Special Broadcasting Service Corporation

[09:02]

CHAIR: I welcome officers from the Special Broadcasting Service. Mr Ebeid, welcome to your first estimates hearing. Would you like to make an opening statement?

Mr Ebeid : Yes, I would. Thank you very much. I might start by saying that in the four months that I have been managing director I have been struck by the depth of passion and commitment by all employees at SBS. I think we are truly a unique organisation and one that is an important cultural and creative institution. Although our TV network is run on about 20 per cent of the average of the other four networks in Australia, we absolutely make sure that our Australian content really counts and makes a difference. Recent programs like Immigration Nation and Go Back to Where You Came From demonstrate our ability to tell Australian stories, to push boundaries and be thought provoking, ultimately contributing to social cohesion. There are also great examples of how we have used social media to not only extend the reach of our content but also connect with new and younger audiences.

In addition, our language services in radio and online have been piloting some really good initiatives. Our virtual Chinese community centre online has really enabled Chinese audiences to congregate online and to get news and current affairs and to share their Australian stories and experiences online. That has been very well received. We have also had a MandarinNews Australia program, which is a 30-minute news and current affairs program done in Mandarin with Australian subtitles, to share Australian news and current affairs with that community. Those two services have been very well received and, off the back of those two successes, we believe that we should be doing more Australian news and current affairs in language for our various communities—at least for our top half-dozen or so languages—to contribute to social inclusion. I have also been quite heartened by community support from our culturally diverse communities. I have had the opportunity to meet many of their leaders and stakeholders to hear first-hand just how important SBS is to those communities and the impact that it has on their lives. It has really led me to believe that SBS is truly more relevant today than it ever has been in its last 35 years of history, mainly because of our cultural complexity in Australian society.

As always, resources and funding is very much the key issue for us at SBS. Our content costs have been increasing dramatically over the last few years, despite the fact that we have been helping ourselves in funding by increasing our advertising revenue. But as we all know advertising revenue for a public broadcaster is very much a double-edged sword. Our ad revenues now are continually under pressure because of the advent of multichannels. They really have not recovered since pre-GFC levels. Unfortunately, the outlook for advertising revenue is not optimistic either, given the state of the retail sector and business confidence.

However, I am very encouraged by Minister Conroy's and other parliamentarians' support of SBS and our SBS services. I am very grateful to Senator Scott Ludlam and Steve Georganas and Paul Fletcher for recently co-convening a bipartisan group of the Parliamentary Friends of SBS, which we hope will make a difference to gaining further support for SBS.

I very much look forward to continuing our positive conversations about SBS and our continued funding needs as we head into consideration for our important triennial funding year. Thank you.

CHAIR: Thank you.

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 NITV 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.

CHAIR: Mr Ebeid, I was remiss; we should congratulate you on your appointment and welcome you to your first estimates.

Mr Ebeid : Thank you, Senator.

Senator BIRMINGHAM: I echo those compliments to Mr Ebeid.

Mr Ebeid : Thank you.

Senator BIRMINGHAM: I will touch on a few of the issues that Senator Ludlam was covering. The first is in relation to advertising. Obviously every extra dollar you can get out of government—to supplement loss in advertising revenue as a result of the downturn but, hopefully, go beyond that—is a dollar you can apply to extra services, regardless of what you have for advertising, is it not?

Mr Ebeid : That is correct.

Senator BIRMINGHAM: The advertising income is a supplementary addition as such and allows you to do more—whether it is $45 million of advertising or $450 million, which you might dream of.

Mr Ebeid : Exactly. I think it is important to remember that the reason, of course, we have the advertising revenue is to supplement the very stagnant government funding that we have had over the past years, when costs have obviously grown to considerably more than that.

Senator BIRMINGHAM: It was years, Minister. It probably goes back more than three or four.

Mr Ebeid : Decades.

Senator Conroy: It was a long, long time. There was actually an increase in funding from us in the last round.

Mr Ebeid : Tht is correct.

Senator BIRMINGHAM: It was relatively marginal, if my memory of Mr Brown's description of that increase is correct. The annual report, Mr Ebeid, indicates SBS Regional delivered 34 per cent growth and was the fastest-growing regional network in Australia for the 2010-11 year. This is in the section about television advertising. I assume that is correct because it is in your annual report. I assume SBS Regional is a description of composite advertising across your regional distribution facilities.

