Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Standing Committee on Communications and the Arts
20/07/2017
Australian film and television industry

RYAN, Ms Suzanne, Chief Executive Officer, SLR Productions

THWAITES, Ms Helen, Head of Business Affairs, SLR Productions

[15:16]

CHAIR: Welcome. Although the committee does not require you to give evidence on oath, I should advise you that these hearings are legal proceedings of the parliament and therefore have the same standing as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. Do you wish to make an opening statement before proceeding to the discussion?

Ms Ryan : Great, thank you. I am the founder and owner of SLR Productions, a company I established in 2002. For the past 15 years, SLR has been creating, developing and financing and producing high-quality Australian children's programs. We are one of Australia's leading Emmy and multi award-winning product companies. We have produced more than 160 hours of content that has been exported to over 165 countries worldwide. Throughout our 15 years of business, we have provided work for more than 2,000 people and trained more than 100 people in the areas of production, writing, design, storyboarding, acting, directing, editing, sound and music.

I am here today as I'd like to express my particular concern over the free-to-air broadcasters who wish to abolish children's television quotas. Australian children deserve to have unlimited access to high-quality local content which reflects a unique and diverse Australian culture and lifestyle and their unique Australian identity.

We know audiences are not yet leaving free-to-air viewing. In the most recent OzTAM research released on 10 July this year, it states that 84 per cent of Aussies are still watching free-to-air television every week—that is over 19 million of us weekly.

While I recognise the need to modernise and review regulation, to abolish children's quotas would almost certainly lead to the collapse of the Australian children's production industry and an increase in foreign product on our channels.

It is fair to say that Australian children are watching Australian children's programs across various platforms; that there is a significant reduction in investment by commercial broadcasters to Australian children's programs; that the free-to-air networks, as part of their licence obligation, should continue to make available Australian children's programs; that we have an outdated regulatory framework that needs modernising; and that we need regulation that supports Australian content on all free-to-air platform, including the ABC as well as other content service providers like Amazon, Netflix, Stan, YouTube and social media services.

Locally-grown children's programs are the most vulnerable sector in the industry. To put it simply: if children's quotas were abolished, we would see companies like SLR eventually go out of business.

At a minimum, current levels of Australian children's quota should remain on all free-to-air networks and their digital platforms. Australian children's quotas should be increased on subscription platforms such as Nickelodeon, Disney and Cartoon Network to offset the vast amount of foreign content these channels show. There should be an introduction of legislation that obliges all content service providers, including social media services, to commission and broadcast Australian children's content, which has been proposed in Europe so that Netflix, Amazon and other streaming services will soon be required to have 30 per cent of their content European. And the ABC, which does not currently have Australian content quotas, should have a commitment and a responsibility for maintaining a level of Australian children's content equal to or above the commercial sector.

As financing children's television is one of the main hurdles to sustaining our industry, there should be an increase in the television offset levels to 40 per cent to match feature films. This would result in the production of more high-quality Australian content.

Lastly, the following should also be considered: TV production should be exempt from payroll tax in all states, the PDV and producer offsets should be continued, the ACMA guidelines should be reviewed to increase qualifying C drama to 16 years to allow more co-viewing audiences, and the episode lengths should be decreased to 22 minutes to align with the global market. SLR believes that the proposals outlined above and in our submission will not only come a considerable way to ensuring the continued survival and growth of our industry but, more importantly, mean that Australian children continue to hear Australian voices, see Australian faces and engage with Australian stories on all their viewing platforms.

CHAIR: Thanks very much, Ms Ryan. I haven't noticed: have you been here for most of the day?

Ms Ryan : I'm afraid I haven't. I have a five-week-old daughter who's just outside.

CHAIR: Ah, okay. There she is. Dad's got her down the back. Just today, we've heard from the major commercial networks, Seven, Nine and Ten, and then the WIN Corporation, the regional one, as well as Free TV, and they're all telling the committee that no-one is watching their children's drama that they're producing now, that it's not commercially viable and that, because they're not government funded and they rely on advertising to run the place, they want it abolished because no-one's watching it. What's your response to that?

