11.pdf

Environment and Communications Legislation Committee 18/10/2011 Estimates BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO Special Broadcasting Service Corporation:  M Ebeid, Managing Director, SBS page 6 (PDF page 10)“The forecast has now dropped to about $45 million for this year” http://parlinfo.aph.gov.au/parlInfo/download/committees/estimate/2b715df2-8420-43c6-8675-c8418d2c3ed9/toc_pdf/Environment%20and%20Communications%20Legislation%20Committee_2011_10_18_573_Official.pdf;fileType=application%2Fpdf#search=%22committees/estimate/2b715df2-8420-43c6-8675-c8418d2c3ed9/0002%22