Budget Cuts for Australian Pubcasters

SYDNEY: Australia's commercial broadcasters are taking issue with the increased ad-time limits being granted to SBS following new budget cuts for the country's pubcasters.

A total of A$308 million ($266 million) will be cut from the budgets of ABC and SBS over the next five years. A statement from Communications Minister Malcolm Turnbull said the cuts would mean ABC and SBS will "eliminate inefficiencies in their back office operations ensuring they deliver Australians even better value."

ABC's budget over the next five years has been reduced from A$5.5 billion to A$5.2 billion, a 4.6 percent reduction. SBS's will be reduced by A$25.2 million, or 1.7 percent. To enable SBS to recoup these cuts, a legislative change will be implemented to enable the broadcaster to increase the amount of ad time it can sell, so its new budget will be A$1.39 billion, down from A$1.44 billion.

"The Government's highest priority is to repair the Budget and build a stronger and more prosperous economy," the statement said. "The ABC and SBS have been asked, like all other government agencies, to contribute to this effort."

It continued, "ABC and SBS can reduce costs and modernize their businesses, learning from other broadcasters' practices in adjusting to rapidly changing technology and unprecedented structural change across the media sector. The Government is confident that these savings can be achieved without affecting the diverse range and quality of programs provided by the ABC or SBS. Suggestions that popular programs or services are at risk because of budget savings are not credible."

Australia's commercial broadcasters have expressed their dissatisfaction with the increase in SBS's ad limits to 10 minutes per hour. Industry body Free TV Australia issued a statement warning that the move will have "a direct impact on the continued production of quality Australian content."

Free TV's chairman, Harold Mitchell, said, “Any increase in prime-time advertising on SBS will come at the expense of the commercial free-to-air broadcasters who are the major investors in quality Australian programming including drama, news and sport. In regional areas this is going to hit hard on the provision of regional news and local content.”

Mitchell also took issue with Minister Turnbull's contention that the increase in ad limits will bring in an additional A$28.5 million for SBS. “The Minister’s figures are very rubbery.” Free TV puts that number at A$200 million. “This government was elected on the basis of being pro-business, but this decision has been taken without any consultation or consideration of the impact on our businesses. There is a finite advertising pie and any increase in SBS revenues will come directly from commercial broadcasters who will in effect be subsidizing 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?”

He continued, “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. Any further erosion of our revenue base will inevitably impact on broadcasters’ ability to continue their record investment in quality Australian content. We call on the government not to penalize Australian businesses. We will be seeking the support of the wider production sector and all members of Parliament, to ensure that our valuable Australian production industry is not damaged."

Seven West Media CEO Tim Worner issued a statement noting, "We love our public broadcasters but we are being asked to put our hands in our pockets to fund our public broadcasters. This is simply not on. We can’t be asking commercial broadcasters to foot the bill. If they had asked us all to make a donation to SBS of $5 million a year, our response would have been totally predictable. SBS needs to live within its means. Commercial television delivers the news, sport, entertainment and drama programming that Australians love to watch. And we deliver it free of charge. And we do that while continuing to produce more Australian programming than anyone else and paying a super tax in the form of 4.5 percent gross revenue license fees. We are operating in a challenging market. Our business is facing more competition from more directions than ever before. In the face of these changes we have had to redesign the way we operate and make difficult choices about how to reduce costs. I can’t see any reason why ABC and SBS cannot do the same."

Ten Network's executive chairman and CEO Hamish McLennan called the new SBS ad limits "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 continued, "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…. 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…. 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.”