Ms Ryan : In certain words, OzTAM did release this research a week ago, which is quite timely given the time of these hearings, and that research shows that 84 per cent of Australians, including children, are watching free-to-air every single week. So my question to the free-to-air networks is: is this posturing to get their argument across, or is it a real fact that they can't monetise children's programming?

CHAIR: I think what they were saying today is that, yes, people are still watching free-to-air, and they're still producing adult dramas and they're doing a lot of reality TV, so to speak, which isn't classed as children's TV—whether that's MasterChef, The Voice, this new Ninja Warrior show or any of these shows they're doing now. So people are watching that in particular, but they're saying that they're not watching children's drama. Do you have any evidence to say that's not true?

Ms Ryan : I don't have that evidence, and I can take that on notice and send something in later, but it is evident that the networks don't promote and market children's television. They once had it on their main platform. Now it's on their digital channel. They don't have any marketing plans on their main channel to have audiences know to go across to their digital channels, and they have restrictions on advertising, which subsequently has an effect on whether people get to see that or not.

CHAIR: What do you mean by the last point there, about restriction on advertising?

Ms Thwaites : I have been here this morning, so I have been listening to what they've had to say. The fact is that they've never been able to monetise children's programming. That has always been the case. This is not something that's new. They're just saying that, as part of the new media landscape, they want to relinquish their responsibility to broadcast Australian children's content on their free-to-air platforms. I think that the more important point is that, because of the advent of a whole range of different media platforms that have come into existence, the children's quota should be extended rather than restricted across all platforms, including, we believe, being maintained on the free-to-air platforms, because part of the role of our broadcasters is to present Australian stories to Australian kids. The fact that there might be a reduction on their free-to-air platforms may be a reality but—excuse the pun—it's like throwing the baby out with the bathwater. It's like, 'Oh well, now we'll just get rid of kids' programming altogether on our platforms because nobody is watching it.' Well, fewer people may be watching it, but they're also talking about diversifying onto other platforms themselves and moving into the digital space. Well, if they don't have any obligation to show kids' programming at all then, when they do start monetising these digital spaces, there will be no obligation on them to uphold their responsibility to tell Australian stories to Australian kids, and I think that's a real problem.

Ms Ryan : Further to that point, we know that Australian children like to see their own faces and hear their own voices in programs. If there were more marketing, promotion and commitment to Australian children's programs, and to higher quality programs, it's not to say that children would be watching those programs less.

CHAIR: When you say 'more marketing, more commitment and more advertising'—

Ms Thwaites : Not necessarily more advertising.

CHAIR: But marketing and commitment. Ms Thwaites has just said that children's television has never made a profit, so to speak, and, if they are commercial broadcasters and the industry has changed significantly in the last 12 years and they are facing significant hurdles now from Netflix and social media companies, shouldn't we be listening to what they're saying?

Ms Thwaites : Certainly we should be listening to what they are saying, but our point is that, instead of taking the argument that that means they should be able to abolish the children's quota, we turn that around and say, 'No, what we should be doing is extending the children's quota across the new platforms so that there is more of a level playing field.' By abolishing the children's quota on free-to-air platforms and then not having any obligation to produce children's programming on other platforms, it will cease to exist, as has been the case in the UK, where they abolished the quota and it proved to be disastrous. Ofcom have now had to reimplement quotas on all the broadcast platforms because they were not producing children's shows and English kids were not seeing their stories on television. That is a real concrete example of the consequences of doing something like that.

CHAIR: Obviously, you started your business back in 2002. You employ 10 full-time people and you're making a profit, so congratulations. How did you get into that? Why did you decide to start it? And what are both of your backgrounds in the industry?

Ms Ryan : I have been in the children's industry, in animation specifically, for 25 years. I started SLR basically because I wanted to be able to create and develop programs myself, with a team of people that I used to work with. It's something that we have been doing now, as I said, for 15 years. An important point is that all of our shows but one have been with the free-to-air networks in Australia, so they're an important and integral part of our business and an integral part of the industry. We have been working with them for a long time, so it would amaze me if they didn't continue their obligation.

CHAIR: Is everything that SLR Productions does just children's television?

