The federal government’s normally cautious TV regulator has found against the ABC over its decision to broadcast a photoshopped image of Australian columnist Chris Kenny having sex with a dog.

The Australian Communications and Media Authority verdict, released at noon today, is a serious embarrassment for the ABC and raises questions about how well the ABC reviews complaints about its work.

It’s a moral victory for Kenny and The Australian, who have been waging war on the ABC over the skit since it aired on The Hamster Decides (the work of the Chaser boys) last September. And the verdict is an interesting addition to the debate around satire, free speech and offence in the Australian media.

ACMA found the ABC had breached its own Code of Practice, specifically section 7, which deals with “harm and offence”. Here’s the section the skit breached:

7.1 Content that is likely to cause harm or offence must be justified by the editorial context.

ACMA chairman Chris Chapman says the skit “crossed that line” on section 7.1. Chapman says ACMA grants “considerable latitude to the ABC to broadcast challenging content that may offend some audiences some of the time”, but the Kenny skit went too far and was “not justified by the editorial context”. It’s the first time ACMA has found the ABC breached this section.

ACMA says it took into account “the extreme and disproportionate construct of the joke”. The skit had a “strong image and coarse language” and was “likely to leave a lasting impression”. It certainly did that.

And in a gently worded but telling rebuke to the national broadcaster, Chapman went on to say “the ACMA has suggested that the ABC Board reflect on whether its code is operating effectively and as intended in the context of dealing with harm and offence”. This could be interpreted to mean ACMA thinks the code is not working properly and needs to be changed.

This issue has a torturous history that does not reflect particularly well on the ABC — and has been used repeatedly by ABC critics as fodder against managing director Mark Scott.

The skit was aired during last year’s election coverage. Complaints followed, prompting the ABC to review the skit — and decide it did not breach ABC editorial policies.

Kenny lodged a defamation case against the ABC and production company Giant Dwarf. Scott then apologised in April this year — seven months after the skit was broadcast. A settlement with Kenny was reached earlier this month, and the ABC make another apology (this one on-air). It’s believed the ABC had to pay Kenny “some damages,” reported to be around $35,000 plus legal fees. Now ACMA, the government regulatory body responsible for television, radio, internet and telecommunications codes of practice and standards, has found in Kenny’s favour. ACMA is seen by some as slow to criticise the media, and its decisions carry clout. It does not often find against the ABC. For example, according to a Herald Sun story this week, ACMA has investigated complaints into 12 ABC programs this year, and upheld none of them (until today).

The Australian’s editor-in-chief Chris Mitchell told Crikey the ACMA verdict “shows the problem with ABC internal processes. These found no breach. I would also ask why the ABC stuffed around for six months when they were advised in December of ACMA’s position.”

An ABC spokesman told Crikey: “The ABC will review the ACMA report and its findings. The ABC has twice apologised to Mr Kenny, and separate court proceedings have been settled.”

ACMA found the skit did not breach two other sections of the ABC Code of Practice.