Special Broadcasting Service Corporation

[19:08]

CHAIR: I now call officers from the Special Broadcasting Service. Mr Ebeid, would you like to make an opening statement?

Mr Ebeid : Yes, I would. Firstly, I wanted to tell the committee that it has been a terrific year for us so far with the success of a lot of our programs in winning some key awards both domestically and internationally, which we are really pleased about. I will talk about them in a minute. Our current affairs and news program Dateline had really good international recognition on a program that they did on Afghanistan recently, which was really terrific. And of course we are really pleased about the funding outcome of the recent budget. SBS is quite grateful to the government and we are very pleased at the funding boost that we got. I think this funding boost will make a significant difference to the organisation. It will really ensure that we are sustainable but also position us for the future. It means that SBS can continue to play a major role in the Australian media. But also very importantly it means that we are able to launch a free-to-air national Indigenous network, which we are really pleased about. The funding boost by the government is really recognition that we have had some significant challenges and it will enable us to now address those, particularly around our reduced commercial revenues but also around the increased costs that we have had due to the changing media landscape with our multichannels.

SBS is quite honoured to be given the responsibility of taking over the new free-to-air Indigenous television service. We are really pleased about that. I think the new service will allow Aboriginal and Torres Strait Islander people to really share their culture and their stories not only with other Indigenous people but for all Australians to be able to get that on a free-to-air platform. SBS will take responsibility for NITV on 1 July this year. A lot of work is already underway to facilitate that and house the organisation in SBS premises. We are absolutely committed to ensuring that the Indigenous channel has Indigenous editorial responsibility. That is something we are very committed to. We want to expand on the really good work that NITV has done over the last five years and give them the benefits of SBS's resources and infrastructure and all the back-office scale that we can bring to help them continue the good work that they do. On behalf of the board and the whole organisation I want to thank Minister Conroy for this unwavering support during our funding big. We are very pleased with the outcome. I also want to thank Senator Scott Ludlam for his support and also the members of parliament Paul Fletcher and Steve Georganas for being able to convene the parliamentary friends of SBS, which I think also played a very important role—not only for that but also for their continued support of SBS's funding. We held a staff function soon after the budget to share the good news with our staff. I think the recognition by the federal government of SBS's work has really boosted the morale within our organisation. I am absolutely convinced that SBS staff are now more committed than ever to continue to do the good work that do to be able to put together good content and news to connect and inspire more Australians.

The second thing I will mention is the recent success that we have had with Go Back To Where You Came From. We recently won an amazing international award, the Rose d'Or Festival. The Rose d'Or Festival is one of the world's premier TV and entertainment festivals. It is probably the biggest one. Not only did we win the Best Factual Program award at the Rose d'Or but we also won the coveted Garden Rose award, which is the best of all categories. So effectively it says that Go Back To Where You Came From is one of the best TV shows for 2012, which we are really pleased about. It is actually the first time that any Australian program or broadcaster has won the award in the 51 years that the awards have being going, so it is a really special award for us. It goes off the back of winning a Logie recently locally.

The final thing I will mention is around our radio review. SBS is conducting a radio schedule review at the moment around the languages that we broadcast on our radio platform. We need to bring our radio schedule in line with today's multicultural make-up in Australian society. The last major review that we did of the radio schedule was in 1994. Australia's demographics have changed quite significantly since then. The relative sizes of languages spoken have really changed, and there are a lot of new languages in the country from recent migrants that we are not servicing at all. That is one of the reasons—because arguably they are high-needs groups that need us more than ever—why we have to look at our radio schedule. So we have undertaken a public consultation process, which has just concluded. We have had almost 1,200 submissions to that. We are now going through that and understanding some of the key issues and concerns that came out of it to help us form the criteria that we will use to decide which languages will be on the radio schedule and which we will put on our digital platforms. This radio schedule review will ensure that we are able to continue to deliver on our charter in a way that really reflects the make-up of today's society.

CHAIR: I congratulate you—and I am sure that this is on behalf of the committee—on the success you had with Go Back To Where You Came From. It is an excellent show and it deserved every award it got, I think. Well done. Could you pass that on to others at SBS?

Mr Ebeid : Thank you.