Ms Ryan : Yes, that's correct.

CHAIR: It sounds like a bit of a niche. Why don't you do other programs?

Ms Ryan : When I first started in the business in 2002, children's television was an extremely viable business for a lot of producers, and the licence fees then were 50 per cent more than what they are now for the free-to-air networks. Co-productions weren't as commonplace as they are now because we're forced to co-produce with foreign companies because of the level of finance in Australia from the networks. So at that time doing children's television was about the creative decision and a business decision as a twofold approach.

Mr LITTLEPROUD: Was that viability in 2002 predicated on consumer habits, particularly around where the eyes were watching? I mean, TVs were it. Now, effectively, the world's evolved into multimedia spectrum, streaming devices and those types of things. Is that where the viability was when it was viable in 2002? Obviously, we are hearing from commercial stations, one of which is in receivership as we speak. Is that where the shift has come from?

Ms Ryan : I have to admit that in 2002 and the whole way through my career the networks have always said that they can't make money out of children's programming. It has been an argument that has continued to be present for them over this long period of time. So, to be honest, I don't know the answer to what you're saying. But, yes, once the quota was allowed to move to the digital channels there was less audience that came with that.

Mr LITTLEPROUD: Just further to that, we've heard evidence from those commercial operators that they're only a business and they're doing it tough. In your evidence you talk about the ABC and that part of their charter is around local content, and I think you had in there about imposing a quota on the ABC as well. In terms of that commercial reality for commercial stations, if we were to look at imposing a quota on the ABC to ensure that we do get that local content production, could that in isolation sustain the players like you within the industry at the moment?

Ms Ryan : No, because if the commercial free-to-air networks were to have their quotas abolished that would be 780 hours a year combined between the three of them. I did hear that they've suggested it be on the ABC, and I don't understand how the ABC could manage 780 hours on one channel with all of that content. Also, producers are then competing for a timeslot as opposed to various timeslots. It just doesn't seem to make sense to me.

Mr LITTLEPROUD: Approximately how much is it an hour to produce?

Ms Ryan : To produce content?

Mr LITTLEPROUD: Yes. Is there an amount you could put on that?

Ms Ryan : Budgets for animation are in excess of $350,000 a half-hour. For live action, we're talking in excess of $450,000 a half-hour.

Mr LITTLEPROUD: Wow!

CHAIR: If the quotas were removed for the commercial broadcasters, have you got a business plan to transition your business to something else?

Ms Thwaites : Open a restaurant!

Ms Ryan : We just wouldn't be able to compete on the world stage. Australia has a highly regarded industry, especially in children's content. We're a viable industry. As I said, we've sold our content to 165 countries. When you do go to the overseas market, Australian content sells well, it's respected—

Ms Thwaites : Kids' content in particular sells very well.

Ms Ryan : Yes, sorry, I'm talking about children's content here. If we don't have these platforms to sell to and have our business work from, then we ultimately can't compete.

Mr LITTLEPROUD: Do you know roughly what, if anything, the streaming services produce in hours at the moment?

Ms Ryan : Very little.

Mr LITTLEPROUD: I think we have had evidence from the ABC, but you don't off the top of your head know roughly what the ABC produces?

Ms Ryan : When ABC3, which is now ABC Me, was given its green light from the government, it was to have 50 per cent Australian content. From the recent paper that Kim Dalton has released, that is now 25 per cent.

Mr LITTLEPROUD: You don't know what that would translate to in hours?

Ms Ryan : No, I don't, I'm sorry.

Mr LITTLEPROUD: I'd just be interested in what they're doing in comparison to the commercials.

Ms Ryan : They're doing very little.

CHAIR: What funding or offsets have you in your business accessed in producing children's content? Are they working well?

Ms Ryan : We have accessed the PDV offset since the guidelines changed for the threshold to be a half million dollar spend in Australia. That became quite a substantial offset for us. Prior to that, we had accessed the producer offset, but only when we were having high licence fees from the network that could allow us to go to Screen Australia to have that funding model. Since the licence fees have dropped by 50 per cent, we don't meet the guidelines for the producer offset; we only meet the guidelines for the PDV offset.