Mr Ebeid : Not knowing what you are referring to, I am assuming that is advertising revenue from our regions. That would probably be correct because I do not think we really focused on advertising revenue from the regions in the sort of way we are now. So, yes, we have had some increases there but it has clearly not offset the decreases in revenue that we are getting from the metros.

Senator BIRMINGHAM: I was quoting from page 48 of the report. If you need to update anything there, please feel free to do so. I will jump to NITV, which Scott touched on. Minister, I think you proposed inclusion post 1 July 2012. Is that the time line that people are working towards?

Senator Conroy: Sorry?

Senator BIRMINGHAM: The NITV integration into SBS.

Senator Conroy: That sounds about right.

Senator BIRMINGHAM: Is that the time line agencies are working towards, Mr Ebeid?

Mr Ebeid : That is correct, yes.

Senator BIRMINGHAM: It is your understanding, Mr Ebeid, that all of the existing $15 million will be shifted across, and in being shifted across it will be isolated for exclusive Indigenous TV production?

Mr Ebeid : That is currently the plan. Yes, that is how we are looking at it.

Senator BIRMINGHAM: Along with real funding increases, or the like, for the future?

Mr Ebeid : We would hope so. Yes.

Senator Conroy: I think they know they would never get it under your government.

Senator BIRMINGHAM: NITV was seeking an increase in annual funding, as I understand it, but their budget appears to be relatively static. Is there any expectation that as part of this integration into SBS there will be an increased funding for NITV or the new format for Indigenous production?

Senator Conroy: It is, just for the record, funded in a stand-alone way until 30 June 2012—that is, next year.

Senator BIRMINGHAM: Thank you, Minister.

Mr Ebeid : Really that matter is yet to be determined. We have not, obviously, accepted the challenge as yet. We are working through those in discussions with the department, the minister and NITV. So I think it is a bit early to comment on that.

Senator BIRMINGHAM: How are you going about working out plans for editorial control and appropriate arrangements for how you would have, in a sense, a currently separate organisation shifting into SBS but maintaining its own level of independence and operational standards?

Mr Ebeid : There is no doubting that one of the benefits of bringing it into SBS is that the new Indigenous service will benefit from the scale of SBS and our resources. So we definitely would not want to keep it as a separate organisation. We would want to be able to integrate it into SBS but we would definitely have a separate unit that would have editorial control over the programming that goes out. We are looking, at the moment through the working parties, at what that would look like and what form it would take in terms of the governance. The minister has already mentioned that we may have an Indigenous board member added to our board. We may or may not develop a separate advisory committee. They are all things that we are discussing and looking at at the moment.

Senator BIRMINGHAM: With regard to the broadcast of the NITV service, are there opportunities as a result of integration to expand the reach of the broadcast to more parts of Australia, or to integrate that into the technical aspects of SBS's broadcast activities?

Mr Ebeid : Obviously the reach will expand instantly overnight, because it will be a free-to-air channel. At the moment it is only on Imparja in the north and on FOXTEL and AUSTAR. So its reach will, by definition, expand instantly with the free-to-air service. Hopefully, that answers your question.

Senator BIRMINGHAM: It does. More generally speaking, having taken over the role and looking at SBS's use of the existing licences and broadcast opportunities available to it, do you believe SBS is getting appropriate value at present from its multichannels?

Mr Ebeid : I think there is a lot more that we could do. A lot of what we have on our multi-channel now is a direct reflection of our budgets. We are doing a good job, I think, of making sure we have a high level of languages other than English on SBS TWO. That is big part of our charter, obviously. So I think we are meeting our charter well on that.

Overall, yes, I think we have got good value for money from that but we would probably like deeper and more Australian content as well. If we were able to put more Australian content on there I think we would get better value for that spectrum.

Senator BIRMINGHAM: In your opening statement you talked about producing more in language, news and current affairs. Is that an objective across SBS in terms of radio and television or is it a specific objective that you have for television in particular?

Mr Ebeid : When I was talking about Mandarin News Australia, that was definitely a TV objective. I think we already do a very good job on radio and online in terms of language. But the problem with radio and online in language, in my view, is that we are not addressing all the new languages that we have in terms of new migrant groups in Australia, and they are the high-needs groups that probably need us the most. We should be expanding the number of languages that we have, given our cultural complexity at the moment; but what is happening in reality is that our number of languages have been shrinking, not expanding, at a time when we have new language groups coming into the country.

Senator BIRMINGHAM: There has been some criticism in relation particularly to the length of time taken to replace the head of television, Mr Campbell, since his departure. What are the reasons for that delay? What is the process in place? Is this hindering the development of next year's program or, indeed, your bidding for triennial funding and where you will go in the future?