CHAIR: In this year's budget SBS received what you described as the biggest funding boost ever, even though your triennial funding round was put off until next year, along with the ABC's. Can you explain to the committee why this funding boost was necessary now rather than next year?

Mr Ebeid : We definitely could not wait for our triennial funding next year. I think that was well recognised. We have continued to suffer with the commercial revenue declines that we have had. And, as I mentioned in the opening statement, our costs of both production and acquiring content have gone up significantly in the last few years. Between those two things we have been running the organisation at a deficit for this year and for last year. This funding boost will allow us to be in a sustainable position which means we do not have to cut or reduce our services, which is what we would have been facing had we not had a funding boost. Had we had to wait another year, for the triennial round next year, that is what we would have been facing. That is why we are very pleased that we did get the funding boost outside the triennial process.

CHAIR: Will some of that money go towards commissioning more original Australian content?

Mr Ebeid : It will. Certainly next year when are going for our triennial funding, when we are asking for new policy proposals we will be talking about new Australian content. But some of the money will be going to more Australian content, yes.

CHAIR: What else will the funding be used for?

Mr Ebeid : Probably half of the funding in the first year will go to just stabilising the organisation in terms of the losses that I was talking about, the deficits that we have been running. We are also in dire need of replacing some of our equipment. A fair bit of it will go to capital. I have mentioned in previous Senate estimates the fact that we are running on 20-year-old equipment in some of our TV studios. We will be replacing that. That is also very important given that NITV is moving into the building and that will be putting more strain and demand on our equipment and our studios. So a lot of it will be going there. In our radio division, part of the radio schedule review that I mentioned in my opening statement will mean that we will need to produce in more languages, and that will obviously require more funding. So some of the funding will go towards that. Some money will go to our online area. The organisation has never been funded for any online activity. This will allow us to stabilise and put some serious resources into our online area. Finally, of course, some will go to Australian content.

CHAIR: A large chunk of the funding is for establishing NITV. I understand the minister was instrumental in asking you to do that. Can you tell us how you are going to set this up?

Mr Ebeid : We are setting up a whole new work area for them. That is under construction at the moment in Artarmon in Sydney. They will be moving into our premises towards the end of June, maybe early July, depending on construction. We are setting the unit up so that it has a channel manager. It will be an Indigenous channel manager. That person will be running the channel and having full editorial responsibility. We will be giving that channel manager the support she needs to be able to do everything in terms of all the contracts, content and production and also supporting them from a news and current affairs perspective through our news division.

CHAIR: When do you expect the channel to launch?

Mr Ebeid : When we take over the responsibility for the channel from 1 July we will continue broadcasting as it currently is on Foxtel and Austar and on satellite until we launch it as a free-to-air channel. We have now ordered a whole lot of equipment that we need for transmission as a free-to-air channel. Once we get that equipment delivered and installed we hope to launch the channel towards the end of this year, hopefully just before Christmas.

CHAIR: How many staff are coming over from NITV to SBS?

Mr Ebeid : We have had about 34 or 35 staff accept positions with us at SBS, and they will be coming over.

CHAIR: What is your vision for this new channel and how do you expect it to look?

Mr Ebeid : One of the most important things is that they retain editorial control and are able to tell Indigenous stories and share their culture. That is a key part of it. But we want to be able to support them as well in the news area so that they can use the resource in our newsroom to improve their current affairs programs. Hopefully, with some of the savings that we will be able to find in the coming years with the integration, we will able to ensure that they have a good increase in their content funds. But of course that will be several years down the track, after we set up.

CHAIR: There was some criticism of NITV that was reflected in the Stevens review. The criticism was from other Indigenous media representatives. Specifically they said that NITV had failed to content from some Indigenous producers and that they failed to include the broader Indigenous community adequately. How does SBS intend to ensure that these criticisms are dealt with?

Mr Ebeid : We have just started thinking about some of those issues. We have put together a project team that will be working on how we connect with a lot of the Indigenous communities—not only the communities themselves but also the Indigenous production communities and the media communities. We will be putting some programs together to get around and meet all of them and see what opportunities there are to acquire content from all angles and from all parts of the country. We are aware of those criticisms and we certainly do intend to address them.