Ms TEMPLEMAN: You are obviously passionate about quality Australian children's television. Why does it matter so much?

Ms Ryan : The quality or children's programs?

Ms TEMPLEMAN: The quality of Australian children's television. I can see the passion and I want to unpack that.

Ms Thwaites : To me it seems fairly clear that seeing our own stories reflected on our broadcast platforms is essential to our sense of identity and place in the world. There is no question about that. As the networks pointed out numerous times when they were giving their presentations, Australians want to see Australian stories, and we will continue to honour that commitment because we are committed to Australian stories. Why should that be the case only for adult drama? Why doesn't the same apply to Australian kids' stories? They want to see their own stories as well. We have a cultural commitment to honour that and continue telling those stories. We believe they should be told across all the platforms and shouldn't be sidelined to only one particular platform, where all kids are ghettoised into watching particular programs. It undermines the importance of what it is to tell our stories and to tell our stories from the day we come into this world—and particularly in an environment where we are being bombarded with foreign culture, foreign content, foreign ideas. There is nothing wrong with that—diversity is great—but our own culture will get lost in amongst it if we abolish quotas and there is no imperative to continue telling those stories.

Ms TEMPLEMAN: Are you typical of the size of business operating in this sphere? It sounds as if there are lots of individual freelancers doing it on a job-by-job basis. How many are like you?

Ms Ryan : I would think we sit in the middle. Yes, there are independent producers and freelancers, and there are mid-sized companies. I often say we are boutique or mid-sized; we are not a studio; we're not foreign owned; and we're not receiving funding from the mother ship to keep us at a big level. Yes, I would say we sit in the middle sector.

Ms TEMPLEMAN: Of your team, how many would already be highly skilled and at the top of their game versus how many are in the process of learning and growing? What are you doing to support people coming through the industry?

Ms Ryan : We have quite a range. We currently have people working with us who have just come out of a course and are wanting to learn in the industry. It's their first job in the industry. We also have directors who are over 60 and are wanting to keep their skill base going to stay in the industry. It's quite a broad spectrum. We don't do 3-D CGI animation; we do 2-D, which is a traditional skill in Australia. Australian animation companies, as you know, were one of the biggest industries in the 1960s in the world. We were doing Saturday morning cartoons for the US consistently as service work, and we had studios like Disney and Hanna-Barbera, and they have all gone away now. So that skill base and training new people through has been hard, but we still try to do that and try to take on people for every single production. And we also try to keep people who are in the older end of the spectrum employed as well and their skill base going.

Ms TEMPLEMAN: In terms of exports, you've mentioned that a number of programs have been exported, but I noticed that Guess How Much I Love You—is that the rabbit one?

Ms Ryan : A hare.

Ms TEMPLEMAN: That has obviously been translated. What is your conversion rate from being just Australian audiences to being an export product where our stories are going overseas?

Ms Ryan : With animation, it travels really well internationally, so a lot of the time, if you watch cartoons, they are entertaining, and entertaining programs sell well. And they are easily translated when it is animation because it is a voice-over, so, a lot of the time, our stories or our creative translates very well into other countries, because the children then feel it is their own local culture and content. So in a world of Guess How Much I Love You, it is meadow-land creatures, so that can translate anywhere in the world.

Ms TEMPLEMAN: And is that common for your work? Or does it go overseas more often than not?

Ms Ryan : It is very common, yes. All of our programs travel to all different countries.

Ms Thwaites : Part of our funding model, or our funding model, essentially, is the free to air broadcast licence fee and an international distributor's guarantee. They put money up to guarantee, and then they get worldwide distribution. So virtually every program we make we know is going to have worldwide distribution because we can't finance it without that. Basically it's a 100 per cent export of the product we make into the international market.

Ms Ryan : And not only does it export as a TV program; it exports across different merchandise categories. It could become a book property, a soundtrack, DVDs, a play or theatre and so on.

Ms TEMPLEMAN: And presumably it is a platform neutral. Can it go into streaming services without any problem?

Ms Ryan : Absolutely.