Mr Ebeid : Firstly, I would probably say that those who would criticise the delay would probably not understand the process of recruiting a senior executive of that level. We have been working quite hard at finding the right executive, and there have obviously been lots of challenges in doing that. It is a tough role and also, given the budgets that we have, our salaries are not as high as what the commercial sector are offering. So I make no apology for the amount of time that we have taken to fill that role, because I absolutely want to get the right person in that role, and I will continue to look for the right person and I hope to have somebody announced. We actually came very, very close, I must say, to announcing somebody recently, but that person had to pull out of the race at the last minute due to family reasons, and that set us back. But I will continue to find the right person, not the best person at the time.

To answer the second part of your question—around its impact on the schedule—I do not believe it is impacting on the schedule at all, actually. I am very, very confident in the management of our TV division. I have been working very closely with them on the schedule and the slate for the next 12 months, and I am very confident that actually it is a great line up.

Senator SINGH: Congratulations, Mr Ebeid, on your new appointment.

Mr Ebeid : Thank you.

Senator SINGH: What do you see as the core business of SBS?

Mr Ebeid : I think the core business of SBS is really to broadcast to Australian audiences, to reflect to Australians our multicultural and diverse society and to give them news and current affairs—and particularly in a way that we can tap into different languages and give our bulletins in language as well as in English for all Australians.

Senator SINGH: That would be done through both acquiring programs from overseas—

Mr Ebeid : Overseas and commissioning.

Senator SINGH: as well as commissioning. What would be the breakdown, roughly, of the acquisitions compared to the commissioning?

Mr Ebeid : It is probably about 80/20 at the moment, and I think the main reason for that is that obviously acquired content is a fraction of the cost of commissioned content. We would love to be commissioning a lot more content, and, to tell Australian stories the way our charter sets us out to, we need to be commissioning more content. But we just do not have the funds at the moment, and therefore we do acquire far more than we commission.

Senator SINGH: I understand that SBS was recently compelled to cancel the commissioning of a new Australian drama series called Dusty.

Mr Ebeid : Yes—we talked about that earlier.

Senator SINGH: Was that a funding reason? What were the reasons behind that?

Mr Ebeid : It was definitely a funding reason. A couple of things on Dusty: when I came into the role and looked at the forward commissioning slate, it was oversubscribed, so we were a little bit over budget on that; also, the budgets for the program itself came in higher than our initial estimates, so we just could not afford the increase that the program was needing. It is a full drama production, and therefore it is at the top end of what you would expect to pay for that sort of drama, so we just felt that financially we could not afford to keep it. But the money that we did cancel from the show we will be re-investing in other programs.

Senator SINGH: So, despite that, you hope to maintain that 80/20 balance that you currently have?

Mr Ebeid : Absolutely—the money that was allocated to Dusty will go to other commissioned content; it will not go to more acquired content.

Senator SINGH: In the case of Dusty and other programs that are commissioned, is it because the full costing gamut has not been realised at the beginning of the commissioning process that you end up no longer able to commission a program?

Mr Ebeid : Yes. The commissioning slate is obviously a complex one. We sign up to various programs, and they get delivered over different financial years. So you have to manage the budget tightly as you get closer and closer to the end of each year. Programs sometimes slip into the following financial year, and you just have to manage that process.

Senator SINGH: With digital radio coming onboard across the country, I understand SBS believes that that will improve audio services. How do you see that taking place—through more SBS digital channels? How do you see that occurring?

Mr Ebeid : Digital radio just allows us to do more programming, particularly language programming, should we want to launch additional radio channels. We also have the opportunity to do that online with fast broadband. So, with that combination, we have recently launched PopAsia on one of our digital channels, and that has been very successful in reaching Asian youth in Australia, and we have converted that into a TV program, which is on for two hours every Sunday morning. That has also been very well received by our audiences.

Senator SINGH: At the moment, I think on SBS Radio there are certain times of the day that are designated to various—

Mr Ebeid : Languages.

Senator SINGH: Yes. Would the programs on those multilingual channels be able to be rolled out on their own or would they have to be rolled out under a different—

Mr Ebeid : We could do that if we had the funding, but at the moment there are no plans to increase any digital radio channels. We just do not have the money for more content there, so there are no plans to do that.

CHAIR: Thank you, Mr Ebeid. That concludes the questiioning of SBS. The committee will now resume its examination of the Sustainability, Water, Population and Communities.