CHAIR: So the CPSU can stop sending correspondence to you and to Senator Conroy?

Mr Ebeid : I think the CPSU could save a few trees on that, yes.

CHAIR: They did a good job.

Senator BIRMINGHAM: Congratulations to SBS on the variety of good news that you have highlighted, Mr Ebeid. I will initially pick up where Senator Cameron left off on the NITV front. He asked how many staff were coming over from NITV. I guess the corollary of that is how many staff are not coming over from NITV—just so that we have an understanding of the proportion.

Mr Ebeid : I think there are seven staff not coming over. Some of them were offered jobs and declined. I think about four declined and three that we did not feel we had the right roles for, given the mismatch of skill sets. We are increasing the numbers. We have about five new positions that we are going to be advertising and looking to fill as well.

Senator BIRMINGHAM: Will existing programming pre 1 July simply transfer across and initially continue as expected post 1 July?

Mr Ebeid : Definitely, yes. A lot of the content that they have now, the programming that they have bought in time—that will all continue to be transmitted on the channel, and we will build off that. So I do not see it changing too much. But what we want to do—going back to Senator Cameron's point—is work in with a lot of the other Indigenous production houses and see what else is available and how we can expand that. I am sure that a lot of the channel's issues have come from lack of funding. They obviously have a limited budget, so they cannot buy content from all the production houses they would like to. Needing to cut your cloth is a key part of it as well.

Senator BIRMINGHAM: So initially people can expect to see the same programs until such time as things settle down and you can start to introduce the strategy, and even then you are anticipating a gradual change, hopefully improvement, in their programming decisions?

Mr Ebeid : Yes. From a schedule perspective probably you will not see much change until we are ready to launch it as a free-to-air channel. When we go to launch it as a free-to-air channel we might look at changing the schedule and some of the line-up. But that will obviously be up to the new Indigenous channel manager. She will be working through those issues.

Senator BIRMINGHAM: When exactly will that launch as a free-to-air channel occur?

Mr Ebeid : We are not exactly sure, because we have only just ordered a lot of the equipment to be able to transmit it as a free-to-air channel. There is a lot of work that has to be done not only to get the equipment but also install it and get it running. We are looking at around the end of the year—hopefully, as I said, before Christmas.

Senator BIRMINGHAM: I understand that an advisory board is to be established. What will the formal structure and nature of that advisory board be?

Mr Ebeid : We are actually thinking through all those issues at the moment. Obviously we have only had a few weeks of formalising this. We will be discussing that with our SBS board in about two or three weeks time. So it is probably a little early for me to address those sorts of questions, because we are still working that through. But when we do we will be publishing the criteria around the advisory committee, its terms of reference and what we hope to achieve out of it. At the surface I can say that what we really aim to do with that is to help us connect in with the communities, connect with the different issues within the culture and understand what things we should be broadcasting and what the communities want to see.

Senator BIRMINGHAM: Will the advisory board be appointed by the SBS board or by the minister?

Mr Ebeid : By the SBS board, I would think.

Senator BIRMINGHAM: And therefore it will be an advisory board to—

Mr Ebeid : To the SBS board, yes—and also to the channel manager and to the staff on the channel, to be able to tap into various issues that might pop up.

Senator BIRMINGHAM: Have any decisions been taken as to how the advisory board will be selected?

Mr Ebeid : No, not yet. That will be part of the consideration that we will be putting to our board in a couple of weeks at a board meeting. We are still working through all those issues at the moment.

Senator BIRMINGHAM: How much does SBS expect to spend on NITV in 2012-13?

Mr Ebeid : The funding we have is about $15 million a year. I think it is $15.1 million. Obviously we will spend that money in the first year. A fair bit of that first lot of money will go to equipment—to buy that transmission equipment that we need. That is several million dollars. One of the things we are working really hard to do at the moment is ensure that the amount of money we are spending on content does not decrease. We have a lot of set-up costs initially, and then in the following year we will be able to return some more money for content.

Senator BIRMINGHAM: What was NITV's budget in their last year as a separate organisation, 2010-11?

Mr Ebeid : It was exactly the same: $15.1 million. So there has not been an increase. I understand that the funding that was given to NITV will just be transferred to SBS, so there is no change in the amount.