CHAIR: What sort of turnover does your business have? I've got your profit here, but it doesn't tell me your turnover.

Ms Ryan : Yes. I will take that on notice. It depends on the year and the production we have had.

CHAIR: You mentioned payroll tax, that's all. I just wanted to know a little bit more about how that is impacting your business.

Ms Ryan : I produced a live-action series, our only one amongst all of the animation, and that was in South Australia. And for an $11 million budget, the payroll tax exemption was extremely important to being able to finance that series, particularly because we had that payroll tax exempt. That contributed to part of the financing. And in New South Wales we are not able to do that.

CHAIR: You've got 10 full-time staff based here in New South Wales?

Ms Ryan : But when you contract a production you have 80-plus staff.

CHAIR: And you pay it in different states?

Ms Thwaites : The production was in South Australia, and you didn't have to pay payroll tax in South Australia.

Ms Ryan : Yes. So if we were to produce series here and we have a hundred people we have employed, if we were able to get the payroll exception for that production then that would help with contributing to finance.

CHAIR: Yes. So what sort of payroll tax do you pay when you've got 80 people employed on a production?

Ms Ryan : I can't tell you off the top of my head, sorry.

CHAIR: What are you asking for when you mentioned payroll tax—that it should be abolished or shouldn't apply for you?

Ms Ryan : Because it is the payroll tax, the percentage of that on a production can equate to tens of thousands of dollars, so that helps a saving in your budget. You put it back into the financing of your show, because, as producers, we look for finance from every different area that we can possibly find it. And that's drying up across all sorts of areas, so that is just one small contribution that could help.

CHAIR: Payroll tax is a state government tax because you're employing people.

Ms Ryan : Yes.

CHAIR: So I guess it is up to each state government to give you that exemption. Do any other states give you an exemption, besides South Australia?

Ms Ryan : Queensland.

CHAIR: Good old Queensland.

Ms Thwaites : And they do it specifically to incentivise people to produce their shows in those states.

CHAIR: Where is the bulk of your work done?

Ms Ryan : Here in New South Wales, in Sydney.

CHAIR: And they don't give you an exemption?

Ms Ryan : No. A typical financing model five years ago would have included home video, and that market is decreasing, and state agency funding, which has decreased.

CHAIR: Have you given that information to Create NSW? They were here this morning. They are the New South Wales film agency that the state—

Ms Ryan : Yes; they are very aware of that. That is because they receive less funding and we receive less funding.

CHAIR: Have you written to your local state member about it?

Ms Ryan : Yes.

CHAIR: Any reply?

Ms Ryan : That is Malcolm Turnbull.

CHAIR: No; the state member.

Ms Ryan : Oh, state; sorry. No, I haven't.

CHAIR: Well, write to your state member, because it is a state tax and they need to know how it is impacting work.

Ms Ryan : Absolutely.

CHAIR: We are out of time, but is there anything else that you wish to put on the record before we finish?

Ms Ryan : I do have a question. Has the committee been speaking to other platforms like Netflix, Stan, YouTube et cetera in this area?

CHAIR: None of them made submissions to the inquiry, and we haven't been speaking to them. My understanding is that Netflix have no employees in Australia.

Ms Thwaites : According to this morning's comment, that is probably right.

CHAIR: We spoke today to Channel Nine, who own half of Stan. But, no, we haven't really—mainly because they're foreign owned and haven't submitted to the inquiry.

Ms Thwaites : I think the final point that we would really like to bring home yet again is that we believe that, rather than abolishing the children's quota, it should be extended across all these new platforms. We accept that it is difficult for the free-to-air broadcasters because the media landscape has changed so dramatically, and we believe that any platform that is broadcasting to Australian audiences should have a responsibility to show Australian kids programs as well.

Ms Ryan : Further to that, I would like to make the point that, to me, modernisation of this regulatory framework is actually increasing quota across all platforms not decreasing it.

CHAIR: Thank you very much for attending. I know that you are both busy, particularly running your own business. If you have been asked to provide any additional information, please provide that to the secretariat. You will be sent a transcript of your evidence here today, to which you can make corrections of grammar and fact.