Senator BIRMINGHAM: Whilst you have been given some additional funding for SBS overall, none of that—no savings from elsewhere, no cost savings generated by complementary activities or the like—necessarily allows you to provide a bit of a boost to that NITV funding aside from the core that you are being directly provided within the budget?

Mr Ebeid : Obviously it is in SBS's interest to make sure that the channel is as successful as possible. It will be up to the SBS board and the management team to work out with our budgets each year. If there are opportunities to increase and there is good reason to, we will try to do that. It will be in our interest to make sure the channel is as good and successful as we can make it.

Senator BIRMINGHAM: There has been some concern about an absence of ring-fencing, as it has been put, of funding for NITV. The fact that it is being provided over the long term and is simply part of the general appropriations to SBS does allow the volume being spent to become hazy. What steps will SBS take to make sure there is total transparency into the future?

Mr Ebeid : As I said, it is really in our interest to make sure that that is a successful channel. I do not think there is any concern that we will be siphoning money off from the NITV budget to address SBS's other shortfalls. That will not be in our interest. In fact we are spending several million at the moment, in this financial year, in order to give NITV a good leg-up in the beginning when they move over. We could have waited till 1 July when the money comes over but we are doing things now. We are very driven to make sure that this is a successful channel. So it would not be in our interest to do that.

Senator BIRMINGHAM: I appreciate that. But equally, as time goes on and funding sources become more blurred and there have been no changes in the budget papers to your outcomes—in fact even in program 1.1, which specifically relates to your television broadcasting, there is no specific mention of NITV or Indigenous production at all. So what transparency will you be applying to make sure that the community who have brought NITV to this point are comfortable and confident that that funding is secure into the future?

Mr Ebeid : Obviously we will continue to keep the finances of the group—we will be able to account for it. And I dare say we will probably be referring to it in our annual reports.

Senator BIRMINGHAM: And referring to it in a manner where the amount spent is clear as well?

Mr Ebeid : Yes, I would imagine so, because we do that in terms of where we spend our money on radio, online, on TV et cetera today. We would report on that accordingly.

Senator BIRMINGHAM: Does SBS have its own reserves or is that loss simply recorded against the government's bottom line?

Mr Ebeid : No, definitely from SBS reserves.

Senator BIRMINGHAM: What have a couple of years of SBS losses done to those reserves?

Mr Torpy : They are currently running at about $26 million, the accumulated surpluses in a balance sheet, so—

Senator BIRMINGHAM: That is the estimate at this at the end of this financial year, or at the end of this financial year will it be more like $21 million?

Mr Torpy : I think it will come down to $21 million.

Senator BIRMINGHAM: It is not a sizeable buffer but a buffer nonetheless for the organisation. Does the forward budget provide for any rebuilding or re-establishment of those reserves?

Mr Torpy : In the forward budget we are looking at small surpluses in the out years.

Senator BIRMINGHAM: Has SBS considered issues of media regulation and any potential changes to the media regulatory framework? If so, does SBS see merit in changing the way that particularly news broadcasting is regulated?

Mr Ebeid : You are obviously referring to the convergence review. We are still going through the convergence review but we are very pleased that the convergence review has acknowledged that we have a very good and healthy co-regulatory system today. We are quite pleased with the recommendations there that would leave the ABC and SBS really continuing as is at the moment.

Senator LUDLAM: Welcome back. It is nice to have you back with a bit of good news to discuss. Congratulations on your advocacy. A lot of portfolios went backwards in this budget and you have swum against the tide, so congratulations—and to the minister as well for his advocacy to the station with his colleagues. This is probably going to be a bit nitty-gritty but I would like you to take us through the financial statements so that we can work out basically what kind of position you are going to be left in. I understand that funding to the station is still going to be pretty tight notwithstanding the increase that you achieved. Can you talk us through the concept of base government funding across the forward estimates, which I understand as being your total appropriations less your fixed transmission distribution costs?

Mr Ebeid : That is right—and commercial revenues.

Senator LUDLAM: And commercial revenues—that is what I want to bring you too. Maybe we could start this with a simple yes or no question. You would be aware that I am concerned and reflect the concerns of many about the degree to which the station has been forced to commercialise, in particular running in-program advertising that people find pretty intrusive. Is it your view that this funding—maybe not taking this into the next triennium but at least for this next 12 months—gives you the ability to wind back any of the advertising that the station will run?

Mr Ebeid : Absolutely not.

Senator LUDLAM: Tell us why that would be.

Mr Ebeid : As I mentioned, probably more than half of next year's amount will simply go towards covering the deficits that we have been running. There are lots of areas around the organisation that are in need of significant funding. I mentioned earlier some of the equipment that we need to swap out, refurbishment of some of our studios et cetera. So I would definitely say that we need to do that before we need to decrease our advertising—because that would mean that we would be really going backwards again.

Senator LUDLAM: Can you talk us through—and take this on notice if you like—your base government funding for each year, 2011-12 and across the forward estimates, as a proportion of the total funding so that we can get a sense of effectively what your fixed transmission and distribution costs are. Is that easy enough to break down?

Mr Ebeid : Yes, that is easy enough.

Mr Torpy : I think for the out years we would need to calculate that for you but the base for 2011-12 is $137 million.

Senator LUDLAM: That is the base government appropriation excluding transmission?

Mr Torpy : Excluding transmission.

Senator LUDLAM: The total being $223 million, so it is a fairly simple subtraction?

Mr Torpy : Yes. Transmission is about $83 million of that.

Senator LUDLAM: On page 137 of your PBS it says that revenue from own sources is budgeted at $84.6 million for 2012-13. You have actually estimated, I think, a small increase in your advertising revenue, which you acknowledge is the main component of your own source revenue. Is that a correct reading of that statement?

Mr Torpy : There would be a small increase, not necessarily in our TV in advertising revenue. There are a couple of lines that go into there. There is online and there is sale of programs.

Mr Ebeid : DVDs, CDs, magazines and that sort of thing.

Senator LUDLAM: I do not know whether it is in the statement and I missed it, but is it possible for you to break out for us—again on notice if this is complex—the revenue from the own sources line item? Can you break it out into categories? I am interested to know the proportion of TV advertising.

Mr Ebeid : Of the $72 million that is there, $46 million is television.

Senator LUDLAM: That is handy. Are you projecting that to go up, down or sideways?

Mr Ebeid : Flat—sideways.

Senator LUDLAM: What happens to the station if it decreases? I think we have discussed in previous sessions that there is a concern, presumably within the station but certainly amongst some of your advocates and supporters, that you are in a kind of a tooth-and-nail competition with digital multichannels that are able to outbid you on content and drive down the price of advertising.

Mr Ebeid : That is right.

Senator LUDLAM: What is the basis of your estimates that those revenues are going to stay flat rather than falling?

Mr Ebeid : To be honest, it is all based around our audience figures as well, particularly the younger demographic that a lot of the advertising is driven by. That is always a forecast number. It is the highest risk one, which is why we ran into trouble this year and last year. What gives us confidence in that? To be honest, I worry about that because it is a forecast. We cannot be sure.

Senator LUDLAM: I know that these budget papers force you to try to predict the future. You just have to do the best with what you have.

Mr Torpy : I think we had some advice, too, from Deloitte giving us a forward projection that was flat last time we had them in looking at our revenue.

Mr Ebeid : We take into consideration a whole lot of things. The industry forecast as a whole, what that is doing, what our audience numbers are doing—and there are a few other factors as well.

Senator LUDLAM: Could you take on notice to disaggregate those figures for us for the out years and come back to us with those.

Mr Ebeid : Sure.

Senator LUDLAM: Can you tell us what it will mean to your online presence—the budget increase in total?

Mr Ebeid : Our online area has been doing a lot with very little at the moment. A lot of our content needs to be on good, proper platforms for content management systems et cetera. When we get our CMS—our content management system—in, it will improve efficiency within the organisation to be able to get content up faster. It will mean that we will be a lot more robust in our online area. We also would like to invest a bit of money in distinctive online content as well. A lot of the funding bodies—the state funding bodies—often want to give us money to be able to produce specific online content. Particularly with the NBN it is going to be more important that we really have good content for our online presence. So that is an area we are very keen to shore up.

Senator LUDLAM: Yes, that was kind of where I was going. Is that something that will need to be engaged with more seriously when we do the triennial funding round next year?

Mr Ebeid : Yes, that is going to be a big part of our triennial discussions.

Senator LUDLAM: I will leave it there. Again, good to see you back. I hope we are not having a discussion in retrospect next time about falling advertising revenues. Otherwise it is great news.

Senator SINGH: I concur with Senator Ludlam in welcoming the good fortune that SBS now finds itself in post-budget. I want to ask about NITV. Obviously NITV had its own board. I presume some of that board will be subsumed into the SBS board—or what will happen with that board?

Senator Conroy: We did have a conversation about that.

Mr Ebeid : Yes. There is no intention to bring any of the NITV board members into the SBS board, as far as I know, but of course the SBS board is up to the minister.

Senator SINGH: So what will happen—

Senator Conroy: It is up to the independent selection process.

Mr Ebeid : The minister's intent is that one of the positions on the SBS board that is currently vacant will be filled by an Indigenous person.

Senator SINGH: Okay, and that is what you were covering earlier with Senator Birmingham?

Mr Ebeid : Yes.

Senator SINGH: With the new budget situation SBS finds itself in, would we think that there could be more Australian made content as a result of that?

Mr Ebeid : Again, we did address that with Senator—

Senator Conroy: But I think you should tell Senator Singh all about the Rose awards. It is worth repeating.

Mr Ebeid : Yes, we definitely will be investing a big chunk of that money into more Australian content.

Senator SINGH: That is good news.

Mr Ebeid : Absolutely.

Senator SINGH: I also want to talk about SBS's online presence. I know that this is something that was recommended out of the convergence review to do with looking at more digital services and ways in which there can be online activities that SBS and the ABC can participate in. How valuable do you consider SBS's online presence to be?

Mr Ebeid : Incredibly valuable. Not only does our online presence support what we do in radio, our language services and television but also it has a life of its own in terms of terms of news and current affairs online. We now have something like 400,000 mobile apps as well from which people get their news from SBS. Both online and mobile and tablet devices are absolutely an essential part of our future within the changing media landscape. So a big part of the budget money in this funding boost is really about shoring that up and making our platform sustainable as opposed to being put together with bandaids. With our triennial funding we hope to be able to increase the initiatives and programs that we actually do.

Senator SINGH: In this year do you see that you could be putting more resources in terms of staff into maintaining an online presence?

Mr Ebeid : That is currently the plan. We are now going through our budgets for next year based on the budget outcome, and absolutely the current thinking is that we will be investing money in those areas: online and more Australian content. I know you missed it earlier but also in our radio area we need to invest more money because we want to produce more languages as well. And our infrastructure, technology and really our building as well—we are in a very old building.

Senator SINGH: It is the unlimited number of apps?

Mr Ebeid : That is right.

Senator SINGH: How many apps did you say it was before?

Mr Ebeid : Sorry—downloads of our news app. The SBS World News app has been very successful for us. Senator Ludlam is using it right now. That is good to see, Senator.

Mr Khalil : Can I just add one point of clarification. Senator Singh, you were out of the room when Michael answered the questions about the Indigenous advisory board. There is a plan, which the minister and Michael referred to, about an Indigenous person for the SBS board. But there is also a separate independent Indigenous advisory committee which will be established as well.

Senator SINGH: Yes, I did hear that. Thank you.

CHAIR: Mr Ebeid, I want to come to the sports side of it. Everywhere you read, it seems, and everywhere you go at the weekend there are more cyclists. How popular is Cycling Central?

Mr Ebeid : Cycling Central is, I think, one of our biggest—it is not the biggest; The World Game is our biggest website—but cycling is certainly very popular. It is certainly one of the two key sports that we really focus on at SBS: football, or soccer, and cycling. And of course with Cadel Evans's win last year there is a lot more interest.

CHAIR: Yes—the Tour de France. Do you have the rights to that for next year?

Mr Ebeid : I am pleased to say that we have the rights to the Tour de France until 2018. I am very pleased about that. I have even taken up cycling myself.

CHAIR: I think there is enough lycra on the road at the weekend. Mr Ebeid, thanks for your appearance here today.